Market Reports

Austin, San Antonio Move Toward Single Metroplex, Further Stabilizing Retail Markets

by Taylor Williams October 29, 2021

By Matt Epple, executive vice president, Weitzman Austin; and David Nicolson, president, Weitzman San Antonio One of the best-known metroplexes — a term that was coined way back in 1915 to describe the phenomenon whereby two or more important cities expand to form one continuous urban area — in the country is Dallas-Fort Worth (DFW). Now, new data from the U.S. Census Bureau has led the Texas State demographer to predict that Texas’ next new mega metro will be Austin-San Antonio. Austin gained nearly 200,000 new residents over the past decade for a growth rate of 21 percent. San Antonio added 107,218 people and is one of the top 10 largest U.S. cities by population. Together, the two markets form a powerhouse metro area of nearly 5 million people. The Austin and San Antonio metro areas each represent robust economies with strong population, job and housing growth. Together, they are almost unbeatable. While the markets are on track to merge into a metroplex, for now they are each distinct enough that we produce separate research reports. But without a doubt, these two metro areas account for some of the most positive retail performance in the state. In formulating this market …

October 29, 2021

Illinois Market Reports Midwest Midwest Market Reports Multifamily

Condo Deconversions Will Continue in Chicagoland Area

by Kristin Harlow October 28, 2021

If we consider that 2017 was the year that deconversion sales in Chicago began in earnest, we are now four years into the cycle. I’m frequently asked my opinion of how much longer this cycle will last, and what it will look like going forward. To me, that comes down mainly to supply and demand, with an eye on change in the relevant state and city statutes governing these sales. The supply of condominiums in Chicago is still plentiful, especially condominiums that were converted from apartment buildings. While there was a bit of a condo-buying frenzy in the early part of 2021 as the world opened back up, that frenzy has dissipated. Condominiums that would typically take a couple of months to sell sold in days, and often at asking price. With that said, there was little meaningful price appreciation. The factors that hinder appreciation of these condominiums did not change: high amounts of rental units in the association; lack of amenities; and aging buildings that are either behind on maintenance or expensive to keep up. Those factors are unlikely to ever change. The current demand for multifamily properties is quite strong. Most investors sat on the sidelines in 2020, …

October 28, 2021

Arizona Market Reports Office Western Western Market Reports

Phoenix’s Office Market Remains Questionable

by Jeff Shaw October 26, 2021

By Laurel Lewis, Senior Vice President, NAI Horizon The office market is in uncharted territory, like going “Down the Great Unknown.” When John Wesley Powell navigated through the Grand Canyon, he did not know what lay ahead. Perhaps if he did, he might have chosen to leave it uncharted. Yet here we are in the midst of the proverbial river, wondering what lies ahead. The advent of a pandemic is changing minds about how and where we work. The work-from-home model may have started a decade ago, but the pandemic and new technology have exacerbated the trend. How will this affect the office market and, more specifically, the office market in Phoenix? The long-term effects remain to be seen, but we know Phoenix continues to attract new residents and new businesses. The Central Business District, for instance, is experiencing renewed interest. This is enhanced by the City of Phoenix’s efforts to offer a pedestrian-friendly environment, more entertainment and access to the light rail. The investment is paying off. Companies in bioscience, education, technology and financial services are taking an interest in the area’s vibrancy. To top it off, the second quarter came to a close with the Phoenix Suns making …

October 26, 2021

Data Centers Industrial Market Reports Southeast Southeast Market Reports Virginia

