New York’s Capital District is ranked 11 out of the top 25 metro markets in the Northeast (according to REIS), but the area is most certainly making noise in the world of multifamily construction projects. A huge demand in the apartment sector, stemming from technology-based job growth, has forced the hands of local and regional developers to get off the sidelines and start tackling sources for much-needed construction financing to meet the demand. To name of few active developers, Tri City Management, Prime Companies, Capital City Properties, and Albany Partners LLC have a total of more than 1,000 units recently built, under construction, or funded and ready to build in the next 16 months. Permit filings were up more than 30 percent from 2009 to 2010, indicating a solid trend for new development slated through 2012. Major projects have been popping up all over the region. The Woods, a 60-unit luxury community in suburban Troy, leased up its first few units in May and had 48 of the 60 units rented long before the grand opening in November. One- and two-bedroom unit rents range from $1,100 to $1,490 for 882 to 1194 square feet, averaging roughly $1.50 per square foot …
Market Reports
These are exciting times for Pittsburgh’s Central Business District’s (CBD) office market. Pittsburgh’s CBD Class A office market is experiencing a very favorable vacancy rate of 7 percent. The high levels of occupancy have been driven by strong growth within the banking, medical, energy and technology sectors, along with nearby abundant natural resources such as Marcellus Shale. PNC Corporation is breaking ground for its second $400 million office building in recent years, which is touted to become the “greenest building in the world.” PNC’s new building will be a true complement to the historic and evolving Market Square District, which has undergone a major landscape renovation, creating a beautiful area for outdoor dining, music and green space for people to enjoy. Accompanying PNC’s new office buildings, Millcraft Industry has begun the transformation of the former State Office building into a 218-unit luxury apartment building. This is their second major CBD project in recent years, having completed and leased a 180,000-square-foot office building known as Piatt Place. Plans are currently evolving within Pittsburgh’s development community to retrofit the historic Henry W. Oliver Building. Additional CBD developments include a mixed-use project comprising a 175-room Hilton Garden Inn, 100,000 square feet of new …
Tenants and landlords forge into 2012 confronting many of the same challenges they had going into 2011. Atlanta’s office market still has a great deal of excess supply and demand remains below its pre-recession levels. The entire market has not pushed fully past concerns about properties with significant vacancy and looming debt obligations. Doubts about the broader economy also inhibit long-term strategic planning. The office market closed out 2011 largely unchanged from a year ago. The overall availability rate only fell by 1.1 pp from 26.5% to 25.4% over the course of the last four quarters. ““Vacancy rates remain high throughout the market and the vast majority of tenants have many options to choose from when negotiating leases,” says Andrew Lechter, executive vice president and branch manager of Studley Inc. The U.S. economy has shown signs of minimal gains in momentum and remains vulnerable to a sharp shock such as what has been called Europe’s “Lehman moment” or a spike in oil prices precipitated by a Mideast crisis. Some of the chronic problems that hampered U.S. growth – weak labor and housing markets – remain particularly acute in Atlanta and registered minimal improvement in 2011. Until employment and labor markets …
In this sluggish real estate market, how is it possible that two major mixed-use projects are under construction? With redevelopment all but halted elsewhere, New Brunswick keeps pushing forward with new opportunities for change for the better. With the assistance of state and federal tax programs through the Urban Transit Tax Credit Program and New Market Tax Credit, projects are becoming a reality. These projects include the Gateway Transit Village and New Brunswick Wellness Plaza which are located within one city block of the New Brunswick Train station. Gateway Transit Village In early 2009, Gateway was the first project to be designated as eligible for the new Urban Transit Hub Tax Credit Program. Under the program, credits are issued against income taxes that would be owed by businesses locating within newly built offices within a mile of a transit center; the credits can then be used to attract tenants, or else be sold as commodities. Fast forward to April 8, 2011 —when Gateway held its topping off ceremony. The Gateway Transit Village, as its name spells out, will serve as a gateway between downtown New Brunswick and Rutgers University. College Avenue, the central spine of the campus will be directly …
Strong job growth characterized the Puget Sound economy throughout 2011, with the region closing the year with a 1.7 percent gain that equated to the addition of more than 28,000 positions. Home to Fortune 100 companies Costco, Microsoft, and Amazon.com, as well as large-scale operations of The Boeing Company, Seattle’s economic prospects are assured. The region will remain a leading employment generator over the next several years, with job growth trending up to 2.6 percent in 2012 and to more than 3 percent in 2013 as the metro area realizes the addition of 50,000 new jobs on average each year. For its part, Boeing now employs more than 81,000 Washington residents, having added nearly 8,000 local jobs in 2011 alone. The Seattle multifamily market deal activity has been good this year, and the market should expect to close more than $800 million in transitions. Current cap rates in the market are in the low 4 percent range and up to $500 per unit in core locations with secondary markets averaging 5.5 percent to 6 percent capitalization rates. One great thing about Seattle is that it has always skewed toward rental housing. In the three-county area alone, the population is 3.4 …
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 …
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 …