The Orange The Orange County apartment market continues to rebound. Operations have improved so far in 2013, with vacancy below equilibrium and asking rents nearly 10 percent above the low point during the recession. The healthy performance of the apartment market is a result of Orange County’s strategic location, population growth, low unemployment rate, high occupancy and shortage of available housing, which has greatly benefited multifamily investors. According to Hendricks-Berkadia Research, the county is one of the most densely populated areas in the United States. Orange County is 2.5 times denser than Contra Costa and Santa Clara counties, and five times denser than San Diego County, which has nearly the same population. The population in Orange County has grown consistently, and reached 3,055,800 residents at the end of 2012, up 26.7 percent from 1990. The unemployment rate for Orange County in the second quarter of 2013 averaged 5.6 percent, 130 basis point below what it was at the end of 2012. According to Moody’s Analytics, the local jobless rate is lower than state and U.S averages. This would be the lowest rate since 2008, indicative of the improving economy in Orange County. Employment growth in the county is also expected …
Market Reports
Most retail brokers in Des Moines are cautiously optimistic in their expectations for 2013. For the first time in years, I’m seeing a lot of site plans for new retail developments come across my desk. Several projects that had been on the back burner for the last few years have finally begun to take shape. Des Moines, like most markets, got hurt when the Great Recession hit. However, with its major industry based in insurance, it weathered the storm better than many other markets. At its high point, the unemployment rate was 6.8 percent, and the rate as of May was 4.3 percent. The Des Moines retail market didn’t get nearly as overbuilt as many of the other nearby larger markets. There wasn’t a ton of first-generation space that sat vacant on the retail market in Des Moines once the recession hit. Most of the retail developers here are conservative. Much of the first-generation space that sat vacant was the result of lenders taking back the properties and not wanting to invest any money in those assets. Lessons Learned The developers in today’s market have a more disciplined approach than many of their predecessors. There was a time when real …
Houston has long been characterized by its energy presence, earning titles such as “The Energy Capital of the World” and the “Petro Metro.” The American drilling renaissance has brought about significant changes on a national and international scale, and the boom is projected to be sustainable for decades. As a result, energy companies are shifting operations back to the U.S. Houston is at the heart of the American oil industry, and as companies grow and expand their footprint in the U.S., the Houston office market is positioned to experience significant growth. The economic impact of the shale boom has been felt throughout Texas. The Eagle Ford Shale, one of the most significant oil and gas plays in the country, spans 14 producing counties and had an economic impact of $46 billion in 2012. Surrounding cities, such as San Antonio and Corpus Christi, are experiencing growth in all product types to accommodate the population and employment gains in the region. Midland has become one of the most expensive places in Texas thanks to the Permian Basin, while the Dallas/Fort Worth metro area, with the Barnett Shale in its backyard, continuously tops various economic health indices. But Houston, home to 87,418 headquarters, …
While out national and local news outlets inundate us with what is going on in Washington, D.C., these days, word may not be on the street yet that the industrial real estate market just north of D.C. has begun to see significant improvement, something that has been slow in the making. This market has always been on the radar of the top real estate investors and remains a sought-after destination for industrial investment. The Baltimore-Washington (BW) Corridor industrial real estate market, historically one of the strongest in the country, received a gut punch in 2008 much like the rest of the real estate markets throughout the country. Defined as mostly Howard and Anne Arundel counties, this 46 million-square-foot market is essentially the area between the Baltimore Beltway and the Washington Beltway, a distance of 25 miles along Interstate 95. This market acts as the “last mile” of distribution to the affluent suburbs of the Capital Region. Prior to the fourth quarter of 2012, most leasing activity in this market consisted of tenants downsizing or shopping their renewals to anxious owners looking to fill recent holes in their portfolios. The results were lower rental rates, more concessions and generally lower investment …
As a global player, New York City enjoys top-shelf retail advantages that continue to support the market as they always have — by keeping one foot on the gas pedal and one eye on the rearview mirror, as the recessionary cycle fades further out of view. From an economic perspective, New York City is recovering by leaps and bounds, posting 1.5 percent year-over-year growth between February 2012 and February 2013, and a liberal 4.3 percent rise in the professional and businesses services sector that includes 35,000 new jobs. Add to that the overall uptick in the global economy (read: consumer confidence) and the market’s inherent strength as an international tourist destination, and all bets are on New York to remain one of the tightest retail markets in the country for the next few years. New York City boasted an enviable 2.2 percent vacancy rate for all types of retail at the end of first quarter 2013 — an impressive figure when compared to the average U.S. first quarter vacancy rate of 6.8 percent. Quoted rents in New York’s five boroughs also rebounded 12.7 percent year-over-year to $50.90 per square foot on average. This is about three times higher than the …
