In June 2008, Cedar Rapids experienced what at the time was the fifth worst disaster in U.S. history. A historic flood covered 10 square miles in the four core neighborhoods and the entire downtown, damaging more than 5,000 homes, over 1,000 businesses, and numerous public, cultural and religious facilities. Since that time, 1,088 residences have been demolished and 2,356 residential properties repaired or rehabilitated. Some 82 percent of the damaged businesses have reopened compared to a national average of 55 percent in previous major disasters. The scope of the recovery in just five years is remarkable. The numbers speak for themselves: • 1,311 new housing units completed since 2008; • 118 new multifamily units recently funded by state recovery grants; • 16 major city of Cedar Rapids facilities built or under construction with all to be finished by 2014; • building permits in 2012 totaled 11,000 with 1,300 commercial and 9,700 residential, which set a record of more than $400 million (63 percent from the private sector); • population growth of 4.6 percent in the last decade despite the June 2008 flood; • unemployment rate currently at 4.9 percent; • AAA bond rating by Moody’s for 41 consecutive years. The …
Market Reports
If you subscribe to the notion that “a rising tide floats all boats,” then all of South Florida is benefiting from the renewed interest by out-of-market and international investors in all of the region’s commercial property sectors. In addition to regular South Florida investors from America’s Northeast and affluent Latin Americans, Florida has experienced a significant number of property acquisitions by Canadians in the last 18 months. While much of the international investment has focused on Miami/Dade County, one of the largest Broward County investments this year has come from Miami-based Fifteen Group, which recently acquired the Sawgrass Technology Park for $52 million in Sunrise, Fla. The Class B office and industrial buildings were formerly occupied by Racal Milgo and the seller had planned to redevelop the campus but never did. While industrial, multifamily and retail are garnering the most attention, the pricing structure for office properties is improving. The current cap rate for well-located, stabilized assets is on average 7.5 to 8.5 percent and falling as the market recovers. Much foreign investment is tied to capital flight and is less concerned with achieving the highest yield. As such, pricing is less important to those investors. In terms of sales …
When it comes to national economic cycles, Baltimore has always led a charmed existence. Its proximity to our nation’s capital, sustained strong consumer demographics and the presence of diversified industries have contributed to Baltimore entering recessionary times late and emerging early. New Centers Underway Five significant retail sites are either recently opened, under construction or nearing approval to initiate development. McHenry Row, positioned adjacent to the headquarters of the rapidly expanding Under Armour, is open and features a Harris Teeter grocery store. Baltimore City will also welcome a premier power center in 2013, as well as Canton Crossing, a 320,000-square-foot Harris Teeter- and Target-anchored center. This project is located east of the Inner Harbor on Boston Street and will be home to fast-casual restaurants and soft good retailers such as DSW, Michaels, Loft, Five Below, Ulta, Red Robin, Jimmy John’s and Chick-fil-A. In 2015, Baltimoreans on the north side of the city will begin shopping in the redeveloped Rotunda; D.C.-based Mom’s Organic Market is rumored to be the lead anchor. This renovation was spurred by the relocation of Giant Food to a larger footprint in the former Super Fresh at Green Spring Tower Square. Whole Foods is making whispers about …
New York City continues to make economic progress. The city’s workforce grew by 78,900 jobs over the 12 months ending April 2013. As a consequence, the unemployment rate declined to 7.7 percent in April compared to 8.8 percent a year ago. Reflecting continued employment growth, the office market was quite active across Manhattan, as a wide range of tenants signed leases during the first quarter. Tenant volume exceeded the previous quarter activity by 38 percent and was more than twice that of a year ago. Availability rates, however, remained relatively unchanged in Midtown North and Downtown and increased in Midtown South. Overall asking rents declined in Midtown North, but rose in Midtown South and Downtown. A number of tenants are viewing their space needs differently than in the past. Collaborative working spaces and “green” are de rigueur; oversized workspaces are not. The recent slow absorption is the result of a combination of tenants frequently relocating or renewing at the same or reduced size and the return of numerous large blocks of space to the market. Manhattan is blessed with the ability to continually reinvent itself. A wide range of exciting changes are in various stages of development that will alter …
Orange County's industrial marketplace doesn’t quite favor owners just yet, but it’s getting close. Our industrial inventories are at historic lows and, with a few exceptions, we have not seen any new construction since 2007. There are a couple new projects planned — and a few more are under construction — but they’ve mostly been large warehouses north of 100,000 square feet. The projected asking rents for these big boxes is $0.50 or more per square foot, triple net; a very expensive rent for a commodity. In general, as these big box rents approach or exceed $0.50 triple net, occupants tend to seek cheaper environs. In Orange County’s case, this usually means they migrate east of town in the Inland markets or beyond. Smaller, newer inventory (20,000 square feet to 50,000 square feet) that hits the market these days is gobbled up quickly, sometimes with multiple suitors. Incubator space (less than 10,000 square feet) has also rebounded nicely with absorption at a blistering pace. We haven’t seen a great deal of rent growth or price appreciation to date, although the latest round of transactions that are in escrow now should bring some evidence of upward change. During the depths of …
