The Houston retail market experienced modest improvement in 2011 as the area economy began to shake off the effects of the national recession with strong local job growth and reasonably steady, if not particularly noteworthy, housing starts. Positive retail space absorption of 2.8 million square feet combined with only 1.2 million square feet of new construction resulted in a decline in the overall retail vacancy rate from 7.1 percent in the first quarter of 2011 to 6.7 percent at year-end. However, average quoted rental rates edged down slightly from $14.51 per square foot in the first quarter to $14.35 per square foot in the fourth quarter. Although the retail statistics for the past year aren’t terribly compelling on their own, they are more encouraging in the context of the regional economy in the sense that retail leasing and development activity generally lags the overall economy. The national recession hit Houston in full force in September 2008. The area lost 152,800 jobs through January 2010. In February 2010, Houston began to create new jobs again, and by October 2011, Houston had regained all the jobs lost during the recession. The Greater Houston Partnership projects that the Houston metro area will add …
Market Reports
Raleigh salutes 2011 as a year of improvement and we welcome 2012 with great optimism. In September of last year, Raleigh received Bloomberg Businessweek’s “No. 1 American City” accolade, which is a measure of the “all-around excellence” of a region. The NCSU Index of North Carolina Leading Economic Indicators, a forecast of the economy’s direction four to six months ahead, rose in October, the first gain in the Index since June. All of the North Carolina-based components of the Index improved, with the leader being a 31 percent jump in building permits, according to Michael Walden, distinguished professor of economics at North Carolina State University in Raleigh. As the economy continues to improve and jobs increase, absorption will take additional existing vacant space. The cities of Raleigh, Cary, Chapel Hill and Durham make up 98 percent of the 76 million square feet of office inventory in the Triangle area. With 461,119 square feet of absorption year-to-date in the third quarter of 2011, the market remains positive. Owner-occupant companies had a major effect on positive absorption. In the third quarter, nine of the 12 submarkets showed positive absorption and decreased vacancy rate over the previous quarter. Wachovia contributed to the negative …
Pittsburgh has been incredibly lucky in that the area has avoided the havoc wreaked on the national economy during the last couple of years. The education and medical sectors bolstered the area during the recession, and the region is fast-becoming the ‘Energy Capital’ of the Northeast, with Pittsburgh as its epicenter. These factors have allowed the region to maintain its traditional path of steady growth, which has bucked the national trend and provided a safe haven for the local industrial real estate investment community. The market continues to operate in a supply-demand imbalance with weight tipping towards demand for industrial product. This has supported irrational pricing, with a number of recent sales of industrial facilities trading higher than traditional prices. The Pittsburgh industrial real estate market comprises less than 170 million square feet. With limited new construction and virtually no impact from loan defaults, the prices for industrial assets have held value. On the flipside, the market does not provide cash-rich buyers with many opportunities to purchase assets at bargain prices. The region’s overall industrial vacancy rate is hovering at 7.5 percent, falling by 0.4 percent from the fourth quarter of 2010. This is 2.2 percent below the overall U.S. …
The multifamily market continues to be the strongest performing real estate market in Orange County. With the support of strong fundamentals and forecasts, investors are flocking to multifamily investments, especially properties located in core cities. As the for-sale residential market remains uncertain, much of the Orange County population is choosing to lease, which has been a big driver following the economic recession. The vacancy rate stands at 4.5 percent, which accounts for a 20 basis point drop from the previous quarter’s rate of 4.7 percent and a 140 basis point decline from the 5.9 percent recorded one year earlier. This was the third consecutive quarter that witnessed a decline in vacancy. These rates haven’t been this low since the second quarter of 2008. Although vacancy has dropped considerably since it peaked of 6.4 percent during the third quarter of 2009 through the second quarter of 2010, it remains higher than the low point of 3.2 percent, which occurred in the third quarter of 2007. Rental rates have also increased as vacancies have filled. The average effective monthly rent is $1,488, which represents a slight increase from the $1,478 recorded during the previous quarter and an even bigger increase from the …
The Houston retail market experienced modest improvement in 2011 as the area economy began to shake off the effects of the national recession with strong local job growth and reasonably steady, if not particularly noteworthy, housing starts. Positive retail space absorption of 2.8 million square feet combined with only 1.2 million square feet of new construction resulted in a decline in the overall retail vacancy rate from 7.1 percent in the first quarter of 2011 to 6.7 percent at year-end. However, average quoted rental rates edged down slightly from $14.51 per square foot in the first quarter to $14.35 per square foot in the fourth quarter. Although the retail statistics for the past year aren’t terribly compelling on their own, they are more encouraging in the context of the regional economy in the sense that retail leasing and development activity generally lags the overall economy. The national recession hit Houston in full force in September 2008. The area lost 152,800 jobs through January 2010. In February 2010, Houston began to create new jobs again, and by October 2011, Houston had regained all the jobs lost during the recession. The Greater Houston Partnership projects that the Houston metro area will add …
