Market Reports

Reports of Industrial, Warehouse Slowdown in Baltimore Are Greatly Exaggerated

by John Nelson May 8, 2023

National headlines report Amazon, arguably the largest warehouse user in the country, curtailing demand and, in some cases returning space back to landlords. This is sandwiched by stories detailing rising interest rates and land prices, stricter entitlement guidelines and NIMBYs working to apply the brakes on new developments. But, in “The Land of Pleasant Living,” (a Baltimore nickname made popular by the smart advertising of a local beer), the industrial revolution continues. And, for good reason. More than 2.3 million square feet of industrial/warehouse space was leased in the greater Baltimore metropolitan region in fourth-quarter 2022, with a net absorption of more than 1.2 million square feet of space, contributing to an overall vacancy rate of 4.5 percent. Additionally, more than 13 million square feet of space is currently under construction and rents have soared more than 50 percent over the past two years, with an average rent of just under $8 per square foot in late 2022. Significant leases signed in fourth-quarter 2022 included Baltimore International Warehousing & Transportation’s 244,304-square-foot lease at 5250-5330 Holabird Ave.; Amazon’s 241,962-square-foot lease at 1713 E. Patapsco Ave. and the 168,655-square-foot lease executed by Transdev at 1610 Wicomico St. Baltimore is contained within …

May 8, 2023

Market Reports Nevada Retail Western Western Market Reports

Northern Nevada Retail Market Sees New Tenants, Significant Development

by Jeff Shaw May 5, 2023

— By Tad Loran, Vice President, Retail Specialist, Avison Young | Western Alliance Commercial — The Northern Nevada retail market has been performing well. New tenants are entering the marketplace and the area experienced positive absorption. Rental rates have increased for the year, but there has been a decrease in commercial sales due to higher interest rates. The retail vacancy rate is currently at 4.7 percent, while asking rental rates are at $1.70 per square foot on a monthly basis. Many submarkets have shown improvement, including South Virginia, Meadowood, South Reno and the North Valleys. Tenants that have recently entered or are expanding in Northern Nevada include Colombia Sportswear, Voodoo Brewing Company, Jamba Juice, the Human Bean, Starbucks, Cracker Barrel, Mountain Mike Pizza, Pet Station, Take 5 Oil Change, AutoZone and Five Below. Tenants with closures include Bed Bath & Beyond, Sizzler Steakhouse, Food Source Grocery Store, Campo, California Pizza Kitchen, Long John Silver’s, Rounds Bakery and Claim Jumper. Unemployment in Nevada fell to 3.4 percent in December 2022. This low unemployment rate has led some prospective new businesses to either delay or cancel expansion plans in this region. From a development perspective, Reno has many new projects in the …

May 5, 2023

Market Reports Midwest Midwest Market Reports Retail Wisconsin

Multifamily, Mixed-Use Driving Evolution of Milwaukee Retail

by Kristin Harlow May 4, 2023

By Tony Colvin and Michael Fitzgerald, Mid-America Real Estate In the absence of significant new construction, the evolution of the retail real estate market in Milwaukee is largely being driven by the conversion and demolition of existing spaces. Some prominent places are being reimagined in creative ways that often include multifamily and other uses in addition to retail. HUB640 in downtown Milwaukee is a perfect example. A historic building formerly occupied by a Boston Store, the property is being transformed by North Wells Capital and Urban Innovations Management. The new mixed-use project will feature Kohl’s as the retail anchor tenant, loft apartments and office space occupied by Fiserv’s corporate headquarters. Other corporate office users, including Milwaukee Tool and Northwestern Mutual, also are betting on the central business district (CBD), with Milwaukee Tool relocating upwards of 1,200 employees, and Northwestern Mutual redeveloping and enlarging its headquarters. At the same time, new multifamily high-rises are remaking the architecture of Milwaukee including the river and lakefronts. The 25-story Ascent opened last year, and 333 North Water (31 stories) and Couture (44 stories) are on the horizon. Additionally, Iron District MKE is an 11-acre mixed-use sports and entertainment development slated to be phased in …

