The end of 2021 in Raleigh-Durham was marked by robust retail leasing and an increased level of investment sales in our suburbs and infill trade areas. Downtown Raleigh, Durham and Chapel Hill have lagged in activity, although each urban environment started to see a resurgence by mid-year, and notably Downtown Raleigh ended 2021 with record retail leasing activity. Population growth and major economic development announcements are driving these positive trends. Apple, Google, FujiFilm, several life sciences companies and most recently Toyota (just east of the Raleigh-Durham region) have highlighted economic expansion. Strong demand and a healthy retail construction pipeline have held retail vacancy to 7.1 percent despite headwinds from the COVID-19 pandemic. The healthy retail development pipeline includes several new mixed-use projects. Cary will see one of the largest active mixed-use projects in the Southeast deliver this year when Fenton opens in the spring. Hines and Columbia Development are currently finalizing the first phases of the project. Spread over 92 acres, Fenton will initially include retailers such as Pottery Barn, Williams-Sonoma and Superica, as well as apartments and office space. Over in Research Triangle Park (RTP), the Research Triangle Foundation and White Point Partners have announced Horseshoe at Hub RTP. …
By Steve Nosrat, Principal, Avison Young As we prepare to close out 2021, Las Vegas continues to thrive, maintaining its place as one of the fastest-growing multifamily markets in the nation. Clark County’s population grew by 2 percent — nearly 40,000 — ranking it among the top 10 metros with at least 750,000 residents. This has further increased the already high demand for multifamily properties. Annual job growth in Las Vegas has outperformed the national average for five straight months, with leisure and hospitality jobs driving most of the recovery. Housing demand and rents are hitting all-time highs all over the Valley. Home values have risen 23 percent annually, and apartment rents are up 22 percent. Vacancy rates are down to just 3.8 percent, compared to the national index of 4.5 percent. This has spurred investors on, causing them to feel more secure with Las Vegas’ long-term outlook. Apartment sales passed $1 billion in the second quarter of 2021, which has only happened twice before in Las Vegas history. The 12-month sales volume has passed $3.1 billion and is trending positively for 2022, according to CoStar. The apartment market gained significant momentum during the third quarter. Cap rates have compressed, and …
By Matt Pesch, Vice Chairman, CBRE The multifamily market in Phoenix experienced a record-setting year in 2021. Market vacancy dropped below 3 percent for the first time, the region led all U.S. metros in year-over-year rent growth for every quarter and total multifamily investment sales volume topped $12 billion. This was nearly double the volume from 2019 and a 125 percent jump from 2020. These metrics are driven by Phoenix’s primary economic drivers of nation-leading population and job growth. As of October, Phoenix was one of only four U.S. metros to recover 100 percent of the jobs the region lost during the pandemic. This was driven by the stable recovery of long-established industries and growing sectors that are diversifying the region’s employment base. Case in point: Phoenix is home to one of the fastest-growing biotech sectors in the U.S. with the life sciences workforce expanding by 8.5 percent from 2019 to 2020, according to CBRE’s latest research. Likewise, large corporate office users continue to relocate or expand in Phoenix at an unprecedented rate, further driving the region’s robust employment recovery. The area’s strong employment recovery and population growth are the fuel driving Phoenix’s multifamily sector. The gains in the apartment …
By Mike Otillio, research director, Colliers The Dallas office market and North Texas region as a whole continue to evolve as leading destinations for corporate relocations, led in part by a favorable business climate. This reputation as a top landing spot for regional workforce consolidations and outright relocations from other states has helped Dallas become a national leader in some key back-to-work metrics. According to research from security firm Kastle Systems, which monitors keycard, fob and app usage within thousands of office buildings across the country, the average occupancy rate in December across 10 of the country’s biggest markets was 40.6 percent. Dallas was one of the 10 markets tracked in the report, posting an above-average occupancy rate of 52.3 percent. The basic business-friendly climate and healthy pace of job and population growth, along with evidence that users are making stronger pushes to return to their workspaces, have accelerated the market’s office investment sales recovery for value-add, core-plus and stabilized product. Barring any unforeseen circumstances, such as a prolonged spike in cases from the Omicron variant, we expect this trend to continue through 2022. Dallas recorded several notable sales of iconic office assets in 2021, plus numerous deals for suburban …