Most Tampa Bay-area businesses look forward to 2012 with more cause for optimism than they had heading into 2011. In prior quarters, the positive direction of the market was largely anecdotal. Over the last few months, though, tangible signs of broad-based improvement have emerged, suggesting that the obstacles to a stronger recovery may be weakening. Hiring activity has spread from a narrow set of countercyclical sectors such as healthcare and education to a broader group of industries such as hospitality and tourism, as well as professional/business services. Housing sales have started to pick up and hotel occupancy rates have increased as business travel and tourism rebound. The rate of growth still falls well short of its heady pace during the 1990s and the post-dot.com years between 2003 and 2007, yet 2011 brought clear signs of forward movement. The resurgence of cost-driven relocations of major businesses to Tampa Bay, combined with significant expansions by locally based firms, has been particularly encouraging. The headlines have been dominated not only by news of firms that are deciding to move to Tampa Bay from other cities, but also of existing companies that weathered the storm of the Great Recession and are moving forward with …
Upstate New York is currently in a renaissance period as the major initiative of the high technology industry creates momentum for local communities. Centered at the University at Albany, the College of Nanoscale Science and Engineering has been a leader in developing more than $6 billion of infrastructure and research and development focused around the semi-conductor industry, and most recently the solar energy industry. The relocation of Sematech International’s world headquarters from Austin, Texas, to the edge of the University’s campus in Albany, New York, has established a partnership program focusing the world’s leading semi-conductor makers and related industries in a collaborative effort to develop and manufacture the next generation of chips that power our lives. The College’s most recent announcement of a partnership involving IBM, Intel, Samsung, Global Foundries and TSMC focused on a $4.8 billion deal that is largely funded privately, will result in substantial job growth in categories not previously significant in numbers. This most recent announcement in September 2011 also spreads the benefits throughout the state in Buffalo, Rochester, Utica, and into the Hudson Valley as new jobs are created in these communities that result from supporting and related industries. The office sector should begin to …
New York’s Capital District is ranked 11 out of the top 25 metro markets in the Northeast (according to REIS), but the area is most certainly making noise in the world of multifamily construction projects. A huge demand in the apartment sector, stemming from technology-based job growth, has forced the hands of local and regional developers to get off the sidelines and start tackling sources for much-needed construction financing to meet the demand. To name of few active developers, Tri City Management, Prime Companies, Capital City Properties, and Albany Partners LLC have a total of more than 1,000 units recently built, under construction, or funded and ready to build in the next 16 months. Permit filings were up more than 30 percent from 2009 to 2010, indicating a solid trend for new development slated through 2012. Major projects have been popping up all over the region. The Woods, a 60-unit luxury community in suburban Troy, leased up its first few units in May and had 48 of the 60 units rented long before the grand opening in November. One- and two-bedroom unit rents range from $1,100 to $1,490 for 882 to 1194 square feet, averaging roughly $1.50 per square foot …
These are exciting times for Pittsburgh’s Central Business District’s (CBD) office market. Pittsburgh’s CBD Class A office market is experiencing a very favorable vacancy rate of 7 percent. The high levels of occupancy have been driven by strong growth within the banking, medical, energy and technology sectors, along with nearby abundant natural resources such as Marcellus Shale. PNC Corporation is breaking ground for its second $400 million office building in recent years, which is touted to become the “greenest building in the world.” PNC’s new building will be a true complement to the historic and evolving Market Square District, which has undergone a major landscape renovation, creating a beautiful area for outdoor dining, music and green space for people to enjoy. Accompanying PNC’s new office buildings, Millcraft Industry has begun the transformation of the former State Office building into a 218-unit luxury apartment building. This is their second major CBD project in recent years, having completed and leased a 180,000-square-foot office building known as Piatt Place. Plans are currently evolving within Pittsburgh’s development community to retrofit the historic Henry W. Oliver Building. Additional CBD developments include a mixed-use project comprising a 175-room Hilton Garden Inn, 100,000 square feet of new …
Tenants and landlords forge into 2012 confronting many of the same challenges they had going into 2011. Atlanta’s office market still has a great deal of excess supply and demand remains below its pre-recession levels. The entire market has not pushed fully past concerns about properties with significant vacancy and looming debt obligations. Doubts about the broader economy also inhibit long-term strategic planning. The office market closed out 2011 largely unchanged from a year ago. The overall availability rate only fell by 1.1 pp from 26.5% to 25.4% over the course of the last four quarters. ““Vacancy rates remain high throughout the market and the vast majority of tenants have many options to choose from when negotiating leases,” says Andrew Lechter, executive vice president and branch manager of Studley Inc. The U.S. economy has shown signs of minimal gains in momentum and remains vulnerable to a sharp shock such as what has been called Europe’s “Lehman moment” or a spike in oil prices precipitated by a Mideast crisis. Some of the chronic problems that hampered U.S. growth – weak labor and housing markets – remain particularly acute in Atlanta and registered minimal improvement in 2011. Until employment and labor markets …