Thursday, April 3, 2025
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LouisianaMarket ReportsOfficeSoutheastSoutheast Market Reports

Challenges Unfortunately Outweigh Opportunities for New Orleans Office Market

by John Nelson

A combination of short sales, declining occupancy rates, loan concerns and migration to suburban offices contribute to uncertainty in the New Orleans office market. As we approach the fourth quarter of this year and begin to reflect back on the market in 2024, the challenges unfortunately outweigh the opportunities. Two notable cases include The DXC Technology Center and The Energy Centre.  The DXC Technology Center, located at 1615 Poydras St. in the Central Business District (CBD), a once-prized office tower anchored by Freeport McMoRan, sold for less than $37 per square foot. The building, over 500,000 square feet, traded for $18.5 million, significantly below the remaining debt on the property. The New Orleans Police Department recently signed a lease to occupy approximately 45,000 square feet in the building, which lessens the steep decline in the building’s value. The Energy Centre, located at 1100 Poydras St., is one of the most desirable and best-performing Class A towers in the CBD. It entered receivership, but the building is back on track and is rumored to be nearing a sale. The building owner, The Hertz Group, controls four additional Class A office towers on Poydras St. (400, 650, 701 & 909 Poydras St.), …

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IndustrialMarket ReportsWashingtonWesternWestern Market Reports

Dynamics Shift in Seattle’s Industrial Real Estate Market

by John Nelson

— By R.J. Vara, first vice president of investments, Marcus & Millichap’s The Vara Group — The Seattle industrial market is undergoing a transitional phase marked by rising vacancies, fluctuating demand and evolving investment dynamics. There was a robust surge from 2020 to 2022, which saw nearly 19 million square feet of industrial space absorbed and more than $8.4 billion in transaction volume. However, the market experienced a reversal in 2023, with roughly 2 million square feet of previously absorbed space becoming available. This shift, driven by decreased container traffic at local ports, rising interest rates and elevated inflation, has continued into 2024, with speculative construction projects contributing to elevated vacancy rates. As of mid-year, Seattle’s industrial vacancy rate has increased by about 2 percent year over year, reaching 7.7 percent. This has surpassed the national average of 6.6 percent. The rise in vacancies is primarily attributed to the completion of new distribution facilities, with spaces of more than 100,000 square feet now available in double digits. Delivery numbers are expected to fall to their lowest level since 2017, but investors are beginning to explore opportunities in the southern regions. Regarding investment activity, Seattle’s industrial sales volume has notably increased …

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Market ReportsMidwestMidwest Market ReportsNebraska

Real Estate Development Thrives in Omaha, Driven by Strong Demographic Growth

by Kristin Harlow

By Tom D’Arcy and Brad Soderwall, Hines The Omaha market has experienced strong growth in recent years, with $8 billion in commercial real estate development currently underway driven by consistent migration of new residents and professionals to the area.  The city’s attractiveness is attributed in large part to its high quality of life and attractive cost of living, both of which present compelling opportunities for new development that further incentivizes in-migration, and cultivates and enhances the unique lifestyle that makes Omaha a desirable place for families and young professionals to put down roots. Shifting demographics drive growth in Omaha Omaha’s low unemployment rate (at 2.6 percent as of July 2024, per the Nebraska Department of Labor), quality of life, affordable cost of living and expanding cultural opportunities are driving migration into the area. The Omaha-Council Bluffs metropolitan area saw its strongest population growth since pre-pandemic (2019) in 2023, with an increase of 0.8 percent, substantially outpacing the national average of 0.5 percent, per the U.S. Census Bureau. 2023 also saw a net migration of over 3,400 residents to the area. This population growth is fueling demand in the multifamily market, where we saw a record-setting year for development in 2023 …

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KentuckyMarket ReportsMultifamilySoutheastSoutheast Market Reports

