Speculative construction in Kansas City’s industrial market has exceeded the height of the last boom for a couple of reasons. On a macro level, the economy is improving, so it’s only natural that the local market would follow suit, especially given its logistical advantages. The development of intermodal facilities, the aging stock of existing product combined with no new construction in the past four years — plus a thriving automotive sector — are pushing this new wave of development locally. During the first half of this year, the Kansas City industrial market has absorbed more than 2 million square feet of space, driving down the vacancy rate to 7.5 percent, slightly lower than the historical average of 7.6 percent and down from the peak of 8.4 percent in 2011. We’re likely to experience an increase in vacancy during the next 18 months, however, as six properties totaling slightly more than 2 million square feet deliver. In fact, 2013 will post the most speculative development of the past decade, exceeding 2008’s total of 753,000 square feet. New Logistics, New Product One of the key demand drivers for the latest boom involves the more sophisticated approach to logistics on the part of …
Market Reports
Dallas/Fort Worth’s office market has experienced some of the strongest leasing activity in its history and will continue to tighten through 2013 as job sectors that demand space lead to record expansion. Additions to local office inventory should more than double this year compared with 2012. Meanwhile, pre-leasing has been steady, and its impact on the vacancy rate is predicted to be minimal. However, vacancy may start to inch up in 2014 as developers fill the pipeline with sizable speculative projects. Far North Dallas has become a draw for major corporate relocations, and therefore a hotbed for office development. This is due in part to the area’s relatively affordable housing and well-rated schools. Space slated for delivery this year in Far North Dallas has been largely spoken for, but the area is also home to one of the largest speculative projects underway, a 342,000-square-foot office tower scheduled to become available in late 2014. Office development has also increased in the Fort Worth area. That being said, near-term deliveries are expected to be light and limited to buildings less than 75,000 square feet, including some properties dedicated entirely for medical uses. Looking at both quarterly trends and monthly updates, healthy employment …
There is a buzz about New Orleans — no longer are only locals singing the virtues of this great American city. In fact, Forbes rated New Orleans the fastest-growing city since the recession in 2013, Bloomberg describes the Crescent City as “Boomtown,” CNN Money rated Louisiana as one of the most entrepreneurial states and Career Builder.com cited New Orleans as one of the fastest for wage growth in the United States. A spotlight has been shining on the dynamics of this market, and local, regional and national investors have taken notice. According to our most recent survey, rental rates in metro New Orleans range from a low of $0.80 per square foot to as high as $2.25 per square foot. Average monthly rent is $1.02 per square foot, and overall occupancy is at 93 percent. The geography of New Orleans is such that there are numerous barriers to entry, most notably the lack of available land to develop multifamily communities. As a result, the Downtown/ Warehouse District is experiencing a major renaissance whereby mid- and late-1920s office buildings are being converted to multifamily. Notable developments downtown that are under construction or soon to commence include The South Market, which will …
Seattle is a top-10 market nationwide for apartment and condo construction, and retailers are following residential growth back into the Seattle core market. In the first half of the 2013, nine apartment projects added nearly 1,300 units to Downtown. As of June 2013, 30 more residential projects were under construction or permitted, representing about 5,400 units. Projects (mostly apartments) are breaking ground at a quickening pace, with total construction costs for those currently underway at about $2.8 billion — a level not experienced since 2008. Many of the projects are mixed-use developments that contain street-level retail components. Almost half are located near Downtown Seattle. In 2012, three major retail renovations were completed in Downtown. This overhauling of aging retail space has continued into 2013. Nordstrom Rack now has a new 42,500-square-foot space in the Metro level of Westlake Center, which is directly across from the Nordstrom flagship store. Pike Place Market completed several renovations that cost close to $70 million. These included upgrades to the Market’s infrastructure and features. Target acquired 95,000 square feet of space in the Newmark building (Pike Plaza) and remodeled the retail space across three floors. This urban-concept CityTarget is roughly two-thirds the size of a …
Things are happening downtown. A number of public and private initiatives are transforming downtown Des Moines from a place to work to a place where you can truly live, work and play. Wellmark Blue Cross and Blue Shield recently moved into its new 600,000-square-foot LEED Platinum-certified office building fronting the John and Mary Pappajohn Sculpture Park, and Principal Financial announced a $250 million renovation of its existing downtown campus. In addition, EMC Insurance Cos. recently added to its downtown footprint by purchasing the Hub Tower and Kaleidoscope at the Hub, the centerpiece of the new Walnut Street transformation. Finally, Nationwide Insurance is firmly entrenched in its 1 million-square-foot campus building. New Home For YMCA Adding to the momentum is a three-way sale and trade fueled by a public/private partnership spearheaded by Des Moines real estate leader William C. Knapp, chairman emeritus of Knapp Properties. Included is an approximate $30 million project for a downtown Wellmark YMCA to be located in the former Polk County Convention Complex. According to The Des Moines Register, construction is expected to begin by year’s end on the YMCA’s new downtown home, which will include expanded recreational offices and a 50-meter, Olympic-sized swimming pool. YMCA supporters …
