Austin’s industrial market tends to be a bell-weather for the local economy, as the market is more focused on local consumption rather than logistics for the transport of goods to other markets. As a result, employment and the overall health of the local economy are reflected in the demand and supply of warehouse, flex and general industrial product. Austin’s go-go economy of 2005 until 2008 saw a rapid absorption of product, as well as more than 2 million square feet of new developments that hit the market during that period. As the economy turned south in 2008, employment numbers and consumer confidence followed. The result was that new product delivered in 2008 and early 2009 took longer to lease. There were also casualties over this time period as projects such as Centerpoint at Colorado Crossing and Plaza 35 went into foreclosure. We are now seeing a return to normalcy, as absorption improved markedly with 477,518 square feet of industrial product absorbed in the third quarter. This is broken down into 183,577 square feet of warehouse/distribution product, 150,121 square feet of general industrial product and 143,820 square feet of R&D/flex space. This market sector has witnessed significant fluctuations in absorption during …
Market Reports
The watchwords for D.C. tenants in fourth quarter, and throughout 2011, were efficiency and flexibility. While many companies opted to renew leases and maintain existing footprints, others relocated and took the opportunity to streamline their operations. This “doing more with less” approach has proven particularly appealing in the face of political uncertainty and economic headwinds and firms are finding they’re able to save significantly on occupancy costs along the way. Writ large, these actions are contributing to an upward trend in availability and are likely to lower the aggregate demand for office space in D.C. for a long time to come. At the height of the economic downturn, companies were forced to reorganize their operations and create leaner organizations in an effort to reduce financial commitments. This heightened efficiency is now being implemented as a long-term cost-savings strategy and tenants are not eager to alter this new model. The real estate decisions made by law firms, in particular, have been demonstrative of this trend as recent leases have resulted in a net decrease in firms’ occupied space. This is especially telling since new leases typically account for both today’s space needs as well as room for expansion during the lease …
Industrial demand in New Jersey has picked up dramatically over the past year, in tandem with a clear shift in corporate America’s mindset to get serious about dealmaking while conditions remain favorable. During the market downturn, tenants with two or three years left on their leases frequently tested the market, making offers that expected property owners and developers to assume the trailing liability of existing lease terms. Most owners simply were not willing to do that, and deals regularly fell apart or remained stagnant. Beginning in mid-2010 and through the first three quarters of 2011, we have experienced a promising increase in real commitments. In fact, during the first six months of this year, some 11.1 million square feet of new industrial leasing took place in Northern and Central New Jersey — a 74 percent year-over-year increase. This included 12 transactions over 100,000 square feet during the second quarter alone. The largest involved Wakefern Food Corporation’s impressive 1 million-square-foot lease at 8001 Industrial Ave. in Carteret. Why the jump? While we are seeing the stock market decimated what seems like every other week, corporate America for the most part is flush with cash. At this point, companies have extracted about …
The Pittsburgh retail market remained tight throughout the third quarter of 2011, maintaining a vacancy rate at just over 5 percent. Absorption within the market edged close to 200,000 square feet, with new big box and specialty retailers entering the region. The influx of grocery and discount chains continued with the opening of Trader Joe’s in Pittsburgh’s South Route 19 submarket. The 12,000-square-foot specialty market is the company’s second location in the area. In addition, Fresh Market confirmed its entrance in the Pittsburgh region just down the street from Trader Joe’s. The high-end specialty grocer has purchased a former Roth Carpet site and plans to demolish the existing building in preparation for a new 18,000-square-foot store. Construction is scheduled to commence in the spring of 2012. Big box retailers ALDI, Bottom Dollar, Walmart and BJ’s Wholesale Club are scouting the area for additional locations as well. Bottom Dollar Foods has taken occupancy of more than 60,000 square feet year-to-date and has approximately 40,000 square feet in two new locations scheduled to open in early 2012. The discount food chain prefers to anchor strip centers or neighborhood shopping centers within the area’s suburban submarkets. Though development activity has been largely focused …
We saw plenty of activity in 2011 in both office leasing and the sale of office buildings in the Greater Seattle area, particularly in the Downtown core markets of Seattle and Bellevue. Amazon alone has leased 460,000 square feet at 1918 8th Ave.; 281,000 square feet at West 8th Avenue; and 106,000 square feet at the 1260 Mercer Building. KPMG has also leased 50,000 square feet at 1918 8th Ave. Other notable leases include Boeing’s 45,000 square feet at the Russell Investments Center; Allrecipes.com’s expansion to more than 55,000 square feet at the 5th & Pine Building; Facebook occupying 27,000 square feet at Met Park; Getty Images agreeing to nearly 60,000 square feet at 605 Union Station; and Brooks Sports inking a pre-lease agreement for 80,000 square feet for a yet-to-be-built office in the north Lake Union submarket. There have also been some major sales in the Greater Seattle market. These include the sale of 1918 8th Ave. and 818 Stewart by Schnitzer West to JPMorgan; Westlake Center Office Tower to TIAA by GGP; 505 1st Ave. and 83 King to Spear Street by Starbucks; Seattle Tower by LaeRoc Partners to the Teachers Retirement System of Illinois. As of December …