Positive Rent Growth Makes Louisville Multifamily Market Stand Out From the Pack

by John Nelson

Amidst economic uncertainty, Louisville stands out for its resilience, establishing itself as a stalwart in today’s market. According to Apartments.com, Louisville ranked No. 1 in the nation for rent growth in the second quarter of 2024. Factors such as Louisville’s non-cyclical job growth, expanding industries including EV production and the burgeoning River Ridge project in Southern Indiana all contribute to its growth.  When we inspect the data, we see a basic yet fundamental market factor at play: supply and demand. Louisville’s supply is low relative to the growth in renters, resulting in upward pressure on rents despite a nationwide market that is largely declining.  Supply dynamics The bulk of Louisville’s development pipeline is concentrated in Southern Indiana, with 1,039 units under construction in the Jeffersonville submarket. The Southern Indiana region has experienced solid growth with over 10,500 incoming jobs due to the economic activity from River Ridge. River Ridge Commerce Center reported an economic impact of $2.93 billion for calendar year 2023, up over $2.7 billion compared with 2022, according to Inside INdiana Business. Notable development projects in Southern Indiana include: • The Flats on 10th, 3300 Schosser Farm Way (300-units by Schuler Bauer Real Estate) • The Warren, 4501 …

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Market ReportsRetailWashingtonWesternWestern Market Reports

Bellevue Retail Booms Again

by John Nelson

— By Jacob Pavlik, research manager, Colliers — A 10-mile drive east of Seattle, Bellevue is the top destination for urban retail activity in the Puget Sound. High incomes, healthy daytime employment and the most active office leasing market in the Pacific Northwest means not much more is needed to make a retail space thrive. That is, except reasonable fit-out costs for new space.  The Bellevue CBD has seen significant new construction for office buildings (with lots of ground-floor retail opportunities), delivering 3.3 million square feet over the past year alone. Unfortunately, sky-high construction pricing and office market financing challenges have made it difficult to get retail leases done in new buildings. Second-generation spaces in the submarket are the reasonable but diminishing alternative. Second-generation spaces are filling up faster than they become available. The demand is partially from tenants whose buildings were torn down for redevelopment. Given the cost of fitting out a space in a brand-new building elsewhere in the Bellevue CBD, second-generation space is the most lucrative alternative.  First-generation space, which delivers as a cold shell without HVAC, plumbing or dry wall, can cost upward of $400 per square foot to build out. Landlords tend to offer $100 …

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IllinoisMarket ReportsMidwestMidwest Market ReportsOffice

Multi-Tenant Trophy Buildings Shine in Chicago Office Market

by Kristin Harlow

By Adam Johnson, NAI Hiffman For years, you’ve read headlines saying the U.S. office market is struggling with record-high vacancy that threatens to push many owners into default. And that is absolutely true. But there’s another side to the story that isn’t getting as much attention, and is playing out not only in Chicago, but also in metros across the country: that smaller, multi-tenant office properties — particularly in suburban locations closer to where workers live — continue to not only survive but thrive following the pandemic.  Throughout suburban Chicago, office buildings with less than 50,000 square feet have considerably higher occupancy rates than larger ones. For instance, at the smallest buildings — those under 20,000 square feet — vacancy was as low as 3.8 percent as of the second quarter of 2024, whereas for the largest properties over 200,000 square feet, vacancy climbed as high as 38 percent, according to NAI Hiffman research.  By comparison, mid-size, office buildings between 20,000 to 50,000 square feet reported vacancy rates ranging from 14.3 percent in the western suburbs to 23.1 percent north of the city.  Small tenants, big impact We’ve all heard about larger office properties going back to their lenders. Look …

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Conference CoverageMarket ReportsMultifamilyTexasTexas Market Reports

