Southeast Market Reports

Metro Orlando Office Market Caught in Limbo Due to COVID-19, Remote Workforce

by John Nelson October 11, 2021

Contrary to what is often portrayed in the national media, the Orlando office market is not a monolith. It instead comprises multiple submarkets, many of which are recovering quite differently. For example, according to data from CoStar Group, Winter Park had a 4.7 percent availability rate (that’s direct and sublease space combined). The Downtown Orlando market, on the other hand, had a rate of 16.9 percent. The total Orlando MSA office availability rate was 11.5 percent, which compares to the national rate of 16 percent. All of these numbers just prove that the recovery from the pandemic is uneven, even in areas in close proximity. It’s easy to get lost in analysis, but the basic answer is that the office market in Orlando, just like in the entire country, will recover in time. Not all areas will be on the same timeline, and the office market will never look entirely the same. Between working from home and companies deciding to relocate their offices or headquarters entirely, there will be some short-term winners and losers. Texas, for instance, is having a relative boom in new tenants. Los Angeles, and indeed California in general, on the other hand, is not. Many companies …

October 11, 2021

Florida Industrial Market Reports Southeast Southeast Market Reports

By the Numbers: Orlando’s Industrial Fundamentals Remain Strong

by John Nelson October 4, 2021

Orlando’s industrial market emerged from the early panic of 2020 in solid shape, and both occupier and investment activity have continued in earnest ever since. While the preceding year has brought its share of pandemic-induced challenges to the Orlando market, the industrial sector itself has not been adversely affected, other than by labor shortages and the escalating prices of construction materials for new development. Sector fundamentals remain strong, with healthy leasing and positive net absorption of space, robust tenant activity and continued speculative development that is focused primarily along the 429 Corridor and in the Orlando Central Park and Airport/Southeast submarkets. Economic fundamentals are also sound. The unemployment rate in Orlando as of June 2021 was 6 percent, down an impressive 1,300 basis points from the height of pandemic unemployment in May 2020. Oxford Economics projects that Orlando is expected to see job growth of 2.1 percent in 2021, 9.1 percent in 2022 and should recover all of its lost jobs by third-quarter 2022, a majority of which are in the leisure and hospitality sector. Central Florida is the state’s fastest-growing region, and the U.S. Census Bureau expects its growth to outpace South Florida by a factor of two to …

October 4, 2021

Industrial Market Reports Mississippi Southeast Southeast Market Reports Tennessee

High Demand for Memphis Industrial Leading to Another Record-Shattering Year

by John Nelson September 27, 2021

Fueled by the acceleration of e-commerce amid the COVID-19 pandemic, the Memphis industrial market’s record-setting momentum continued into the first half of the year. Demand fundamentals are the strongest they’ve ever been, with lease transaction volume at mid-year exceeding 12.2 million square feet for the second year in a row and total market direct net absorption reaching an unprecedented 5.3 million square feet. To put these numbers in perspective, lease transaction volume and direct absorption through June of pre-pandemic years averaged 5.8 million square feet and 1.6 million square feet, respectively. The market’s direct vacancy rate has hovered around 6.5 percent since the end of 2019, an impressive feat given the exceptional amount of speculative product that has been added to inventory over the past year and a half. New to the market The region’s central location, complemented by its world-class transportation infrastructure and low rental rates, make Memphis an attractive option for industrial users. Notable deals that have occurred since the beginning of 2020 include Milwaukee Tool’s 1.1 million-square-foot lease at I-269 Industrial Park, as well as two new Amazon leases totaling nearly 2 million square feet, growing the e-commerce giant’s Memphis-area footprint to more than 6.7 million square …

September 27, 2021

Industrial Market Reports Mississippi Office Southeast Southeast Market Reports Tennessee

