The retail market in the Raleigh-Durham-Chapel Hill MSA (“The Triangle”) is steadily improving. Retail vacancy dropped to 8.39 percent within the Triangle as of the third quarter — the result approximately 525,000 square feet in absorption over the past 12 months. Investors and retailers alike continue to be attracted to the region because of its sustainable economy fueled by the state government, Research Triangle Park and the University system. Several new anchor retailers entered the Triangle market during 2010, absorbing the majority of available boxes abandoned by Circuit City and Linens ‘N Things. Nordstrom Rack filled the former Linens ‘N Things space at CBL’s Renaissance Center at Southpoint in Durham; Ollie’s Bargain Outlet opened at York Properties’ Cary Village Square in Cary; The Container Storemade its Triangle debut in the former Circuit City location on Glenwood Avenue across from Crabtree Valley Mall in Raleigh; and buybuy BABY opened its first Triangle location at Kimco’s New Hope Commons in Durham. Only a small amount of new retail development was completed in 2010. Kane Realty delivered the only anchored retail project at North Hills East, which is situated at Six Forks Road and Interstate 440 — Raleigh’s “Beltline”. Anchored by Harris Teeter …
Market Reports
Austin remains a popular destination for institutional and private multifamily investors. In the first half of 2010, there was a scarcity premium as buyer demand far exceeded the number of properties offered for sale. It was common to give 50-plus property tours and receive roughly 40 offers for a fully marketed Class A apartment community. The enormous amount of investment capital raised in 2008 and 2009 struggled to find a home in early 2010. As apartment fundamentals improved, interest rates decreased and cap rates compressed, more product came to market in the third quarter of 2010. Subsequently, the number of investor tours and offers has been cut in half. Offers today are coming from well-capitalized low leverage private investors, pension fund advisors, private funds and public REITs. Urban Class A cap rates have dropped from 6.5 percent in late 2009 to an average of 4.75 percent today. Suburban Class A cap rates are trading around 5.25 percent. The 1980s to 1990s vintage, B class product, is trading in a range from 5.75 to 6.75 percent based on quality and location. The highest conventional apartment sales prices have occurred in and around the Central Business District (CBD) where mid-rise Class A …
The Los Angeles creative office market sector was certainly not immune to the timid economy, which continued during the third quarter. The limited number of creative companies experiencing growth through this period was limited and representative of the economy as a whole. However, the creative product type — the preferred space sought by the production, post-production, advertising/marketing and even technology sectors — was also surprisingly supply constrained. Due in large part to the lack of new construction or large-scale conversion of old industrial buildings into creative office, tenants entering the marketplace with hopes of finding numerous attractive options and generous business terms in a more tenant-favored climate instead found limited product to meet their needs from a functional and/or aesthetic standpoint. Although buoyed by a market that was experiencing meek demand, many businesses that view their office space as much in terms of the environment it creates for the attraction and retention of creative talent were prevented from realizing the true benefits of a tenant-favored market due to a lack of supply. Those that made moves during the end of 2009 and earlier this year absorbed much of the attractive, ready-for-occupancy space at more aggressive pricing from landlords looking to …
Like virtually every major metropolitan area, the Kansas City market has suffered in the economic malaise of the past few years. However, it hasn’t experienced the irrational highs and devastating lows that have beset markets in Arizona, Nevada and Florida. In fact, the submarkets that are struggling the most are the few that got ahead of themselves in anticipation of housing construction and leasing that never materialized. In many ways, this scenario has enhanced the position of well-located, established centers in fully developed submarkets. Many developers are renovating and, in some cases, re-tenanting their shopping centers situated in more established Kansas City neighborhoods. While demand is certainly not as robust as it was in the heyday of 2006-2007, we are still seeing more-than-respectable leasing of small tenant spaces of 1,200 to 1,500 square feet and of “mid-box” spaces ranging from 5,000 to 10,000 square feet throughout the market. Service firms such as cleaners and hair stylists, plus small eateries including breakfast/lunch-only restaurants such as Big Biscuit, as well as Starbucks, are taking smaller spaces. Dollar Tree, Dollar General and other value merchandisers are mostly taking the mid-box vacancies. Traditional lifestyle centers, however, seem to be the exception. They continue to …
Southeastern Wisconsin, which consists of a seven-county region, is experiencing slight growth in the industrial markets. We have seen positive absorption throughout the area with rumblings of future deals on the very near horizon. The region is experiencing flat to declining leasing rates due to hungry landlords and excess available space. Day-to-day activity is busy, but many of the current tenants that are touring are typically attempting to procure a better deal in their current location. Tenants in the market are still in a wait-and-see mode. The southeastern region of Wisconsin has seen very little new development. Wispark LLC purchased a 185,000-square-foot building in Racine County for CalStar Products, a green brick manufacturer that will manufacture bricks and pavers from fly ash obtained from the nearby We Energies Oak Creek power plant. Wispark is also planning a new 170-acre business park in the southern Milwaukee county community of Oak Creek. The business park is shovel-ready and part of a TIF district. “There is not a lot of new development going on in Southeastern Wisconsin, but I would say there is uptick in the market,” says Todd Rizzo, vice president of Milwaukee-based Wispark LLC. CenterPoint Properties has landed a build-to-suit project …
