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

Market Reports Restaurant Retail Texas Texas Market Reports

Restaurants Embody Trends That Define Houston Retail Market Post-Covid

by Taylor Williams December 1, 2021

By Jeff Tinsley, senior advisor, SVN | J. Beard Real Estate – Greater Houston As we reach the end of the calendar year, it’s become clear that 2021 has been a year of transition. Many new trends are emerging from the pandemic year of 2020 with regard to retail real estate. COVID-19-induced trends within shopping, dining and entertainment have given rise to a new generation of retailers to the Houston market. Many quick-service restaurants (QSRs) are looking to reduce store sizes for future locations and focus on streamlining their drive-thru, call in and pick-up order service. Some restaurant concepts are instilling the use of “ghost kitchens” and are aggressively looking to lease second-generation spaces in order to take advantage of the growing takeout and delivery demands. During the pandemic, one of the hardest-hit sectors was in the restaurant industry. Following months of minimized interaction between customers and proprietors due to dining room closures, we are now seeing a greater increase in pick-up and delivery requirements. Many restaurants are now using new technology and methods in terms of how service is offered, how food is prepared and how kitchen and service areas are designed. Furthermore, many food and …

December 1, 2021

California Market Reports Office Western Western Market Reports

San Diego County’s Office Market Positions for Pandemic Recovery

by Jeff Shaw November 30, 2021

By Christopher Reutz, Research Director, Colliers It’s no secret the San Diego County office market experienced unprecedented conditions in 2020. Yet, brighter days may be ahead for the local office market. The COVID-19 pandemic caused many “non-essential” businesses to adopt work-from-home policies. San Diego’s office market took an incredible hit from this in early 2020, amounting to 450,000 square feet of negative net absorption. This was the biggest drop in local demand in more than six years. Last year recorded 1.8 million square feet of negative net absorption, while the first quarter of 2021 posted nearly 400,000 square feet of additional negative demand. The forecast for San Diego’s office market, though, is cautiously poised for an upswing. Demand began to pick up this last quarter as the percentage of vaccinated employees increased. Demand for office space also increased with net absorption totaling 16,000 square feet, signifying the wave of move-outs had finally passed. Additionally, while vacancy during the recession increased from 9.9 percent to a current rate of 14.2 percent, it still remains lower than historical rates recorded during the Great Recession. From late 2008 through mid-year 2011, vacancy remained in the 15 percent to 16 percent range. While the national conversation has focused …

November 30, 2021

California Industrial Market Reports Western Western Market Reports

San Francisco East Bay Industrial Market Soars to New Highs

by Jeff Shaw November 29, 2021

By Steve Kapp, Executive Managing Director, Newmark Strong tenant demand, coupled with a limited supply of Class A industrial product, has pushed industrial rents in the San Francisco East Bay industrial market to new highs. Also known as the I-880 corridor, vacancy rates stood at 6 percent, down slightly from a year ago on a building base of 189 million square feet. Some submarkets like Fremont and Union City, as well as certain building types like new construction Class A warehouse, have performed even better than average. Warehouse rental rates now average above $1 per square foot, per month, in most East Bay markets. These show no signs of slowing down based on strong tenant demand. This demand goes beyond the typical ecommerce giants. Large lease deals were signed by Wine.com, Applied Materials, Home Depot and Chef’s Warehouse in the second quarter alone. Another trend is the rise of the life sciences sector. These firms have traditionally gravitated to research-oriented campuses in South San Francisco, Emeryville or Palo Alto. However, the I-880 corridor is chalking up a number of deals for pilot plants and good manufacturing practices (GMP) facilities. Sana Bio recently leased a 164,000-square-foot advanced manufacturing facility in Fremont, while Senti Bio …

November 29, 2021

Market Reports Midwest Midwest Market Reports Multifamily Nebraska

Omaha’s Healthy Multifamily Market Drives Increase in Agency Lending

by Kristin Harlow November 24, 2021

Despite some disruption from COVID-19, Omaha’s multifamily market is resilient. It remains a healthy, stable market boasting sound fundamentals and continues to experience increasing demand for apartments. Multifamily, in general, has outperformed many other real estate sectors during the pandemic. Omaha’s multifamily occupancy remains strong and rent growth over the past 12 months has shown a positive overall trend. In construction, the market takes a measured approach with roughly 1,500 units per year on average. According to Reis, there are 384 units scheduled to be delivered throughout the remainder of 2021, while absorption is forecast to be more than 400 units, resulting in a 0.1 percent uptick in occupancy. Solid market fundamentals Both Omaha and nearby Lincoln, Nebraska, are seeing strong investment sales activity although limited assets are available. The market is predominantly controlled by local players, many of which build for their portfolios and operate the properties. However, some smaller players and out-of-town investors have found the timing was right to exit out of the market and sell. Out-of-state groups are aggressively entering these markets and paying significant premiums for available assets. Driving investment sales activity are low interest rates and better returns than these groups can find in …

November 24, 2021

California Market Reports Office Western Western Market Reports

Sacramento’s Office Market is Eager for Stability

by Jeff Shaw November 22, 2021

By Cole Sweatt, Brokerage Manager, Sacramento Region, TRI Commercial Now that we’ve had the chance to analyze the data from the first two quarters of 2021, it seems that consumers and businesses are experiencing positive trends throughout Northern California. However, the initial recovery has come with challenges, including semiconductor shortages, supply chain disruptions and increased commodity prices due to a confluence of demand from consumers. We have seen relief in some of these sectors, which has led to increased production and the stabilization of commodity pricing. Although inflation should curb a bit this year, this would seem to be a temporary activity as average inflation over the next couple years is projected to be higher than the average of the prior decade. How is the office sector reacting, particularly in the capitol region near Sacramento? Office sales have been lukewarm in the first part of 2021. Investment strategies continue to change due to economic uncertainty and the long-term goals of companies occupying real estate. Employees have continued to trickle back into the office, but many employers have extended their stay-at-home and/or part-time policies through the fourth quarter of this year. As a result, the market is trending toward a flight to …

November 22, 2021

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