By Eric Chen, Senior Vice President, CBRE Multifamily has been a well-performing real estate segment during the past 18 months as demand for housing continues to trump supply in most of California. The Inland Empire has been the recipient of much of this demand within the Greater Los Angeles and Southern California regions due to their economic and population growth. Tenants are also in search of more affordable, quality dwellings outside the urban core. Due to the confluence of these factors, multifamily vacancies in the area are at an all-time low of less than 5 percent. This is exasperated by the fact that new developments are at the lowest level across the nation, pushing rent growth to No. 1. This dynamic is, of course, ideal for investors who seek stable, income-producing investments with potential upside and little risk of oversupply. We do expect additional apartment properties to be built in the coming year or two, which will create more investment opportunities and provide more options for tenants who are new to the region or relocating from within. Looking back on this year, we have seen a number of large institutional-sized transactions between $25 million and $100 million, with investors ranging …
By John Griggs, co-founder, co-CEO, Presidium Everything is bigger in Texas, including the opportunity for apartment investment, development and absorption — and the nation is catching on. In 2021, Dallas-Fort Worth (DFW) again led the country in the number of multifamily units delivered, adding more than 20,000 new residences for the fourth year in a row. With the thriving economy, lower taxes, central location and an influx of people moving to the area via natural net migration and corporate relocations, it’s not surprising that the demand for apartment units is at an all-time high. A study from RealPage reported that the issuance of North Texas apartment building permits saw a 27 percent uptick in the 12-month period between September 2020 and 2021, one of the heftiest increases among the 10 largest U.S. markets. While the hyper growth the DFW area is experiencing is a positive thing, it’s shaping the economic landscape so rapidly that developers have to adapt efficiently and effectively. Supply chain issues and production bottlenecks are further complicating this equation. Desirability Brings Demand A clear benefit for us in the current North Texas real estate industry is that population, job opportunities and incomes are surging. The flood of …
WREB recently sat down with Tom van Betten, vice president of Matter Real Estate Group. The San Diego-baseed real estate development company currently has 2.5 million square feet of industrial projets either in development or owned by Matter. One of those four projects is Matter Logistics @ North 15, a 930,000-square-foot warehouse/distribution project in North Las Vegas that spans two buildings. Below, Van Betten discusses the firm’s attraction to the Las Vegas Valley, where he sees the industry heading and how Matter is able to find developable land in tight markets. WREB: What about the North Las Vegas submarket is attractive to Matter? Van Betten: Right now, Matter is focused on scale and land availability. North Las Vegas is currently where the larger available land parcels are — or were. I say “were” because there is a real shortage of land that has the infrastructure to develop, such as power and water. On the scale size, the tenants moving to Las Vegas continue to grow in size. To accommodate that demand, we are focused on larger sights. WREB: How were you able to acquire more than 42 acres for the new Matter Logistics @ North 15? As you mention, transactions of that size are …
By Philip Levy, senior managing director, investments, Marcus & Millichap The Dallas retail climate is more favorable entering 2022 than it has been for most of the COVID-19 crisis. Overall, the marketwide retail vacancy rate fell 50 basis points during the first three quarters of 2021, ending at an even 6 percent in September. Nevertheless, that rate is about 100 basis points above the pre-pandemic level. A strong rebound in tenant demand is helping lower vacancy, however, with net absorption across the opening nine months of 2021 totaling more than 2.2 million square feet, compared with a net loss of 1.5 million square feet in 2020. Additionally, the construction pipeline has shrunk considerably, helping mitigate supply-side pressure as the market bounces back. As of the fourth quarter of 2021, less than 1 million square feet of new retail product with an expected completion date in 2022 was under construction in the greater Dallas area. This is a sharp contrast to the 2 million-plus square feet that developers delivered in each year between 2014 and 2020. Strengthening demand drivers amid a reduction in development suggest that downward pressure on vacancy will continue in the coming quarters. New Households Spend Near-term uncertainty …
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 …
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 …