The Inland Empire apartment market improved slowly since the end of the recession, as apartment demand received little help from the local job market. In the past year however, an economic recovery finally began to take shape, boosting expectations for accelerated improvements in apartment fundamentals. Prior to 2012, local payroll growth significantly lagged state and national gains. After the U.S. shed more than 8.7 million jobs, employers rehired nearly 66 percent of workers so far nationally. Meanwhile, as 53 percent of laid-off Californians returned to work, the Riverside-San Bernardino metro recouped just 31 percent of the jobs lost. Despite the slow overall recovery in the employment market, Inland Empire job creation surged in 2012. Metrowide employment increased by 34,400 workers last year. This represented a gain of 3 percent and was the largest 12-month rise since September 2006. In comparison, state and national headcounts expanded just 2.3 percent and 1.7 percent, respectively. Hiring has accelerated so far in 2013 with both public and private employers announcing hiring plans. The Riverside County Sheriff’s Department will add 500 deputies, while AT&T plans to add 500 California workers. Many of these workers will be based in Riverside. With job creation expected to build …
Market Reports
The industrial real estate market in Southeast Wisconsin continued its climb upward during 2012 as the overall vacancy rate fell from 7.1 percent to 6.5 percent. The result was positive net absorption of 3.6 million square feet for the year. This trend marks two-and-a-half straight years without a quarter of negative absorption. Seven of the eight counties in the Milwaukee industrial market area posted a reduction in vacancies during 2012. In Kenosha County, for example, the vacancy rate dropped from 11.1 percent in the fourth quarter of 2011 to 9.4 percent in the fourth quarter of 2012. Two transactions by Venture One Real Estate LLC accounted for most of the positive net absorption. The first transaction, which occurred in December 2012, was the sale of a 62,000-square-foot facility to EMCO Chemical Distributors Inc. This deal was followed shortly by Venture One’s acquisition of the 160,300-square-foot former Cenveo Inc. facility in Kenosha. Kenosha’s industrial market should perform well this year because of overflow demand from the Racine County market, which will necessitate deals in Kenosha. The shortage of space in Racine County will make it a better candidate for build-to-suit and speculative developments in 2013. Transaction Highlights Strong demand in Waukesha …
Birmingham — Alabama's largest apartment market — is in the midst of a continued recovery from the economic downturn. The city posted a net-gain in jobs, occupancy and rental rates, which has helped spur new development, particularly at close-in urban locations. Last year was a turnaround year for Birmingham. The city gained 700 jobs and the Birmingham-Hoover unemployment rate dropped to 5.8 percent by December, two percentage points below the national average, according to the Bureau of Labor Statistics. The gain in jobs was the first annual increase since 2007. For the apartment market, 2012 results were strong: a 2 percent increase in occupancy pushed occupancy rates to 93.2 percent market-wide. Additionally, rent levels increased by 3.2 percent in 2011 and 1.9 percent in 2012, according to MPF Research. The favorable market dynamics have drawn the attention of regional and national investors, which has led to healthy transaction and development volume. In 2012, 27 apartment complexes traded in the Birmingham MSA, totaling approximately $300 million in volume. Both local owners and several owners headquartered in New York and Florida, for example, made significant investments in Birmingham, including the CLK Properties acquisition of the five-property Park Lane portfolio in April. On …
In the words of Benjamin Franklin, New Jersey’s multifamily housing investment market is “a barrel tapped at both ends,” with fluid trading activity extending from the Hudson River’s Gold Coast to the shores of the Delaware River. Statewide, multifamily properties continue their reign as one of the healthiest investments. Low vacancy rates, convenience to mass transit and a high concentration of properties, particularly in Central and Northern New Jersey, continue to feed the appetite of investors who are hungry for virtually any building class. Thanks to the state’s choice location along the Boston/New York City/Philadelphia/Washington, D.C., corridor, New Jersey has historically been, and continues to be, one of the strongest and most desirable markets for multifamily investments. From urban walk-up buildings to suburban garden-style apartment complexes, the Garden State boasts some of the best multifamily housing stock in the nation. This is further bolstered by a strong average occupancy rate of more than 95 percent and durable rent growth. Both of these conditions are fueled by the enduring effects of the residential housing crisis as well as people “priced out” of cities like Philadelphia and Manhattan, who are seeking a more affordable living option. These migratory tenants are flocking to …
In 2012, Hawaii’s major economic indicators continued on a positive trajectory. The tourism sector, on which Hawaii’s economy is centered, showed growth in both visitor arrivals and visitor expenditures in every month of the year. According to the Hawaii Tourism Authority, total visitor expenditures for 2012 were a record high of $14.3 billion, an 18.7 percent increase over 2011, while the total visitor arrivals of 7.99 million exceeded the previous record of 7.63 million in 2006. Wage and salary jobs, personal income, and state general fund tax revenues all also increased in comparison to 2011. According to the latest reports from the Bureau of Labor Statistics (BLS), job growth accelerated during 2012 in Honolulu, with similar improvements taking place statewide. The construction sector, along with hospitality and leisure employment, both increased at a higher rate than any other sectors with increases of 5 percent and 3.7 percent, respectively. Improvement to the hospitality and leisure sector is notable due to the fact that leisure and hospitality jobs represent the third largest employment block in the state and its largest metro area. With respect to construction, this sector plays an important role in driving consumer confidence. This, in turn, gave retailers the …