Memphis is Well-Established for Industrial Owners and Users to Win

by John Nelson September 20, 2021

Momentum in the local industrial market has been maintained because of Memphis’ world-class infrastructure offering the “four Rs” of transportation: river, road, rail and runway. Thanks to Memphis’ central location, truck freight can reach 65 percent of the nation’s population in 24 hours. The Port of Memphis is the fifth-largest inland port in the United States and an east-west highway spans the width of the country. As home to FedEx Global Headquarters and a UPS hub, Memphis International Airport surpassed Hong Kong International Airport this year as the busiest cargo airport in the world. The direct vacancy rate of the metro industrial market went from 6.5 percent in 2020 to 4.8 percent by mid-2021. Currently, there is 13.7 million square feet of inventory under construction with over 75 percent of it being speculative. The demand and recent growth continue to improve in 2021. Net absorption is above 5.3 million square feet with tenants like Yeti, Walgreens, Hamilton Beach and Amazon moving into new facilities mid-year. Rents have also continued to rise faster than the national average in many years. The average rent growth over the past 12 months is 6.9 percent, or $4 per square foot. Large preleased facilities are …

September 20, 2021

Affordable Housing Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Robust Memphis Apartment Demand Continues to Push Rents Across Classes

by John Nelson September 15, 2021

The Memphis multifamily market has recently captured attention from prospective buyers with some impressive statistics. With 2020 rent growth at 6.6 percent and year-to-date 2021 at 10.5 percent year-over-year, the metropolitan showed resiliency through a turbulent period as peer Sun Belt cities experienced stagnancy and even decreases in rents. This trend has put the metropolitan area on acquisition radars and garnered sales to new-to-market buyers looking to plant a flag in the market. But it raises questions concerning the longevity and sustainability of the rent growth. By taking a further look at the market’s fundamentals, economic drivers and rent trends across market segments, we can shed some light on this over-arching question. Logistics and healthcare Memphis’ stable 2020 and 2021 multifamily performance is grounded by an economy rooted in logistics and medical services. Within the Memphis metropolitan area, 42 percent of the workforce is in the transportation/logistics or education and health service industries, compared to a national aggregate of 20 percent. The growing reliance of these industries insulated the Memphis economy from the worst of repercussions stemming from the pandemic-induced recession. While quarterly wages decreased an average of 6.5 percent in peer markets in the second quarter of last year, …

September 15, 2021

Market Reports Retail Southeast Southeast Market Reports Tennessee

From Urban Core to the Suburbs, the Memphis Retail Market is Poised for Growth

by John Nelson September 6, 2021

Memphis is a city with a soul and is internationally famous for music, food and entertainment. The city draws over 12 million tourists annually, but less publicized is that Memphis is home to six Fortune 1,000 companies (FedEx, International Paper, AutoZone, Terminix, First Horizon and Sylvamo). Additionally, the city’s employment base includes a robust healthcare community with St. Jude Children’s Research Hospital, the University of Tennessee Medical School and Regional One Health. Plus, Memphis is known as “America’s Aerotropolis” with the second busiest cargo airport in the world, Memphis International Airport. The Memphis metro statistical area (MSA) has jobs, low cost of living and a relatively young population with an average age of 34. There is a perception that the population is flocking to Nashville, but the latest Census Bureau statics show that between 2013 and 2017, slightly more Nashvillians moved to Memphis than the reverse. Memphis’ unique trade area encompasses parts of Arkansas and Mississippi, leveraging Interstates 40, 55 and 22 with the new Interstate 269 Corridor, a 60-mile half loop around southern Memphis and north Mississippi. The I-269 Corridor links to a web of seven converging highways, serving 152 metro areas and two-thirds of the nation’s population that …

September 6, 2021

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte’s Industrial Market Expected to Close Another Robust Year of Leasing

by John Nelson August 30, 2021

The Charlotte industrial market is seeing significant tenant demand and investment activity at mid-year 2021 as the market begins to return to normalcy after the disruption during the early days of the pandemic. Like many other Southeastern industrial markets, Charlotte saw a lag in activity through the second and third quarters of 2020. One year later, the impacts of the pandemic continue to burn off, creating an almost insatiable appetite for modern warehouse and distribution space. Since the start of the year, the market has seen a strong increase in overall activity as local economies continue to open up, employment levels rebound and businesses move forward with decisions about space utilization. Tenants in the e-commerce, consumer goods, retail and light manufacturing sectors are particularly active. While the market finished 2020 with nearly 5.3 million square feet of net absorption, a figure that outpaced 2019’s total of 2.7 million square feet and was on par with the nearly 5.4 million square feet absorbed in 2018, 2021 is expected to reach a net absorption for the calendar year that is equal or greater than 2020. Many tenants expanding in or entering the market are taking mid- to large blocks of space, a …

