Market Reports

Las Vegas Retail Remains a Strong Investment

by Jeff Shaw June 23, 2023

— By Todd Manning, Managing Broker, NAI Vegas, and Maria Herman, Senior Vice President, Retail Division, NAI Vegas — The Las Vegas retail market continues to perform well into 2023 despite a few headwinds (and headlines) dogging the industry. The success is due in part to Las Vegas continuing to experience strong growth coming out of the pandemic years. For example, visitor volume to Las Vegas reached more than 3 million people in February 2023, which was up 17.8 percent year over year, but was still down 3.4 percent from February 2019. Speaking of performing well, Las Vegas’ retail vacancy rate has been holding steady at around 5.2 percent, just slightly lower than it was a year ago. It is also the market’s lowest retail vacancy rate in over 15 years. Rent growth is slowing, however, and is down from the 10.4 percent gains of one year ago. Rent growth has been another bright spot for Las Vegas retail landlords as rates continue to increase at 7.7 percent year over year. Rent growth is slowing, however, and is down from the 10.4 percent gains from a year ago. Not surprisingly, the investment market for commercial property, retail included, has experienced …

June 23, 2023

Industrial Iowa Market Reports Midwest Midwest Market Reports

Tenant Demand Remains Strong for Des Moines Industrial Space

by Kristin Harlow June 22, 2023

By Jeremy Spillman and Corey Sedrel, Capstone Commercial In a setting where I-80 and I-35 intersect to make up one of the busiest truck traffic intersections in the Midwest, Des Moines is well positioned to harness the power of manufacturing in Iowa to support several larger Midwest cities such as Chicago, Minneapolis, Kansas City, St. Louis and Omaha. As we see change in our global supply chains, manufacturers and distributors look to states like Iowa to support these changing environments where we see these organizations moving away from the just-in-time model to just-in-case. The transition to a just-in-case supply chain model began to form due to several supply chain-related issues we encountered during the pandemic. This led to higher demand for additional warehousing to be constructed. Availability of large cube warehousing had been historically tight in Iowa since 2012 where most years carried vacancy rates of 2.5 to 4.5 percent annually. During 2022, there was 2.97 million square feet of warehouse/distribution space delivered to meet the increase in demand of rising inventories. “From the construction standpoint, supply chain issues are subsiding, but there are still longer than normal lead times for certain trades and equipment. These lead times are still …

June 22, 2023

California Industrial Market Reports Retail Western Western Market Reports

The Future of Downtown LA’s Food-and-Beverage Industry

by Jeff Shaw June 20, 2023

— By Evan Jurgensen, Senior Vice President, Lee & Associates Los Angeles – Downtown — As the pandemic recedes, the hospitality and food and beverage industries in downtown Los Angeles are rebounding, driven in part by the return of venue entertainment and conferences. The number of visitors to the area has climbed back to within 10 percent of pre-pandemic levels and now sits at 10 million people per month. Consequently, there has been an influx of new restaurants, venues and breweries in the region. However, as overall occupancy levels in the market remain in flux, businesses are becoming mindful of how they utilize their spaces to achieve a triple bottom line impact that benefits not only the asset owner, but also the consumer and community at large for the long run. Increased Investment in Outdoor Space Outdoor dining saved many restaurants during the pandemic and continues to have great appeal in the present day. In addition to being a healthier option for diners, outdoor seating allows restaurants to handle more customers at once and increase profitability. Los Angeles city officials created a streamlined process known as the L.A. Al Fresco program in May 2020, which allowed more than 2,500 restaurants and …

