Southeast Market Reports

Nashville’s Robust Industrial Market is Growing Toward the South and East

by John Nelson April 11, 2022

After several years in the top 10, Nashville was named the No. 1 “market to watch” in overall commercial real estate prospects, according to Urban Land Institute and PwC’s 2022 Emerging Trends in Real Estate report. Nashville surpassed its supernova competitors (markets with a population between 1 million and 2 million people) such as Raleigh-Durham, Phoenix, Austin and Charlotte. The report credits Nashville’s robust and sustained job and population growth, above-average levels of economic diversity and investment/development opportunities. In short, Nashville’s economy fared relatively well during the pandemic-induced recession, and its industrial market never slowed down. Nashville has been a top location for relocating and expanding industrial-using companies, as its location is unmatched for distribution. Fifty percent of the nation’s population lives within 650 miles of Middle Tennessee, with 24 states falling within that radius. This translates to a one- or two-day truck delivery time to more than 75 percent of all U.S. markets. Additionally, it is one of only six U.S. cities with three major intersecting interstate highways. Nashville’s economy is extremely resilient due to its diversified economy. However, Nashville is not immune to national trends that have affected multiple industrial markets. The cost of construction continues to increase, …

April 11, 2022

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Suburbs Continue to be the ‘Shining Star’ for Nashville’s Multifamily Sector

by John Nelson April 4, 2022

Suburban household growth in metropolitan Nashville was already outpacing urban growth prior to the COVID-19 pandemic, but has accelerated since the outbreak due to corporate America’s acceptance of work-from-home staffing. Multifamily investors have followed this suburban household growth as well. Two recent examples are in Lebanon and Murfreesboro, both high-growth, high-quality suburbs of Nashville that have recently experienced record-setting transactions. The Pointe at Five Oaks recently sold for $243,000 per unit, setting a record for Lebanon. Vantage at Murfreesboro recently went under contract north of $270,000 per unit, also setting a record for Murfreesboro. We don’t see this activity and record-setting slowing down any time soon due to the lack of supply, overwhelming out of state demand and skyrocketing replacement costs. New multifamily development continues to follow the suburban trend, often times with a mixed-use component. Case in point, Highwoods Properties has completed the assemblage of all 145 acres of Ovation Franklin and is beginning the journey to reimagine and re-introduce one of the greatest opportunities for mixed-use development in the nation. This project will consist of 1.4 million square feet of Class A offices, 950 residential units, 480,000 square feet of retail and restaurants and 450 hotel rooms. Single-family …

April 4, 2022

Market Reports Restaurant Retail Southeast Southeast Market Reports Tennessee

Nashville Welcomes Wave of New Retailers, Restaurants Entering the Market

by John Nelson March 28, 2022

After national media declared traditional brick and mortar retail to possibly be on it’s “last leg” due to the COVID-19 pandemic, the Nashville area has seem quite the opposite reaction. Already in an accelerated state of demand going into the shutdown of 2020 that extended into a malaise in 2021 in many places, Nashville is seeing all indicators of the hottest retail market in its history. Prior to the pandemic, rents and occupancy were already at historic highs. 2020 began with a continuance of that trend and ended the year higher with the most active submarkets closing the year below a 5 percent vacancy rate across all retail product types as the market absorbed more than 300,000 square feet of new product. During 2021, the region experienced further good news for landlords with rents increasing at one of the fastest rates in the United States (more than 8.8 percent). This continues a trend lasting more than 10 years where regional rent growth outpaced the national average. This growth was at least partially driven by a vacancy rate at year-end of only 3.7 percent. The primary driver of these metrics continues to be population growth and a low level of retail …

March 28, 2022

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

High Demand for Raleigh-Durham Multifamily Drives Record Sales Volume, Pricing

by John Nelson February 28, 2022

Raleigh-Durham is increasingly popping up at the top of shopping lists for multifamily investors, and buyer demand — coupled with strong rent growth — is resulting in record sale prices. As of this writing, 2021 is on pace to be one of the best years ever in terms of total transaction volume. As capital continues to flow into the market across the spectrum of investor groups from institutions to high net worth individuals, cap rates also have dropped into record territory. Just about every sale in the market is trading at a cap rate in the 3s, and even sub-3 percent in some cases. For example, Northmarq recently brokered the sale of the 489-unit Indigo Apartments in Morrisville on behalf of Blue Heron Asset Management. The asset sold for $121.9 million. The deal was one of the largest single-property multifamily sales in North Carolina in 2021, and the largest in Raleigh-Durham’s history upon closing. The property received multiple qualified offers before selling to Toronto-based Starlight Investments for $249,000 per unit, surpassing initial pricing guidance by nearly 20 percent. The phenomenon of lower return expectations and compressed cap rates is not unique to the Raleigh-Durham market. That trend is occurring throughout …

February 28, 2022

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Raleigh-Durham’s I-40/I-85 Corridor Emerges as Industrial Tour de Force

by John Nelson February 21, 2022

The I-40/I-85 Corridor is an emerging distribution area with a remarkably strong tenant mix between national manufacturers and distribution users, making it one of the most fundamentally sound corridors in the Sun Belt. The I-40/I-85 Corridor, squarely centered between the Triad (Greensboro, Winston-Salem and High Point) and the Triangle (Raleigh, Durham, Chapel Hill), is home to companies such as Walmart, Lidl, Ford, Kidde, Amazon, Chick-Fil-A, UPS, Lenovo, FedEx, Coca-Cola, among others. This corridor is seeing rapid expansion and is poised to be an epicenter of industrial activity in the region as the logistical significance of the area is attracting larger users and a growing amount of institutional capital. Recently, this submarket has seen significant demand from larger users leading speculative developers to plan large, Class A industrial parks. Historically, the market has been dominated by older manufacturing buildings. The newer development in the area is making these properties more obsolete due to their lower efficiencies, a phenomenon marking a larger shift in the composition of the emerging submarket. The industrial inventory’s makeup is continuing to evolve over time, marking the transition from smaller manufacturing properties to distribution and significantly larger manufacturing operations. Buildings currently under construction are average a footprint …

