Market Reports

Nashville’s Robust Industrial Market is Growing Toward the South and East

by John Nelson April 11, 2022

After several years in the top 10, Nashville was named the No. 1 “market to watch” in overall commercial real estate prospects, according to Urban Land Institute and PwC’s 2022 Emerging Trends in Real Estate report. Nashville surpassed its supernova competitors (markets with a population between 1 million and 2 million people) such as Raleigh-Durham, Phoenix, Austin and Charlotte. The report credits Nashville’s robust and sustained job and population growth, above-average levels of economic diversity and investment/development opportunities. In short, Nashville’s economy fared relatively well during the pandemic-induced recession, and its industrial market never slowed down. Nashville has been a top location for relocating and expanding industrial-using companies, as its location is unmatched for distribution. Fifty percent of the nation’s population lives within 650 miles of Middle Tennessee, with 24 states falling within that radius. This translates to a one- or two-day truck delivery time to more than 75 percent of all U.S. markets. Additionally, it is one of only six U.S. cities with three major intersecting interstate highways. Nashville’s economy is extremely resilient due to its diversified economy. However, Nashville is not immune to national trends that have affected multiple industrial markets. The cost of construction continues to increase, …

April 11, 2022

Industrial Market Reports Midwest Midwest Market Reports NAI Office Ohio

The Secret Is Out About Investment in Columbus, Ohio

by Kristin Harlow April 7, 2022

There was a time when an investment in the Columbus, Ohio commercial real estate market had to be justified to outsiders and required a higher return to attract investors. After all, it sits squarely in “fly-over country” in the heart of the rust belt. With the exception of getting a superior return, why would an investor choose Columbus, over say, New York or Chicago? But that’s all changed. Cap rates are now as low as, or lower than, other major markets. Investors have been driven to those markets, despite having a lower cap rate, because they knew rent growth was continuous and the sales price would appreciate over time. For decades, Columbus’ sales prices had remained stagnant due to a lack of increase in lease rates. However, over the past two years, lease rates have been rapidly increasing in the industrial market, and projections expect that trend to continue. The Columbus office market hasn’t seen the same rental appreciation — yet. But projections indicate that there will be rental appreciation in office as well, mostly due to increased demand and lack of speculative development over the past two years, but also due to rising land and construction costs. Because of …

April 7, 2022

California Market Reports Retail Western Western Market Reports

Orange County’s Retail Sector Looks Resilient in 2022

by Jeff Shaw April 6, 2022

By Glenn R. Rudy, Senior Managing Director, Retail Capital Markets, Newmark We all know the commercial real estate industry is cyclical and there are casualties in every cycle across asset classes. However, retail seems to always be in everyone’s crosshairs. It quite frequently is the tail wagging the dog across institutional investors. Consider this, though: if there is one thing the pandemic has proven (once again), it is that the retail sector as a whole is one of the most resilient in the industry. Nowhere in the country is this statement more evident than here in Orange County. While investment sales activity was sluggish overall in 2021, picking up largely in the fourth quarter, retail leasing activity was record breaking. Annual net absorption turned positive after nine consecutive quarters of losses. Vacancy rates have not yet returned to pre-pandemic levels, but rent growth has reach a new all-time high as of year-end 2021. Tenants and landlords were both motivated to sign leases in 2021 to satisfy the increased market demand from consumers yearning to get out and be social again. Society wanted to spend its money on soft goods, dining out and enjoying the retail experience that was so sorely missed in 2020. On the investment …

April 6, 2022

Industrial Leasing Activity Market Reports Texas Texas Market Reports

What’s New With Industrial Deals in Texas?