Demand for industrial space remains moderate in Northern and Central New Jersey. People are, undoubtedly, out in the marketplace, but much of our regional activity ties to lease renewals. Tenants facing term expirations are opting to remain in place, reflecting the “wait and see” approach that so many companies have chosen in this tough economic climate. Relocations almost always involve a flight to quality, with tenants taking advantage of opportunities to land attractive deals for Class A space. Deals today are being made at aggressive rental rates. As a result, available Class A space, especially in the Exit 8A submarket, has seen some absorption over the past 12 months. Across all submarkets in Northern and Central New Jersey, renewal activity comprises the bulk of leasing activity. Although year-to-date leasing totals are up from a year ago by approximately 1.2 million square feet, vacancies have held steady during the past 12 months. At the end of 2010’s third quarter, the overall Northern and Central New Jersey vacancy rate rested at 11.3 percent. That figure is identical to the rate recorded at this time last year. The average direct triple-net rental rate for Northern and Central New Jersey was $5.84 per square …
The St. Louis office market continues to see a relatively slow pace of activity. As the economic downturn hit the market slightly later than the rest of the country, the recovery is also delayed, and companies continue to be cautious, with renewals dominating the leasing market. As of the end of the third quarter, the market-wide vacancy rate was 16.3 percent, slightly lower than second-quarter figures. The vacancy rate has stayed steady between 15.5 and 16.5 percent for the past 5 quarters. Firms continue to employ the blend-and-extend strategy of extending leases before the expiration date and locking in a lower lease rate at the same time. While asking rates have remained relatively steady, effective rates are lower than 2 or 3 years ago, and concessions, including free rent, are still being used by landlords to entice potential tenants in most submarkets. Much of the activity within the marketplace is being seen at smaller sizes, between 3,000 and 5,000 square feet, with a dearth of large tenants in the market. Exceptions to this include Panera Bread, which recently leased 71,130 square feet at 3630 South Geyer Road. Recently, the St. Louis office market was dominated by the moves of several …
The Portland multifamily market continues to slowly improve in spite of the unemployment rate stalemated at 10.6 percent — now entering its 10th month. When Portland headed into the recession, many believed its multifamily market would experience a similar plight to that seen in the Southern California and Arizona multifamily markets. It certainly dipped, but fortunately didn’t hit their low values estimated to be 50 to 60 percent below the original prices for some properties there. Rents have returned to pre-recession levels, concessions temporarily came into the market and net operation income went down, causing apartment values to decrease between 15 to 20 percent. But through the worse of the recession, and even today, vacancy has held around 5 percent. However, it should be noted that in some pockets of the Portland market, like Gresham, certain areas of Beaverton and outer Hillsboro submarkets, vacancies are somewhat higher. At first glance, when comparing Co-Star year-to-date multifamily sales numbers (August measure for transactions ≥ $1 million) of $196 million with $116 million in 2009, it appears that transaction sales numbers are up by 59 percent. Yet, on closer inspection, a different story emerges. Since the beginning of the year, there have been …
The Twin Cities area, a region of more than 3 million people, is still trying to extricate itself from the base of this pesky commercial real estate cycle. While the retail real estate deal volume is starting to pick up here, it remains more of a trickle than a flow, with value-priced merchants spurring much of the activity. In the first half of 2010, the Twin Cities retail vacancy rate stood at 10.4 percent, meaning nearly 7 million square feet of retail space remains vacant, according to Minneapolis-based NorthMarq, a commercial real estate services firm. On the national tenant side, several retailers are repositioning themselves, either by upgrading existing stores or relocating to more advantageous spaces as leases expire. There are also rumblings of several national tenants eyeing vacancies in the 10,000- to 25,000-square-foot range. Not surprisingly, value merchandisers such as Dollar General, Big Lots and Dollar Tree have increased their footprints in this environment as well. We are also seeing a slight resurgence in demand from mom-and-pop tenants. As in past downturns, there’s a growing roster of talented people who were displaced by corporate America that are opening their own retail businesses. At the commodities level, the grocery trade …
The fast-growing Salt Lake City metropolitan area, also known as the Wasatch Front, stretches about 40 miles north of downtown Salt Lake City to Ogden and about 40 miles south to Provo, now boasting a population of about 2.1 million — or about 75 percent of the state’s population. Highly favorable demographics continue to lure top-quality retailers, restaurants and shopping centers to the region, which enjoys one of the largest average family sizes in the country (3.6), the youngest median age (28.9) and an unusually high median household income of about $63,000. The market also has a highly educated, value-based population with a strongly established work ethic that encourages retail patronage and expansion. Growth in Salt Lake County, which has a population of about 1.1 million, is particularly strong in the southwest portion, which is the region’s strongest submarket. Area planners are projecting a population growth of 1 million people in the Wasatch Front over the next 30 years. Unlike other Western markets such as Phoenix, Las Vegas and Denver, retail real estate in the Salt Lake City metro area is not as volatile. Area unemployment stands at a relatively low 7.3 percent in contrast to the national mark of …