New Jersey’s industrial market is showing signs of continued improvement, as evidenced by increased investment sales activity and the return of speculative development to the region. A number of significant development projects are already in progress, as well as a few proposed projects, including 2.8 million square feet of new construction at 2450 U.S. Highway 130 and 2.6 million square feet at Cranbury Half Acre Road, both located in Cranbury and within the Exit 8A submarket, which benefits from a central location that provides tremendous access to points both north and south. The Central New Jersey industrial market continues to have positive momentum with 583,653 square feet of positive net absorption in the third quarter, leading to a decline in the overall vacancy to 7.8 percent from 8.0 percent in the previous quarter. The vacancy rate is now below the 10-year historical average of 8.3 percent, an impressive recovery from a peak vacancy of 10.7 percent in the third quarter of 2009. Overall, market fundamentals remain strong and demand is expected to remain high for the remainder of 2012 and into 2013 based on a sizable number of tenants in the market and pending deals expected to close within the …
Market Reports
The Pheonix economy is recovering slowly, with accelerating employment growth and rising housing prices outpacing national averages. These drivers have begun to stabilize the local retail market, and with future economic expansion likely going forward, retailers are expected to become more active. In 2013, retailers are forecast to absorb about twice as much space as they did in 2012. While vacancy rates remain above 10 percent in many of the valley’s primary trade areas, the overall retail outlook is more promising than in recent years. Following a pre-recession wave of retail construction, development activity has been limited to just a handful of projects over the past several years. The largest project to deliver in 2012 was the 328,000-square-foot Tanger Outlet Mall at Westgate. The center came online during the fourth quarter almost entirely pre-leased and accounted for about 30 percent of the total net absorption in the West Valley in 2012. No projects of this size are expected to be delivered in 2013, and developers will remain on the sidelines for a few more years before bringing additional shopping centers to the market. With vacancy still elevated throughout much of the valley, the development that occurs in 2013 will likely …
Although apartment construction has heated up in Minneapolis, renter demand remains healthy as many renters are wary of homeownership. As a result, vacancy is still below market equilibrium. Many renters in the market are young professionals who, before the housing market collapse, would have been looking to purchase a condominium. To appeal to renters, new apartment developments are adding higher-end finishes and features such as a concierge service, pub or cafe, outdoor gathering space, rooftop decks, dog runs and pet-care areas. In the process, builders have established a new rent ceiling and redefined the Class A segment. Supply-Demand Balance As a wave of new high-end projects are injected into the market, owners with existing top-tier properties could be at a disadvantage and will need to increase concessions to maintain occupancy levels. Approximately 131 apartment units came on line in the second quarter, for a total of 405 units finalized in the first half of 2012, expanding overall inventory by 0.3 percent. In the first six months of last year, 175 units were added. Development activity is expected to continue at a heightened pace. Some 2,450 units are under construction with completions scheduled through 2013. Also, there are more than 9,300 …
The Orlando office market continued to inch forward during the third quarter of 2012 with modest net absorption of 74,851 square feet. This marks the ninth straight quarter of positive net absorption for the Orlando office market, which includes more than 38 million square feet of Class A and B office space. Overall vacancy, however, rose 28 basis points quarter over quarter to 17.89 percent due largely to negative absorption in the Maitland Center submarket and due to an increase in available sublease space. The uncertainty created by the presidential election and the pending “fiscal cliff” were likely a factor in these modest third quarter results. Otherwise, office demand fundamentals continue to steadily improve. According to the Bureau of Labor Statistics, unemployment levels dropped to 8.4 percent in September, down from 8.7 percent in August. The office market will ultimately benefit from a multiplier effect as increases in construction and trade today should lead to increased demand for professional services and therefore increases in office using employment in the near future. Positive absorption in the third quarter was mostly due to growth within the Downtown/CBD submarket where 76,287 square feet of space was absorbed. The remaining non-CBD submarkets had mixed …
Despite the challenging and uncertain economic climate in New Jersey where the unemployment rate is now at its highest level in three decades and major companies are placing large blocks of space on the market, there is at least one encouraging sign of progress and glimmer of hope. Due to a number of factors, small and mid-sized biotech companies are choosing Central New Jersey — and areas adjacent to the Interstate 287/78 corridor — to base their operations. Several companies have located their headquarters or expanded branch functions in the I-287/78 corridor during 2012. In Bridgewater, Allergan leased 93,000 square feet, Dendreon leased 39,940 square feet, while Aptalis Pharma expanded into a total of 50,000 square feet. In Basking Ridge, Celgene renewed its 90,000-square-foot lease and Ipsen leased 32,500 square feet. Outside the I-287/78 corridor, Watson Pharmaceuticals recently expanded into an additional 32,000 square feet in Parsippany, and leased 32,000 square feet of lab/administrative space in North Brunswick. A recent study from BioNJ, a 300-member organization founded in 1994 that is focused on advancing the growth and prosperity of New Jersey’s biotechnology cluster, reinforces this trend and paints a vivid picture of its impact over the past few years. The …