On account of the diverse local economy and a tech employment base in high demand by global firms, the Austin industrial market has realized a recovery that should sustain continued rent growth with a healthier inventory delivery schedule over the next 24 to 36 months. Austin has added nearly 105,000 jobs during the economic recovery through May 2013, bringing total employment 9 percent above its previous peak in late 2008. The unemployment rate, at only 5.4 percent in May, is more than 200 basis points below the national average of 7.6 percent. The broad tech sector expansion, including new facilities underway for Apple and Samsung, and the strong housing market are driving robust growth in construction employment, while all three areas represent key supports for industrial tenant demand. On the heels of record net absorption in 2012 of 2.1 million square feet — an annual total not experienced in more than 15 years — industrial vacancy in Austin has fallen to 12.5 percent, a low not seen since the market’s peak in 2007. An important differentiating factor for the market today versus the 2007/2008 cycle is the limited amount of construction. When vacancy rates fell to 11 to 12 percent …
Lease renewals and, in some instances, expansions into larger layouts, are occurring in Atlanta as employers create new jobs. The metro has also landed some plum relocations recently. State Farm and General Motors have chosen the metro as the site for regional headquarters, and the firms will create thousands of jobs during the next several years. Many of the GM jobs are new information technology positions and they are coming here in response to the metro’s highly skilled and educated work force. As the region becomes an information technology hub in the Southeast, other employers are also adding workers. AT&T has expanded its presence by filling 600 IT positions and plans to hire an additional 1,000 employees throughout the state. Additionally, Airwatch, a mobile software firm, has already hired 200 Atlanta workers and expects to create 600 more positions by year end. Other companies, such as InfoSystems, ExactTarget, PulteGroup Inc. and Spanx, are also planning to expand operations in the metro. Scheduled expansions by these employers and recent additions to payrolls have helped to fill office space that has been vacant since the trough of the recession. The Atlanta office market will make strides by the end of this year, …
Boston's waterfront redevelopment is generating thousands of jobs and facilitating growth across several employment sectors. The construction industry, in particular, has benefited as workers build thousands of residential units along the waterfront. Pier 4, a mixed-use project located in the Seaport District, is underway and will consist of three buildings to contain apartments, ground-level retail, condos, and a hotel or office space. Additionally, developers are moving forward with plans to build two 22-story towers in the Seaport Square mixed-use development, adding 800 apartments and 300,000 square feet of retail and entertainment space. This would be the first major project at the 23-acre site, considered the key to connecting the surrounding Fort Point, Fan Pier, Pier 4 and Waterside Place developments into a 24/7 urban environment. The developments are successfully transforming the area from sizable parking lots to a center that will draw employers and young professionals seeking a live-work-play lifestyle. In addition, many builders are acquiring older assets in prime areas of Boston and deploying capital in order to increase rents or convert to condos as empty-nesters and young adults seek more affordable ownership opportunities in affluent neighborhoods. Developers in search of conversion opportunities are targeting larger units with nice …
It is no secret hat recovery in this real estate cycle hinges on job creation. In Phoenix, this means all eyes are on the markets that can deliver not only space and amenities, but also that golden element: employees. The Southeast Valley emerged early as Phoenix’s premier labor play and most dynamic “big picture” winner with amenities like Arizona State University, Light Rail and a strong base of corporate users. As a result, markets like Tempe have surged ahead with year-to-date positive net absorption of 4.1 percent, 15.8 percent vacancy (compared to the metro Phoenix rate of 24.9 percent) and a host of new tenant announcements. In 2013 alone, Go Daddy added 150,000 square feet to its local footprint; Silicon Valley Bank inked an expansion at Hayden Ferry Lakeside; and State Farm rocked the industry with plans for a new $600-million, 2-million-square-foot office development. In March, GM announced it will invest $21 million and hire 1,000 employees for a new Information Technology Innovation Center in Chandler. This will boost Chandler’s already positive performance, which includes an auspicious 12.8 percent office vacancy and rents at $22.31 per square foot. This area has experienced a small but positive year-to-date absorption of 0.6 …
Strong and steady is an apt description of the current course of the commercial real estate market in the greater Grand Traverse Area of Northwest Lower Michigan. Traverse City’s unemployment rate registered 7.5 percent in June, virtually unchanged from a year ago but down dramatically from 14.3 percent in March 2010. In 2012, the commercial real estate market rebounded with a total of 400,000 square feet sold, up from approximately 300,000 square feet in 2011. Last year’s rebound was fueled largely by increased investment in the industrial warehouse and light manufacturing market. More than half of the square footage absorbed last year was in this particular sector. Only 139,000 square feet of commercial real estate space has been absorbed year-to-date through July. This is considerably less than the 300,000 square feet absorbed during the first seven months of 2012. The reduction in absorption activity is due to a shortage in the available inventory of quality light manufacturing and industrial warehouse buildings. To put that statement into context, consider that a total of 22 industrial and manufacturing buildings ranging in all sizes traded hands in 2012. Currently, we have only six buildings 20,000 square feet or larger on the market for …