Market Reports

Houston Industrial Market Puts a Bow on a Record Year

by Taylor Williams December 15, 2021

By Zack Taylor, senior vice president, Colliers Houston’s industrial market continued to see strong leasing activity in the third quarter. Overall net absorption for 2021 should easily pass 20 million square feet, making it the best year on record by a long shot. For context, Houston’s industrial market has, on average, absorbed between 8 million and 11 million square feet of space per year since 2014. Houston’s North and Southwest submarkets absorbed the most space in the third quarter of this year, led by Lowe’s Home Improvement taking down 1.5 million square feet and Amazon taking 1.9 million square feet in each of those respective submarkets. Total marketwide leasing volume for the year is well over 30 million square feet and does not show any signs of stopping as we hit the midpoint of the fourth quarter. Direct vacancy is continuing its downward trend, but rental rates have largely remained the same on new product. Second-generation infill warehouses are experiencing the greatest increase in rents, especially for tenants with requirements between 20,000 and 50,000 square feet. Many of these tenants are faced with a dilemma: They can either accept higher rents for their infill locations or relocate to more expensive …

December 15, 2021

Market Reports Nevada Office Western Western Market Reports

Reno’s Office Market Continues to Outperform Out West

by Jeff Shaw December 14, 2021

By Evan Meyer, Senior Office Specialist, Kidder Mathews The business climate continues to thrive in Reno as the regional economy quickly rebounded from the pandemic-fueled recession of 2020. Reno performed far better than most markets on the West Coast with a low unemployment rate (4.2 percent in August) and expanding job growth (+7.2 percent year over year). The region’s rapid growth persists as new businesses continue to move into the area, a trend that accelerated over the past few years. Most relocations are coming from California, attracted by the strong economic environment and business-friendly policies in Northern Nevada. As one of the fastest-growing regions in the U.S., expansion is occurring across multiple industries, including technology, manufacturing, distribution, financial and healthcare. The diverse and dynamic nature of the regional economy has driven the overall performance of the office market. This has produced continuous years of declining vacancy and a decade of rising rents, even through the peak levels of the pandemic. At the end of the third quarter, the vacancy rate was 7.7 percent, a 130-basis point drop compared to the previous quarter. Vacancy rates continue to decline across all submarkets due to strong demand and tenant expansion. Net absorption also gained momentum …

December 14, 2021

Hospitality Louisiana Market Reports Retail Southeast Southeast Market Reports

New Orleans Lays Ground Work for a Return to a ‘Wonderful World’

by John Nelson December 14, 2021

“I see friends shaking hands, saying how do you do…” Like many urban city centers, New Orleans has faced unprecedented challenges from COVID-19 over the past 19 months. The metro area lost more than 85,000 jobs between second-quarter 2019 and second-quarter 2020. In an economy heavily reliant on tourism, Orleans Parish was the most impacted with over 41,000 jobs lost, predominantly in the hospitality sector. Retailers — and their employees — depend on the large boosts of economic activity provided by large-format gatherings such as conventions and festivals like Jazz Fest, French Quarter Fest, and Mardi Gras, all of which were cancelled for the past 24 months. Additionally, the very active hurricane seasons of 2020 and 2021 resulted in devastation from three major storms in economic centers along our coastal community. New Orleans is still navigating clean-up efforts following Hurricane Ida, which landed Aug. 29, while real estate developers, builders and tenants face even more pricing and timing challenges due to material and worker shortages that were further hindered by storm activity. However, we are marching in the right direction. Cruises are resuming from Port of New Orleans (Port NOLA). Business travelers are getting back on the road. Offices are …