August 30, 2021

Data Centers Industrial Life Sciences Market Reports North Carolina Southeast Southeast Market Reports

Life Sciences Firms Dominate Activity in Raleigh-Durham’s Industrial Market

by John Nelson August 23, 2021

It seems as though we have recently seen significant weekly announcements about investment and job creation by major U.S. companies into the Research Triangle Park region, the area situated between the cities of Raleigh and Durham. For instance, tech titans Apple and Google declared plans to establish major engineering hubs in the region, adding heat to an already dynamic market. It is common knowledge that the Triangle area is respected for its large, highly educated workforce thanks to top-ranking colleges and universities, including Duke University, North Carolina State University and University of North Carolina at Chapel Hill. Wake Tech, North Carolina’s largest community college, also serves as a vital engine, providing the region’s workforce with STEM candidates. These institutions supply existing and expanding businesses with an impressive talent pool. Theses factors, along with a business-friendly economic climate, have grown the Research Triangle into one of the nation’s largest research centers. Although local headlines continue to buzz with real estate business news, the Raleigh-Durham industrial market has witnessed steady real estate investments from life sciences and R&D businesses for decades. Over the past 24 months, however, demand for life sciences space has had a dramatic impact on traditional flex/light industrial users …

August 23, 2021

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Charlotte’s South End Remains ‘Go-To’ Submarket for Young Renters

by John Nelson August 16, 2021

Charlotte’s South End district has firmly established itself as one of the most dynamic millennial urban submarkets in the Sun Belt. It is increasingly on par with the most thriving areas in other growth cities such as Atlanta, Austin and Nashville and is becoming a 24-hour neighborhood with dining, nightlife and high-end jobs. Charlotte is one of the few cities in the region that has both a true city center as well as a relevant mass transit system. The city’s LYNX Blue Line, which runs from Interstate 485 to the University of North Carolina at Charlotte’s main campus, has proven to be very meaningful for the local multifamily market. LYNX was the catalyst driving South End’s emergence and gives the neighborhood its own heartbeat as renters can commute to Uptown for work or UNC Charlotte for class. Developers are taking note with several apartment projects and mixed-use developments underway in the area, including Broadstone Queen City and Haven South End. As South End has grown into a more dynamic district, Charlotte is becoming an even more attractive destination for recent college grads who are looking to work in the city’s established financial sector, as well as for firms like Lending …

August 16, 2021

Market Reports North Carolina Office Southeast Southeast Market Reports

A City on the Rise: Charlotte Office Market Poised for Growth and Recovery

by John Nelson August 9, 2021

Last year posed many challenges for Charlotte’s office market, as companies continued to delay making decisions about their office space needs. In the fourth quarter, leasing velocity had slowed, with limited deal activity driven largely by lease expirations. But the city still scored several corporate relocations and expansions, faring well compared to other major cities throughout the country. Fast-forward to June 2021, and the light at the end of the tunnel is getting brighter as more occupants set re-entry plans for this fall. This is a transformative year for Charlotte. Commercial Café ranked the Queen City as No. 5 in the United States for the most anticipated office deliveries in 2021 with more than 4.1 million square feet delivering in the metro area this year. Uptown added to its skyline with the addition of 366,000 square feet at Legacy Union Two, the completion of the 742,000-square-foot Ally Charlotte Center, Honeywell’s 330,000-square-foot corporate headquarters delivering later this fall and the 156,415-square-foot FNB Tower delivering this summer. At the end of the first quarter, new construction in Uptown was more than 82 percent preleased. And as more tenants seek out highly amenitized and efficient space, new construction is expected to be the …

August 9, 2021

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