The top 10 fastest growing subdivisions in San Antonio had a combined 1,832 housing starts in fourth quarter 2012, according to a recent report from housing-market research firm Metrostudy. And that number is already up with 2,042 new home starts in first quarter 2013, a 24.3 percent increase over the same time period last year. So far, builders are on track to build 8,478 homes this year, as major markets in Texas continues to outperform the nation. Alamo Ranch is the bright star in the bunch. Statistics solidly place this northwest subdivision in the top spot of San Antonio’s fastest growing subdivisions with 649 new housing starts in fourth quarter 2012. Bulverde Village, in second place, saw 169 new home starts during the same time. April single-family home sales rose 14 percent over last year and 4.5 percent from last month, according to the San Antonio Board of Realtors. In keeping with the boost in housing, retail is showing solid, if slow, growth. San Antonio retail occupancy rates increased for the fourth consecutive quarter, reaching 94.5 percent in first quarter 2013. And while rental rates remain fairly flat, according to research from Delta Associates, the second half of 2013 is …
Market Reports
While most office markets are bifurcated between Class A and the rest, the Triangle market has a particularly pronounced disparity that is driving market trends. In the first quarter of 2013, Class A vacancy was 12.7 percent — nearly half that of both Class B (24.7 percent) and Class C (23.0 percent). The playing field, in terms of both tenant desires and rental rate differential economics, is skewed heavily in favor of Class A space, which currently only has six options for tenants seeking blocks 50,000 square feet or greater. Not even projects currently under construction, including the NC State Employees Credit Union’s downtown Raleigh headquarters and Diamond View III in downtown Durham, offer available space in that range. Class A vacancy is at its lowest rate in nearly five years and is only slightly above the 11 percent range that spurred the office building boom between 2005 and 2007. The lack of available large blocks has already resulted in lost opportunities and market timing mismatches for potential preleasing or build-to-suit tenants, such as Wyrick Robbins Yates & Ponton. The law firm recently renewed and expanded its lease in place at The Summit in the West Raleigh submarket, due to …
Apartment development is ramping up across the U.S., creating significant concerns for multifamily operators in 2013 and 2014. Nevertheless, there is pent-up apartment demand. Slow but steady job creation is allowing college graduates to move out of their parents’ homes or to shed the extra roommates who assisted with living expenses. Additionally, construction averaged fewer than 70,000 rentals in the past three years, compared to 130,000 units annually prior to that span. Yet more than 100,000 apartment are expected to come on line nationwide this year alone. While many of the Northern California apartment markets are typically high barrier-to-entry metros for developers, supply concerns are mounting in some areas. Fortunately for apartment operators in the region, a majority of this construction is occurring in the largest metro areas. Elevated populations and job creation in these metros will bolster demand and ease supply-side vacancy pressure. Although construction activity will elevate for the foreseeable future, the biggest Northern California inventory additions will occur in 2014. About 10,000 units will come on line in the region next year. Deliveries will be greatest in San Jose and San Francisco between 2013 and 2014 as 7,000 units and 6,700 units are delivered, respectively. The surge …
The weather in Cleveland in the springtime is notoriously changeable — sunny and warm one minute and then cloudy and chilly the next. The current state of Cleveland’s office market is similarly uneven. The sunniest segment is clearly the Class A market in the Central Business District (CBD). Ernst & Young Tower, Cleveland’s first multi-tenant downtown office building in more than two decades, recently opened at close to a 90 percent occupancy rate. Despite an asking rental rate in the low $30 per square foot range, which represents the top of the market, this 487,000-square-foot tower illustrates a substantial pent-up demand for new, efficient office space. The balance of existing Class A properties in the CBD are also performing well, with an average vacancy rate of 15.7 percent at the end of the first quarter. And the overall momentum downtown is strong. Nearly $1 billion of development has occurred during the past 24 months, including a new casino, convention center and medical mart completed this year. Additionally, a new headquarters for the Cuyahoga County government will be completed next year. All of these factors increase the likelihood that another office project in the CBD will start soon. Downtown’s Class B …
The Washington, D.C., area boasts the lowest unemployment rate among major metros, at 5.5 percent as of February 2013, which is about two percentage points below the total U.S. unemployment rate of 7.6 percent. In the 12 months prior to February 2013, the area fell only behind New York, Los Angeles Basin and Houston in terms of job growth, with 39,700 new jobs created. At the same time in 2012, retailers shed approximately 1,100 jobs. While the effects of sequestration legislation are still unknown, the projected job growth from 2013 to 2017 is estimated to average 48,100 per annum. Two rapidly growing industry sectors are cybersecurity and healthcare. The Washington area also has an average household income of $108,400, making it an impressive 59 percent higher than the U.S. average. Incomes grew by 43 percent from 2000 to 2012, compared to 20 percent nationally. By 2017, the area’s average income is estimated to rise 14 percent, still higher than 13 percent nationally. Retail inventory (all types) for the Washington metro area totals approximately 220 million square feet. As of March 2013, the overall vacancy rate was 4.8 percent — the lowest in the nation. The market has seen no overall …