December 14, 2021

Idaho Market Reports Office Western Western Market Reports

Employers Take Notice of Boise

by Jeff Shaw December 13, 2021

By Patrick Shalz, Partner, TOK Commercial Net absorption in Boise’s office market through August is nearly 806,000 square feet. This has already outpaced the amount seen in 2020 by more than 40 percent. Meridian and Downtown Boise have had the most net absorption, with 232,000 square feet and 191,000 square feet, respectively. Overall vacancy has declined a full percentage point in 2021, from 7.3 percent to 6.2 percent. Multi-tenant vacancy has also declined from 11.2 percent to 10.7 percent. Many of the largest transactions of 2021 involved companies that are new to the Boise MSA. Kiln, a co-working company with offices in Utah and Colorado, leased nearly 50,000 square feet of newly constructed space in the Eagle View Landing project near Eagle Road and I-84. U.S. Investment Corp. and AMS Sensors, both of which are new to the market, leased 13,100 and 10,900 square feet, respectively, at the 11th & Idaho Building in downtown Boise. Overall asking rates have increased in the past year, rising $0.50 per square foot to $18.50 per square foot (full-service lease/FLSV, annually). Class A space in newly constructed office buildings have asking rates ranging between $26 and $30 per square foot. Landlords have been offering $60 to $65 …

December 13, 2021

Kentucky Market Reports Multifamily Southeast Southeast Market Reports

Booming Employment Continues to Drive Louisville’s Impressive Multifamily Market

by John Nelson December 13, 2021

Louisville’s multifamily market has long benefited from the city’s highly diversified employment base. With strongholds in distribution (boosted by the recent surge of e-commerce sales), manufacturing, healthcare and professional services, Louisville has rebounded from the pandemic-induced recession more quickly than much of the rest of the country. As of July 2021, the local unemployment rate was 4.5 percent, while the national rate was 5.4 percent. In addition to increased job growth, local employers are raising wages to attract top talent needed for expansion requirements. This wage growth, coupled with employment demand, has created a considerable advantage for multifamily property owners that have been able to push rental rates on an annual basis. Integra Realty Resources (IRR) reports that overall market vacancy is hovering at a low 4 percent. The combination of low vacancy rates and wage growth has allowed multifamily owners to increase rent structures. Landlords have seen high single-digit annual rent increases for the last four years in the Louisville MSA. Class A properties have been achieving rents approaching $2 per square foot for some unit types in luxury developments. IRR also reports that there are currently over 4,000 multifamily units planned or under construction in the Louisville MSA. …

December 13, 2021

Idaho Industrial Market Reports Western Western Market Reports

Idaho Industrial Takes Center Stage

by Jeff Shaw December 10, 2021

By Devin Ogden, Partner, Colliers Idaho has been overlooked by investors and developers in the past due to its smaller size and geographic isolation. This is not the narrative anymore. Tenants and users are currently looking to expand their operations into Idaho to serve the surging population and take advantage of a business-friendly environment with minimal regulation. Expensive land costs and significant cap rate compression in primary markets are causing developers and investors to shift their focus to secondary and tertiary markets to chase yield and opportunity. With the positive trend of people and businesses moving or expanding to Idaho, Boise is now near the top of the list for many national and regional investors and developers. The Boise industrial market has been underdeveloped in the past with only a handful of local developers that never got out ahead of themselves. The population of the Boise MSA is more than 750,000. Total industrial inventory is more than 42 million square feet with an additional 5 million-plus square feet being flex product. The market has had nearly 3 million square feet of positive absorption over the past two years and, as such, the current vacancy rate is 1.9 percent. Most new warehouse being constructed …

December 10, 2021

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Three Key Trends to Watch in the Philadelphia Multifamily Market in 2022

by Taylor Williams December 9, 2021

By Gary Holloway Jr, president, GMH Communities The COVID-19 pandemic served as an accelerator for transforming the Philadelphia multifamily market. Overnight, property owners and managers had to quickly adapt and find new ways to serve their residents while prioritizing their safety and following all of the guidelines from the Centers for Disease Control and Prevention (CDC). As we head into 2022, the pandemic will continue to influence what prospective tenants expect from their apartment communities. Here are three opportunities that multifamily owners should consider as the industry continues to grow and evolve in Philadelphia. WFH is Here to Stay Working from home is not a new trend. However, the pandemic thrust countless residents into remote work situations without warning. This sudden shift in work routines has prompted multifamily developers to rethink which amenities they need to provide now that remote and hybrid work is the norm. At GMH Communities, we are actively growing our amenity offerings to enhance the work-from-home experience. At The Yards at Malvern, one of our newest properties that is located in the suburb of Malvern, residents have access to a robust business center with multiple small and large conference rooms with a Zoom conference room, …

