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 …
Market Reports
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 …
Fueled by an increase in population and job growth, Denver’s robust housing market and the constant influx of young professionals to the region has attracted some attention. Both new and existing retailers and investors are now looking to either penetrate or expand within this ever-growing market. Metro Denver added a total of 37,300 jobs last year. This was an increase of 2.7 percent from 2011, according to the Metro Denver Economic Development Corp. The region’s growth rate has consistently outpaced the national rate in every decade since the 1930s. By 2020, the region’s population is expected to increase from 2.9 million today to more than 3.2 million. Retailers are definitely taking note. Cabela’s, a Nebraska-based outfitter of hunting, fishing and outdoor gear, has two stores under construction that should be completed in the third quarter of this year. These will represented Cabela’s second and third Colorado locations. The chain already has a Grand Junction outpost. THF Realty also recently completed the 147,806-square-foot Walmart in the Lakeside Shopping Center redevelopment area. Metro Denver has seen quite a few Walmart Neighborhood Markets pop up throughout the region recently. Also new to the Denver market is Trader Joe’s. The California-based specialty grocer plans …
Like many markets in the Midwest and across the U.S., the Columbus industrial sector started the year sluggishly. First-quarter net absorption fell into the red with few notable leases to report, although a couple of significant investment sales closed. Generally, industrial activity is back-loaded into the second half of most years, and that should be the case for Columbus in 2013. Also, few markets have brighter long-term prospects than Central Ohio. After closing the fourth quarter of 2012 with 500,000 square feet of net absorption, Central Ohio’s 260-million-square-foot industrial market gave back 239,439 square feet in the first quarter of 2013, resulting in an 8.9 percent vacancy rate. The bulk warehouse sector suffered through 833,816 square feet of negative net absorption in the first quarter, resulting in a jump in the vacancy rate of 233 basis points to 10.6 percent. Bare Escentuals, a cosmetics retailer, registered the first quarter’s biggest industrial lease, expanding by 102,155 square feet to claim the entire 512,113-square-foot building at 5255 Centerpoint Drive. While leasing trudged along, a few investment sales took place in the first quarter of 2013, with notable deals including the sale of two buildings by KTR Capital Partners to affiliates of Welsh …
The recession negatively affected local, regional and national banks in Minneapolis/St. Paul and all commercial real estate product types. A wide range of real estate owned (REO) assets have sold in recent years, including single- and multi-tenant office buildings, industrial buildings, convenience stores, office condos, residential condos in bulk blocks, raw land, a campground, a historic warehouse, hotels — just about everything. The biggest sector of bank REO property has been land, particularly residential development land. Nevertheless, the start of the housing recovery has seen a reduction in the inventory of individual residential lots coupled with increased interest in some of our larger residential development sites from national homebuilders. While most of the insurance companies exited the Minneapolis commercial real estate market years ago, one of the national insurance companies did repossess a large Class A office property last year and sold it to a local investment group for a dollar more than the loan, which was $110 million. Zeller Realty Corp. of Chicago and Atlanta-based Invesco acquired the Fifth Street Towers from MetLife in April 2012. The buildings (two towers) were built in 1987 and 1988, and consist of roughly 1 million square feet. The group that lost the …
Improvement in Dallas Dallas office market fundamentals has been supported by economic concentrations in the finance/insurance, energy and technology sectors, as well as the amenity-driven desirability of infill submarkets, namely Uptown and the Arts District. Yet, any discussion of Dallas area office expansions must begin with State Farm Insurance. The firm has accounted for a significant portion of activity, leasing more than 2 million square feet of office space in Richardson and Las Colinas in the past year. Banks and financial firms, including Frost Bank, Wells Fargo, Capital One and USAA, are expanding as improving economic conditions support lending and investment activity. With a 500,000-square-foot expansion by Denbury Resources in Plano and the growing presence of Crosstex Energy and Alon USA in Dallas, it is clear that the new energy boom is a positive for North Texas offices too. Leasing activity among technology firms is strong with Ericsson’s new building underway at its Plano campus being the most notable, although smaller software and telecom companies are also expanding, such as Hawkeye Communications in Uptown Dallas. Overall office vacancy in Dallas/Fort Worth has fallen 210 basis points (bps) from its peak in 2010. While this is certainly a strong recovery, it …
“Hot” does not adequately describe Miami’s current residential real estate climate. Back from the brink of extinction in late 2009, the residential condominium market in Miami is currently booming. The apartment market is booming as well, but did not take it on the chin like the condominium market did. From 2009 to 2010, Greater Downtown Miami was considered one of the most overbuilt markets in the country. Developers delivered approximately 34,000 condos in the market in a six-year period, more than double what was delivered in the prior 40 years. The majority of those units came on line during the crash, which left Miami with an unsold inventory or more than 20,000 units in early 2010. Forecasters expected it would take 10 or more years for that inventory to be absorbed. Today that inventory of developer-owned units is down to less than 900, according to Condo Vultures, Miami’s condo watchdog. One can almost say that Brazil and Argentina brought back Miami’s high-rise condominium market. Brazilians and Argentineans in particular, but not exclusively, have experienced hyperinflation — to the point of scheduling the purchase of groceries on payday — like few others. They therefore have an acute understanding of the need …
The last quarter of 2012 indicated signs of overall market improvement including increased activity in the office sector, according to most New Castle County owners and leasing brokers. Most professionals anticipated a good start to 2013 based on this performance. Although there are a few bright spots, early reports for 2013 are not yet meeting the expectations that stemmed from the continuing improvement seen last year. It seems most activity so far this year represents smaller deals, which are not resulting in positive absorption. Most tenants are moving to take advantage of the opportunity to upgrade or resize their space. One favorable aspect of the market has been demand for medical office space. A new four-building medical office project that was started last year at Becks Woods on Route 40 in Bear, Del., is nearly fully leased or sold with the last building coming out of ground a few weeks ago. Additional medical projects are planned on Churchman’s Road near Christiana Hospital and on Lancaster Pike at Little Falls although groundbreaking has not yet occurred on either site. Christiana Hospital is nearing completion of its new Emergency Center at Route 1 in Middletown, Del., and we expect there will be …
In the immediate wake of the Great Recession (version 2.0), it was not uncommon to see halted development projects in greater Cincinnati. Now that the economy has rebounded, retail development has started to follow suit. However, the original developers that began many of the region’s key projects aren’t necessarily the ones finishing them. What follows is a summary of some key projects in various stages of completion that have had to adapt to changing market conditions and consumer preferences. Oakley Station Among the high-profile projects in the greater Cincinnati market that have undergone changes in development direction is Oakley Station. This former 74-acre Cincinnati Milacron complex, originally known as the Millworks project, was conceived as a Main Street-focused lifestyle center supplemented by structured parking that would incorporate some of the existing industrial structures. Once the recession hit, the project fell victim to the nationwide lending freeze and tenants’ slowing growth plans, making it difficult to move beyond the project’s design stage. However, given the location in the geographic center of Cincinnati and the easy access to interstates, Oakley Station was always prime real estate and stayed on developers’ radar screens. Now being developed by Vandercar Holdings, the developer responsible for …