The Greater Salt Lake City multifamily market has continued to strengthen during 2012. Vacancy rates have steadily improved, dropping from 5.3 percent in January 2012 down to 4.2 percent in the third quarter of 2012. With the market vacancy tightening, average rent growth was 3.6 percent from mid-year 2011 to mid-year 2012. The average rent per unit is now at an all-time high of $802 per unit — eclipsing the average rental price of $771 per unit in early 2008. Many factors contributed to the positive rent growth and the contraction of vacancy rates, but the most significant were strong job growth and population growth. Utah’s job growth currently ranks fourth in the country at 2.6 percent, adding more than 32,000 jobs over the past 12 months. Utah’s job market is strengthening as the state’s unemployment rate dropped to 6 percent in June 2012, the lowest it has been since March 2009, according to the Utah Department of Workforce Services. The state also has the third fastest-growing population in the nation with nearly 2 percent annual growth. Utah also has the youngest median age in the country at 29.2 years, and the largest average house-hold size of 3.1 persons. These …
The Nashville metropolitan retail market remains strong in comparison to the rest of the United States as the overall vacancy rate dropped to 5.7 percent at the end of the third quarter. Nashville’s MSA has grown to more than 1.6 million residents and ranks as the 38th largest MSA in the country with Nashville being the largest core population in the state of Tennessee. The strong economy is supported by diverse sectors of industry including healthcare, entertainment, education, and automotive. At the end of the third quarter, the unemployment rate dropped to only 7.3 percent compared to the national average of 8.6 percent. Highly sought after retail submarkets, such as Green Hills, Brentwood, and Midtown/West End Avenue corridor, have little to no vacancy which has spurred a new trend in Nashville: urban and mixed-use redevelopments. The lack of available large tracts of land for development in and around metro Nashville has created significant demand back into the core urban markets of Nashville. For example, following the success of the highly touted Hill Center retail/office project a few years ago, the Green Hills Mall underwent a major expansion to accommodate Tennessee’s first Nordstrom and Container Store in 2011. In Brentwood, Bristol …
The dense markets of northern and central New Jersey are showing some encouraging signs of momentum. Over the past 18 months, retailers have flocked to places like Paramus, Millburn, Wayne, Totowa, Springfield/Union, Livingston, East Hanover and Jersey City/Secaucus, to name a few. They are well aware that the major malls and retail corridors of Northern New Jersey, in particular, draw lots of traffic from nearby New York City. The pace of new construction has been sluggish in part because lenders now demand equity stakes of around 40 percent on projects that used to be financed at 70 or 80 percent. Therefore new supply is limited, which is helping to push up rents and drive down vacancies. In the northern and central parts of the state, in fact, the vacancy rate now stands at about 10 percent—a big improvement over the 20 percent average of 2010. Paramus, the state’s top retail market, has seen quite a nice recovery. Here, rents of smaller stores of less than 3,000 square feet now range from $35 to $60 per square foot. At stores of 5,000 to 10,000 square feet, space is leasing for between $30 and $40 per square foot. Paramus’ medium boxes, which …
Has the pendulum swung to favor property owners in the Twin Cities industrial market? Not quite, but strong net absorption for bulk buildings and a recovering economy are creating positive momentum, bringing the market closer to equilibrium. Challenges remain for manufacturing and low-clear-height properties, but we expect that area of the Twin Cities industrial market to strengthen, too, as overall conditions continue to improve. In the third quarter, industrial net absorption totaled 669,179 square feet, driving down the vacancy rate to 11.2 percent compared with 11.8 percent in the previous quarter for the 113 million-square-foot market. The Northwest and Southwest submarkets led the way, with 329,774 square feet and 226,230 square feet of net absorption, respectively. While positive net absorption is a great sign for the Twin Cities industrial market, the statistics really get interesting when broken down for big-box bulk properties, especially modern space built since 1995 with at least 28-foot clear-height ceilings. Modern bulk industrial properties account for approximately 25 percent of the overall 25 million-square-foot bulk market, but gained more than half of the subsector’s net absorption with 131,175 square feet. That led to a 2.1 percent drop in third-quarter vacancy from the previous quarter, to 5.7 …
The sun shines once again on Tampa’s office sector — especially for the Westshore submarket, the largest in the Tampa Bay area. Job growth and a lack of new development have led to strong net absorption and declining vacancy in 2012. All those factors create the very real possibility for speculative office development in 2013, especially given the region’s lack of large blocks of contiguous Class A space. Overall vacancy for Tampa’s 32 million-square-foot office market was 16.7 percent through the third quarter, a full percentage point lower than vacancy at the beginning of 2012. Westshore captured 250,000 square feet of the area’s 350,000 square feet of net absorption, but even the Downtown submarket totaled 100,000 square feet of net absorption through the third quarter — not bad for a section of the market that’s struggled disproportionately over the past few years and has 6.5 million square feet of office space. Conversely, Tampa’s I-75 submarket struggled, with negative 40,000 square feet of net absorption through the first three quarters of 2012, but it has a strong track record over the past 15 years and brighter prospects ahead. Net absorption could’ve been greater, too, but potential tenants waited out election results. …