Like other markets throughout the region, Cincinnati’s retail market was slow to recover from the Great Recession. But it has now turned the corner and is in the midst of an upswing in both transaction velocity and leasing momentum. Overall, the recovering Cincinnati economy is drawing investors to the market and sales of retail assets will continue to gain traction. Single-tenant assets have never been more popular among private investors as evidenced by cap rates that have fallen to levels that would have amazed most industry watchers in 2007. Cap rates have compressed to the point that some long-term ground leases are trading in the mid-4 percent range, while best-of-class fee simple property yields begin 100 to 150 basis points higher. A number of investors are targeting single-tenant, net-leased assets with lower-credit tenants or leases that will expire in the near future with the potential to re-sign or re-tenant the property, trading at yields starting in the 6 percent range. In the multi-tenant segment, investors are scouring the market for grocery-anchored deals, though limited supply will hinder transactions. Value-add plays are popular with private buyers across the metro area, providing owners in low-profile submarkets the opportunity to cash out while …
Over the past decade, Baltimore City has seen a gradual shift in office market activity. Demand for office space has become increasingly focused on the waterfront properties of the Pratt Street Corridor and Harbor East. Many older buildings in the traditional Central Business District (CBD) with smaller footprints have become less attractive for office use. The CBD has also experienced a surge in both population and apartment demand that has pushed the residential supply to its occupancy limit. This balance between vacant office space and demand for residential space in the CBD has created a prime opportunity for redevelopment. The CBD has struggled to recover from the economic recession, when office vacancy rates spiked to almost 23 percent. It has, however, experienced small amounts of positive absorption over the past few years. Demand for space has been focused on Class A inventory as a “flight to quality” trend has emerged in the CBD. Net absorption for Class A inventory in the CBD has increased each year since 2008 and has been a primary factor in stabilizing the overall Baltimore City vacancy rate. Mid-year 2013 numbers suggest that this trend of increasing demand for Class A office space will continue for …
The Orange The Orange County apartment market continues to rebound. Operations have improved so far in 2013, with vacancy below equilibrium and asking rents nearly 10 percent above the low point during the recession. The healthy performance of the apartment market is a result of Orange County’s strategic location, population growth, low unemployment rate, high occupancy and shortage of available housing, which has greatly benefited multifamily investors. According to Hendricks-Berkadia Research, the county is one of the most densely populated areas in the United States. Orange County is 2.5 times denser than Contra Costa and Santa Clara counties, and five times denser than San Diego County, which has nearly the same population. The population in Orange County has grown consistently, and reached 3,055,800 residents at the end of 2012, up 26.7 percent from 1990. The unemployment rate for Orange County in the second quarter of 2013 averaged 5.6 percent, 130 basis point below what it was at the end of 2012. According to Moody’s Analytics, the local jobless rate is lower than state and U.S averages. This would be the lowest rate since 2008, indicative of the improving economy in Orange County. Employment growth in the county is also expected …
Most retail brokers in Des Moines are cautiously optimistic in their expectations for 2013. For the first time in years, I’m seeing a lot of site plans for new retail developments come across my desk. Several projects that had been on the back burner for the last few years have finally begun to take shape. Des Moines, like most markets, got hurt when the Great Recession hit. However, with its major industry based in insurance, it weathered the storm better than many other markets. At its high point, the unemployment rate was 6.8 percent, and the rate as of May was 4.3 percent. The Des Moines retail market didn’t get nearly as overbuilt as many of the other nearby larger markets. There wasn’t a ton of first-generation space that sat vacant on the retail market in Des Moines once the recession hit. Most of the retail developers here are conservative. Much of the first-generation space that sat vacant was the result of lenders taking back the properties and not wanting to invest any money in those assets. Lessons Learned The developers in today’s market have a more disciplined approach than many of their predecessors. There was a time when real …
Houston has long been characterized by its energy presence, earning titles such as “The Energy Capital of the World” and the “Petro Metro.” The American drilling renaissance has brought about significant changes on a national and international scale, and the boom is projected to be sustainable for decades. As a result, energy companies are shifting operations back to the U.S. Houston is at the heart of the American oil industry, and as companies grow and expand their footprint in the U.S., the Houston office market is positioned to experience significant growth. The economic impact of the shale boom has been felt throughout Texas. The Eagle Ford Shale, one of the most significant oil and gas plays in the country, spans 14 producing counties and had an economic impact of $46 billion in 2012. Surrounding cities, such as San Antonio and Corpus Christi, are experiencing growth in all product types to accommodate the population and employment gains in the region. Midland has become one of the most expensive places in Texas thanks to the Permian Basin, while the Dallas/Fort Worth metro area, with the Barnett Shale in its backyard, continuously tops various economic health indices. But Houston, home to 87,418 headquarters, …