Operations will remain tight in the urban core as retailers expand to premier locations in Boston, while stagnant building activity and an uptick in demand will allow operators to backfill under-utilized space in the suburbs. As businesses expand payrolls in the Financial District, residents will migrate toward major employment hubs and entertainment districts in surrounding areas. As a result, global and national retailers will expand or relocate from older centers in peripheral neighborhoods to newer, redeveloped infill properties in Boston. Prime shopping districts in Back Bay, including Newbury Street, Commonwealth Avenue, and Boylston Street will garner the most consideration this year as tenants lease quality, street-level store fronts with high visibility. As available space shrinks in the submarket, vacancy will drop to a metrowide best of 3.4 percent this year, giving owners enough leverage to raise rents. Meanwhile, muted construction and large lease signings will support positive net absorption in third-ring suburbs such as Bristol County and Merrimac Valley submarkets, reducing vacancy an average of 100 basis points this year. Solid retail sales and job growth encouraged tenants to move forward with expansions, underpinning a 60-basis-point decrease in vacancy over the past year to 6.5 percent. In the prior 12 …
Market Reports
One of the hardest-hit real estate segments, both in Cleveland and across the nation, has been the retail sector. A dramatic reduction in consumer spending over the past four years has caused significantly lower retail sales and resulted in a long list of bankrupt retailers and struggling retail centers. While the pullback by the consumer has ultimately led to numerous instances of shuttered stores and bank-owned retail centers across the region, there have also been some noticeable trends that illustrate the underlying resiliency and strength of this segment. Digging in the dirt Although the pace of retail development has been at a near standstill for the past few years, some projects have begun to take shape. The furthest along is a new 86,000-square-foot Giant Eagle in Broadview Heights, which is under construction with an early 2012 opening planned. The South Euclid/Cleveland Heights area has also emerged as a favored development location with two large-scale projects. The long-planned expansion and renovation to the northern half of Cedar Center began in the spring with the construction of a new GFS Marketplace. When fully completed in late 2012, this project is expected to contain approximately 60,000 square feet of total retail as well …
Southeastern Wisconsin’s industrial market absorbed nearly 1.28 million square feet in the third quarter — the fifth consecutive quarter of positive absorption — and 2.87 million square feet of absorption year-to-date. The vacancy rate registered 7.6 percent in the third quarter, down from 9.2 percent a year ago, according to Xceligent/CARW. Leasing activity in Milwaukee and Waukesha counties has accounted for 80 percent of the 2.87 million square feet absorbed year-to-date. Kenosha and Racine counties both experienced positive absorption of 81,527 square feet and 486,832 square feet in the third quarter, respectively. While impressive, this data is less substantial than previous quarters that we have analyzed. Traditionally, Racine and Kenosha counties compete for tenants crossing over the border from Illinois. These two counties will likely attract the next speculative or build-to-suit developments in Southeastern Wisconsin. With leasing and sales activity continuing to be on the rise late into the third quarter, we expect these positive trends to carry over into the final quarter of 2011. Quality industrial space is being depleted in many of the more popular submarkets south of I-94 and west of I-45. Natural tensions between quality supply and increasing demand are causing a stabilization of lease rates …
When we look back at the last couple of years in the Dallas/Fort Worth industrial real estate sector, it is absolutely certain that it’s been great to be a tenant. Landlords have been fighting for new deals and trying to keep the ones they have. But is next year going to be better or worse than this year? In the past year, there have been glimmers that the real estate market and the economy might be on the rebound. With a complete lack of any notable new speculative industrial construction in the past 3 years in DFW, we’ve all been working to fill up the existing vacant inventory. In the past 4 quarters, we’ve seen positive absorption of approximately 10 million square feet. We’ve moved the needle in DFW from 11.5 percent vacancy, to 10.5 percent in one year’s time. While that’s significant compared to where we’ve been, it’s approximately half of where we were in 2007 when we saw more than 20 million square feet of industrial absorption in 2007 in DFW alone. While it seems that the market is positioning itself for some sustained growth, the flex sector of the industrial market still seems to be flagging. Vacancy …
As we approach the end of the 2011, there are clear indications of an improving economy. Although the rate of commercial property foreclosure is still high, the rate of absorption of foreclosed properties has risen appreciably. These properties are not sitting on the market like they did the previous 24 months. One may say that this is not only a clear indication that we have turned the corner, but also that the community has genuine faith in the investment in commercial real estate. Although it may be time-consuming for some local businesses to secure financing, it is evident that traditional lending institutions are far more accessible than they were in 2009 and early 2010, albeit some more than others. The Small Business Administration (SBA) programs are propagated frequently, and the qualification process is not as cumbersome as in years past. The types of businesses that have taken advantage of the improved lending environment vary, and include automotive parts suppliers, manufacturing businesses, and distribution companies. Many area businesses are unsure about the near future. Considering what Detroit has endured over the past three years, this is to be expected. Although cautious, these same businesses are moving forward in a confident manner. …