The industrial real estate market in West Michigan, and particularly in Kent County, continues to trend positive. CBRE’s most recent survey of this real estate class recorded the fifth consecutive period of positive absorption, resulting in a vacancy rate of 7.8 percent for gross industrial space. The industrial base in West Michigan includes nearly 95 million square feet of gross space, of which nearly 50 million square feet is categorized as “leased” space, with the balance “owner occupied.” The absorption of space is being led by the slow and steady improvement of economic conditions in our region. As of the December 2012, the Grand Rapids unemployment rate stood at 6.5 percent, much better than Michigan and the nation, with unemployment rates of 8.9 percent and 7.8 percent, respectively, for the same period. Economic Catalysts Much like the rest of the state, West Michigan has benefited from the steady improvement of the auto industry. The increase in vehicle sales — brought about by both pent-up demand following the recent recession and by need resulting from natural disasters such as Hurricane Sandy — has boosted manufacturing orders to local companies that supply parts and capital equipment to the auto industry. Additionally, our …
It looks like the worst may be over for the Tampa Bay office market, and 2013 is shaping up to be the best year for investment sales and leasing activity since before the start of the recession. The health of the local office market is directly tied to job growth, and professional and business services employment has increased over the past few years. With additional job growth forecast in 2013, tenant expansions could develop as the year progresses. Many tenants weighing moves to larger spaces in the near term will monitor available spaces and advance timetables in the event vacancy in their target locations falls rapidly. For owners of Tampa Bay office properties, the news comes at a great time, as they should see some relief from high vacancies in 2013. That said, additional tenant demand will be needed to make a significant dent in the overall vacancy rate and support more substantive rent growth. Overall, the Tampa/St Petersburg office market ended the fourth quarter of 2012 with a vacancy rate of 13.6 percent, which was down from the previous quarter. Net absorption totaled 356,991 square feet, which was a vast improvement over the negative 390,098 square feet recorded in …
The rising demand for bulk warehouse space among e-commerce users is driving the New Jersey industrial market. After climbing to 14.1 percent during the third quarter of 2010, the vacancy rate for warehouse space for the 10-county region in Northern and Central New Jersey has declined to 12.5 percent during the first quarter of 2013. More than 7 million square feet of inventory has been absorbed since the middle of 2011. Increased demand resulted in rising average asking rents during 2012, the first year of steady increases since 2007. Nearly 90 percent of the net absorption occurred in Central New Jersey, more specifically along the New Jersey Turnpike from exits 7A to 8A, where vacancy rates ascended to as high as 22.5 percent during the third quarter of 2009 and currently stand at 14.4 percent. Adding to the momentum of activity in Central New Jersey is Amazon’s commitment to open two large fulfillment centers here, demonstrating the significant impact that e-commerce is having on the state’s commercial real estate market. The first of these two warehouses, which is slated to open in 2014 in Robbinsville (Mercer County), will generate an estimated 700 jobs and more than $22 million in tax …
With its central, accessible location, relatively affordable prices and strong labor pool, the Inland Empire’s office sector is poised for steady growth. The Inland Empire is actually considered one of the top markets in the country in terms of population growth, job creation, construction and industrial space absorption — all of which bode well for the commercial office sector. The Inland Empire market is composed of two submarkets: the East, containing Riverside, San Bernardino and Corona, among others; and the West, which includes Ontario, Rancho Cucamonga, Fontana and Chino/Chino Hills. Transaction volume is on the rise in both, and vacancy rates have been at some of the lowest levels seen in three years. This is partially due to some exceptionally large transactions recorded in 2012. The largest and most significant was a 232,176-square-foot office lease transaction at the Atrium building in Rancho Cucamonga for Inland Empire Health Plans (IEHP). The lease was valued at nearly $100 million. IEHP currently serves more than 575,000 residents of Riverside and San Bernardino counties and is anticipating continued growth, which prompted the need for this space. With IEHP now occupying the building, the previous 60 percent vacancy has all but been eliminated. This lease …
The Omaha apartment market remains a strong performer. According to MPF Research, Omaha’s apartment occupancy stood at 95.5 percent at the end of 2012, up a modest 80 basis points from the end of 2011 and in line with Omaha’s average occupancy rate of 95.9 percent since 2000. Coupling the strong occupancy rate with a continued favorable financing environment, it is no surprise that developers are eager to bring new units on line and move quickly to lock in permanent financing. As a result, 2012 saw 1,225 multifamily housing building permits issued, which was very much in line with my predicted total of 1,300 permits for the year, and up 25 percent when compared to 2011. The addition of 1,225 units will increase the apartment housing stock in Omaha by 1.4 percent on an overall inventory of approximately 88,000 units. My expectation is that permit activity will again be around 1,200 units for all of 2013, with a small chance that it could possibly increase to as many as 1,400 units. There are a number of local and regional developers who are actively seeking multifamily land, and the lack of top sites is likely to be the biggest development constraint …