InterFace Panel: Institutional Capital’s Return Signifies Long-Term Strength of Austin Multifamily Market

by Taylor Williams

By Taylor Williams AUSTIN, TEXAS — Sources of institutional capital are slowly trickling back into buyer pools of deals for multifamily properties in Austin, a move that marks an inflection point within the sector as a whole and speaks to investors’ long-term faith in that market’s fundamentals. And faith is perhaps just what the doctor ordered. In some ways, Austin has become a victim of its own success over the past decade, a sort of cautionary tale of growth gone too heavy too fast. The feverish attempts of multifamily developers to keep pace with demand during that time have come to a head, and the market now languishes in a state of oversupply. With rents softening and interest rates only just now showing concrete signs of decreasing, institutional capital has been more than content to sit on the sidelines of this market for the past 18 or so months. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. But that is starting to change, at least according to a panel of multifamily investment sales professionals who spoke …

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KentuckyMarket ReportsOfficeSoutheastSoutheast Market Reports

Louisville’s Office Market Is a Tale of Two Sectors: Suburbs and the CBD

by John Nelson

The Louisville office market is at an interesting crossroads, to say the least. Historically, the sector has always skewed toward the suburban submarkets as east Jefferson County has been the go-to area for companies looking for office space.  Over the past few years, the shift to the suburbs has become more pronounced than ever as Louisville’s office market experiences a dramatic contrast between the current state of the overall office market in the suburbs versus the central business district (CBD). In the suburban markets, the premier office buildings are experiencing low vacancy rates and record-setting growth in rental rates.  On the opposite side, the CBD continues to struggle with increases in vacancy rates, which is expected to increase in the coming months. This trend reflects overall national office trends as companies focus on new, highly amenitized spaces to offer their employees. Suburban Louisville The suburban office market in Louisville has demonstrated reliable stability over the past four years. As of second-quarter 2024, the vacancy rate for Class A spaces stood at 12.7 percent, while Class B spaces recorded a higher rate of 17.2 percent.  The suburban market has seen limited new construction deliveries thus far in 2024. The most notable …

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IdahoIndustrialMarket ReportsWesternWestern Market Reports

Boise’s Industrial Market Boasts Strong Fundamentals, but Challenges Continue

by Jeff Shaw

— By Devin Pierce, industrial specialist, TOK Commercial in Boise — In recent years, Boise’s industrial market has become a focal point for investors and developers drawn to the region’s economic growth and location. With demand for industrial space on the rise, the market has experienced an unprecedented wave of new construction aimed at meeting the needs of both local businesses and national tenants looking to expand their operations.  This surge in development activity reflects Boise’s growing prominence as a logistics and manufacturing hub. However, as new projects come online, the market is also grappling with the challenges of balancing supply and demand, particularly in the wake of fluctuating economic conditions. Speculative Construction Drives Vacancy Surge Boise’s industrial market saw a considerable number of projects completed during the first half of 2024, with more than 2.2 million square feet of new construction delivered. Speculative construction accounted for more than 86 percent of these projects, totaling nearly 2 million square feet and marking a record high for mid-year.  Top spec projects included nearly 1 million square feet at Red River Logistics Center; three new buildings (totaling 292,000 square feet) at Park84 in Nampa; and 396,000 square feet at Sky Ranch Logistics. This …

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DFW-Industrial-Panel
Conference CoverageIndustrialMarket ReportsTexasTexas Market Reports

Tenant Activity Has Slowed in DFW Industrial Market, But That’s Not Necessarily a Bad Thing, Say InterFace Panelists

by Taylor Williams

By Taylor Williams In the eyes of some commercial brokers, especially those who represent tenants, there actually is such a thing as too little vacancy. When markets are running super-hot, meaning demand is far outstripping supply, tenants have minimal options and often end up paying premiums just to be able to secure space. That’s great for landlords — to a point — because markets can only bear so much rent growth in so much time before tenants start looking for workarounds to physical occupancy. Enter the Dallas-Fort Worth (DFW) industrial sector, which has been on fire for the past seven-plus years. Explosive volumes of new deliveries, frenetic paces of absorption, stiff competition for space, record levels of rent growth and a national coming-out party as an undeniable Tier 1 market have all been hallmarks of this activity. But such torrid paces of growth were never really sustainable in perpetuity, and although both the supply and demand sides of the market have cooled, the slowdown in some ways reflects a return to healthier dynamics. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements …

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