June 20, 2023

Florida Market Reports Restaurant Retail Southeast Southeast Market Reports

Reviewing Miami’s Retail Scene: An Overview of the Present Atmosphere

by John Nelson June 19, 2023

Miami is a vivacious city renowned for its scenic beaches, sunny climate and dynamic nightlife. The South Florida city is also a hub for a flourishing retail industry, which serves an eclectic blend of both locals and visitors. Miami’s retail market is characterized by its diversity, with a broad spectrum of retailers ranging from luxurious, high-end boutiques to small, locally owned businesses. This range of retailers is a reflection of the city’s diverse population, which includes a sizable Hispanic community, as well as individuals from all corners of the globe. Consequently, Miami’s retailers must be adept at catering to a wide range of tastes. One of the most notable trends in the Miami retail market in recent years has been the growth of e-commerce. Like many other cities around the world, Miami has seen a significant increase in online shopping. This has presented both challenges and opportunities for retailers in the city. On the one hand, the rise of e-commerce has led to increased competition for brick-and-mortar retailers in Miami. Online retailers such as Amazon and Walmart have made it easier than ever for consumers to shop from the comfort of their own homes, and this has put pressure on …

June 19, 2023

Market Reports Nevada Office Western Western Market Reports

Las Vegas Office Market Dynamics are Driven by Convenience, Quality

by Jeff Shaw June 16, 2023

— By Dan Palmeri, Senior Vice President, CBRE — As Las Vegas reinvents itself as the sports and entertainment capital of the world — while still maintaining the fun factor it has always been known for — the corporate world continues to look at Southern Nevada as a legitimate place to do business. The city saw a record number of Class A deliveries in 2022 and has shown no signs of slowing down through 2023. This is a reflection of the demand for new, functional and relevant office space. Like most markets, location and quality of buildings are the main drivers for employers as they focus on employee happiness and retention. As Las Vegas has grown from a small desert town in the ‘70s and ‘80s with 505,000 residents in 1983, to a market of more than 2.3 million residents today, the natural geographical growth outward has hit a point where the city has reached the Valley’s boundaries in all directions. What was once a five- to 10-minute commute to the center of town has now become a 20- to 30-minute commute for the mass of suburban dwellers. This has organically led to a focus on a 25-mile stretch from …

June 16, 2023

Illinois Market Reports Midwest Midwest Market Reports Retail

Chicago Neighborhoods Experience Flurry of Positive Signs for Retail

by Kristin Harlow June 15, 2023

By Jaime Bertsche and Lara Keene, Mid-America Real Estate Positive signs for retail real estate abound across many Chicago neighborhoods and high streets, with physical stores demonstrating their necessity coming out of the pandemic. Both of us live and work in the city of Chicago, so it’s particularly heartening to see favorable trends and leasing activity throughout our city of neighborhoods. It may surprise some to know that Chicago has been No. 1 in corporate expansions for the last nine years, with 441 major business expansions and relocations in 2021. Chicago employment has grown by 75,000 since the start of 2022 and ranks third in the U.S., according to World Business Chicago. Google is investing in the city and purchased the 17-story, 1.2 million-square-foot Thompson Center in the Loop with plans to use the building as a second Chicago headquarters. Kellogg announced it will move a spinoff company to Chicago for a new headquarters in the city. Some of the economic changes we saw in the market in the second half of last year affected retailers’ expansion plans. Inflation and interest rates challenged retailers to maintain their customer base, keep their own costs in line, and adapt to higher …

June 15, 2023

Arizona Market Reports Retail Western Western Market Reports

Phoenix Retail Is Flying High

by Jeff Shaw June 13, 2023

Ryan Desmond, partner, Western Retail Advisors in Phoenix Metro Phoenix’s population grew faster than any other major U.S. city between 2010 and 2020. By 2021, the Valley’s 1.48 percent population growth continued to far exceed the country’s .01 percent growth — the slowest annual growth rate in our nation’s history. For a community that has historically been criticized as being over-retailed on a per-capita basis, this has injected tremendous strength into the local retail market. Today, Phoenix ranks as a hotspot among U.S. cities for retail absorption. According to CoStar, Phoenix had absorbed 4.1 million square feet of retail space year over year — the strongest absorption since the start of the Great Recession — by the start of the second quarter in 2023. This reduced the market’s overall vacancy rate to 5 percent. This is impressive, but it doesn’t reflect the increased gap between demand for Class A product and all other retail classes. Much like the flight to quality happening in the office sector, tenants looking for retail space in metro Phoenix want excellence: high-traffic locations in a growth submarket with compelling demographics. As a result, we have seen more metro Phoenix Class A retail properties reach full …