by Taylor Williams April 5, 2022

With each year that passes in the current cycle, industrial real estate, along with multifamily, becomes more deeply ingrained as a darling asset class among commercial developers, lenders and investors. For all the talk about Americans being social creatures, there remains a massive contingent of the population that, when it comes to shopping, overwhelmingly prefers the convenience and relative anonymity of e-commerce. What started out as pandemic-related justifications for buying goods online as opposed to in-person has given way to a full-fledged, tacit acknowledgement of a trend that was already in place prior to February 2020. As such, demand for facilities — not just traditional, pure-play industrial spaces — that can function as e-commerce fulfillment and distribution centers continues to skyrocket. This trend is even more pronounced in markets with surging populations like those of major Texas cities. Industrial brokers are the ones who see it all. These professionals talk to tenants about acute real estate needs that are critical to serving customers without accruing exorbitant transit costs. Brokers work with developers who must build and price their spaces in accordance with their own escalating cost structures for land and construction. The deals that industrial brokers execute form the backbone …

April 5, 2022

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Suburbs Continue to be the ‘Shining Star’ for Nashville’s Multifamily Sector

by John Nelson April 4, 2022

Suburban household growth in metropolitan Nashville was already outpacing urban growth prior to the COVID-19 pandemic, but has accelerated since the outbreak due to corporate America’s acceptance of work-from-home staffing. Multifamily investors have followed this suburban household growth as well. Two recent examples are in Lebanon and Murfreesboro, both high-growth, high-quality suburbs of Nashville that have recently experienced record-setting transactions. The Pointe at Five Oaks recently sold for $243,000 per unit, setting a record for Lebanon. Vantage at Murfreesboro recently went under contract north of $270,000 per unit, also setting a record for Murfreesboro. We don’t see this activity and record-setting slowing down any time soon due to the lack of supply, overwhelming out of state demand and skyrocketing replacement costs. New multifamily development continues to follow the suburban trend, often times with a mixed-use component. Case in point, Highwoods Properties has completed the assemblage of all 145 acres of Ovation Franklin and is beginning the journey to reimagine and re-introduce one of the greatest opportunities for mixed-use development in the nation. This project will consist of 1.4 million square feet of Class A offices, 950 residential units, 480,000 square feet of retail and restaurants and 450 hotel rooms. Single-family …

April 4, 2022

Industrial Market Reports Nevada Western Western Market Reports

Unprecedented Industrial Rent Growth Puts Eyes on Northern Nevada

by Jeff Shaw April 1, 2022

By Shawn Jaenson, Senior Vice President, Industrial Specialist, Kidder Mathews The Northern Nevada industrial market is composed of 98.7 million square feet of industrial real estate spread across six submarkets. Northern Nevada’s centralized location allows for a one-day truck service to more than 60 million customers. Couple that with the fact that Nevada has no corporate tax, personal tax, inventory tax, franchise tax, or special intangible tax and the city is one of the most desirable industrial locations in the Western U.S. What was once thought of as unattainable in Northern Nevada has become the norm as nearly every record or statistic has been shattered and the market continues to show no signs of slowing. The overall market vacancy rate plummeted in 2021 to 1.7 percent, with a direct vacancy rate of 1.6 percent — a more than 200 percent decrease from the start of the year when overall vacancy rates were 5.3 percent and direct vacancy rates were 4.9 percent. Due to the unprecedented demand, new product in Northern Nevada has never been more crucial as new construction struggles to keep pace with market demand. In 2021, Northern Nevada had a positive net absorption of just over 7 million square feet, which …

April 1, 2022

Development Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Multifamily Developers Face Unique Set of Challenges in Boston’s Seaport District

by Taylor Williams March 30, 2022

By Becky Bedwell, vice president of development, Cottonwood Group As one of Boston’s fastest-growing and most dynamic areas, the Seaport District has gotten a lot of attention as it has undergone a multitude of transformations over the past 150 years. The area has evolved from a bustling railyard and shipping area in the early 20th century to a no-man’s land of parking lots in the 1990s to its most recent iteration: The Innovation District. While the spotlight is only growing brighter as several high-profile residential and mixed-use projects come on line in this distinctive and in-demand neighborhood, the headlines tell only part of the story. The Seaport District’s seemingly sudden emergence is the result of more than a decade of development and over $22 billion in public funding — efforts that have helped draw hundreds of new businesses and support a growing list of noteworthy developments. The challenges faced and opportunities realized by developers in this part of town reveal some important truths about what it takes to create great civic spaces and successful multifamily developments — not just in this city and this area, but in urban communities around the country. What follows are some best practices, consideration and …

