The Orlando multifamily market has exhibited noticeable improvement this year, and is gaining momentum toward a very strong recovery. After 3 years of rent and occupancy losses due largely to the global recession, apartment fundamentals in Central Florida have registered gains again in 2010. With more than 207,000 new jobs expected locally through 2015 and a very favorable supply/demand balance during the next few years, investors see strong upside in the Orlando apartment market moving forward. Sales volume in Orlando has increased significantly through mid-year, and is up from the historic lows of 2009. Through June, the local market has seen approximately $188 million in multifamily sales — already approaching last year’s total of $219 million but still largely off the 2005 high of $3.2 billion. Cap rates have compressed considerably during the last several months, and most buyers are securing Freddie Mac debt on new acquisitions. Lenders have been the most active sellers in 2010 thus far, and institutional buyers have returned to the acquisition market. New private equity groups — both national and foreign — have also been drawn to Orlando during the last 12 months. Average rents are projected to increase about 1 percent in the second …
Market Reports
Despite a spike in supply last year and increasing competition from the affordable housing sector, San Antonio’s solid labor market and resilient economy will help to improve apartment fundamentals by the close of 2010. Following steep inventory additions in the first quarter, deliveries will slow significantly through the second half of the year. As renter demand begins to outpace supply growth, owners will trim incentives, reversing 10 quarters of revenue declines. The lower tiers will register the greatest revenue increases, supported by vacancy improvements toward the end of the year. Foreclosure activity has increased 19 percent over last year, and some top-tier renters will likely to make the transition into homeownership this year as these properties come to market. Class B and Class C operators will get a boost from the strengthened labor market as traditionally blue-collar employment sectors start to recover rapidly. In the construction sector, for instance, roughly 1,200 construction workers will be hired in the next few months to complete the Brooke Army Medical Center. During the last 12 months, developers have ramped up the pace of completions to 3,620 units, or a 2.5 percent inventory expansion, following the delivery of 2,490 units in the previous year. …
With a strong economic foundation based upon the education, healthcare and pharmaceutical industries, the greater Philadelphia market has long been revered as one of the most stable markets in the United Statesthat isunaffected by the manic swings often experienced by other major markets. Even at the height of the recession, savvy retailers remained relatively active in top-tier, well-positioned segments of the market. In fact, several used the recession to position themselves more strategically and affordably in tough-to-penetrate areas, minus the frenzied competition they faced before the downturn. The black eye created by the closures of Circuit City and Linens ‘N Things, two of the most high-profile retail bankruptcies of the recession, has seemingly healed faster here than elsewhere,as many of the junior anchor spaces they vacated are getting absorbed by several electronics retailers. hhgregg, which had 12 simultaneous openings in the region on May 20, 6th Avenue Electronics and P.C. Richard & Sons are the most conspicuous of said retailers. hhgregg is making its first retail foray into the Northeast while the more regionally oriented 6th Avenue Electronics and P.C. Richard & Sons found themselves conveniently based in the New York metropolitan area and able to take advantage of these …
Greater Cleveland’s office market is showing some signs of recovery, and this is being fueled by the many development projects in the works. Planned developments include a casino to be located in the Tower City area opening sometime in 2013 and a proposed Medical Mart facility, which will be located next to Cleveland’s convention center in the heart of downtown. Another projected office development is the East Bank project by Scott Wolstein, which will house the national headquarters for Ernst & Young and law firm Tucker-Ellis. The project will be the first phase of a planned office, retail and residential development at the edge of Cleveland’s historic warehouse district. Eaton Corporation also is planning a new 400,000-square-foot campus in the Chagrin Highland’s 630-acre corporate community on Cleveland’s east side, which will leave Eaton’s current building at 12th Street and Superior, in the central business district, with more than 300,000 square feet available. Other major deals in the works are the relocation of Huntington Bank (approximately 100,000 square feet) from its namesake historic property at East 9th Street and Euclid to the former BP building, which is now 200 Public Square. The iconic bank building is home to several large firms …
Office development in the Minneapolis market is virtually at a standstill. Since the economy’s downturn, many projects have been shelved, and developers today are striving to locate aggressively priced, dispossessed buildings that can be repositioned and brought back to life for the next real estate cycle. The exceptions are highly visible build-to-suit projects. In September, Acosta, a sales and marketing company, plans to move into a new 65,000-square-foot building in the southwest suburb of Eden Prairie. Additionally, the law firm Hellmuth & Johnson is building 44,000 square feet of office space, topping three levels of covered parking at the intersection of Interstate 494 and Highway 169, also in Eden Prairie. Shadow space is an underlying issue affecting development in the Twin Cities. Until companies can absorb space they already lease but currently maintain as vacant, the development cycle will remain flat. Leasing activity is also quiet. Those businesses that are relocating are typically consolidating or otherwise downsizing. However, the U.S. General Services Administration is in the market for nearly 500,000 square feet of office space. Half of that is being spurred by a short-term need to relocate workers displaced by a $115 million federal stimulus funded renovation of the Bishop …
