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

Market Reports Midwest Midwest Market Reports Nebraska Retail

Today’s Retail Landscape in Omaha is Different, But Healthy

by Kristin Harlow April 20, 2023

By Holly Jones and Trey MacKnight, Cushman & Wakefield/The Lund Co. The world of retail real estate in the Midwest has been rapidly evolving over the past few years, with the pandemic serving as a catalyst for more change. As we move further into 2023, it’s becoming increasingly clear that the retail landscape is different than in years past, yet healthy in numbers. In this article, we’ll explore and explain some of the latest trends, developments, absorption and vacancy, and how this is impacting the industry as a whole. Whether you’re a retailer, landlord or investor, it’s essential to stay up to date with the current market and future developments. Omaha’s retail market recorded 350,931 square feet of positive absorption in the fourth quarter, bringing the year-to-date absorption total to 1 million square feet. Throughout 2022, there were 34 buildings delivered, increasing the retail inventory by 379,733 square feet. At the close of the year, more than 86 percent of the new construction was occupied, creating a very healthy environment. While there were sizable deals inked throughout the year, just over 85 percent of the new leases signed were under 5,000 square feet. Many of the leases were signed by …

April 20, 2023

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Industrial Market Reports New Jersey Northeast Northeast Market Reports Pennsylvania

Industrial Developers in Northeast Reckon with New Underwriting Parameters

by Taylor Williams April 18, 2023

By Taylor Williams “Numbers never lie; they simply tell different stories depending on the math of the tellers.” Mexican-American poet Luis Alberto Urrea may not have been talking about commercial real estate development and investment when he wrote that line, but the implications of that statement are undeniably applicable to those fields. The use of numerical projections in commercial development and investment is different from employing sabermetrics in sports or using predictive analytics to diagnose illnesses in medicine. Hard costs are what they are, and the formulas that developers and investors rely on to make critical decisions tend to be well-established in their rigidity, even if their inputs can and do change. Respecting the time-tested veracity of these formulas can make the difference between coasting through a down cycle or being crushed by it. Yet this is a world in which complex equations, algorithms and computations increasingly influence key business decisions. And so the ability to accurately forecast, control and manipulate numerical inputs is beyond valuable. Underwriting represents the piece of the real estate development or acquisition process in which these numerical details are shoved under the microscope and relentlessly finagled in hopes of keeping a development or deal alive. …

April 18, 2023

Florida Market Reports Office Southeast Southeast Market Reports

Tampa Bay’s Popularity Breathes New Life Into Local Office Market

by John Nelson April 17, 2023

Once bypassed by national developers and investors for larger, metropolitan cities like Miami, the real estate community is now realizing what locals have known for years: Tampa is trending. Tampa Bay’s recognition as one of the country’s top places to live has trickled into the region’s office market, which as of the first quarter of the year, has continued to reap the benefits. While some credit the Tom Brady effect to Tampa’s rise into the national spotlight, the Tampa Bay region is seeing growing demand in other economic sectors beyond sports, including housing, business and leisure. In fact, Time Magazine just featured Tampa as one of only four U.S. cities in its highly coveted 2023 list of the “World’s Greatest Places.” Flurry of activity to start 2023 For the first time in five quarters, the Tampa Bay office market recorded positive absorption of more than 55,000 square feet thanks to more companies moving into space rather than vacating it, JLL’s first-quarter Office Insight Report for 2023 shows. This can be largely attributed to Reliaquest’s move into its 140,000-square-foot headquarters located at Thousand & One Water Street, where it is currently occupying 120,000 square feet, and which made up the lion’s …

April 17, 2023

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