December 9, 2021

Market Reports Office Texas Texas Market Reports

Rising Oil Prices, Positive Quarterly Absorption Spell Hope for Houston Office Market

by Taylor Williams December 8, 2021

By Blake Virgilio, SIOR, CCIM, vice president at Colliers The Houston office market continued its very gradual stabilization with 27,000 square feet of positive absorption in the third quarter. While that volume of absorption only represents roughly one floor of office space in a typical Houston office building, it’s the first time the market has posted a quarter of positive net absorption in the last two years. The key activities of tenant tours and the return of employees to the office continued to increase throughout the third quarter. Nonetheless, the vacancy rate rose over the course of the quarter by 400 basis points from 22.9 to 23.3 percent, a historical high. Also in the most recent quarter, Houston’s office inventory increased slightly, with approximately 1 million square feet of new product added. There is still 3.2 million square feet of office space under construction, and most of the new inventory, which is 47 percent preleased, is expected to deliver this year. Of that total new product, about 2.3 million square feet is spec development, of which 60 percent is preleased. Houston has one of the highest physical office occupancy rates in the country, though many larger corporations began phasing their …

December 8, 2021

California Market Reports Multifamily Western Western Market Reports

Multifamily Rents Skyrocket in San Diego Despite Pandemic

by Jeff Shaw December 7, 2021

By Allen Chitayat, First Vice President, CBRE Capital Markets The San Diego multifamily market has continued to exhibit very strong fundamentals in light of the pandemic. This is due to the region’s diversified economy, as well as the continued shortage of housing supply. Tourism, biotech, healthcare, education, the Navy, drone manufacturing, business services, software, and other high-tech industries have made San Diego a magnet for venture capital and other business investment, with several high-profile technology companies announcing expansions in San Diego. Local historic housing policies, which have been unfriendly to new development, have made it very expensive to build, and perpetuate the shortage of housing. This dynamic has continued to bode well for multifamily investment in the region. However, there have been numerous efforts by the various municipalities within San Diego County to increase housing density in their transit priority areas. This has been aided by more relaxed parking requirements and revisions of community plans in the City of San Diego (through the Complete Communities Initiative), Mission Valley, Kearny Mesa and Downtown’s Midway District. These community plan amendments and initiatives call for an additional supply of about 70,000 new housing units. In addition, the Navy recently announced a preliminary decision to redevelop …

December 7, 2021

California Market Reports Multifamily Western Western Market Reports

NorCal’s Apartment Market is All About Location

by Jeff Shaw December 6, 2021

By Ramon Kochavi, First Vice President and Regional Manager, Marcus & Millichap Winston Churchill wrote, “Those that fail to learn from history are doomed to repeat it.” Precipitated by a once-in-a-lifetime health crisis, the 2020 market shift has had an oversized effect on Northern California’s multifamily marketplace. The ongoing pandemic has the hallmarks of an event that causes people — including real estate investors — to draw overarching conclusions. Overreaction is a characteristic of most recessions, but time and time again, investors have turned away from the Bay Area only to spend the next decade watching rent growth and massive appreciation from the sideline of some secondary market. While some Bay Area cities experienced double-digit, year-over-year rent decreases, these reductions are likely transitory in nature. Three factors have led to the Bay Area apartment rent growth over the past three decades: • A limited supply of units • A robust labor market (especially high paying jobs) • An onerous regulatory environment. These three trends are still present in the marketplace. While some jobs have transformed into either hybrid or fully remote positions, there is no doubt that the majority of work, especially entry level, will return to an office setting after the health crisis. Office …

December 6, 2021

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