The demand for quality office space in Salt Lake City is higher than ever. According to Forbes, Utah’s economy continues to lead the nation, and more employers are looking to expand into the Salt Lake market. Large companies like eBay, Adobe and Boeing are setting up shop along the Wasatch Front, and more corporations will be coming soon. Several new Salt Lake office projects are in the planning stages, while others have already broken ground. With lower vacancy rates in Class A and B spaces, new developments — which vary from build-to-suit to spec projects — are encouraging. Overall Class B and C rates are hovering between 15 percent and 17 percent and inching downward as 2013 progresses, according to Newmark Grubb Acres’ research. Valley-wide, Class A properties are averaging about 11 percent, and will likely level off until more product is built. A big change is currently taking place in the office market. The past few years have been predominantly tenant-driven, but trends now show a decrease in generous landlord incentives. Property owners who were previously given four to six weeks of annual free rent may now only receive two to four weeks. Landlords are also looking at tenant …
Cleveland's retail market is continuing to slowly recover from the effects of the recent recession. This recovery is sparked by a number of factors. One of the brightest spots in the Cleveland retail market is the revival of downtown, which is bringing businesses, residents and retailers to the area, stabilizing the metro’s core. The number of visitors to downtown Cleveland is expected to double from 3 million in 2012 to 6 million in 2013, largely drawn by the opening of the Horseshoe Casino Cleveland last year. The completion of the highly anticipated Cleveland Medical Mart & Convention Center is also contributing to increased traffic. Several large conferences have already been booked and area retailers will benefit greatly from convention center traffic as visitors eat at local restaurants and shop at nearby stores. In addition to tourism, the daytime population of downtown is increasing as several employers move or expand offices. This growth is encouraging many residents to locate in proximity to these jobs, and the rising housing demand has spurred apartment development throughout downtown neighborhoods. As retailers expand in the area to serve this residential population, retail operators will benefit from rising occupancies and rents. Improving Vital Signs Cleveland’s economy …
The Dallas/Fort Worth industrial market has performed very well during the past three years. Healthy market fundamentals have created an environment in DFW that is highly conducive for robust growth, though the sluggish national economic recovery will cause some volatility in the pace of that growth. Strong job gains, an expanding position as a global distribution hub and local market confidence are all characteristics driving industrial market performance. The warehouse/distribution sector drove demand in the DFW industrial market during the first quarter of 2013, with flex space also in demand. Net absorption of industrial space across the Metroplex totaled 1.3 million square feet during the first quarter of 2013, with warehouse/distribution product accounting for 62 percent of the space taken. This compares to 2012 when net absorption of warehouse/distribution space totaled 8.8 million square feet, making up for move-outs in the manufacturing sector. Total net absorption for all product types was 8.3 million square feet during 2012. Industrial inventory is expanding in DFW with approximately 3.7 million square feet of industrial space under construction or renovation as of March 2013. This compares to 2.1 million square feet under construction or renovation one year ago. Developers are responding to a lack …
Orlando has always shown an uncanny ability to grow, diversify and prosper, all while shrugging off a few economic hiccups along the way. Now, it appears that “the City Beautiful” is doing it again, with apartment development leading the way. Not since Lincoln Property Co. built the 164-unit Aspire apartments in 2008 has any significant multifamily rental development taken place in downtown Orlando. Yet, over the next two years more than 2,000 new rental apartment units are expected to dot the downtown landscape. This represents an untested pace for downtown, higher than any other two-year stretch in Orlando’s history. Although the addition of this many units may raise some concern (especially understanding Orlando’s history of overbuilding), several well established multifamily developers have taken a deeper look into Orlando’s urban lifestyle; and they like what they see. It would appear that through a mix of public/private partnerships, infrastructure improvements and quality of life, downtown is on the verge of moving one step closer in its quest of becoming one of the most robust “live-work” cities in the U.S. Laying the foundation for its continued transformation is the nearly $5 billion in capital investments that have been, or are being, invested in …
Positive demographic trends, low interest rates and Boston’s stable economy inspired a surge of investments in the New England multifamily market. Last year, multifamily transaction volume neared $1.2 billion across the region, roughly 70 percent of the $1.6 billion peak we experienced in 2007. Transaction volume has increased every year since 2008, fueling competition for product and driving down cap rates. Investors pursuing deals in Greater Boston’s inner ring are accustomed to cap rates in the low 4s and sometimes below. While low cap rates have been great for sellers, they are causing some investors to widen their investment parameters. Many groups are finding Boston’s economic momentum resonates beyond the 128 beltway, allowing for rental increases and limited vacancies previously unrealized. ARA has tracked sales from Rhode Island to New Hampshire and has seen an influx of foreign equity, mainly from Asia, the Middle East and Australia. This trend represents a change from the last cycle when Europeans, mostly Germany and Ireland, were the largest foreign capital source in the region. In recent years, the majority of investments targeted by these foreign players have been in the city of Boston and the immediate suburbs; however, ARA has tracked recent sales …