June 13, 2023

Georgia Market Reports Office Southeast Southeast Market Reports

What Atlanta Office Workers Need Is Energy at Their Doorstep

by John Nelson June 12, 2023

Five blocks doesn’t seem that far. It’s about a quarter of a mile, or 560 steps. But, it’s just a hair past convenient for today’s office workers. Now more than ever, tenants are seeking an office experience that is dynamic and energized with amenities. They want great options for coffee, lunch or happy hour that are steps away, not blocks. If it’s not right outside the office, it’s not close enough. In Atlanta, the Midtown submarket is still where the action is. In 2022, Midtown had 775,652 square feet of positive absorption, which was the highest in the metro according to Cushman & Wakefield. In keeping with the flight-to-quality trend, Atlanta leasing activity last quarter was dominated by Class A product, which accounted for 75.6 percent of all transactions. Most of this activity occurred in Midtown. With a Walk Score of 87, Midtown is Atlanta’s most walkable submarket. But even there, it’s the vertically integrated office developments that bring a new layer of urban density that are rising above the rest. Not only are they seeing more leasing demand, but they are also experiencing a constant hum of activity and energy due to immediate access to great retail and restaurants. …

June 12, 2023

California Market Reports Multifamily Western Western Market Reports

Opportunities Abound for Investors in Westside Los Angeles Apartment Market

by Jeff Shaw June 9, 2023

— By Kimberly Stepp, Principal, Stepp Commercial Group — Los Angeles’ Westside apartment market is poised to see a robust pipeline of transactions in 2023. Long-time owners have been increasingly seeking to trade into out-of-state assets, while 1031 investors or those looking to pay all cash seek to take advantage of opportunities in a high interest rate environment. Last year, Stepp Commercial Group saw a significant number of transactions with LA-area sellers who were frustrated with rent control and other problematic apartment legislation. They were looking to trade into states like Arizona, Florida and Texas because they provide a stronger ROI over the long-term and offer fewer landlord restrictions. We see that trend continuing into 2023 as owners want to enjoy a passive income as they achieve their individual investment goals and objectives. Additionally, while Measure ULA (“the mansion tax”) went into effect on April 1 — and impacts only homes and apartment complexes sold within the City of Los Angeles at $5 million or more — the overall sentiment has been sour from owners throughout the Greater LA area. They are justifiably concerned that similar legislation will soon be coming to their city, on top of other landlord-unfriendly restrictions …

June 9, 2023

Illinois Market Reports Midwest Midwest Market Reports Multifamily

Chicago’s Multifamily Sector Boasts Healthy Occupancy Rates, Strong Rent Growth

by Kristin Harlow June 8, 2023

By Mark Stern, JLL Chicago’s multifamily sector currently enjoys strong market fundamentals highlighted by healthy occupancy rates and continued rental rate growth. The current core apartment rents average over $4 per square foot, which is higher than previous peak pricing. After the pandemic, rental rates between late 2021 to 2022 recorded 10 to 15 percent growth, which is substantially ahead of the historical norms. Currently, the Chicago rental market is experiencing more stable rent growth in the 3 to 4 percent range. Chicago remains one of the most affordable major markets to rent an apartment when looking at the current average effective rents as a percentage of median household income. This affordability will allow owners to continue to push rental rates in the future. One of the major factors leading to strong operating fundamentals in the Chicago market is the lack of new supply. The supply in Chicago is currently 1 percent of the inventory, which is quite low in comparison to other markets where there could be as much as 10 to 12 percent of the inventory under construction. In the city, there are just over 7,000 units under construction slated for delivery between 2023 and 2024. The majority …

June 8, 2023

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