Market Reports

Reimagined Class A Office Projects Lead Phoenix’s Road to Recovery

by Jeff Shaw September 23, 2022

By Phil Breidenbach, Senior Executive Vice President, Colliers Class A landlords are answering the call from tenants for captivating workplaces. These re-imagined environments are drawing businesses to buildings and invigorating absorption in the market. Greater Phoenix office vacancy fell to 13.5 percent at mid-year, which was a 0.6 percent drop from last quarter and 0.7 percent lower than mid-year 2021. This number also sits 1.6 percent below the national average. While 287,000 square feet of new product was delivered, more than 587,000 square feet was absorbed. This is evidence the workforce is finding its way back to the office, if not full-time at least a few days a week. The refreshing surge in absorption is driven by companies coming to the best and newest buildings — redefining Class A with amenities that compel the workforce back into the office. New buildings like 100 Mill and Cavasson are two great examples. The first, 100 Mill, was completed in the second quarter and is more than 90 percent preleased. The building will feature next-level common areas and best-in-class meeting and lounge areas. The flight to quality trend has evolved into a flight to experience trend. Companies are finally coming to grips with the reality that how they …

September 23, 2022

Market Reports Midwest Midwest Market Reports Minnesota Retail

Minneapolis Suburbs Continue to Shine for Retail Real Estate

by Kristin Harlow September 22, 2022

By Jesseka Doherty and Johnny Reimann, Mid-America Real Estate The fundamental strength of the metro Minneapolis economy is on full display in the suburban retail real estate market this summer, where space is tight, new supply is limited, rents are on the rise and construction costs continue to challenge tenants and landlords alike. The macroeconomic picture in the first half of the year was stunning, actually. For the second quarter that ended June 30, the unemployment rate was a remarkable sub-2 percent, which was even lower than the national level of about 4 percent, and consumer spending was robust. Urban submarkets have been more challenged, but even in the Minneapolis central business district, retail rents are holding up as the office market shows stability. Driving demand With work-from-home still a factor, remote employees who live in the suburbs often are more inclined to shop, dine and play close to home, which bodes well for retail in proximity. Across key trade areas, retailers and other tenants in regional and community centers are more in demand than ever. Submarkets faring well include Apple Valley, Burnsville, Coon Rapids, Eagan, Maple Grove, Roseville and Woodbury. The densification of the suburbs also is driving demand …

September 22, 2022

Market Reports Office Texas Texas Market Reports

Demographic Trends Point to Strong Recovery for Texas Office Markets

by Taylor Williams September 21, 2022

By Brett Merz, senior vice president, KBS Texas continues to be a top state for job and population growth as its low cost of living and business-friendly policies attract companies and residents from other parts of the country. As such, many commercial real estate owners and operators are recognizing the state’s potential for increased leasing activity in the second half of 2022 and throughout 2023. The portfolio of KBS, which has long been investing in these markets, currently contains 16 office assets in these cities, and we continue to evaluate opportunities to acquire more that align with our investment strategy. Based on 30 years of experience in acquiring and operating premier office assets throughout Texas and beyond, here are a few trends we anticipate continuing for the remainder of 2022 and into next year. Rising In-Migration Major Texas markets including Austin, Dallas-Fort Worth (DFW), Houston and San Antonio are likely to remain magnets for in-migration. Residents are moving to these markets in search of a more affordable quality of life, which is aided by the absence of a state income tax. In addition, companies are seeking office space in a region with business-friendly tax policies. Austin, in particular, continues to …

