The largest challenge facing the Greenville/Spartanburg industrial market is the lack of quality industrial buildings. So, how did we go from the worst recession in recent memory to a shortage of available industrial space? With the recession and the 2012 election behind us, the industrial sector has stabilized and continues to improve. Much like the rest of the country, the effects of the Great Recession were felt in the Greenville/Spartanburg market, which experienced higher-than-normal vacancy rates, lack of leasing activity and depressed rental rates. Companies planning for expansion and growth during the recession — and that ultimately survived the tough years — have recovered to the point of near-normal business. In the past few years, these companies have been able to implement their growth plans, after being on hold for an extended period. Many businesses experienced a delay in business growth, ultimately resulting in pent-up demand. The companies that were waiting to expand took advantage of the symptoms of a slowly recovering market, including depressed rental rates and high vacancy levels, to expand or enter the market at historically rental rates. In conversations with prospective clients, often times I help provide clarification on the current status of the Greenville/Spartanburg industrial …
Market Reports
As we come off the high of the holiday season and take a look at how New York retail fared throughout the year, we can expel a deep sigh of relief knowing that the Big Apple continued to recover faster than the national average and has a bright outlook for 2013. While New York City’s retail recovery has been slow and steady, the year closed on a positive note with total retail vacancy rates hovering around two percent. New York City continues to be a one of the most vibrant and growing retail markets in the world as the local economy has seen steady gains in private sector hiring that outweigh cuts in government employment. While Hurricane Sandy dented the recovery, the city rebounded almost immediately with Black Friday weekend sales exceeding expectations. New York’s resiliency and continued low unemployment bodes well for the Big Apple’s continued success. Big Apple Big Deals The New York retail market saw some notable large deals in 2012 including H&M’s new 57,000-square-foot lease and Cartier’s 50,000-square-foot renewal on Fifth Avenue. This coupled with the unprecedented 200,000 square feet available on Fifth Avenue solidifies the opportunity for a successful 2013. While the market has seen …
Multifamily transaction activity increased 13 percent year over year in San Diego in 2012. Although many people predicted a dramatic increase in year-end closings to avoid the uncertainty of tax reform, owners continued to shelter their money in apartments. Economic Drivers San Diego’s diverse economic base added 24,600 jobs over the past 12 months, and year-over-year employment gains were positive in all sectors except manufacturing. • Unemployment has decreased 1.1 percent since November 2011, and as of November 2012, is 1.3 percent below state levels. • Home prices increased about 8.6 percent in 2012, but remained 35 percent below the peak levels of 2006, with a median priced home at $397,000, and a mere 50 percent homeownership rate in the metro area compared to 66 percent nationally. • San Diego’s population has increased 5.81 percent since 2008. Projections call for solid 1.5 percent annual growth through 2017. Performance San Diego remains a supply constrained market with a vacancy rate of 5.3 percent countywide, including Class A, B and C product. Coastal and core submarkets routinely log less than 3 percent vacancy. San Diego’s year-over-year rent growth is expected to be 2.2 percent in 2013. It is expected to increase to …
A relatively strong 2012 Columbus office market left us with a few questions that will be answered as we move through 2013 and into 2014. Will rental rates continue to increase incrementally while vacancy and tenant improvement allowances continue to fall? Will we see speculative office development for the first time in five years? There are other compelling questions, which should keep things interesting for the next 12 to 18 months. Will the handful of prospects for large blocks of office space opt for longer lease terms versus recent trends favoring short-term deals? Will Canadian investors continue to perceive Central Ohio as a great place to shop for bargains as the Canadian dollar maintains its strength against the U.S. dollar? Development Picks Up Of course, new construction is currently the big story. Last year, the development community broke ground on more than 1 million square feet of new office space, including two downtown projects near Nationwide Arena. The projects include a 286,000-square-foot building, of which Columbia Gas has pre-leased 208,000 square feet, and a 214,000-square-foot Nationwide Insurance build-to-suit. In the Northeast office submarket, nearly 200,000 square feet of new development is under construction, including a headquarters facility for Bob Evans …
Momentum. In a word, that’s how 2012 ended in the Memphis industrial market. Nearly 3 million square feet of net absorption in the fourth quarter of 2012 helped the market end the year with 2.3 million square feet in positive absorption — setting the tone for what we expect to be a solid 2013. The uptick in fourth quarter net absorption caused vacancy rates to fall to 12.5 percent, down from a high of more than 13 percent. But those vacancy rates can be a bit misleading when you look specifically at Class A space, where vacancy rates are at 10.4 percent. In 2009, industrial development in Memphis totaled only 743,000 square feet in combined under construction and delivered space. Things began improving in 2010 and 2011, with approximately 2 million square feet under construction and/or delivered in both years. In 2012, that number increased by 50 percent to more than 3.1 million square feet. What’s particularly noteworthy about construction activity in 2012 is that it includes speculative development, something the market hasn’t seen in quite a while. IDI has already delivered one spec building totaling 286,000 square feet and has another 870,000-square-foot spec building under construction, both in DeSoto …