Richmond Industrial Pipeline Shows No Sign of Slowing Development, Leasing

by John Nelson October 25, 2021

At the mid-year mark, industrial occupancy in the greater Richmond area remains strong, closing with an overall occupancy rate of 93 percent in the categories we track (Class A, B select C vacant and investor-owned product with a minimum of 40,000 square feet total). Class A occupancy increased to 96 percent at the end of the second quarter, up from 93 percent at the end of the first quarter. Class B occupancy experienced a slight decrease to 91 percent, down from 92 percent at the end of the first quarter. CoStar Group reports overall industrial occupancy at 95 percent for product of all sizes, including investor-owned facilities, but excluding flex space (minimum 50 percent office). Richmond’s strategic Mid-Atlantic location along Interstate 95 provides access to 55 percent of the nation’s consumers within two days’ delivery by truck, and in addition to being the northernmost right to work state on the Eastern seaboard, Virginia has once again been named as the top state for business by CNBC. Business Facilities also ranked Richmond as one of the top locations for corporate headquarters. With 12 Fortune 1000 companies located in the region, Richmond is home to the most Fortune 1000 headquarters compared to …

October 25, 2021

Market Reports Midwest Midwest Market Reports Multifamily

How to Woo New Tenants and Keep Them Amid Booming Multifamily Market

by Kristin Harlow October 21, 2021

By Ryan Kirby, Village Green In the understatement of all understatements, the COVID-19 pandemic has changed a few things in the housing market. Supply chain disruptions, labor shortages and the astronomical rise in the price of lumber have all exacerbated the steady decline in new home construction. For more than a year, home prices have been on the rise, making purchasing a home a challenge — or even an impossibility — for many. As a result, the rental market is booming, but that’s not entirely due to COVID. In fact, the rise in rentals began taking shape long before COVID made its impact on the world. Then, new challenges and norms created by the pandemic accelerated these existing trends. Ultimately, more Americans are choosing to rent due to generational, financial and practical factors, not just situational factors related to COVID. That said, the pandemic has fundamentally changed what renters are looking for in a rental unit, and these preferences are likely to continue long after the coronavirus is a distant memory. For property managers, this means playing into the trends of what today’s renters are looking for. Keeping these renter preferences in mind won’t just make your properties more attractive …

October 21, 2021

California Market Reports Retail Western Western Market Reports

Valley Area Retail Market Slowly Picking Back Up

by Jeff Shaw October 20, 2021

By Yair Haimoff, Executive Managing Director, Spectrum Commercial Real Estate The COVID-19 pandemic slowed or halted markets across the world. But how did Los Angeles fare? Well, the retail market slowed in 2020 as a result of the pandemic, but, fortunately, it is slowly picking up with reopenings and the adoption of the COVID-19 vaccine. Looking back, recent transactions in the retail space have predominantly included food-related deals. With established fast food businesses like In-n-Out, Starbucks, Popeye’s Chicken, Chick-Fil-A and more showing more transactions, there is definitely a pattern of increased demand for services that support activities necessitated by isolation. However, there have also been deals that included gyms/fitness users, family entertainment, tutoring centers and a few other ancillary retail uses. It looks as if the reopenings are starting to bring in a renewed demand for more social activities, which, blended with the rise of fast food establishments, is a good sign the market is picking up. Looking at current retail development activities, the local market has been mostly quiet in terms of retail-only centers. This makes sense, as retail stores suffered during the shutdown, with many existing retailers turning to curbside pick-up services to stay afloat. Many developers simply aren’t …

October 20, 2021

Arizona Market Reports Retail Western Western Market Reports

Small Businesses Make Big Strides in Phoenix’s Retail Market

by Jeff Shaw October 19, 2021

By Matt Harper, Senior Vice President of Retail, NAI Horizon Arizona relies heavily on a robust tourism industry. When COVID-19 hit, it was a massive blow to the hospitality and retail sectors. Coming out of the pandemic, however, the Metro Phoenix retail sector has shown great resiliency, especially mom and pops. Phoenix ended the fourth quarter of 2020 with a positive net absorption of 124,330 square feet of retail space. With negative net absorption in the second and third quarters of 2020 – the devastating months of the pandemic – Phoenix ended the year at negative 373,715 square feet. This was compared to an overall positive net absorption of more than 1.1 million square feet in 2019. Phoenix vacancy rose slightly in the second quarter of 2021 from the previous quarter, coming in at 7.7 percent and 7.5 percent, respectively. Net absorption for the second quarter was a negative 63,558 square feet, down from a strong first-quarter 2021 of 466,714 square feet. The average triple-net rental rate rose slightly to $15.81 per square foot. COVID-19 travel restrictions and stay-at-home orders attributed to the paltry second- and third-quarter 2020 numbers. Then those orders were lifted by Gov. Ducey, and the sun came …

