Demand for industrial space remains strong in Miami’s commercial real estate market as enhancements and improvements to the city’s airport and seaport — along with the expansion of the Panama Canal — promise to bring a boom in trade to the South Florida area. In July, Miami’s industrial real estate vacancy rate stood at 5.8 percent, nearly four percent below the national average of 9.4 percent, according to the National Association of Realtors (NAR). Experts agree that Miami’s industrial real estate vacancy rate will continue to shrink as local infrastructure enhancements and improvements near completion, leading many companies that already utilize industrial space to vie for a slice of the 220 million square feet of storage and warehouse space presently available in Miami-Dade County. The new tunnel, rail and the deep dredge at the port, along with terminal improvements at the airport, have increased demand for millions of additional square feet of industrial space from users and offshore investors from South America, Canada, Europe, and China, both to lease and purchase property. Investors and users realize Miami will experience an increase in trade and commerce once the Panama Canal expansion is finished and they want a stake in it. Once …
Market Reports
Anecdotally, by activity and by the numbers, the suburban Boston industrial market has definitely strengthened. If positive net absorption trends continue through the balance of the year, 2013 could end in territory that we have not seen since before the Great Recession. The momentum in the market has changed significantly in two years. For example, two years ago our firm was hired to sell a 53,000-square-foot single-story industrial building in Woburn for a third-generation plastics manufacturing company that was growing and wanted to buy a larger facility in the region. The company concurrently asked us to look for a larger building for them to buy. However, before putting an alternative building under contract, they would need to sell their Woburn property. In 2011, we did not have much activity from prospective buyers interested in our client’s property yet there were a number of viable purchase options available to them. Fast forward to the present, and we have multiple, highly qualified companies interested in buying their Woburn building — but now there is nothing to buy that meets our client’s criteria for size, quality and location. As a result, we have been forced to switch our acquisition strategy to buying land …
Each week seems to bring news of yet another record-selling price for a commercial property in Seattle, including assets ranging from office and retail to apartments and even development sites. Increasing occupancy rates for industrial and retail properties also suggest that property values are headed up. The King County assessor has undoubtedly tracked these price trends, too. In 2012, the assessor’s office reported overall increases in taxable values for major office buildings, major retail properties, hotels and apartments. As a result, many commercial property owners in the Puget Sound region saw increases on their 2012 assessed value notices. In March, King County’s chief economist projected that total assessed values in the county would reach nearly $327 billion in 2013 (for taxes payable in 2014), up nearly 4 percent from $315 billion in 2012. For many taxpayers, notices in 2013 will reflect assessment increases even greater than 4 percent. The general recovery in the Seattle market should not trigger increased assessments for all properties. For example, some suburban areas have missed out on the trend toward increasing property values. And there are always individual properties that do not experience the same increases as their neighbors. Accordingly, owners should be attentive to …
In what might be the twilight of the Fannie Mae and Freddie Mac years, investors in Kansas City’s apartment market have fully capitalized on the continued availability of cheap debt and a slowly improving economy. As reminders of the 2008–2010 economic downturn, bank-owned properties are still being sold, but the bulk of REO sales have already occurred. Additionally, local job creation surged in the past three months, buoying investors’ confidence. As a result, sales of Class B and C properties will continue to rise and approach historic levels. The sales velocity of top-quality apartment product is also normalizing, albeit on a downward trajectory. All Classes Normalizing So far this year, transaction volume and average sales price per unit have both been strong. Nevertheless, the data suggests the market is stabilizing below the levels of 2011 and 2012, which represented after the pent-up demand from 2008 through 2010. Annualizing the year-to-date sales data from Hendricks-Berkadia suggests there will be 36 transactions of Class A, B and C properties with 40 or more units this year. An end-of-year boost in sales is expected, but we still anticipate fewer than the 55 and 54 transactions completed in 2011 and 2012, respectively. Total sales …
The boom is back and stronger than ever in Austin, making the city a top destination for retailers and investors. Bass Pro Shops, H&M, Trader Joe’s, Fresh Plus, In-N-Out Burger, Gander Mountain and Five Below are among the list of well-known national retailers that have opened or announced plans to open their first Austin area stores within the last year. Meanwhile, a growing list of retailers in the Central Texas market are expanding, including Whole Foods Market, H-E-B, Walmart and Alamo Drafthouse, a locally-based chain of movie theaters. As host of the U.S. Grand Prix, the Austin City Limits Music Festival, the SXSW music festival and conferences, and ESPN’s Summer X Games (starting in 2014), Austin enjoys a certain cachet and glowing national and international media, but the coolness factor isn’t nearly as important as hard numbers for expanding retailers, and Austin’s numbers are impressive. The Central Texas economy is expected to add more than 35,000 jobs this year, including thousands of well-paying positions at Apple, GM, Samsung, National Instruments and Visa. More than 70 people move to Central Texas each day, and the Austin MSA is now the 11th-largest city in the nation, according to the U.S. Census. Signs …
