Market Reports

Four Demographic Shifts Poise St. Louis for Lasting Multifamily Market Growth

by Kristin Harlow January 26, 2022

Fueled by a trifecta of favorable cap rates, an underserved apartment market and sharp increases in market demand, St. Louis is starting to gain momentum with the potential to become a new multifamily hotspot. As investors and developers take note, capital that typically has been focused in higher growth markets on the coast and cities like Chicago and Nashville is starting to flow into the Gateway City. The fruit of these investments is now coming to market. Despite 20-plus percent increases in construction costs, 24 percent more units — 2,057 total — were built in 2021 compared with St. Louis’ five-year annual average. Nearly 4,000 additional units are under construction in the St. Louis region. Population, personal income and job growth are the key economic drivers of multifamily unit demand. In 2020 and 2021, all three of those markers are finishing on the upside in St. Louis after pandemic dips. Employment growth is particularly promising. After slight employment declines over the last five years, St. Louis employment has grown at an average annual rate of 2.7 percent for the last four quarters. CBRE forecasts positive growth of 2 percent for the next two years and 0.8 percent for the next …

January 26, 2022

Industrial Market Reports Texas Texas Market Reports

Manufacturing Can Play an Unsung Role in Driving Industrial Growth in Dallas

by Taylor Williams January 25, 2022

By Conrad Madsen, SIOR, co-founder and partner, Paladin Partners; and Kipp Collins, partner, Paladin Partners Just 20 years ago, the conventional wisdom and commonly held belief throughout the Dallas commercial real estate scene was that office and retail were preferable sectors to be in versus industrial. Looking back and reflecting on how industrial has gone from ugly duckling to white swan in just 20 short years, we can’t help but be glad that we didn’t take that advice. Led by Amazon, e-commerce has truly changed the world, and certainly industrial real estate by extension. Everyone talks about how e-commerce is what’s driving the explosion of warehouse and distribution center development and absorption across Dallas-Fort Worth (DFW) and beyond. But the fact of the matter is, e-commerce still only accounts for about 14 percent of total retail sales, according to data from the U.S. Census Bureau. Think about that for a moment — the current proportion of 14 percent leaves a tremendous amount of room for additional growth. Demand for warehouse and distribution space is through the roof; developers can’t build warehouses fast enough these days, and yet the market is nowhere close to reaching its peak. Inventory Growth There is …

January 25, 2022

Georgia Market Reports Restaurant Retail Southeast Southeast Market Reports

Atlanta’s Resilient Restaurant Sector is on the Rebound Post-Pandemic

by John Nelson January 24, 2022

When I recently looked into a prime site in Atlanta’s bustling West Midtown district on behalf of one of my restaurant clients, I quickly realized that several restaurants were eyeing the space. There were six other restaurant groups interested in leasing the space, creating a bidding war at rental rates far higher than my client wanted to pay. Heated competition for available restaurant spaces is by no means unusual in the Atlanta market these days, particularly for intown Atlanta, or the portion of the city located within the Interstate 285 loop and containing some of the city’s most urban, in-demand neighborhoods including Old Fourth Ward, EAV (East Atlanta Village) and Poncey-Highland. It’s been a rollercoaster stretch for the retail and restaurant sectors since the onset of the COVID-19 pandemic. Large decreases in sales at the outset were followed by a substantial recovery by early 2021, only to be followed by a setback in some markets over the summer caused by the more contagious Delta variant. Despite the challenging conditions, Davis said his clients have been forging ahead with their expansion plans. These clients have benefitted from their history of strong sales and the ability to adjust their service models (such …