The Cincinnati office market recorded positive net absorption of 74,378 square feet during the first quarter of 2013 while the overall vacancy rate dipped slightly to about 23.2 percent. The forecast from Cassidy Turley is for Class A submarkets to become tighter as medical and service industries continue to drive absorption. However, the increasing success of the Class A sector has come at the expense of Class B space. First-quarter Class A direct vacancy in the metro Cincinnati office market stood at approximately 20 percent, while Class B direct vacancy was about 28 percent. That’s a stark contrast from 2004 and 2005, when Cincinnati’s office vacancy rate was 10 percent for Class A space and 17 to 18 percent for Class B space. “If you look back eight to nine years, that’s where [the vacancy rates] stayed during good times,” says Scott Abernethy, senior vice president and principal in Cassidy Turley’s Cincinnati office. When the market took a hit during the 2008 to 2010 period, large vacancies popped up, forcing landlords of Class A buildings to lower rental rates. That in turn created deal incentives for Class B tenants to move to newer facilities. “Class B tenants can move over …
As Houston As Houston continues to create jobs and power the economic engine of Texas, every segment of the multifamily sector continues to push higher. With more than 100,000 jobs added in the past year alone, the newly hired and the job-hungry are leasing up available space in Houston faster than units are being delivered to the market. Demographics demonstrate a growing shift toward rentals for the city in general. For the first time since 2005, Houston apartment occupancy is averaging more than 90 percent. As the energy, medical, service and construction industries continue to expand in Houston, demand will remain strong across the board for Class A, B and C product. New multifamily construction is heavily concentrated within the Inner Loop, Energy Corridor and the vicinity of The Woodlands. The development pipeline trends toward these job-ready markets as Houstonians dream of shorter work commutes and “live, work and play” scenarios. Multifamily options inch toward this dream, providing retail, dining and entertainment options on property or nearby. But living the dream does not come cheap. While convenience is desirable, these benefits can be packaged at a steep price. Houstonians, however, are more than willing to pay premium prices for premium …
Columbia is is considered a tertiary market by definition, with more than 47 million square feet of industrial space. In the past few years, national and international companies have recognized Columbia as having a strategic position in the Southeast. While most markets struggled in the downturn, Columbia’s steady industrial announcements demonstrated stability. Today, the city’s industrial vacancy rate is hovering at 10 percent. The Columbia market has remained attractive due to its low cost of doing business, non-union affiliation and quality of life. The city’s employment base is diverse, ranging from traditional sectors such as agriculture and manufacturing to emerging sectors such as health services, insurance and financial markets. The region is home to the state government, Fort Jackson and the University of South Carolina. Rental rates for Class A industrial space have decreased significantly since 2008. Today, we have a 184,000-square-foot LEED-certified building with a quoted rate of $3.95 per square foot. At delivery, this building had a published rate of $4.75 per square foot. Another competing Class A property in the market is the former Lamson Sessions building, a 350,000-square-foot, cross-docked facility listed at $3.35 per square foot. The reduction in rates has been necessary to stay competitive …
In Providence, R.I., the the Class A office market has stabilized. GTECH Center has been successful in leasing up just about all of its available space to four or five tenants. Consequently, The GTECH Building sold for more than $50 million prior to the end of 2012. In addition, the new Blue Cross tower was successful in leasing 10,000 square feet of available space with plenty of continued interest for additional floors from prospects. Also, Bank of America’s move from its former headquarters at 111 Westminster into space located in 100 Westminster and One Financial Plaza has further helped push vacancy rates down for Class A office space. The current vacancy rate for this product is less than 9 percent in the Capital City. Consequently, this activity has pushed rental rates for Class A space back over the $30 per square foot mark on new deals. High Rock Development, which owns 111 Westminster (the former Bank of America building), is currently lobbying the state for tax credits to redevelop the building into apartments. It will be interesting to see, since the 38 Studios collapse, how far the state and city are willing to get involved — or if the building …
The Orange County retail market, which consists of about 140 million square feet of space, continues to thrive as it sees an overall vacancy rate of just 5.5 percent. With strong income demographics, an improving job market and a limited supply of retail property, Orange County continues to be a target for both retailers and investors. As job growth is an indicator of a positive retail market due to increasing demand from the county’s consumer base, the positive data coming supports a well-held belief that the investor protects his or her downside risk by targeting ideally located retail property in Orange County. Through this, they benefit from consistent appreciation by virtue of owning retail property in a market characterized by very high barriers to entry. In its 2013-2014 Economic Forecast & Industry Outlook, the Los Angeles County Economic Development Corp. says that the county’s job market over the next couple of years will be strong. It anticipates an increase of nearly 52,000 jobs. LAEDC also reports that retail jobs will increase, and that taxable retail sales reached $39.3 billion last year. Those sales are expected to reach $42 billion this year and $43.7 billion next year. With that said, from …