October 19, 2021

Florida Life Sciences Market Reports Retail Southeast Southeast Market Reports

Orlando Retail Market Experiencing Record Investor Demand and Pricing

by John Nelson October 18, 2021

As COVID-19 took hold in early 2020, the Orlando retail market only saw a modest dip in fundamentals where metro-wide rental rates fell by 5 percent and occupancy dropped 100 basis points during the second and third quarters. Beginning in the fourth quarter of 2020, rental and occupancy rates began an extraordinarily strong comeback, climbing 12 percent and 140 basis points, respectively, from the COVID-19 lows. According to data from CoStar Group, the metro’s average rental rate of $15.84 per square foot in the second quarter is more than 7 percent higher than the pre-pandemic peak. And occupancy rates are 40 basis point higher than the pre-COVID-19 peak, currently standing at 96.4 percent. With escalating land prices and shortages in raw materials and labor, we anticipate overall construction costs will continue to increase, stalling deliveries and further advancing rental and occupancy rates. Last year, some retail owners (sellers) and investors (buyers) focused on asset management within their portfolios and reevaluated the perceived investment risk due to the pandemic, which caused a sharp dropoff in 2020 investment activity, despite an abundance of capital available to invest. After a couple quarters of fundamentals bottoming out, owners and investors had confidence in their …

October 18, 2021

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Philadelphia’s Growing Demand for Industrial Space: Is There an End in Sight?

by Taylor Williams October 15, 2021

By Richard Gorodesky, SIOR, senior managing director, Colliers International; and Adam Gorodesky, associate, Colliers International Commercial real estate is historically a cyclical business. There is a fairly predictable pattern of oversupply, recession, recovery and finally expansion before starting all over again. While the cycle isn’t always this cleanly defined, it generally follows this pattern, and has done so for decades. While this formula can be very useful for understanding the cycles and what occurs during them, it lacks one key ingredient: timing. There’s no way to accurately predict when one stage is ending or how long each phase will last. On a basic level, like in all markets, the commercial real estate market cycle responds to the balance, imbalance and rebalancing of supply and demand. The factors that influence the market and determine the length of each cycle are and will continue to be moving targets. Demand Overview While e-commerce represents about 18 percent of retail sales today, and it is widely believed in commercial real estate circles that that number could grow to 30 percent by 2025. Amazon, online retailers and other e-commerce companies have not only fueled demand for last-mile distribution facilities, which are necessary to reach as …

October 15, 2021

Features Leasing Activity Market Reports Southeast Feature Archive

NAIOP: Commercial Real Estate Industry Sentiment Up to 56 in September, Near Pre-Pandemic Level

by Julia Sanders October 14, 2021

WASHINGTON, D.C. — Commercial real estate professionals indicate conditions in the industry have returned to approximately where they were before the onset of the COVID-19 pandemic, according to The National Association of Industrial and Office Parks (NAIOP) Fall 2021 Commercial Real Estate Sentiment Index. The index for September 2021 came in at 56 out of 100, up slightly from 54 in April 2021 and identical to March 2019, a year before the pandemic began. At the pandemic’s worst point — March through September 2020 — the index sank to 45. The NAIOP Sentiment Index was created to predict general conditions in the commercial real estate industry over the following 12 months by asking industry professionals to predict conditions for their own projects and markets. The Fall 2021 report surveyed a total of 357 respondents from 263 distinct companies from Sept. 7 to 14. The index asks respondents questions about jobs, space markets, construction costs, capital markets and other conditions for real estate development. A sentiment index below 50 means many believe there will be unfavorable commercial real estate conditions over the next 12 months; 50 means little to no change in commercial real estate conditions are expected; and greater than …

October 14, 2021

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