Market Reports

Is Your Mall or Shopping Center Ready for Redevelopment or Rehabilitation?

by Taylor Williams January 4, 2023

By Taylor Williams From small-scale refreshes of neighborhood shopping centers to massive conversions of regional malls, retail redevelopment has become a budding business as seismic forces like e-commerce and COVID-19 have fundamentally altered the ways in which Americans shop, dine and seek entertainment. Yet empirical and anecdotal evidence shows that people still love to frequent brick-and-mortar stores, restaurants and entertainment centers. According to data from Transwestern, at the end of the third quarter, Dallas-Fort Worth, Houston, Austin and San Antonio all had marketwide retail vacancy rates under 6 percent. Year-over-year vacancy contracted by anywhere from 80 to 130 basis points across the four major markets, all of which also experienced positive net absorption in the third quarter. While these Texas-specific numbers reflect a steady, sustained rebound for brick-and-mortar retail in the post-COVID era, preliminary data on holiday shopping indicates that e-commerce’s foothold on the market is getting stronger. According to Adobe Analytics, online sales during Black Friday topped $9.1 billion, a 2.3 percent increase over 2021. While that number should be judged against the fact that this year, the public health risk of shopping in physical stores was substantially reduced, it also represents a 21.7 percent increase over pre-pandemic online …

January 4, 2023

District of Columbia Market Reports Restaurant Retail Southeast Southeast Market Reports

D.C. Retail Sector is a Tale of Two Markets: Downtown and Everywhere Else

by John Nelson January 2, 2023

So much has been made about the future of retail in the United States. Is it dead? Is it back? How has it evolved? No doubt, retail was the sector most affected by the COVID-19 pandemic, and that is also true here in Washington, D.C. If you look at regional data, it appears to be rebounding nicely. The overall market currently boasts a near record-low vacancy rate at just 5.1 percent, according to CoStar Group. Tighter market conditions have helped landlords restore pricing power throughout the District, and asking rents and rent growth have surpassed pre-pandemic highs. When we measure by net absorption, retail demand in the region in 2022 is on pace to reach its highest level since 2016. But numbers don’t tell the whole story as the retail sector’s recovery in D.C.’s downtown market post COVID differs greatly from all of the metropolitan area’s other submarkets in a scenario that can only be described as a tale of two markets. Downtown D.C. So, what’s driving downtown retail these days? Simply, it’s the office market. Retail’s post-pandemic recovery is almost entirely dependent on office workers, and there is no more significant factor at play for its success than corporation’s …

January 2, 2023

California Market Reports Multifamily Western Western Market Reports

San Bernardino Multifamily Market Slows But Market Fundamentals Remain Strong

by Jeff Shaw December 22, 2022

By Guy Enriquez, Vice President, NAI Capital The market for small- to medium-sized multifamily buildings ranging from 10 to 100 units in the City of San Bernardino has experienced a severe downturn in sales transactions recently. This was caused by the rapid increase in interest rates and a disconnect between buyers and sellers on pricing expectations. Cap rates on sales completed in the third quarter of 2022 show an increase of about 80 basis points year over year to 5.5 percent in the Inland Empire. Third-quarter 2022 sales volume in the Inland Empire fell to 15 transactions totaling $54 million. The area has been averaging 37 transactions totaling $180 million on a quarterly basis over the past four quarters. This quarter, the City of San Bernardino saw one sales transaction in this segment of the market, indicating the lack of deal volume. While rising interest rates caused a collapse of sales volume, combined with other general economic factors, San Bernardino’s rental market has remained very strong. The city’s overall multifamily physical vacancy rate has stood at 3.2 percent throughout 2022. The average rent for a one-bedroom unit increased from $949 to $966 per unit during the first three quarters of …

