Multifamily development has come to a near halt in Las Vegas. In 2011, only two market rate properties finished their deliveries with a total of 682 units, most of which had already been completed in 2010. Only one market rate property was started in 2011. This 156-unit project was originally started as for-sale townhomes, but after a foreclosure, the development is being completed by Alliance Residential as a rental property. Other development is limited to affordable or senior housing. We are expecting a limited number of market rate starts this year, but at numbers that will not significantly impact existing inventory. The most active market rate developers in Las Vegas over the past years have been Picerne Real Estate Group, Alliance Residential, Fairfield Residential, Ovation Development, Trammel Crow Residential and Nevada West Development. Fore Property Company has been active in both the market rate and affordable sector, and Nevada Hand remains active in the affordable and senior sector. Between 2003 and 2007, 47 properties totaling 13,483 units were converted to condos. The combination of unsold units from these conversions, as well as the unsold units from properties built as condos during that time, has added 4,625 units to today’s rental …
Market Reports
It was a little less than two decades ago that local business leaders could see what was unfolding in West Michigan. The industrial sector was steadily declining, and companies were either going out of business or moving away. It was evident that something had to be done. That’s when two hometown heroes, Amway founders Richard DeVos and Jay Van Andel, proposed their vision to turn Grand Rapids into one of the top medical services cities in the world. Their leadership and philanthropic efforts spurred a series of events, forever changing the landscape, mentality and image of Grand Rapids. One of the city’s first streets, Michigan Street, running parallel to I-196, was the initial site of their vision. In 1996, Jay and Betty Van Andel founded the Van Andel Institute. They broke ground in 1998, and the Van Andel Institute opened its doors in 2000. The institute is now home to scientific research that is focused primarily on cancer and Parkinson’s disease and has received more than $1 billion in research funding. The original development was a $60 million facility. In 2010, the institute opened a second phase with an additional 242,000 square feet at a cost of $175 million. Butterworth …
2011 was a good year for the Dallas office market with above average demand, minimal new construction and two quarters of rising overall asking rates. If you look at the Dallas office market since 2001, a typical year net absorption is usually about 800,000 square feet. In 2011, the Dallas market recorded more than 1.6 million square feet. New construction (excluding owner-occupied properties) averages 2.5 million square feet for that same time period, but a little more than 200,000 square feet was completed in 2011. Still, the overall total vacancy rate remains higher than normal at 22.5 percent. Keep in mind Dallas, with its abundance of land and pro-development climate, rarely dips below 20 percent vacancy. The average total vacancy since 2001 is 21.4 percent. Typically if it nears 20 percent, the construction cycle picks up again and more new product is brought to the market. That’s about where the market is headed at this point. Developers have not made any official announcements for new construction yet, but more than a few are prepared to break ground on potential projects in a few submarkets (Far North Dallas and the Dallas CBD being two of the more likely submarkets). Unless there …
South Florida, the densely packed grid squeezed between the Atlantic Ocean and the Everglades, is back on the priority list of retailers that, until recently, were content to hang out on the beach and wait for more inviting waters, so to speak. Over the past few months, the list of the most active newcomers has included Toys “R” Us, Babies “R” Us, Ross Dress for Less, Sports Authority and Dick’s Sporting Goods, just to name a few. And while the region is still a long way from the blistering pace of activity that was evident during the housing boom, there are other positive signs of life. A year and a half ago, similar to most major cities across the U.S., shopping center landlords in Miami and South Florida were fending off an overabundance of aggressive rent requests from retailers. All too often, in an effort to grasp some security for the future, many had to give in to retailers’ insistent demands for relief. In fact, many chains managed to lock into long-term leases at low- to mid-double-digit rent amounts in class “A” centers that used to command $25- or even $30-per-square-foot. During the past few months, however, the flood of …
The Las Vegas market has a total office inventory of 60.7 million square feet in 3,820 buildings. There were 13 buildings completed in 2011 totaling 724,535 square feet. An additional 550,000 square feet was still under construction at the end of the fourth quarter. Net absorption in 2011 was a positive 402,712 square feet, largely due to the Metropolitan Police Department moving into their new 390,000-square-foot facility during the third quarter. The total office vacancy rate valley wide was 19.4 percent at the end of the fourth quarter, which did not include shadow inventory. As this article was being submitted, Auction.com was completing another round of asset sales. Of the 25 property deed sales on the block in Las Vegas, four were office projects totaling about 204,000 square feet. Two of the14 non-performing notes were secured by office product totaling 103,000 square feet. The largest office project sold in the auction was the 124,082-square-foot Sahara Plazas. Sahara Plazas is located in the central portion of Las Vegas and consists of 10 individually parceled Class B buildings situated on 7.87 acres. The largest non-performing note secured by an office product was Charleston Valley View at 86,586 square feet. This property is …