After years of little or no new construction, the Greater Cleveland area is experiencing the construction of a broad range of major new projects representing more than $5 billion of new investment. Some of the largest projects include a new convention center and medical mart, a new Caesars Horseshoe Casino, plus major new medical center facilities developed for the Cleveland Clinic, University Hospitals and the VA Medical Center. There also are four new office developments: a 450,000-square-foot multi-tenant office tower in the Flats East Bank area of the central business district; a 580,000-square-foot world headquarters complex on 53 acres in the eastern suburb of Beachwood for Fortune 500 company Eaton Corp; a 700,000-square-foot corporate headquarters for American Greetings in Westlake, a western suburb; and a 639,000 sq. ft. global headquarters for Goodyear Tire & Rubber Co. in Akron to the south. Not since the 1990s, when we saw the completion of a half dozen CBD office towers and new stadiums for the Browns, Indians, and Cavaliers has Cleveland seen this kind of activity. Build new or renovate? In mature, established cities like Cleveland, the time comes for companies and institutions to decide between building new or renovating existing structures. The …
As the national market recession began in 2008, and started to settle in throughout the city of Houston around mid-year 2009, businesses focused on the implementation of efficiency, accomplishing more with fewer resources applied to the daily routine. In most business models, the most expensive resources are the current staff, followed closely by office space. In that most office leases are illiquid, downsizing of non-essential personnel is logically the most expedient way to an immediate impact on the bottom line during an economic downturn. However, this also results in an immediate surplus of office space per person or phantom vacancy; a pattern logically should trend downward during a recessionary cycle in the economy. According to CoStar data from the 3rd quarter 2011 webinar, the average square footage per worker has increased by almost 10% since 2008, and leveling off after 2009 without significant decrease. Certainly, the trend is quite the opposite of what we would expect today, arguably even in a stable economy as the trend is increasingly toward efficiency. However, such excess may not only be to the lack of the ability to dispose of such vacancy, but the intentional positioning where employers are seeking to recruit quality personnel …
During the third quarter of this year, the Memphis multifamily market slowed down compared to the second quarter. Rent and construction were up, however, occupancy and sales fell during the third quarter. “We’re seeing continued improvement in our market,” says Tommy Bronson, III, vice president of the multi-housing group in CB Richard Ellis’ Memphis office. “Due to record low construction levels, we’re seeing positive rent growth, occupancy and concessions burning off.” The overall occupancy in the third quarter of 2011 was 91.6 percent, compared to 92.1 percent in the second quarter. The strongest submarkets are Germantown/Collierville, Downtown and Cordova, which all average in the low- to mid-90s for occupancy, Bronson says. “In those locations, we are often seeing no concessions now, which is a big deal in the Memphis market because we’ve been a concessionary market during the last few years,” he says. Bronson adds that Class A and B properties are pushing rents because concessions are burning off. Rents for new construction rose from $939 per unit in the second quarter of this year to $960 per unit in the third quarter of this year, an increase of 1.8 percent. Overall rents also increased slightly, from $733 in the …
When people manufacture products in the U.S., they manufacture them in the Rust Belt, and Cleveland is in the heart of the Rust Belt. Our manufacturing sector has experienced increased occupancy and decreased vacancy levels quarter over quarter for the past three quarters. Cleveland historically has been a manufacturing market, and when manufacturing is strong the Northeast Ohio market is strong. In addition to the strength of manufacturing, the development of the Utica and Marcellus Shale is the biggest factor affecting Cleveland right now. The Utica and Marcellus Shales have been big in the Pennsylvania market for the past five years, but development is now moving westward into Ohio. As drilling increases, so too does the need for services for the drillers. The drillers and their service providers need real estate, and there have been dramatic increases in prices over the past four months in rural markets such as Steubenville, Ohio. That growth is beginning to move toward Youngstown, Warren, and up to the Streetsboro area. Employment is expected to grow dramatically over the next five years. While the overall manufacturing market is surging, there are still challenges in old properties that were modern in the 1930s and 40s, which …
The downtown San Antonio office sector is shining brightest when compared to the second quarter. Vacancy has declined from 29 percent to 24 percent and absorption is in the black. “The downtown San Antonio office market experienced a big win in the third quarter,” says Kim Gatley, senior VP and director of research for NAI REOC San Antonio. Some of the major transactions for the CBD include HVHC Inc. leasing 112,652 square feet and Argo Group US Inc. leasing 77,000 square feet at the IBC Centre I & II complex. Transactions like these have lead to 265,034 square feet of positive absorption this quarter. But it's at the expense of the suburban market, which is struggling with 99,504 square feet of negative absorption this quarter. Year-to-date, San Antonio's non-CBD properties have posted 62,580 square feet of negative absorption. Citywide, there is 165,530 square feet of positive absorption in the third quarter, but the year-to-date total sits at 129,871 square feet of negative net absorption. Vacancy, however, remained relatively stable at 19.9 percent. Rental rates citywide have risen 2.1 percent from last quarter to sit at $21.11 per square foot. Bright areas for San Antonio: • Domicilio Conocido purchased Pacific Plaza …