Cheers and the clamor of new construction are among the dominant sounds wafting above the downtown Austin skyline of late, as the city welcomes a new wave of hotel construction and construction plans. Not a moment too soon. For several years, the hospitality industry has fretted that Austin’s growth as a destination city is outpacing the development of hotel accommodations, particularly in and around downtown. Voila! Hospitality’s proverbial “rooms available” signs are flickering brighter. By early 2013, no fewer than five major hotels will be under construction, delivering more than 2,000 rooms to Austin’s central business district. From all indications, more hotel developments are in the offing for later next year. That’s welcome news for those who promote Austin’s viability as a destination city and who roll out the red carpet for everything from conventions and corporate meetings to spring break activities and mega-events. In mid-November, Austin will debut as host city, through 2021, of the Formula One U.S. Grand Prix, accommodating Formula One racing’s return to the U.S. following a five-year absence. This high-profile race could attract some 300,000 fans. The South by Southwest Film Conference and Festival, Rodeo Austin, and the Austin City Limits Music Festival are just …
Market Reports
Washington, D.C.’s suburban industrial markets in Maryland and Northern Virginia have seen limited new development due to supply constraints for well-located and developable land. Currently, suburban Maryland’s industrial activity is centered around the redevelopment of inefficient but well-located properties to meet the needs of today’s warehouse users that require features such as ceilings with at least 24-foot clear heights, 120-foot truck loading courts, trailer-drop areas and flexible configurations with 50-foot on center column spacing. With its strong fundamentals, the industrial property investment sales market continues to be a focus for institutional investors and REITs. Despite overall economic sluggishness, both markets have strong upside potential. Suburban Maryland Exemplifying suburban Maryland’s redevelopment trends, Chesapeake Realty Group, Oakmont Industrial and Carlyle Group are renovating a 368,000-square-foot former special-purpose facility into a new, modern general- purpose distribution center along the eastern Capital Beltway network. A similar deal involves the renovation and Nash Finch’s subsequent 500,000-square-foot lease of a former Giant Food ’60s-era distribution center. This single transaction led to the vacancy rate falling to below 9 percent in the Landover submarket. Limited new development is occurring along the main transportation arteries feeding into D.C.’s CBD. Demand drivers include regional distributors and service companies catering …
Though a balanced Los Angeles office market may be a year away, the situation is certainly looking more promising than a year ago. This is due to rising rents, positive (and continued) absorption and increased transaction volume. These trends are buoyed by falling unemployment rates, which declined to 11.1 percent in the second quarter, compared with 12.4 percent a year ago. Professional services companies led this charge, adding 16,500 jobs over the past 12 months. Entertainment and media also showed robust gains, adding 8,000 jobs over the same period. Government and manufacturing sectors represent the opposite end of the spectrum and still lag in the recovery. As expected, creative users within the respective fields of entertainment, social media and gaming companies continue to drive leasing activity. This is particularly true on the Westside where companies like Riot Games in Santa Monica, Google in Venice and YouTube in Playa Vista abound. DirecTV also recently signed a 205,202-square-foot renewal in El Segundo. Many Los Angeles companies are also once again thinking about recruitment and seeking out locations that appeal to their employee base. One example is law firm Morrison Forester, which is relocating from Downtown’s Bunker Hill to the amenity-rich Financial District. …
Economic conditions in Clark County and Las Vegas continue to improve with evidence of a slow and steady recovery finally emerging. Analysts from the UNLV Center for Business and Economic Research’s late summer survey noted respondents remained optimistic about general economic conditions in southern Nevada, with 82 percent expecting to see no change or improvement. Their Southern Nevada Business Confidence Index rose to its highest level in more than four years during the summer, echoing this positive sentiment. A couple of indicators highlight the emergence of a more favorable environment, with retail sales improving, McCarran Airport traffic on the rise and the gaming “take” on the rebound. Median existing home sale prices have jumped more than $12,000 compared to the same period a year ago. Furthermore, the labor market in Clark County has stabilized with more than 6,000 jobs added to non-farm payrolls since the spring. The overall county population has also increased to its highest level in five years, according to US Census estimates. In the multifamily market, the past two indicators carry the most weight for the region’s apartment market. A healthy apartment market requires significant population densities with a positive trend. This needs to be supported by …
After five years of economic challenges, the Orlando industrial market — hit harder than any other industrial region in Florida — is rebounding. During the recession, central Florida experienced what amounted to a full stop in home construction, the failure of dozens of banks and almost no foreign investment. Vacancy rates for Orlando’s industrial warehouse market peaked in 2010 at nearly 15 percent and remained high until 2011. But now the economy is picking up. Payrolls expanded by 4,400 jobs year-over-year for the period ending in May and construction of multifamily residential has grown consistently. The improvements are part of a trend that could extend for years. Today, the industrial market that had the highest vacancy rates in the state is now experiencing the greatest absorption, with 1.1 million square feet leased in the second quarter of this year, for a six-month total of 2.4 million feet. That’s a 19.3 percent gain over the same period in 2011 and the third consecutive quarter of positive absorption. The overall vacancy rate has fallen to 10.7 percent, and that doesn’t tell the whole story. Outlying areas and Class C properties are lagging. In Class A and Class B properties in southwest Orlando …