During the last 12 months, the Raleigh/Durham apartment market has continued to maintain a lofty appeal in the eyes of local, regional and institutional investors. The fundamentals of the region, including its growth projections, the diversity of employment and the driving force that is created by three major research universities, has continued to offer good reasons for investors to inject capital into the Raleigh/Durham apartment market. After a slow start in 2010, many developers have set their eyes on taking advantage of the reduced development pipeline that was a casualty of the recession. The institutions as well as local and regional developers with strong balance sheets were those that were in the best position to take advantage of being the first to break ground. After just a few developments started in 2010, the number of new construction starts and new developments in the planning stages during 2011 has exponentially increased. However, number of new apartment units added to the market in 2011 will be the lowest in recent memory. Part of the reason for this increase in development activity is that the investment sales market has been so strong in the Raleigh/Durham marketplace, arguably as strong or stronger than any …
The Boston apartment market is on fire. As a result there is a vast amount of equity, developer interest, and investor interest focused on the Greater Boston Market. What does this mean for the future of the Greater Boston Apartment market? First a matter of definition, the metro Boston market encompasses all towns within Interstate 495 (Boston’s second beltway) and inwards and, therefore, does not include Central and Western Massachusetts, New Hampshire nor Rhode Island. The overall vacancy was 4.2 percent in second quarter 2011 (REIS: Metro Boston submarket). Class A property has seen the greatest rent growth, 1.5 percent in Q2 2011, alone. However, Class B property has maintained a lower vacancy at 4.5 percent during Q2 2011, dropping from 5.9 percent. The city of Boston has exhibited the most rental growth of any submarket of all the Greater Boston submarkets. In the city, rent is up 6.5 percent over the first half of 2011 with rents exceeding $4 per square foot and an average rent of $4,400 per unit based on a recent ARA Class A Survey. These rents are attracting developers and capital. The most recent development start is the 187-unit Avalon Exeter Apartments at the Prudential …
Our recent market activity spotlights the differential between the Haves and Have-Nots. Third quarter 2011 was exceptional for large, Class A facilities in Kent Valley. Thanks mostly to international corporations, direct vacancy rates dropped about 1 percent point and now hovers at 7.89 percent. We have also experienced net absorption of 348,358 square feet. This marks the fourth consecutive quarter of positive net absorption, bringing the annual total to 968,784 square feet. After experiencing record corporate earnings and large cash reserves, companies like Brooks Sports, Amazon, Sealed Air, Graybar, Electrolux, Bunzl, Pacer, International Paper, Sealy and more have expanded or looked to expand their presence in our market. Seeking state of the art, 30’ clearance, ESFR distribution facilities, these corporations have caused a shortage of Class ‘A’ space and a rent hike of 5 percent to 10 percent. However, regional and local companies are still struggling, while the mid-size market that services those spaces has not significantly recovered. On average, spaces available in that size range (over 66 spaces at press time) have been on the market for about 18 months. Unlike the otherWest Coast ports, container traffic in this Pacific Northwest region hasn’tt increased dramatically. To date, the Port …
The office segment of Omaha’s commercial real estate market is currently in a transitional phase. Companies that have been in the market for office space during the past two to three years have realized that discounted rent and/or the ability to relocate into higher-quality properties are feasible options. In order to retain and attract tenants, landlords are now required to lower rents and renovate properties to the extent they can. This pressure on property owners has been the leading force behind this current state of transition, and the ripple effects are felt through all classes of buildings. Tenants in Class C properties are now able to climb the property ladder and obtain favorable lease rates in a Class B property. Owners of Class C properties are forced to renovate, or redevelop, to avoid obsolescence. The Lund Co. refers to this evolution as “Real Estate Darwinism.” FACELIFT PAYS OFF A perfect example of the evolution of a property is the 450 Regency building. Originally constructed as a single-tenant, build-to-suit for IBM in 1983, the property became stale and was a non-factor in the overall office inventory in Omaha. The building sat vacant for many years after its second tenant, Commercial Federal/Bank …
The Raleigh/Durham retail market consists of approximately 41 million square feet and serves a population of about 1.75 million people. Raleigh, Durham and Chapel Hill comprise the “Research Triangle” metropolitan region, which is continuously ranked among the best areas in the nation to live and work. The retail market has an overall low vacancy rate and remains relatively healthy despite the lingering recession. A period of remarkable growth has slowed and only a handful of new developments opened in 2011. These include Park West Village, a 373,748 square feet power center located in Morrisville at Highway 54 and Cary Parkway, and the 57,511-square-foot Market at Colonnade, a shopping center anchored by Whole Foods and located on Six Forks Road in north Raleigh. Another notable project is the renovation of the 200,000-square-foot Waverly Place in Cary. Few new development opportunities are expected in the near future and positive absorption of vacancy for anchor and shop space has been encouraging, as centers have continued to strengthen albeit at lower rental rates. Job growth drivers are simply not there to support the rapid retail growth the area experienced prior to the recession. Trends in the marketplace include expansion of discount chains such as …