Blessed by a favorable location and high quality of life standards, the Danbury, Conn., retail market has grown in the recent 18 months and should continue to expand in 2013. Key among growth indicators are: * Whole Foods is opening its first store in the Danbury market in 2013. * Panera Bread and Petco recently opened second stores in this market. * Toll Brothers is under way with a new 1,200-home community in anticipation of regional population growth and changing demographics. * Danbury has the lowest unemployment rate in the state (7.1 percent seasonally unadjusted as of January 2013, according to the Bureau of Labor Statistics). Location and Demographics Danbury is located in northern Fairfield County on the border of New York State and is approximately 50 miles north of New York City. (The Metro train to NYC takes just over an hour.) The population is approximately 80,000. Danbury serves Fairfield and Litchfield County in Connecticut as well as Westchester, Putnam and Dutchess counties in New York. Stamford, Conn.; White Plains, N.Y.; and Hartford, Conn., are each about an hour away. The relatively short commutes to these larger urban hubs entice real estate occupiers for office space and retail tenants …
After several years with virtually no new construction of multifamily homes, the Metro Phoenix market looks to rebound with a pipeline of projects that could result in 5,000 to 7,000 new units built per year in 2013, 2014 and 2015. That returns our market to construction levels last seen in 2007. In order to see this volume of construction, developers will need to be successful in raising the required equity, which has been a challenge. At the end of 2012, the Valley had 17 projects (of 50 units or greater) under construction, totaling a little more than 4,200 units. Building on that, we expect to see 15 to 20 projects per year through 2015. This is just a fraction of the more than 20,000 units filling the development pipeline. The demand for all these units, however, will hinge on Phoenix’s population and job growth. It will also be influenced by the national and global economies. Developers are capitalizing on the recent purchases of properties in prime, upscale locations that were not previously considered for strictly rental housing. Alliance Residential, P.B. Bell and JLB have all either begun construction or have plans in the works for rental developments in premium Phoenix …
The Indianapolis industrial market has experienced a significant amount of absorption during the past several quarters, driving down the multi-tenant vacancy rate to 3.3 percent and leading to a new round of speculative development, according to brokerage firm Cassidy Turley. The key engines driving growth are technology, housing, auto suppliers, and distribution centers related to Internet sales. Some 3.2 million square feet of speculative industrial space is under construction in the Indianapolis area. The city currently has 240.5 million square feet of inventory. When completed, the speculative product in the development pipeline is expected to result in the multi-tenant vacancy rate rising closer to the historical norm of approximately 4 percent. Michael Weishaar, senior vice president and principal at Cassidy Turley’s Indianapolis office, says the low industrial vacancy rate is partly the result of proper planning. “Our developers are intelligent about oversupply,” says Weishaar. “They saw a rough economy and thought we needed to re-look at our supply chain.” With so much speculative development under way, is there enough demand to absorb it all? Although vacancy rates will rise closer to their historical average in the short term when space comes available, in the long run this amount of space …
The Woodlands office submarket is one of Houston’s better performing submarkets, experiencing a robust fourth quarter 2012 with total absorption of 107,932 square feet. Spec office buildings have recently achieved 85 percent occupancy or higher prior to completing construction. For example, both 4 Waterway Square Place (a nine-story, 216,000-square-foot Class A building) and 3 Waterway Square Place (an 11-story, 234,000-square-foot Class A building) preleased to more than 95 percent prior to completion of construction. Total net absorption registered a positive 145,804 square feet in 2012. In addition, total vacancy for the market dropped 5.2 percent overall in the third quarter of 2012 to 4.2 percent in the final quarter of 2012. Class A rental rates in the second quarter of 2012 were $33.07, up 83 basis points from the prior quarter. Similarly, Class B rates increased three basis points to $22.81. Based on the continued decreasing vacancy rates, as well as continued increasing rental rates, The Woodlands projects to be a landlord favorable market for the year 2013. Several high-profile projects are under construction, including: • ExxonMobil Corp. is currently developing a 385-acre site along Interstate 45 and Spring Creek. The site will serve to consolidate all upstream Houston ExxonMobil …
Well, 2012 has come to an end, the fiscal cliff has been averted for now and the presidential election is behind us. Despite it all, retail sales in the Arizona market seemed to fair reasonably well last year, albeit with markdowns acting as the trigger point for consumers to make those last-minute holiday purchases. With an active 2012 under our belts, the Phoenix market is hoping to outdo itself this year with leasing activity as retailers gear up for cautious expansions, downsizes and relocations. The housing picture for Maricopa County is terrific in terms of inventory being absorbed. Homebuilders are building out improved lots and creating new subdivisions. It is likely that new housing permits, which were positive in 2011, will result in more than 12,000 new homes in 2013. This number should increase steadily for the balance of the decade. This is not to indicate that new retail development will be built anytime soon, but that these numbers may create more of an opportunity to fill existing retail space that has a current vacancy rate of 11.7 percent. Last year, we experienced a positive absorption of 1.03 million square feet, according to CoStar. Therefore, unless a significant amount of …