May 4, 2023

Market Reports Multifamily Utah Western Western Market Reports

Salt Lake City’s Multifamily Market Remains Resilient Among Uncertainty

by Jeff Shaw May 3, 2023

— By Rawley Nielsen, President of Investment Sales, Colliers — Salt Lake City’s multifamily market will continue to stand out and impress in 2023…even with so much uncertainty, ongoing readjustments within the market and many investors at a stay. That’s because Utah continues to receive outsized investor interest that will maintain stability in pricing. Investors recognize overall performance at property levels remains healthy as the state continues to be a leader in population growth. Utah is also one of the top states for outstanding job creation, increased demand for housing and exponential rent growth. While multifamily investment sales volume was record-setting during the first half of 2022, we have seen volume taper dramatically in recent months. This is due to rising interest rates and a lack of clarity in the debt and equity markets that have impacted pricing. Much of this slowing can be attributed to the rising cost of capital and low leverage caused by debt service coverage ratio (DSCR) requirements. (See Tables 1-3) Overall, 2022 saw an average cap rate of 3.75 percent, decompressing over 20 basis points compared to the first half of the year. Cap rates are expected to expand further through 2023 as uncertainty in …

May 3, 2023

Market Reports Maryland Retail Southeast Southeast Market Reports

Baltimore’s Retail Market Is Showing Resiliency Post-Pandemic

by John Nelson May 1, 2023

Retail is not dead. In fact, coming out of COVID-19, retail is arguably the strongest that it’s been in many years. According to S&P Global Market Intelligence data, in 2022 we saw a 13-year low in retail companies filing for bankruptcy. Here in Baltimore, we’re seeing extremely low vacancy rates and steady demand, which in turn, is cultivating a competitive environment. However, despite the challenges that retail has faced over the past several years, its resilience is where we continue to find plenty of reasons to be optimistic. A look back In March 2020, the phones stopped ringing and businesses shuttered for what was anticipated to be a few short weeks. We soon came to find that was not the case. Retail did struggle, significantly in some cases. Restaurants, service-based businesses, soft goods, fitness, entertainment and experiential concepts amongst many others, whether large corporate-owned or mom-and-pop users, struggled to stay afloat. And many did fail. Space came back on the market and concepts dwindled at an uncanny pace. But the so-called “retail apocalypse” — a common phrase that was originally coined because of the increased popularity of e-commerce — was, again, proved to be hyperbole. Retailers sought ways to enhance …

May 1, 2023

Industrial Market Reports Nevada Western Western Market Reports

Industrial Market Stays Elevated in Northern Nevada

by Jeff Shaw April 28, 2023

— By Baker Krukow, Senior Advisor, Industrial, Dickson Commercial Group — The Reno-Sparks industrial market is expected to remain active in 2023. It has a hefty pipeline of proposed industrial projects, steady increases in rental rates and a direct vacancy rate below 2 percent. The lack of available product has remained a challenge for tenants looking to occupy space, while landlords have been able to benefit from competing offers. The result of these tight market conditions will continue to push industrial development throughout the year. There was roughly 5.4 million square feet of new industrial product delivered in 2022, with 76 percent of those projects being speculative developments. A vast majority of those spec projects were pre-leased prior to completion. Looking at 2023 new construction, developers are dealing with severe winter weather delays. As a result, several projects have had to push back their completion timelines. Amongst some of the anticipated industrial projects under construction are Dermody Properties’ LogistiCenter at I-80 West Phase II, which will contain two state-of-the-art distribution buildings totaling 429,000 square feet. In the Sparks submarket, Panattoni Development has broken ground on the Pyramid Pointe Commerce Center, a 195,000-square-foot, Class A flex/bulk building, which will demise to …

April 28, 2023

Market Reports Midwest Midwest Market Reports Nebraska Office

Omaha Office Market Is Somewhat Insulated from Broader Economic Conditions

by Kristin Harlow April 27, 2023

By Eric Rose and Erick Tjarks, Cresa The Omaha office market proved to be somewhat insular from the effects of the many factors the real estate industry has experienced since 2020 (COVID-19, the hybrid work-from-home model, discussions of impending recession to name a few). Although down year-over-year, which given the recent interest rate hikes is expected, market sales volume remains above-average over the surveyed period going back to 2007. Though, this transaction volume dropped precipitously in the second half of 2022 and has continued to be slow in early 2023. However, the local market has seen pockets of increased activity, as Northwest Omaha saw heightened transactional volume, with Midtown Omaha, downtown Council Bluffs and suburban West Dodge following suit. As showcased above, market cap rates have largely accounted for interest rate hikes and are currently stable but subject to future interest rate increases. These statistics all point to a stable market, with fundamental performance on solid footing. However, it should be noted that, according to CoStar, 2022 is only the second year on record when demolitions outpaced gross deliveries, with only 93,000 square feet of net deliveries Omaha ranked in the bottom 10 of the top 60 office markets …

