Market Reports

See You at Work: New Orleans Employers Rethink the Office Environment

by John Nelson November 21, 2022

In the post-pandemic environment where employers are trying to navigate new work schedules, office tenants are focusing more on the finish and design of office space than they are the rents. In New Orleans, we are seeing office tenants rethink the concept of office space altogether, and their employees are thinking differently about their individual offices as well. There has been a shift from the traditional office space of years past where one spends eight hours a day in a large private office with the door closed. The office has evolved into more of a social place. Companies want their employees to come back to the office and not to be fully remote. Many employees want to get out of their pajamas and come back to the office. But, getting them all to come back has proven to be the challenge. Companies are now enticing their employees with redesigned spaces that are more aesthetically pleasing and rich with amenities that allow for more social interactions and collaboration. Employees who work remotely a few days a week are coming to the office because they want that engagement with their colleagues. Tenants are now less interested in refurbishing private offices and spend …

November 21, 2022

Market Reports Multifamily Washington Western Western Market Reports

Seattle Metro Multifamily Market — It’s a Supply Thing

by Jeff Shaw November 18, 2022

By Brian O’Connor, Executive Director, Valuation & Advisory, Cushman & Wakefield The Seattle Metro apartment market has been surprisingly resilient. The market quickly bounced back from the COVID downturn at a robust clip and has continued moving at a healthy pace. During the first six months of 2022, metro Seattle absorbed more than 12,600 units. That already surpasses a typical full year of demand by several thousand units. From January 2022 through June, the market absorbed 3,779 newly constructed units — a respectable level. If you also factor in the decline in existing units, then the market absorbed another 8,886 units. That tells us that the supply of new units was too low…or demand was much stronger than we expected. The market had rebounded to a metro-wide vacancy rate of only 1.33 percent at mid-year 2022, an astoundingly low level. From year-end 2021 to June 2022, overall apartment vacancies declined from 3 percent to 1.33 percent. We do, however, expect vacancies to begin increasing slightly. These rates typically see an uptick as we head into winter. Rent growth also slows during this time. We expect to see the metro-wide vacancy rate start to rise just a bit by year-end 2022, to …

November 18, 2022

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Tenants Turn to Third-Party Logistics in Milwaukee Market

by Kristin Harlow November 17, 2022

By David Hodge, NAI Greywolf The demand for commercial industrial real estate was exceedingly strong in the Milwaukee market leading up to the onset of COVID-19. The economy and labor markets were also strong and incentives for onshoring spurred on this growth. Post-pandemic commercial industrial product continues its upward trend. The catalyst for this, however, is international supply chain disruptions. The reaction to this unfortunate circumstance is the accumulation of higher inventories of raw material and finished goods. The resulting impact is high demand, especially for warehouses, in an extremely low vacancy rate environment. Demand beating inventory According to Catylist, in the second quarter of 2022, the Milwaukee market’s vacancy rates were 3.3 percent for all commercial industrial products. This is largely due to the continued lack of available inventory. High demand in part has spurred increases in rental rates to approximately $5.98 per square foot triple net. While this is good news for landlords who look to capitalize, it presents challenges for tenants who are expanding their operations. The other factor driving rental rates is the rapid increase in interest rates. The upcoming election may also affect the rates in the later part of the fourth quarter of …

November 17, 2022

Market Reports Northeast Northeast Market Reports Northmarq Restaurant Retail

Quick Service Restaurants Represent A Tasty Option for Northeast Investors

by Taylor Williams November 15, 2022

By Tom Georges, investment sales broker, Northmarq The U.S. economy reported annualized growth of 2.6 percent in gross domestic product (GDP) in the third quarter, thereby avoiding a third consecutive quarter of negative growth. This positive news can be easily tempered by the fact that the growth was greatly affected by trade and inventory numbers, which were skewed as a result of world events like the war in Ukraine. But the news of growth was welcomed in an economy that has been starved for something positive for most of the year. Compounding the economic caution in the absence of sustained economic growth, of course, is the strain that inflation has inflicted on all Americans. In response to 40-year inflationary highs, the Federal Reserve has been forced to react with its primary inflation-countering tool: increasing interest rates. In early November, the Fed raised short-term rates to their highest level since January 2008. Additional rate hikes are anticipated in December, although signals suggest we’ll see increases in smaller increments going forward. Still, amid all the turmoil and uncertainty, several quick service restaurant (QSR) operators continue to roll out expansion plans and report better-than-expected sales and earnings. Restaurant Brands International (NYSE: QSR) recently …

November 15, 2022

Colorado Market Reports Office Western Western Market Reports

The Work-From-Home Trend Continues to Plague Denver

by Jeff Shaw November 11, 2022

By David Gagliano, Senior Vice President and Principal, Fuller Real Estate Leasing trends in the metro Denver office market are continuing their slow progression downward. Inquiries from tenants looking to lease office product is down 10 percent from 2021. Concurrently, we have seen an uptick in smaller office users who are looking for space in lieu of their home office. Landlords have been quick to concede to tenants, incentivizing them with extensive quantifiable tenant improvements and lease rates lower than their competition. Anecdotally, it becomes obvious with nearly every prospective tenant that they are viewing multiple properties. Not only are they viewing several properties, but many have several options within the exact vicinity of the subject property. This trend makes it even more critical for landlords to have the best representation from their brokers. This market instability also speaks to the favor landlords are giving to current tenants upon lease renewal, as capturing occupancy prior to vacating becomes vital. With current and most likely future increases in interest rates, we will see a dip in activity in owner-user purchases that should lead to a rise in leasing activity. The suburban markets are still seeing a surge in migration from the downtown …