December 22, 2022

Market Reports New Jersey Northeast Northeast Market Reports Office

The Two Most Likely Outcomes for New Jersey’s Suburban Office Parks

by Taylor Williams December 21, 2022

By Ken Colao, president and CEO, CNY Group Whether you’re on the Jersey Parkway or the Turnpike, you’ve undoubtedly driven past commercial buildings and office parks that have stood in the Garden State for decades. But the age of many of these structures is starting to cause problems. Earlier this year, JLL released a report in which the real estate firm estimated that 57 percent of suburban office space nationwide is old enough to be considered functionally obsolete. In New Jersey, specifically, that figure rises to 72 percent, among the highest in the nation. Based on two decades worth of construction experience in New Jersey and New York, CNY Group believes the two most likely outcomes for these structures involve upgrades to true Class A offices or conversion to life sciences facilities. Keeping Offices Intact With a growing number of people migrating out of urban cores, suburban office developers are revitalizing their properties to attract new tenants. When employees began moving away from city centers, employers didn’t particularly follow them, but that trend could change. Businesses will decrease their real estate footprints in urban areas unless costs of occupancy are reduced, safety is maintained and environmental standards and practices are …

December 21, 2022

Market Reports Texas Texas Market Reports

Major Tech Acquisitions, Expansions Fuel Growth Throughout Allen, Texas

by Taylor Williams December 20, 2022

By The Allen Economic Development Corp. Austin is often in the spotlight as one of the country’s top tech hubs, but Allen, a growing suburb located north of Dallas, has emerged as a mini tech hub in its own right. Most recently, the Allen Economic Development Corp. (AEDC) announced that Pushpay, a provider of payments and engagement solutions for faith-based and nonprofit businesses, has signed a lease at One Bethany West as the company looks to expand its presence in North Texas. Pushpay is one of several companies that has in recent years discovered that Allen has the right combination of qualities and amenities to support tech companies seeking a new home. Pushpay is one of several companies that has in recent years discovered that Allen has the right combination of qualities and amenities to support tech companies seeking a new home. Pushpay will occupy 10,000 square feet of office space in the 17-acre Watters Creek campus, which will be accessible to its employees in the metroplex, many of which include associates from its subsidiary, Resi Media. “Pushpay and Resi are the perfect additions to the growing roster of tech-focused companies in Allen,” says David Ellis, assistant director at AEDC. …

December 20, 2022

District of Columbia Market Reports Office Southeast Southeast Market Reports

Something is Happening in Downtown D.C.’s Office Market

by John Nelson December 19, 2022

Downtown Washington, D.C., is confronting many of the same pandemic-generated challenges as other urban markets across the United States. This includes above-average and record high commercial vacancy (office and retail), as well as lower-than-average daytime foot traffic, in part due to an increase in hybrid work. Yet there is a case to be made that now is a unique moment for leasing office (and retail) space in the District’s central business district (CBD). The loss of foot traffic has hit downtown retail particularly hard, especially fast-casual dining. Coffee shops and sandwich places that depend on office workers have closed at a higher rate than other food-related retail. But the pedestrians are coming back. Kastle Systems’ data from the DowntownDC Business Improvement District (BID) shows an increase since Labor Day in the number of workers at their desks, with approximately 42 percent of the pre-pandemic number of employees in-office on a weekly basis, compared with around 33 percent last spring. This is expected to rise as more employers establish return-to-office policies. Despite 2022’s turbulent economy over the first six months, D.C.’s office leasing activity was up 16 percent compared with the first half of 2021, according to Cushman & Wakefield. The …

December 19, 2022

Affordable Housing Market Reports Multifamily Washington Western Western Market Reports

Multifamily Deals, Development Slow in Seattle After Breakneck Run

by Jeff Shaw December 16, 2022

It’s been quite the run for Seattle. Like many secondary markets out West, the Emerald City was a pandemic darling, racking up loads of new residents and workers over the past few years. Seattle-area employers added more than 102,600 workers in 2021 alone, according to Marcus & Millichap’s second-quarter market report, which predicts the area will add another 85,000 workers by year’s end. The report also forecasts Seattle’s population will increase by more than 220,000 residents over the next five years. All this activity has led to a bull run for multifamily owners, investors and developers. Net absorption in Seattle’s central business district surpassed the 5,000-unit mark for the first time on record last year, while rents have risen by 14 percent year over year. Demand was so fierce that all 20 of the metro’s submarkets recorded vacancy compression over the past four quarters, resulting in an average 2.8 percent vacancy rate, according to Marcus & Millichap. This is the lowest rate in two decades. Nearly 9,000 units — representing 1.9 percent of the supply — were added over the 12-month period that ended in March, with another 25,000 units still under construction at the end of the second quarter. …