April 27, 2023

Market Reports Office Texas Texas Market Reports

Texas Office Owners Shift Priorities from Maximizing Rent to Showcasing Occupancy, Vibrancy

by Taylor Williams April 26, 2023

By Taylor Williams Office owners have spent the last two-plus years undertaking every creative measure they can fathom — and afford — to get tenants and their employees to legitimately want to come back to their buildings. From investing in upgrades to physical amenities to hiring hospitality-minded professionals for property activation to offering personalized incentives, nothing has been out of bounds when it comes to recouping occupancy. Enough time has now passed such that owners can judge the extent to which their ideas and initiatives have worked. Of course, the goalposts for what defines success in the office sector have shifted radically during that time. Profit margins and forecasts have shrunk as 60 to 70 percent occupancy three to four days a week now starts to look pretty good, all other factors being held equal. It’s simply a different world. “We are never going back to pre-pandemic ways,” says Ami Figg, senior leasing specialist at Houston-based Hartman. “What COVID-19 has done for the office market is equivalent to what September 11 did for the travel industry. There will always be a need for traditional office space, but it’s changed forever, so it’s upon us as landlord and tenant reps to …

April 26, 2023

Market Reports Maryland Office Southeast Southeast Market Reports

Slowdown in Leases, Development Help Baltimore Office Market to Rightsize

by John Nelson April 24, 2023

Unprecedented development is underway across the Baltimore metro area with more than $6.6 billion of infrastructure and major development projects in the pipeline, and office-using employment remains strong. More than 574,000 people are employed in a diverse set of employment sectors that require offices, including professional and business services, government, financial services and tech and information. The past year, unemployment fell in each Maryland submarket, with Baltimore dropping 140 basis points, which is similar to the national unemployment rate that decreased 150 basis points. In the second half of last year, several public sector agencies relocated into the Central Business District (CBD) from Midtown and Mount Vernon locations, pushing net absorption positive and vacancy negative. This helped state and local government tenants lead all sectors in leasing activity in the fourth quarter of 2022, accounting for 56 percent of all leases signed. The Maryland Department of Health signed the largest lease of the quarter with its new 463,000-square-foot lease at 300 N. Greene St. Other State of Maryland relocations include Department of Labor, Office of the Comptroller, Department of Budget & Management, Department of Planning and Department of Aging. Combined, these state government tenants leased 761,000 square feet in the …

April 24, 2023

Market Reports Nevada Office Western Western Market Reports

Local Business is Reno’s Primary Office Driver

by Jeff Shaw April 21, 2023

— By Melissa Molyneaux, Executive Vice President, Colliers — The Northern Nevada market has seen continued positive net absorption, slowed investment sales and a sizeable increase in available sublease space in recent months. Local tenants with smaller footprints have been the driving force behind leasing activity and the market’s positive net absorption, with most new leases signed in 2022 being 5,000 square feet and less. Meanwhile, national and corporate tenants reevaluating their space needs have brought much of the available sublease space to the market in significantly larger blocks. Uncertainty surrounding interest rates has slowed investment sales, although pricing remains healthy. With investors putting a pause on new acquisitions, owner-user purchase activity may increase as tenants seize new occupancy opportunities. New construction starts have been minimal, although redevelopment/renovation projects remain prevalent. Two new developments that have broken ground include the Kimpton, a premier Class A high rise in downtown Reno, and Renown South Meadows, a specialty care center with about 40,000 square feet available for third-party providers. Each development represents continued demand from client-facing occupiers and healthcare providers in the region. In 2022, there were 30 companies that either expanded in or relocated to Northern Nevada, according to the Economic Development Authority of Western …

April 21, 2023

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