February 21, 2022

Market Reports North Carolina Office Southeast Southeast Market Reports

Corporate Expansions, Sales Highlight Hopeful Office Recovery for Triangle

by John Nelson February 14, 2022

The Raleigh-Durham region is experiencing increasing optimism despite the lingering impacts of COVID-19. While some reentry plans have been delayed and companies are still grappling with the way in which they will utilize office space moving forward, tenant demand is expected to rebound sharply in the first half of 2022. “We’ve seen an encouraging uptick in tenant activity since the second quarter of 2021, and we expect that trend to accelerate,” says Kathy Gigac, principal of Avison Young and a member of the firm’s Occupier Solutions Team. “Tenants seem ready to get back to some sense of normalcy.” Local economic fundamentals are sound, as reopening efforts and positive job growth have allowed Raleigh-Durham’s unemployment rate to recover from a pandemic high of 12 percent to 3.2 percent as of Sept. 2021. The region continues to witness major economic development wins with companies such as Google and Apple announcing plans to create thousands of new jobs. In its largest presence on the East Coast, Apple will invest $1 billion over a 10-year period to create a 3,000-job campus to eventually span 1 million square feet. In the most recent announcement from an office-using tenant, Fidelity Investments will add 1,500 jobs in …

February 14, 2022

Market Reports Mixed-Use North Carolina Retail Southeast Southeast Market Reports

Mixed-Use Projects, Mall Redevelopments Headline Triangle’s Retail Development Activity

by John Nelson February 7, 2022

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. …

February 7, 2022

Georgia Market Reports Restaurant Retail Southeast Southeast Market Reports

Atlanta’s Resilient Restaurant Sector is on the Rebound Post-Pandemic

by John Nelson January 24, 2022

When I recently looked into a prime site in Atlanta’s bustling West Midtown district on behalf of one of my restaurant clients, I quickly realized that several restaurants were eyeing the space. There were six other restaurant groups interested in leasing the space, creating a bidding war at rental rates far higher than my client wanted to pay. Heated competition for available restaurant spaces is by no means unusual in the Atlanta market these days, particularly for intown Atlanta, or the portion of the city located within the Interstate 285 loop and containing some of the city’s most urban, in-demand neighborhoods including Old Fourth Ward, EAV (East Atlanta Village) and Poncey-Highland. It’s been a rollercoaster stretch for the retail and restaurant sectors since the onset of the COVID-19 pandemic. Large decreases in sales at the outset were followed by a substantial recovery by early 2021, only to be followed by a setback in some markets over the summer caused by the more contagious Delta variant. Despite the challenging conditions, Davis said his clients have been forging ahead with their expansion plans. These clients have benefitted from their history of strong sales and the ability to adjust their service models (such …

January 24, 2022

District of Columbia Market Reports Maryland Restaurant Retail Southeast Southeast Market Reports Virginia

Grocery Chains and Other Retail Categories are Making Hay in Mid-Atlantic Region

by John Nelson January 11, 2022

The Washington, D.C., and Baltimore markets, when combined, represent the fourth-largest metropolitan region in the nation by population, and retailers are taking notice again. Grocery-anchored projects are the most prevalent in the headlines. For example, the first of nearly 20 Amazon Fresh locations has opened in the area. Additionally, Wegmans’ smaller format rollout plan is active with its first location in Stonebridge’s Carlyle Crossing in Alexandria opening spring 2022, along with Roadside Development’s City Ridge Project at the former Fanny Mae Headquarters in Northwest D.C. Former Shoppers Food Warehouse boxes also continue to get absorbed by new grocers. A less-covered sector of the grocery market is the international markets category, which remains very active in the region. There are 29 different banners across the region that exceed 10,000 square feet in size, with the newest entrant being Oh! Markets in Northern Virginia. Other international market newcomers, including 99Ranch and Enson Market, are also searching for space. With the immense ethnic diversity of the region, we expect investors to start taking notice of this sector with their acquisition appetite, just as they have in other regions like Texas and Florida. Publix, a customer favorite, is in the early stages of identifying …

January 11, 2022

Georgia Market Reports Multifamily Southeast Southeast Market Reports

Ongoing Population, Job Growth in Atlanta Drives Multifamily Demand

by John Nelson January 3, 2022

Atlanta remains an incredibly active market for multifamily demand from both a renter and investor standpoint. The Atlanta metropolitan statistical area (MSA) boasts a population estimate by the U.S. Census Bureau of more than 6.1 million people, an increase of 14.3 percent over the past 10 years, and ranks consistently as one of the top recipients of in-migration in the country. The continued influx of new residents and rising home pricing have led to a vacancy rate of 4.9 percent, the lowest recorded in the MSA since 2000. In the third quarter, rents reached the highest average in Atlanta’s history of $1,561 per unit, an increase of 21.3 percent year-over-year. While on average apartment communities tend to see an average occupancy rate around 95 percent, eviction moratoriums have pushed occupancies at many to as high as 99 percent leased as property managers seek to make up for lost revenue. Residents are flocking toward urban infill projects in walkable parts of the city, such as in the micro-market along the Atlanta BeltLine Eastside Trail where effective rents reached $2,052 per unit, commanding a 31.5 percent premium over the metro Atlanta average. However, there has also been substantial rent growth recorded in …

January 3, 2022

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