January 24, 2022

California Industrial Market Reports Western Western Market Reports

The Famous Inland Empire Industrial Market Remains as Tight as Ever

by Jeff Shaw January 21, 2022

By Tony Phu, Senior Executive Vice President, Colliers Rental rates and land values continue to outpace construction cost inflation, driven by the insatiable need for industrial and distribution space across the entire Western U.S. This is especially true in Southern California where a critical mass of population/tenant demand and high barriers to entry for development have created an exacerbated supply and demand imbalance. Scarcities of land for new development, as well as existing and under-construction buildings, are the main drivers. Entitlements are difficult to secure with a timeline between 24 and 30 months from start to finish. As a result, scarcity will remain the name of the game, and tenants will continue to pay increased costs to secure a building. With roughly 29 million square feet expected to deliver over the next five quarters, vacancy should remain flat as demand stays high for these buildings. Lease rates will continue to rise as existing tenants renew while expanding tenants compete for limited space that comes to market. Total net absorption for 2021 will break the record set in 2018, likely falling just shy of 30 million square feet. Activity levels in both the Inland Empire East and West remain about the same. There are so …

January 21, 2022

Industrial Market Reports Midwest Midwest Market Reports Missouri Retail

2022 Outlook Looks Strong for Industrial, Retail in St. Louis

by Kristin Harlow January 20, 2022

This past year, many commercial real estate sectors and geographies that had been affected by the initial impact of pandemic-induced shutdowns demonstrated improvement. Across Missouri, we saw very robust levels of sales activity, as well as new construction and development — with more than $2.4 billion in overall commercial real estate sales volume through the end of third-quarter 2021. Although statewide growth was reported across all property types and sectors, industrial was especially strong, while retail emerged with slightly less consistency, but was positive nonetheless. The forecast for 2022 is bright, especially as retailers announce expansion plans and developers break ground on new projects. St. Louis is central to growth As an important secondary U.S. market, St. Louis and the surrounding areas are experiencing high levels of demand and activity. In the first three quarters of 2021, the St. Louis market reported $1.7 billion of overall commercial real estate sales volume, representing more than 70 percent of statewide activity. These statistics illustrate the sentiment of today’s active buyers who agree that St. Louis is a stable and attractive market for investment. Within the metro area, St. Charles County stands out as one of the fastest-growing counties in the country, reporting …

January 20, 2022

Market Reports Nevada Retail Western Western Market Reports

Vegas Shows Resilience with Strong Economic Growth in Retail

by Jeff Shaw January 18, 2022

By Jeffrey Mitchell, Principal Broker, Mountain West Commercial Real Estate Las Vegas experienced the second largest unemployment rate at the start of the COVID-19 pandemic in April 2020. Since then, the Las Vegas Metro has come a long way in recovering economically. It continues to see growth, particularly in the retail sector. Some key factors as to why Las Vegas has been on a continued trajectory of growth include the migration of residents, capital from across the country (with California being the primary source) and substantial tourism to the Vegas Strip. This has all fueled the flames for a hot Las Vegas that’s attracting investors, big box tenants and franchises looking to expand with a fury. The migration of California residents has helped increase residential growth by 2.2 percent in Clark County. California residents typically have a higher disposable income, which has flooded the housing market with prices increasing by 20.9 percent. New residents translate to new sales, which have also bolstered the food and beverage and retail markets by creating demand for more retail tenants around them. Ironically, high-end retailers have set records throughout the pandemic with their sales on the Strip. Other business owners have strategically managed PPE from the government or capital …

January 18, 2022

California Industrial Market Reports Western Western Market Reports

Mixed-Use Industrial Sector Soars in the Inland Empire

by Jeff Shaw January 14, 2022

By Dan MacDavid, Principal, AO Mixed-use industrial has become a significant economic driver in the Inland Empire. Cities are benefiting from business synergies, additional tax revenue, high-quality design and civic engagement that builds community. The recent mixed-use trend can be attributed to one key change: the significant growth in size and scale of industrial master plans over the past few decades, combined with a new approach to industrial as a partial result of the pandemic. After the 2008 financial crisis, the U.S. economy has managed to make a comeback in ways that are unique and new to the commercial real estate industry, specifically in the mixed-use industrial sector. The Inland Empire — historically regarded as a key industrial market — saw record-level demand for industrial space as online sales surged during the pandemic. Some 19.1 million square feet of industrial space was leased in the fourth quarter of 2020. This was down slightly from 19.8 million square feet in the third quarter, according to JLL’s fourth-quarter market report. Despite 19.7 million square feet of new product being delivered in 2020, supply still lags demand. Data from the second quarter of 2020 shows there are no signs of slowing in this sector, particularly in …

