The resumption of job growth and significant reductions in new construction will support improvement in Dallas/Fort Worth apartment fundamentals through the end of the year. During the first half of 2010, employment in the metroplex increased by 32,600 jobs, a welcome turnaround after the loss of 124,000 positions during the recession. While the financial, information and trade, transportation and utilities sectors shed a combined 6,000 jobs in the first half, the government, manufacturing, and education and health services sectors led job creation, adding 34,000 positions. As a result, the unemployment rate in Dallas/Fort Worth dropped roughly 10 basis points to 8.2 percent in the first half and remains well below the national average. Developers will deliver approximately 7,600 apartment units in 2010, down nearly 56 percent from 2009 and more closely aligned with new-supply trends in 2006 and 2007. Construction remains focused on the Dallas side of the Metroplex, with developers in Tarrant County completing 2,675 units during the past year. New supply in Fort Worth was isolated to the North Arlington, Northern Tarrant County and Northwest Fort Worth submarkets. After rising 360 basis points through the recession, apartment vacancy in Dallas/Fort Worth declined 80 basis points to 8.9 percent …
Market Reports
The Las Vegas office market features a number of unique characteristics. For example, the Class A office market is not concentrated into a central business district. Office users in the downtown area consist almost exclusively of tenants that require proximity to the courts or government offices. Consequently, the tenant mix is limited to uses associated with litigation and government services. Other Class A tenants are spread around the valley at projects such as Hughes Center, a location favored by financial services, gaming interests and transactional law firms. The pool of Class A tenants is relatively shallow, measuring 6.2 million square feet or 13 percent of the overall office market. Reasons include a narrow economic focus — primarily gaming and tourism — and a lack of regional or national corporate headquarters. Consequently, speculative development and operation of Class A office space favors local players (i.e., developers, lenders and brokers). The speculative office pipeline for Las Vegas is dry except for one notable project. Tivoli Village, a 750,000-square-foot retail/office project, is anticipated to deliver its first phase in October. Despite office vacancy in excess of 20 percent, the developers, a partnership between IDB Group of Israel and local developer EHB Companies, have …
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. The area now boasts 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. Area planners are projecting a population growth of 1 million people in the Wasatch Front during the next 30 years. Unlike other Western markets, retail in the metro area is not highly volatile. Most retailers did take an expansion hiatus here during the recession, but store fallout was minimal, except for a handful of closings by bankrupt national retailers. Some major national retailers, including Target, …
San Francisco is not immune to the forces of gravity, but sometimes it appears that might be true for the city's apartment market. Across the country, the multifamily sector has weathered the Great Recession better than other asset classes. Availability of capital — both equity and debt — has resulted in relatively modest value declines compared to office, industrial and retail investments. Transaction volume has been relatively robust, largely attributable to the disassembly and re-sale of the former Lembi portfolio. Research indicates that in excess of 50 apartment sales were completed in the first half of 2010, for a total value representing about $120 million. Among the most active buyers were Flynn Investments, Klingbeil Capital Management and Tribeca Cos. Expect market activity to remain level or even increase, as buyer appetite has yet to be satisfied. The rental market also seems to have stabilized. According to Novato, California-based RealFacts, a national leader in apartment industry research, rents in San Francisco are only down modestly since second quarter of 2009, but they are up slightly in the first half of 2010. While occupancy is reported to be at a relatively low 94 percent, we believe this state may be a temporary …
Dallas/Fort Worth’s retail market continues to show the impact of the economic downturn, most notably in a lower occupancy rate. But the market at mid-year 2010 is showing signs of getting a little better. The market is helped by the improving economy. For example, April represented the third month in a row of positive job growth in D/FW, although overall unemployment remains more than 8 percent. As of mid-year, D/FW shows an occupancy rate of approximately 86.2 percent, compared to 86.4 percent at year-end 2009. The rate, which is very low, results in part from the many vacant boxes that were created in the past few years by the closures of Circuit City, Linens ‘n Things, Shoe Pavilion, Steve & Barry’s and Mervyn’s, plus underpforming grocer and department store locations. The rate remains fairly consistent thanks to a market where no major chains have gone out of business. Other than a handful of 2010 closings of underperforming Blockbuster stores (following a number of 2009 closings), we haven’t seen major chain pullbacks similar to when Linens ‘n Things failed in late 2008 and Circuit City and closed its last stores in early 2009, putting hundreds of thousands of feet back onto …
The Hampton Roads metropolitan area of southeastern Virginia, named for both the Norfolk-Virginia Beach metro area it encompasses and the body of water that surrounds it, is unlike most other U.S. markets. Its huge military presence, which includes the Air Force, Army, Coast Guard, Marines and the largest Naval base in the world, helps keep this market on an even keel, as do the estimated 6 million people who visit its tourism haven, Virginia Beach, each year. Consequently, this growing market has not been hit nearly as hard by the retail downturn as others. The seven cities that chiefly comprise the Hampton Roads trade area—Virginia Beach, Norfolk, Hampton, Chesapeake, Newport News, Portsmouth and Suffolk—are expected to show a combined population well in excess of 2 million when the 2010 census is tallied, up from 1.6 million at last count. There has been some softening in retail demand. Like elsewhere, landlords have had to re-adjust expectations. Those willing to be aggressive and creative are getting deals done, though certainly not at the same numbers as just 3 years ago. While small businesses seem more willing to look at new opportunities, one overriding issue continues to be tenants’ inability to obtain financing. …
It’s no secret that the greater Detroit area suffered a double hit in the last 4 years, first from the well-publicized decline in auto sales and then from the 2008 crash and lengthy downturn.Despite the economic gyrations, however, there is a considerable upside and leasing momentum to talk about. Several new-to-the-market retailers, restaurants and fitness chains are landing in the region, including ULTA, which has done 10 deals in the last 7 months in mostly high-income areas. Discount grocer ALDI has opened 20 stores in the past 18 months, most often purchasing land to build 12,000-square-foot stores in high-density, middle-income areas. Other new retailers to the market are Five Below, Christmas Three Shops, buybuyBABY, Yankee Candle, clothier Citi Trends and a new concept by local furniture giant Art Van called Pure Sleep. Five Guys Burgers and Fries, Fat Burger and Chipotle have also moved into the market, as have Fitness 19, Planet Fitness and their much larger competitor LA Fitness. LA Fitness is opting for 50,000-square-foot locations, both stand-alone and retrofit, primarily in professionally oriented, mid-to-upper income areas. The chain has opened eight locations in the market, and in the past 2 years, it has built clubs in such high-traffic …
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 …
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 …