The Minneapolis-Saint Paul MSA was on the road to recovery long before many others. And while that might come as a surprise to outsiders, this market actually packs quite a punch. With more than a dozen Fortune 500 employers — including Target, Wells Fargo, U.S. Bank, Ecolab and 3M, to name a few—the MSA’s 5.1 percent unemployment rate is a full three points lower than the national average and is consistently ranked as one of the friendliest job markets in the country. Little wonder national retailers have been so keen on taking space in prime Twin Cities markets such as Roseville, Edina (Southdale) and Minnetonka (Ridgedale). Whole Foods, for instance, opened a Minnetonka store in a former Circuit City box late last year and also razed a vacant Storables to make way for a Southdale store. More recently, the Texas-based chain announced plans to open a downtown Minneapolis store on the site of a former Jaguar dealership. Slowly but surely, remaining Ultimate Electronics, Circuit City and Linens ’n Things boxes are being refilled by expanding chains. Some are leasing vacant boxes in their entirety; others are taking portions of subdivided boxes. Case in point: Last year T-Mobile, Godfather’s Pizza and …
The Austin multifamily market is extremely strong overall, with the most robust submarkets found in the Central Business District, South Central and Southwest submarkets. Due to the number of previously shelved projects coming back online, potential deliveries in 2012 will likely be around 3,500 units, followed by another 5,500 units or so in 2013. However, there are no major projects scheduled to be completed in 2012 that will have a drastic effect on the market — most of the starts that have taken place will not come on line until the first part of 2013. As a result, the upward push on occupancy and rental rates seen during 2011 will continue throughout 2012 — until the market sees some of these new projects coming online, owners of Austin multifamily properties will continue to be aggressive on rents and not offer concessions. One of the leading factors supporting this focused rise in apartment revenues is Austin’s ranking as one of the top growth markets for jobs. In particular, the CBD and South Central areas have seen an influx of new companies that want to be located in the middle of the action — and, thanks to the employees brought to the …
Like most cities, Miami’s class A office market suffered during the depth of the recession: vacancy rates doubled, tenants gave back space, and many landlords offered significant incentives to close leases. Interestingly, the market bounced back sooner than many projected with leasing activity accelerating. New to market tenants began filling and backfilling space, foreign investment dollars began pouring in, and the market has benefitted from a flight to quality. There has been a real gravitation toward urban submarkets. Business hubs with residential and retail amenities such as Coral Gables, Doral and the Brickell Financial District have fared well despite the arrival of new product. We’re seeing an overall shift from suburban markets back to urban ones, which is consistent with what’s happening in cities across the U.S. The downtown Miami/Brickell market in particular is seeing high demand as the area comes to life as a 24/7 urban district with lively retail, available housing product at all points of the price spectrum, and many of Miami’s cultural and entertainment amenities. Planned upgrades to the nearby Port of Miami will stimulate further activity. 1450 Brickell office tower is now 80 percent leased just 18 months after delivery. The building has attracted many …
For tenants, this slower sector correction and still attractive rents will make for great opportunities in this area in 2012. The competitive rental rates are not expected to tick up by much, but will probably stabilize after hitting bottom in select submarkets. They will offer a wide choice of options for relocating tenants. Concessions will remain generous to secure the best tenants in the market. Over the short term, the Orange County office outlook will remain a tenant’s market. The average overall full-service gross (FSG) asking rent in Orange County during 2011 was $1.95, dropping from near $2 the previous year. The trend of Class B users jumping to attractively priced Class A product will continue in the first half of 2012. This effort to reduce expenses, while landing better operational locations, will still be very popular. Expect to see some tenants that were on the sidelines in 2011 now ready to make a move. These national and regional occupiers are sophisticated and will be looking for experts with the talent and expertise to focus on their specific needs and their unique corporate expansion requirements/considerations. However, even with slightly increased activity, the pace of demand will appear low by historical …
The land market in Austin, like the rest of the country, is driven by future expectations throughout the real estate product types from new home construction and apartments to office, retail and industrial development. Therefore, the same underlying fundamentals driving demand for new construction will also drive the demand for land development. Fortunately, Austin, like much of Texas, continues to outperform the nation economically. While the recovery has been sluggish elsewhere, Austin continues to gain economic momentum. Most metro areas throughout the country have yet to recover the employment losses sustained through the Great Recession. Austin with a net job growth of 16,300 in 2011 has now surpassed its pre-recession employment peak of 770,000 in August 2008. Current estimated employment is more than 787,000, according to the Bureau of Labor Statistics. Austin remains attractive to a variety of employers because of its educational infrastructure, young educated workforce, IT infrastructure and concentration of technology industries. While not the lowest cost of living or the lowest cost of doing business it is far and away more affordable than other tech centers such as San Jose, California, Boston and northern Virginia. Consistently ranked high by top economic development, relocation and business consultants, Austin …