With the third quarter results in, all signs point to continued incremental improvement of the Charlotte office market. Vacancy rates have fallen to a four-year low and investment sales activity continues to strengthen as new capital sources enter the market. On the economic front, unemployment in Charlotte continues to lag behind some other North Carolina cities at 9.5 percent, but the city is experiencing positive economic movement in other measures, particularly single-family housing and retail sales. For some long-term perspective, the labor force in Charlotte has grown 22 percent during the past 10 years, nearly three times the national rate. Additionally, in August, the population of Mecklenburg County reached 1 million people. With a population of approximately 2.3 million, Charlotte maintains its position as the largest MSA in the Carolinas. Office Market Conditions With a reported 460,000 square feet of positive net absorption in the third quarter, the overall office vacancy rate has fallen to approximately 15.7 percent, the lowest rate since 2008. Correspondingly, rental rates have continued to increase, with overall average rates reaching $22.55 per square foot ($23.59 for Class A space), the highest rates in the past four years. While much of this tightening has occurred in …
Market Reports
The retail industry has piggybacked onto the high tech world by recognizing the impact that the high tech industry is having on the demographics and income levels of the entire Upstate New York region. Recent announcements of the return of Lord & Taylor to Crossgates Mall in Albany, and the positioning of UNIQLO at the Palisades Mall in Nyack, N.Y., are proving that the impact of the high-tech industry is now being felt throughout the entire upstate region. The addition of both of these retailers to the mix in the Tech Valley corridor of Upstate New York (from Nyack to Saratoga Springs, N.Y.) bodes well for the region, and shows the world that the growth rate of young, tech-savvy professionals will become one of the strong foundations for retailers well into the future. The recent addition of these two dynamic retailers into the Hudson Valley/Tech Valley regions is evidence of their understanding of the impact of the high technology industries located here. The higher paying, clean-tech employment base, focused on a younger work force, points directly to these two retailers’ “sweet spot.” UNIQLO’s format is very fashion forward with a very high level of quality at their specific price point. …
Modest economic growth in the Chicago metro area will support further improvements in apartment vacancy and rents this year. Staffing levels grew in the first half of 2013, though the pace of hiring eased from prior periods. Vacancy will remain lower than normal in the near term, though temporary imbalances between supply and demand will occur over the next two years. This trend is especially likely in the city, where the number of new luxury units aimed at upwardly mobile young households and affluent older households is increasing. New sources of demand, however, will also emerge, including echo boomer and new immigrant households. Properties listed for sale typically elicit multiple offers, placing upward pressure on prices and compressing cap rates. Northside neighborhoods remain a targeted area, and the best assets in those submarkets can trade at cap rates from 5 to 6 percent. Investors continue to look for underperforming assets and are giving greater consideration to eventual exit strategies. Interest in Class C and Class D assets in blue-collar neighborhoods on the west side and south side is also gaining traction. Recent transactions have established $30,000 per unit to $35,000 per unit as the strike point to execute deals, and …
Transportation and third-party logistics companies are flocking to fill San Antonio’s industrial space. For example, Tennessee-based logistics company Forward Air recently announced the lease of an 89,600-square-foot Air Cargo Terminal at Port San Antonio. But Forward Air is just the latest among those moving in. Listed among the larger leases inked in the second quarter were companies such as JB Hunt (26,227 SF) and HDR Trucking (11,827 SF) at Woodlake Distribution Center I, CFI Delivery (23,400 SF) at City Park East Distribution Center B, Towne Services Moving Co. (21,964 SF) at Interstate Business Park 3 and the recent renewal and expansion of Hazen Transport (20,000 SF) at Rittiman Industrial Park — all of which are situated in the Northeast sector. The growing oil production in the nearby Eagle Ford shale is the major driving force behind the increased transportation-related activity. The oil industry depends on trucks to haul machinery, equipment, piping and sand to the oil fields, and San Antonio serves as a hub for those services. In addition, growing demand for rail-based logistics has prompted the development of two new rail parks in Southeast Bexar County – Alamo Junction Rail Park and Mission Rail Park. Railroads in and near …
The government shutdown impacted local economies and real estate dynamics in many U.S. markets, but none moreso than the Washington, D.C., region. With anywhere from a quarter to over a third of metro D.C.’s privately owned office leasing tied to the federal government, the inability of the federal government to engage in long-term real estate planning has serious implications for the office sector. Non-federal tenants in the region are impacted as well in that a significant portion of the region’s occupiers are reliant, at least in part, on government contracts and spending. In fiscal 2012 alone, more than $72.6 billion of federal contracting dollars were procured in Washington, D.C., and its suburbs. Possible repercussions in the contracting arena from the shutdown and continued budgetary uncertainty from the federal sector could include contract cancellations, delays in payments and scope reductions. With ongoing questions about government funding and spending, these companies, like the government itself, cannot plan for the future and make decisions in areas that affect their businesses such as staffing, office and facility needs and support infrastructure. The inevitable uncertainty due to the current stop-gap fiscal environment creates questions about where funding for fit out, technology and equipment will come …