January 14, 2022

Industrial Market Reports Midwest Midwest Market Reports Missouri

Available Land, Developer Talent Boost Kansas City’s Industrial Scene

by Kristin Harlow January 13, 2022

2021 was a historic year for Kansas City industrial real estate. The local market size eclipsed 300 million square feet of space, representing the 16th-largest industrial market in the U.S. Class A building inventory is nearly 44 million square feet, ranking 15th in the nation. Of the industrial building inventory, 14.4 percent is Class A, ranking ninth-highest in the country, suggesting the inventory that we have is quality compared with other U.S. markets. Capital markets are firm influencers with soft voices. Nationally, the amount invested is a record high. Rental rate growth is at an all-time high and investors are confident that this growth will sustain. While you may not read about where capital is being deployed, the institutional development and investment activity provide the output to see where institutions have comfort. Cap rates in the Kansas City area broke records and saw compression in the last year of 50 to 150 basis points depending on the asset class. This is a result of investors seeking return and believing in the long-term strength of tier II industrial markets and yield premium afforded in these markets compared with gateway cities. Well-positioned assets traded with cap rates in the low to …

January 13, 2022

Market Reports Nevada Office Western Western Market Reports

Southern Nevada Suburban Office Market Demand Improves

by Jeff Shaw January 12, 2022

By Wes Drown, Broker Associate, REMAX Commercial The Las Vegas Valley continues to see growth in the demand, velocity, rates and a decline in incentives as Vegas bounces back. This is led by the return of our entertainment industries, which are almost to pre-COVID levels, in addition to the massive demand for housing and commercial construction. All you have to do is take a drive around the 215-Beltway to see that activity is everywhere. The news-grabbing projects that are seemingly announced weekly are once again turning heads. They’re attracting young college graduates and stimulating the needs for goods and services, almost to a pre-COVID level. Office construction is underway in earnest, with expansion in Summerlin, the SW “Curve” and West Henderson. High- and mid-rise office with parking structures are being leased up in the Westside areas, with predominantly single-story popping up in Henderson. Rates for suburban office products are pushing over $2.10 per square foot, per month, including operating costs. The spread between asking price and closed deals is shrinking significantly. Incentives are back to “normal” with landlords offering new carpet and paint, or maybe a partial month early occupancy rather than the free rent or step-up rents we’ve seen in the past. …

January 12, 2022

Market Reports Office Texas Texas Market Reports

Texas Office Owners Double Down on Health, Wellness

by Taylor Williams January 12, 2022

By Taylor Williams Office owners in Texas remain acutely aware of how the pandemic has changed the game and are not shying away from promoting health and wellness within their buildings. According to data from security firm Kastle Systems, which tracks keycard, fob and app access to some 2,600 office buildings across 138 cities and 47 states, office space in America’s largest markets continues to be underutilized. Across the 10 markets that Kastle Systems tracks, including Austin, Houston and Dallas, the average office occupancy rate in early December was 40.6 percent. Yet the three Texas markets all registered occupancy rates considerably above the national average — 59.3 percent, 54.9 percent and 52.3 percent, respectively — for Austin, Houston and Dallas. A more temperate climate in Texas could bear some responsibility for these above-average performances, given that access to functional outdoor spaces has undeniably become a key tenant demand during the pandemic. Along those lines, tenants have understood for some time now that successfully bringing their employees back to their offices is somewhat contingent on making sure those workers feel safe on the job. The onus, therefore, has fallen on office owners to ensure that their buildings have protocols through which …

January 12, 2022

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