November 11, 2022

Market Reports Michigan Midwest Midwest Market Reports Office

Five Factors Defining the Grand Rapids Office Market

by Kristin Harlow November 10, 2022

By Jeff Karger, JLL There’s no doubt that the office market today is much different than what it was five years ago. Employers across the nation have had to adjust their work models, time and time again, to meet the needs of their employees — and those in Grand Rapids are no exception. As landlords, employers and employees adapt to these changes, it’s important to understand the direction of the office market. Below, check out five factors that are defining it. 1. A flight to quality Like many other cities across the nation, Grand Rapids is experiencing a resounding flight to quality. Employers are seeking Class A and trophy spaces to appeal to their employees and offer them an experience, rather than just a cubicle to work in. Some of these office features can include free fitness centers, onsite cafés, coffee shops and restaurants, outdoor terraces and more. Plus, according to JLL research, 59 percent of employees expect to work at a company that supports their health and well-being. Interestingly enough, employees prioritize this over salary — a key reason why companies and landlords alike are investing in amenitized spaces with up-to-date HVAC systems, exercise classes and healthy food options. …

November 10, 2022

Market Reports Retail Washington Western Western Market Reports

Seattle’s Retail Sector Proves Resilient

by Jeff Shaw November 8, 2022

By Dino A. Christophilis, Senior Vice President, CBRE; Daniel Tibeau, Associate, CBRE; and Parker Ksidakis, Associate, CBRE Few sectors were as disrupted by the pandemic as retail. While 2020 proved to be a tumultuous year, the last year and a half have demonstrated the resiliency of retail — both in Seattle and nationally. The Seattle economy is performing well for a recovering retail sector, with continued employment growth and increasing retail spending. The Puget Sound is notorious for its lack of new retail development, and the recent years have been no exception. The environment of increasing demand with a flat level of supply results in positive conditions for existing retail space. Like much of the nation, concerns persist in Seattle around inflation, increasing debt costs and a potential slowing in the global economy. However, the situation in Seattle is more positive and nuanced. Growing Investment Activity Year to date, Seattle is poised to outperform the prior year in terms of total investment dollars. The second quarter of 2022 experienced 65 percent greater investment volume relative to the same quarter in 2021. This figure is particularly notable as 2021 was an exceptional year. Investors deployed pent-up capital that was held during the height of the pandemic. Total retail …

November 8, 2022

Colorado Market Reports Multifamily Western Western Market Reports

Population, Absorption, New Construction Offer Opportunities in the Denver Multifamily Market

by Jeff Shaw November 4, 2022

By Chris Mitton, Advisor, Pinnacle Real Estate Advisors Denver has been seeing major growth of new residents from 2020 through the second quarter of 2022. Denver is gaining many residents from coastal cities due to our lower cost of living, and gains of such tech giants as Conga, RingCentral, Xactly, Slack, and Angi. Since 2020, Denver has added 8,100 jobs in business services and 2,900 jobs in the financial activities sector. Over the last five years population growth in Denver has increased 8 percent compared to the 3.8 percent national average. The multifamily market has benefited from this population growth. Denver has absorbed 6,400 units over the past 12 months, placing it in the top 15 metro areas in the country. Colorado has seen record high prices in single family homes as well, which is pricing out many first-time homebuyers. This is forcing many renters to stay in multifamily apartments. However, if you haven’t been living under a rock, you know that the Federal Reserve has been increasing interest rates at a record pace. The single-family market has seen an increase from 1,200 homes for sale during the start of the year to 7,300 homes in August. With this increase in supply …

November 4, 2022

Market Reports Michigan Midwest Midwest Market Reports

The Inside Lane: How the Motor City is Pulling Ahead of Other Midwest Markets

by Kristin Harlow November 3, 2022

By Andy Gutman, Farbman Group This is a complicated and even confusing time for anyone trying to make sense of the commercial real estate market. Conflicting economic indicators and pervasive concerns about inflation — and even the potential for a recession — create a somewhat cloudy outlook, even as promising opportunities remain in some markets. In the Midwest, there are noticeable market-specific differences that give a sense of just how much variability there is across the region. Taking a closer look at the commercial real estate in a city like Detroit — where the commercial real estate investment activity remains high — and comparing it with other Midwest markets in terms of retail activity, receivership rates, commercial real estate taxes, crime rates and urban revitalization efforts, can start to give us a better sense of how and why some Midwest markets are currently viewed as more favorable than others. It can also give us a feel for what investors and commercial real estate decision-makers are likely to be evaluating when they look at how to spend their dollars in the months and years ahead. Detroit looking good What is it about Detroit that makes it an appealing commercial real estate …

November 3, 2022

Market Reports Texas Texas Market Reports

A Buyer’s Legal Guide to Purchasing Real Commercial Property in Texas

by Taylor Williams November 2, 2022

By Ryan Sullivan, partner, attorney, Kruger Carson PLLC Over the last few years, record numbers of businesses have relocated to Texas to take advantage of the strong economy, including a red-hot commercial real estate market. Whether a party intends to acquire or lease real property, he or she must be aware of several customs and laws that make Texas real estate transactions different from those in other parts of the country. Below is a high-level survey of some of these issues. Independent Consideration Purchasers of real property in Texas will want to ensure that their purchase agreements include payments of sums that they cannot recoup even if they terminate during their “free look” period. Otherwise, Texas courts have taken the position that purchase agreements are not enforceable against sellers until some portion of the earnest money has become nonrefundable. Deceptive Trade Practices The Deceptive Trade Practice/Consumer Protection Act (DTPA) is intended to protect consumers against unconscionable business practices or unequal bargaining power. The DTPA does not apply to many commercial transactions, but because of the high potential for liability, a carefully drafted waiver should be included in most purchase agreements and leases as a matter of best practice. Closing Costs …

November 2, 2022

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