September 21, 2022

Florida Market Reports Office Southeast Southeast Market Reports

Activity in Orlando’s Office Market is Fueled by Flight to Quality, Tech Industry

by John Nelson September 20, 2022

The Orlando office market is finally seeing positive absorption across all major submarkets. An impressive second quarter recorded 122,423 square feet of positive absorption, bringing the total for the first half of the year to 156,778 square feet. As companies have been making decisions on their return to the office, the Orlando market has seen increased activity with numerous large, long-term leases signed, predominantly fueled by smaller local users and corporate relocations from other markets. Kimley-Horn’s relocation and expansion to 60,000 square feet in downtown Orlando marked one of the largest transactions in the past five years. While still up 20 basis points year-over-year, total vacancy saw its first drop in the last four quarters. Vacancy was consistently holding at 13.3 percent from third-quarter 2021 until it fell 30 basis points this quarter to 13 percent. The major driver of the drop was vacant sublease space being withdrawn or leased. Although firms are still seeking sublease route for their office space, we believe more space will be given back in the near term. We are seeing an increased pattern of flight to quality, where corporate users are focusing their attention on submarkets and assets that provide higher quality workplaces and …

September 20, 2022

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Amenities Rise in Importance as Greater Philadelphia Users Return to Offices

by Taylor Williams September 19, 2022

By Marc DeLuca, CEO and eastern regional president, KBS Refreshing office properties with updated amenities is a time-tested strategy for infusing buildings with new life and appealing to future and existing tenants. While an asset’s location is a fixed element and a region’s fundamentals tend to change slowly, amenities are more flexible and can usually be implemented quickly if necessary for immediate impact. A recent report by flexible workspace provider TCC Canada found that many companies and their team members increasingly recognize the benefits of gathering teams in a central workplace. But after more than two years of varying degrees of remote work, it makes sense for property owners to invest in amenities that actually meet the needs and wants of office users — which have recently shifted. So which amenities are the best ones to include in today’s office buildings? As an owner and operator of premier office assets for the last 30 years, KBS has witnessed amenity preferences come and go. We know how to spot a passing fad versus a trend with legs. Based on our expertise in this area, here are a few amenities we see attracting office tenants in the current and emerging environment. Scalable …

September 19, 2022

Arizona Market Reports Retail Western Western Market Reports

Phoenix’s Successful Retail Sector Stretches from Power Corridors to Main Streets

by Jeff Shaw September 16, 2022

By Dave Cheatham, President, Velocity Retail Group For decades, Arizona’s housing and commercial real estate industry have benefitted and fed the state’s robust gains as population grew. Even during the pandemic, Phoenix welcomed more than 140,000 new residents fleeing more expensive, crowded coastal cities for what many deemed an improved quality of life. As we know, retail follows housing. Phoenix’s housing market has restarted, and these new markets will need retail to serve them. It has taken 15 years for retail vacancy rates to return to pre-recession levels in Phoenix. In the second quarter of 2022, the direct vacancy rate for retail properties declined to 6.7 percent. West Phoenix, Northwest Phoenix and Scottsdale are currently the strongest submarkets, drawing residents to fast growing cities and towns. I see retail expanding as residential development at the edges of the city continue, and agricultural land is transformed into subdivisions. With inflation shrinking household budgets, consumers are making intentional choices on where they drive and what they buy. Those retailers who are large-space occupiers will continue to focus on delivering value and lower prices to their customers. Shopping center development has been anemic in Phoenix in the past decade, as those that lease big …

September 16, 2022

Market Reports Midwest Midwest Market Reports Missouri Multifamily

Metro St. Louis Multifamily Market Caters to Aging Population

by Kristin Harlow September 15, 2022

By Dan Thies, Sansone Group We are more than halfway through the year and the multifamily market in the St. Louis metropolitan area continues to grow. As of the first quarter, there were 5,112 multifamily units under construction in the metropolitan area. So far, the rise in interest rates and the increase in construction costs has not dampened the enthusiasm of investors and developers for constructing new units in this market. Vacancy rates continue to stay low and lease rates continue to increase. As long as these market conditions continue, developers are going to bring new units to market. The new units being built will reflect new design features, which many developers are implementing in their communities. One of the many design trends taking place across the country and in the St. Louis area addresses the rise in the older population becoming renters. Many members of the baby boomer generation are looking to sell their suburban homes to downsize into smaller, more practical spaces. Their children have moved out of the home, and they no longer need all the space or maintenance of a home. They want to pull the equity out of their home and place it in a …