Performance prospects for the Philadelphia apartment sector remain positive. At mid-year, vacancy was in the low five percent range despite only modest job growth in the first two quarters. Since then, a steady flow of residents moving into apartments has enabled owners to reduce or maintain vacancy and improve asset values. By the end of the year, rental property completions will have risen after several years of limited construction. The current upswing in development will minimally affect market-wide vacancy and rents, and the impact of the new units will be contained to local areas. In Center City, for example, minor vacancy swings and more frequent concession use will occur as new projects are leased up. Generally, strong conditions in the market are encouraging developers and building will progress at a steady pace in the next two years. Nonetheless, the new construction cycle hardly looks forbidding, as the units permitted over the past year would expand multifamily stock only 1.1 percent if all those projects were built. Year to date, 879 new rental units have been placed in service in Philadelphia and it looks like developers will complete 2,600 apartments in 2013, which is up 1,238 units over last year, but …
The Las Vegas market, one of the hardest hit by the recession in the nation, is showing continued signs of economic recovery. Visitor volume is exceeding peak levels, hotel occupancy rates are averaging ±90 percent, unemployment levels continue their decline (9.5 percent in June 2013) and numerous renovations and new resort development projects continue to be announced. As recently as a year ago, experts were predicting that there would not be another major resort project in Las Vegas for at least 10 years. Then came the announcement by Malaysia-based Genting Group of its plans to construct a $7-billion, 3,500-room, Chinese-themed resort project on the Strip, and suddenly that prediction was put to rest. In similar fashion, the industrial market, which currently contains 103 million square feet, continues to show consistent signs of recovery. More than 1.6 million square feet of positive net absorption was reported as of the second quarter of 2013. This is more than we’ve seen in the past five years combined. Vacancy rates stand at 14 percent, a 1 percent decrease from the second quarter of 2012. Average asking rates for warehouse distribution product across the MSA are $4.68 per square foot, down about 50 percent from …
During the past several years, Laredo’s retail sector has experienced tremendous growth. With the continued development of the Bob Bullock Loop (Loop 20) that connects I-35 to South Laredo, retail stores and restaurants are finding this major roadway to be an attractive alternative to the existing I-35 corridor. Up to this point, the major retail corridor in Laredo has been I-35, which serves the Mexican shoppers as they visit Laredo from Nuevo Laredo and Monterrey. However, since the development of Loop 20, a shift in retail clusters along the loop has brought in local shoppers and growing number of Mexican shoppers. • Weingarten Real Estate Investment Trust now owns and operates three shopping centers in Laredo, all anchored by HEB. Its third and most recent acquisition, Independence Plaza, was purchased from San Isidro Ranch. The property, designed by Madeline Slay Architecture, has the only HEB plus! in Laredo as well as Ross Dress for Less and other junior anchor retailers. • The City of Laredo recently sold 79 acres across from Laredo International Airport off Loop 20 to Laredo Town Center LP. The property will be developed into a shopping center. • To help revitalize downtown, a public-private partnership between …
In 2013, Washington’s office market has been characterized by tenant-favorable conditions, lower-than-average deal volume and absorption reliant on a handful of major transactions. The metropolitan area has recovered its pre-recession employment levels; however, with the federal government being the region’s major economic driver, there has been considerable impact on the office market from BRAC (Base Realignment and Closure), sequestration, the recent government shutdown and the failure of Congress and the President to permanently resolve budget and debt-ceiling issues. And while sequestration technically took effect in 2013, many major tenants, in anticipation of cutbacks, began right-sizing their occupancy well in advance. Obviously any tenant whose revenues depend on government contracts led the charge in this proactive right-sizing movement. At the same time, federal tenants face a mandated reduction in their utilization rate, and private-sector tenants are looking for more densely packed, open-workspace floor plans as demonstrated by tenants leasing less space as they relocate. Notwithstanding the apparent economic headwinds, it is a remarkable time for confident tenants to lock in favorable terms. Concession packages, which comprise improvement allowances and rent abatement periods, are at all-time market highs, and landlords have demonstrated a willingness to restructure leases considerably in advance of expirations. …
Revitalization efforts in Detroit are underway and drawing residents and businesses back to the city. These measures aim to improve downtown Detroit’s streets and parks, enhance outdoor activities to increase foot traffic and attract new retailers, jobs and residents. In addition, construction will begin later this year on 3.3 miles of the M-1 light rail line, which will run mainly down Detroit’s Woodward Avenue between downtown and the New Center neighborhood, attracting redevelopment along the route. These efforts, coupled with a growing desire of many young professionals and downsizing baby boomers to live in an urban setting, have led to tightening vacancy rates in the downtown core. Although there is no hard data collected on apartment vacancies in the downtown market, developers claim vacancy in some pockets is below 4 percent. The vacancy rate across the metro area currently stands at 4.4 percent. As a result, some vacant buildings such as the former Broderick Tower, Detroit Savings Bank and the David Whitney office building are being put to new use as apartments. Older apartments are also being renovated, some of which are being converted to luxury units, such as the Griswold Apartments. As renters in these properties are relocated, occupancy …