March 30, 2022

Development Market Reports Multifamily Texas Texas Market Reports

Texas Multifamily Developers Carefully Scrutinize Product Types

by Taylor Williams March 29, 2022

By Taylor Williams From sprawling garden-style complexes in the suburbs to wrap-style construction and high-rise buildings in the urban core, multifamily properties come in many shapes and sizes. And in Texas, all of these product types are in high demand. Consequently, developers have generally seen healthy paces of rent growth over the last decade. But with each year of cyclical maturation, land becomes more scarce, construction grows more costly and more communities come on line, making the competition to secure renters increasingly stiff. On a more granular level, bidding wars for large tracts of land that can support major residential density are becoming increasingly intense with the growth of build-to-rent (BTR) development throughout Texas. Global supply chain disruption is putting relentless pressure on costs of construction materials and timelines for new projects, and leasing initiatives are getting smarter via sophisticated proptech platforms that were developed exclusively with real estate operations in mind. But these economic and operational constraints exist entirely on the supply side of the market. Simultaneously, demand for housing is accelerating unencumbered throughout Texas, a perennial medalist in population growth among the 50 states. These market factors are creating an unusual dynamic in which the forces that drive …

March 29, 2022

Market Reports Restaurant Retail Southeast Southeast Market Reports Tennessee

Nashville Welcomes Wave of New Retailers, Restaurants Entering the Market

by John Nelson March 28, 2022

After national media declared traditional brick and mortar retail to possibly be on it’s “last leg” due to the COVID-19 pandemic, the Nashville area has seem quite the opposite reaction. Already in an accelerated state of demand going into the shutdown of 2020 that extended into a malaise in 2021 in many places, Nashville is seeing all indicators of the hottest retail market in its history. Prior to the pandemic, rents and occupancy were already at historic highs. 2020 began with a continuance of that trend and ended the year higher with the most active submarkets closing the year below a 5 percent vacancy rate across all retail product types as the market absorbed more than 300,000 square feet of new product. During 2021, the region experienced further good news for landlords with rents increasing at one of the fastest rates in the United States (more than 8.8 percent). This continues a trend lasting more than 10 years where regional rent growth outpaced the national average. This growth was at least partially driven by a vacancy rate at year-end of only 3.7 percent. The primary driver of these metrics continues to be population growth and a low level of retail …

March 28, 2022

California Market Reports Office Western Western Market Reports

Orange County’s Office Market Ebbs, Flows

by Jeff Shaw March 25, 2022

By Bob Caudill, Executive Vice President, Colliers We continue to see a flight by tenants into low-rise office properties, typically four stories or less, and out of high rises. This trend began pre-pandemic, but COVID has undoubtedly accelerated its movement. Asking rates in the market have flattened, while concessions like free rent, beneficial occupancy and improvement allowances have increased. The surge in construction costs continues, putting stress on the economics of lease deals. In addition, construction material delivery delays have impacted the completion of tenant improvements. We will continue to see challenging times for office owners in the short-term as tenants are unsure how much space they need going forward. More tenants will also struggle to pay rent on time. In the long-term, although some industries have learned that they can remain successful with most of their employees working remotely, others are experiencing negative impacts on creativity and collaboration. As a result, their businesses have suffered financially, and they will require their employees to return to the office. Activity and Impact The Irvine Company’s Spectrum Terrace has set a new standard in design and quality for low-rise, Class A office properties. Tenants in this project are creating a workplace environment that employees will want …

March 25, 2022

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