December 16, 2022

Industrial Market Reports Nevada Western Western Market Reports

Northern Nevada Industrial Sector Remains Solid Despite Economic Slowdowns

by Jeff Shaw December 16, 2022

By Nick Knecht, Senior Advisor, Industrial, Dickson Commercial Group The vibrancy and growth of the Reno-Sparks industrial market has solidified the region’s position as a premier distribution hub of the Western U.S. — even as we head into what is expected to be a nationwide economic slowdown in the near term. The third quarter continued the trend of positive net absorption of 469,970 square feet. This occurred even with four new construction deliveries totaling 1.7 million square feet, 98 percent of which was spoken for upon completion. This momentum is expected to continue to some degree, as our team is actively negotiating RFPs on each of our speculative big box listings, with space requirement inquiries coming in at a steady pace. Alongside this positive activity, our market has been affected by the economic turmoil that has started to take shape over the past two quarters, with similar trends discussed nationwide. A changing debt market has produced several price adjustments mid-transaction for buyers to stay within their underwriting thresholds. The number of developers aggressively acquiring land at a feverish pace has decreased as they face a higher cost of capital and tamp down rent growth assumptions to more reasonable levels. There …

December 16, 2022

Market Reports New York Northeast Northeast Market Reports Retail

New York City Retail Market Enters Phase of Discovery

by Taylor Williams December 15, 2022

By Taylor Williams The New York City retail market is currently functioning like an episode of The Price Is Right. Developers, investors, brokers and operators are all trying to attach fair values to rents and sales prices for spaces of all sizes and submarkets. But after a tumultuous period marked by a global pandemic and record inflation, followed by a string of severe interest rate hikes, accurately assigning those numbers is easier said than done — at least in some submarkets. According to data from JLL, at the end of the third quarter, the average rent throughout New York City was $290 per square foot, down 5.3 percent year over year. That figure represents an improvement from the second quarter of 2022, when rents posted a 12 percent decline on a year-over-year basis. In addition, JLL’s data shows that 58 new leases were signed in the third quarter. While that figure marks a decline of 13 percent from the second quarter, it also constitutes an increase of 7.4 percent on a year-over-year basis. These numbers suggest that after retail leasing and sales completely stagnated in 2020 due to an unprecedented public health crisis, the market corrected sharply in 2021 and …

December 15, 2022

California Industrial Market Reports Western Western Market Reports

Despite a Slowdown, San Bernardino’s Industrial Outlook Remains Strong

by Jeff Shaw December 13, 2022

By Rick John, Executive Vice President, Ontario Branch Manager, DAUM Commercial The San Bernardino industrial market is experiencing strong market fundamentals as it’s home to 18 percent of the Inland Empire East’s nearly 245 million square feet of industrial space. The city also commands one of the highest prices per square foot across the market, exceeding $300. Although vacancy rates for the Inland Empire East increased for the first time since the pandemic – jumping 14 basis points and ending at 1.1 percent for the third quarter – overall vacancy in San Bernardino remains historically low. In fact, it’s among the lowest in the region at 0.24 percent. This incremental increase in vacancies was primarily seen among smaller buildings, while larger buildings of 500,000 square feet or more continue to be in short supply as vacancy remains near zero. Consistent low vacancy and competition for space are encouraging large companies to pre-lease new developments in the construction pipeline. This has helped bring gross leasing activity to near pre-pandemic levels. In September, Shein signed the largest lease within the Riverside-San Bernardino metro for the quarter with plans to open a 1.8-million-square-foot distribution center that’s currently under development in Cherry Valley. Due …

December 13, 2022

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