The major headlines dominating the greater Baltimore region this summer involved the unexpected resurgence of our beloved professional baseball team following nearly two decades of performing at a level below .500, and the logistical challenges facing the organizers of the second annual Grand Prix racing event scheduled for the Labor Day weekend. Connecting this news to the regional retail environment, we see a tremendous amount of winning and successful projects emerging throughout the area, combined with a great deal of noise and fast-moving activity. Fasten your seatbelts for a quick lap around the Charm City marketplace. Downtown CBD As General Growth Properties slowly emerged from bankruptcy, the company renewed its focus on re-energizing its retail assets lining the retail magnet known as the Inner Harbor by attracting new merchants and restaurants and upgrading the physical plant. The arrival of Bubba Gump Shrimp Co. and Ripley’s Believe It or Not Museum were among the notable adds. There is still some work to do with regard to reinvigorating The Gallery at Harborplace, which has lost some luster due to the emergence of Harbor East, but the improvements have been noticeable and well received. In Baltimore, the waterfront rules. The Cordish Company rebounded …
The retail market in Greater Rochester has been active for the first three quarters of 2012, and we anticipate steady demand into 2013. The most active retailers in the market have been national restaurant chains, dollar stores, retail bank branches, medical (urgent care) and gas stations. Overall market vacancy is currently 7.47 percent with the southeast market at 4.77 percent, and the northwest market at 5.06 percent, showing the tightest vacancy levels. The southeast market includes both the 1.3 million-square-foot Eastview Mall corridor in Victor and the Monroe Avenue corridor in Pittsford. The Monroe Avenue corridor is centered at Pittsford Plaza and Wegmans’ flagship grocery store. The southeast market boasts the highest household income demographics in the region, which has attracted retailers like Trader Joe’s, which is opening in Pittsford Plaza in October; The North Face, currently under construction across from Eastview Mall; and Von Maur, which is currently under construction and replacing The Bon Ton at Eastview Mall. Benderson Development is completing construction of the small shop space at Victor Crossing, a power center anchored by a Walmart Supercenter and Kohl’s on Route 96 just south of Eastview Mall. New tenants include HomeGoods, PetSmart, Dollar Tree, and Famous Footwear. …
Resilient apartment demand will continue to insulate the Los Angeles apartment market from the effects of the uneven recovery, though modest downside economic risks will persist. For example, the Eurozone crisis and economic slowdown in China – the Port of Los Angeles’ largest foreign trading partner – will limit imports and exports and moderate overall employment gains. Local manufacturers have already shed 5,000 jobs in 2012, and 2,400 transportation and utility positions were eliminated in the past two months. Nevertheless, metro-wide employment expanded by more than 40,000 jobs in the past six months, a growth of 1.1 percent compared to 0.6 percent nationally. Additionally, gains have been relatively broad-based. The professional and business services, as well as education and health services industries, have added 25,000 jobs since the start of 2012. Resurgent tourism has also boosted leisure and hospitality payrolls by more than 10,000 workers. Rehiring, combined with a still weak demand for single-family homes, has supported apartment leasing. Asking rents have particularly improved. In the first half of 2012, market-wide asking rents appreciated 5 percent to $1,730 per month, compared to a gain of 3 percent for all of last year. Rent increases have been particularly robust in the …
Despite little commercial real estate development with the lowest rental rates in a decade, Las Vegas’ office leasing market has inched up in the positive direction. There are also indicators that the area’s commercial real estate market will continue to struggle, with vacancy rates remaining as high as 25 percent until the end of 2012. Las Vegas remains one of the most challenging real estate markets in the country with some submarkets showing vacancies as high as 32 percent, while others report vacancies as low as 16 percent. Still, there have been some significant developments recently impacting the office market. Zappos.com will occupy the former Las Vegas City Hall building in Downtown Las Vegas, which will house about 2,000 employees. This signals continued revitalization for the Downtown area. Those 2,000 employees will need housing and, with a younger workforce, will probably spend disposable income on entertainment, particularly in the area close to their place of employment. Along with Zappos, government-related entities occupying commercial space is on the rise, and traditionally those entities prefer to be centrally located. While there is noticeable activity taking place in certain Las Vegas submarkets like Downtown, other areas of Las Vegas are also improving — …
Using the turtle and the hare metaphor, it is appropriate to associate Atlanta’s medical office market with the turtle and the metro area’s general office market with the hare. With a few exceptions, Atlanta’s medical office market has continued a slow and steady expansion during the last 30 years. While the size of the medical office market is substantially smaller than the general office market, it has not experienced the booms and busts that have plagued general office market over the same 30 year period. On-campus and Class A medical office buildings have consistently enjoyed 85 percent or greater occupancy. The primary difference in the stability of the two segments of office space is that the demand for general office is driven by the state of the overall economy, while demand for medical office is driven more by the health and size of the general population. Metro Atlanta’s population has increased by more than 51 percent since 1990. The last few years have seen slower growth in the medical office market primarily due to the unknowns of the Affordable Care Act law (Obama-care). Initially, there was uncertainty over whether the law would pass or not. After the law passed, then …