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

Industrial Market Reports Midwest Midwest Market Reports Minnesota

Institutional Capital Targets Minneapolis Industrial Market

by Kristin Harlow October 14, 2021

By Peter Loehrer, Colliers MSP Minneapolis has secured its position as the darling market of the Midwest industrial investment community. Minneapolis was the quintessential Midwest city: cautious real estate development, durable rents with stately growth and moderate but unwavering absorption growth year to year. This, however, is no longer the case. A combination of repeated institutional capital injections, a highly constrained land market and exponential growth in tenants looking for new space has transformed Minneapolis into an institutional and foreign capital target market. Institutional capital By far the most transformational event in recent history for the Minneapolis industrial market was Link Industrial’s entrance into the market. Beginning in 2018 with the Gramercy acquisition, and continuing in 2019 with the Space Center acquisition — both of which have bits and pieces of the national portfolio located throughout Minneapolis — Link made its first real foray into Minneapolis in May of 2019 with the acquisition of the 2.2 million-square-foot Industrial Equities portfolio. Link quickly followed this up with pieces of the GLP and Colony Capital acquisitions, as well as the largest real estate purchase in Minneapolis history, the 7.2 million-square-foot CSM Corp. industrial portfolio, and most recently the 2.5 million-square-foot Prologis portfolio. …

October 14, 2021

California Market Reports Office Western Western Market Reports

Greater Los Angeles’ Office Market is Bouncing Back

by Jeff Shaw October 13, 2021

By Steve Solomon, Senior Executive Vice President, and Kristen Bowman, First Vice President, Colliers International Greater Los Angeles leasing activity surged, reaching nearly 3 million square feet in the second quarter. Although higher than the past few quarters, it was significantly lower than the 2019 pre-pandemic quarterly average of 4.6 million square feet. Much of the activity occurred in West Los Angeles, where large expansions and renewals were signed by tech, media and entertainment tenants. While leasing did ramp up, overall vacancy continued to rise, eventually reaching a historic high of 19.4 percent. This rate, which includes direct and sublease space, is 160 basis points higher than the previous peak in 2013 when it hit 17.8 percent. Nearly 25 percent of office space, whether vacant or currently occupied, is available for lease. There is currently 4.9 million square feet of speculative new office construction underway delivering by 2023 in Greater Los Angeles. These major developments, which do not include renovations, are currently 30.7 percent pre-leased. Over half of this new construction is in West Los Angeles, which has a higher pre-leased rate of 36.6 percent. The rate is highest in Central Los Angeles, where Netflix has snatched up 44.6 percent …

October 13, 2021

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