The Phoenix industrial market ended the second quarter of 2013 with vacancy rates at 12.4 percent, while net absorption totaled a positive 471,635 square feet. Asking rents are increasing and demand for larger facilities has been the catalyst in the recovery. Over the past 15 years, vacancy rates have averaged 10.3 percent, providing evidence that the current market is not far off from the average. Phoenix has historically seen significant cyclical swings. This past recession has been no exception to this. However, the positive net absorption the area’s industrial sector has experienced over the past two-plus years signals that the Valley is well on its way to recovery. The Phoenix market has absorbed 20.7 million square feet, and has built more than 7 million square feet of new space. Year-over-year, the total number of transactions has increased 24 percent, bringing excitement to the Valley once again. Big box industrial in Phoenix has absorbed about 15 million square feet of space on a net basis throughout 2011 and 2012. The vast majority of that net absorption has been big box product in the Southwest Valley. Rental rates also increased from the high $0.20 net range to a current low-mid $0.30 range …
Population and employment growth are providing a substantial boost to the Austin apartment market. Metro-wide vacancy is hovering in the mid-4 percent range and is 150 basis points below the average historical rate. Rents also increased measurably. In addition to rising job and resident totals, limited new apartment product in recent years supported an average quarterly rent growth of 1.2 percent, compared to three-month gains of roughly 1 percent in the year prior to the recession. The most notable economic news in the metro is Apple Inc.’s substantial expansion. Over the next eight years, the company will construct and staff a 1 million-square-foot, 39-acre development in Austin’s Far Northwest submarket. Day-to-day operations will yield more than 3,600 new hires, doubling the metro’s number of Apple employees. In the near-term, LegalZoom Inc. plans to add 600 new employees before the end of the year. Additionally, Accenture and General Motors hired a combined 700 workers during the first half of 2013. Beyond the large job announcements, both small and large businesses are hiring, attracting new residents and fueling apartment demand. In the 12-month period ending in the second quarter of this year, total nonfarm employment in Austin increased by 28,900 positions, a …
Retail is looking up in Richmond. Following a recession characterized by a dearth of new retail development, the Richmond retail market is once again poised for growth. Decreases in the overall vacancy rate, positive employment growth, increases in retail rents and an upswing in overall retail construction suggest that the market is amidst a retail recovery. Historically, these economic factors have driven robust expansions. While “robust” might be a bit dramatic for 2013, several retail projects are in the pre-development and development phases, coupled with a number of significant retail transactions. Those are encouraging signs that point to recovery. Several noteworthy retail developments fill the pipeline. Walmart recently acquired a 10-acre site at Reynolds Crossing, a 90-acre, mixed-use development in Richmond’s established “near west end” suburb, with plans to build a 90,000-square-foot store with a garden center. Expected to open in spring 2014, Walmart is set to anchor the development that includes small shop and restaurant space in addition to outparcels. Likewise, Kroger is under construction with its third Kroger Marketplace in the Richmond MSA. This 124,000-square-foot grocery concept anchors Staples Mill Marketplace, which will also include outparcels and small shop and restaurant space. After 10 years of planning, Gumenick …
Kansas City is best known for its beer, barbecue and jazz, and an economy inextricably linked to railroads and cattle. It’s not unusual for an Easterner flying over Kansas City on his way to Los Angeles to remark, “I hear I can get a great steak down there.” You can indeed find a great steak down here, but most importantly the economy is more about the steak than the sizzle. The truth is that the local economy is so broad-based that it is difficult to define. Kansas City’s economic growth today is driven by life sciences, architecture and engineering, information technology as well as financial services. All of these industries feature homegrown companies and institutions that began with entrepreneurial roots such as telecommunications giant Sprint, a company that traces its roots to a small utility company west of Kansas City. The world’s power plants and sports stadiums are designed in Kansas City, and a cure for cancer is ongoing driven by The Stowers Institute for Medical Research and the University of Kansas in conjunction with the Kansas City Area Life Sciences Institute. Cerner, the second largest health care technology company in the world with more than 8,000 employees, announced in …
Amazon, Zulily, Real Networks, Intel, eBay, Attachmate, PATH, Omeros, F5 Networks, Microsoft. Collectively, these technology companies have dominated Seattle’s office leasing landscape over the past 12 months. This period has seen an eye-popping absorption of more than 1.9 million square feet. That would be astonishing growth in nearly any city, but with a Class A and B base of 63 million square feet, this number is even more impressive. The vacancy rate has dropped and now stands at 11.5 percent, while correspondingly rental rates rose more than $4 per square foot, cresting above the $30 per square foot, full service, for the first time in more than a decade. In addition, both rental abatement and discretionary tenant improvement allowances have diminished. What’s noteworthy is that none of these companies made commitments in the Central Business District. Instead, each opted for an urban campus style as opposed to a traditional stacked, high-rise presence. These companies either backfilled Class A properties immediately south of Downtown in Pioneer Square or relocated into first-generation space just north of the core in the South Lake Union submarket. Despite this current trend, Seattle’s core is very healthy. It’s even listed as a top-three investment market on …