What a difference a year can make. At this time last year, the Detroit and Southeastern Michigan multifamily housing markets were experiencing some of their worst economic times since the early 1970s. But with recent announcements from Ford and General Motors concerning first quarter profits, there appears to be hope for the troubled region. Because the region has been so challenged during the past 18 months, there has been very little new development planned for 2010. But in 2011, nearly 2,800 apartment units are planned in the metro region, representing a potential 1.3 percent increase in the current inventory. One recent success story within the city is Garden View Estates, a mixed-use development with affordable housing, including rental units, senior co-ops and single-family homes. Bloomfield Hills, Michigan-based Windham Development is the principal in the residential portion of the project, which celebrated its grand opening in September 2009. These types of developments are going to play a key role in re-growth within the city because of joint efforts between private developers, the U.S. Department of Housing and Urban Development, the Detroit Housing Commission and the City of Detroit. We can anticipate new development in Ann Arbor and downtown Detroit. Ann Arbor …
The Las Vegas retail market has taken a significant hit during the economic downturn, but amid the doom-and-gloom the city continues to attract retailers and visitors that eventually will help restore stability to the region. Much of the declines are being driven by the general economy and, subsequently, joblessness throughout greater Las Vegas. According to the U.S. Bureau of Labor Statistics, the metropolitan area reported an unemployment rate of 13.8 percent in January 2010, compared with 10.3 percent in January 2009. With nearly 136,000 people out of work in metro Las Vegas, it has been difficult for the market to achieve consumer spending levels that could help turn the market around. Recent retail statistics show worsening conditions for metro Las Vegas. According to a December 2009 survey conducted by Applied Analysis, the Las Vegas retail market had a vacancy rate of 10 percent, which is up from 7.5 percent in December 2008 and more than double the market's historical 10-year vacancy rate of 4.5 percent for anchored retail centers. Meanwhile, average retail property rents reportedly declined to $1.84 per square foot, down from $2.13 just 1 year prior. New development virtually stalled for retail properties in the market during 2009. …
The writing was on the wall. Some read it; others ignored it. Regardless of the strategy, retail development came to a halt in 2008. A few single-tenant buildings were developed, but most ground-up projects went into a holding pattern. Two years later, most of those projects are still on hold or moving very slowly at best. From power centers and mixed-use developments to strip centers and grocery-anchored centers, development activity remains stagnant throughout the Peach State. Hardest hit are the secondary and tertiary markets where developers built shopping centers based primarily on residential growth projections. Unfortunately, those projected communities were never built. Many retailers in those markets have struggled, and some have closed their doors. As national retailers look for space again, shopping centers in those markets will be low on their list, furthering the decline of these centers. How Will Developers Survive? The old cliché — location, location, location — holds true. Developers with good projects in prime locations will make it through the cycle by adapting to the changing market conditions with the short-term focus on cash flow and long-term focus on value. However, several fundamental tactics are needed to survive this economic cycle: • Asset Stabilization: One …
Orlando retail vacancy will rise again in 2010, partly as a result of significant blocks of vacant space in properties built during the past few years. While slumping demand has affected all vintages of assets, the vacancy rate in shopping centers constructed since 2007 topped 20 percent last year, much more than the marketwide rate for all properties. Continuing softness in the job market will reduce store visits and suppress spending, further influencing spacial demand and limiting the number of tenants available to fill new shopping centers. Additions to supply will not be a major factor this year, however, as completions will fall to the lowest annual level in at least 30 years. Housing starts, typically a precursor of retail property development, declined for four consecutive years through the end of 2009. Home building will likely remain depressed in 2010 while the economy continues to stabilize, thereby deterring retail developers. Following a year in which 39,400 jobs were eliminated, employers in Orlando will trim 1,000 positions this year, a 0.1 percent decrease. Completions will drop from 900,000 square feet in 2009 to 300,000 square feet this year. Falling rents and rising vacancy will force the delays of some developments currently …
Increasing vacancies mean increased worries for Atlanta’s commercial property owners, but also more options for the city’s tenants. How soon will the market regain some stability? Office The big uncertainty facing the 125 million-square-foot and 22 percent-vacant Atlanta office market in 2010 is whether or not increased leasing activity will outpace recession-induced tenant downsizing/rightsizing and result in occupancy growth. On the demand side, the approximately 1.5 million square feet of leases signed during fourth quarter 2009 represented a nearly 30 percent drop from the previous quarter. Notable transactions inked include those by KPMG, with a multi-floor renewal at SunTrust Plaza in downtown Atlanta. In Buckhead, SunTrust Robinson Humphrey decreased its footprint, renewing 92,000 square feet at Atlanta Financial Center. In the suburbs, Cox Enterprises committed to approximately 95,000 square feet at 9000 Central Park, with its subsidiary, AutoTrader, in negotiations at 3003 Summit Blvd. for up to 400,000 square feet. Meanwhile, increasing vacancy and downward pressure on rental rates are luring tenants into the market to search for deals. Major tenants checking out Atlanta space at the start of 2010 included Alston & Bird, with a 400,000-square-foot requirement; Kilpatrick Stockton (240,000 square feet); and an unnamed corporate relocation, dubbed “Project …