September 15, 2022

Industrial Market Reports Texas Texas Market Reports

Austin Continues Its Ascendance as an Emerging Industrial Market

by Taylor Williams September 14, 2022

By Chase Clancy, vice president, Colliers The Austin industrial market is booming. According to Colliers’ research, Austin’s industrial market continues to grow at an amazing clip, spurred by rapid population growth, major manufacturing relocations and new e-commerce and inventory trends. Despite the longstanding shadows that larger markets like Houston and Dallas have cast on Austin’s growth, the market is reaching a fever pitch of rising rents, tightening vacancy, significant new deliveries and equally noteworthy preleasing activity. Based on Austin’s population size, Colliers’ research suggests that the market has the runway — both in terms of supply and demand — to nearly double in size over the next five years. With demand for space showing no sign of cooling at the local level, we project a prolonged period of record development and record absorption. To put that into context, Austin’s industrial market currently spans roughly 57 million square feet. We are tracking more than 40 million square feet of product in our development pipeline — more than 10.2 million square feet of which is currently under construction — with more on the horizon. Trailing 12-month absorption stands at approximately 3.4 million square feet as of the second quarter of 2022, but …

September 14, 2022

Florida Industrial Market Reports Southeast Southeast Market Reports

Low Vacancy, New Development, Rent Growth Reflect Industrial Demand in Orlando

by John Nelson September 13, 2022

Still going strong after two years since the onslaught of COVID-19, Orlando’s industrial market has seen a steady increase of robust leasing activity and development, with no signs of stopping. The growth is attributable to record-low vacancy, emerging construction and increasing demand from existing tenants expanding their businesses and new tenants in the market. Economic conditions affecting the market are similar to last year, as labor shortages and supply chain issues remain. However, the industrial sector overall has not been adversely affected. Orlando continues to be the place for existing business advancement and new business development. The city’s population growth outpaces that of any other city in Florida due to its central location, warm weather year-round, no state tax and relative affordability. As such, the market is seeing large enterprise retail and consumer goods companies claiming their stake in the Sunshine State. Robust leasing activity The total industrial leasing volume in the Orlando market for the second-quarter 2022 was 4.5 million square feet, 43 percent of the total leasing volume seen in 2021. Eight leases over 100,000 square feet were signed to date in 2022. The largest lease in the first half of 2022 was the new 294,787-square-foot Coca-Cola lease …

September 13, 2022

Market Reports Northeast Northeast Market Reports Pennsylvania Retail

Philadelphia Shopping Centers Present Opportunities to Revamp, Unlock Value

by Taylor Williams September 12, 2022

By Kari Glinski, vice president of asset management, Federal Realty Investment Trust Philadelphia is known for many things, from being the City of Brotherly Love to a city rich in history, art, culture and food. As a result, the region is desirable for many residents and visitors and has been recognized in real estate circles for its housing and retail development opportunities. Throughout the pandemic, greater Philadelphia has lent itself to commuters, residents, tourists and hybrid employers by providing convenient access to other East Coast cities, vast amenities and outdoor recreation spaces, as well as unique dining, entertainment and shopping experiences. Recognizing the need to continue catering to the remote employees, shopping center owners and developers see ample opportunity across the region, specifically within the inner suburbs. In these locations, there is a great mix of diversity, mature employment bases and irreplaceable real estate where developers can continually create long-term value through blended opportunities. Federal Realty has been reinvesting in the greater Philadelphia and Southern New Jersey region for the past decade, strategically transforming our portfolio. Our company focuses on the ownership, operation and redevelopment of high-quality, retail-focused properties, with a mission to deliver long-term, sustainable growth through investing in …

September 12, 2022

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