The Charlotte economy has created jobs at a faster rate than the national average throughout this cycle. With 34,900 new jobs over the last 12 months and more than 110,000 over the last three years, the regional job market has created a new demand for the luxury multifamily inventory throughout infill and select suburban submarkets. Four of the MSA’s top five employers — Wells Fargo, Bank of America, Carolinas HealthCare System and Novant Health — each have a combined 1,000-plus job openings in Charlotte, while AXA, Red Ventures, Dimensional Fund Advisors and CompuCom have begun major expansions across the metro area. This has created a need for additional multifamily inventory, which has expanded by 7,700 units over the last 12 months, while absorption was just shy of 7,000. The modest downtick in occupancy was more than offset by a 4 percent same-store rent growth (30 basis points higher than the five-year trailing average of 3.7 percent). Two marquee high-rise projects are nearing completion in the central business district’s Third Ward: Greystar’s Ascent and Childress Klein’s Museum Tower. The early returns show unprecedented per square foot rents for the metro area. In most infill locations, developers are offering one month free …
The industrial market in Charlotte is healthy, with trends pointing to another solid year of net absorption and rent growth. The market continues to attract institutional capital, as cap rates hover slightly below 6 percent for Class A product in the metro’s primary submarkets. Charlotte’s job growth continues to drive population migration into the market. More than 37,000 new jobs have been added in the past 12 months, dropping the unemployment rate from 5.2 percent to 4.9 percent. North Carolina has a young, educated workforce and boasts 53 universities and colleges. The state is nationally recognized for its labor climate. Major employers span the gamut of the business world, from financial and energy stalwarts such as Bank of America and Wells Fargo, Duke Energy and Siemen’s Energy Inc., to more industrial players such as Daimler Trucks North America, Lowe’s, FedEx and Snyder’s-Lance Inc. Charlotte is a logistically sound market, with the city’s airport ranking as the eighth busiest in the U.S., according to the Federal Aviation Administration. A relatively new intermodal rail facility and continued investment in road infrastructure projects are also helping to foster an optimistic environment. The HB2 legislation, which proved a major obstacle to attracting new companies …
The multifamily market in South Florida is gaining strength but not sales velocity due to converging market and demographic forces. Sales topped $400 million for the third year in a row in 2016, largely because the average price per unit jumped 13 percent to $185,300 per unit. The vacancy rate fell below 4 percent at the end of last year, and rents climbed almost 4 percent on all types of units to an effective rate of $1,351 per month. It’s clear the current upcycle will continue beyond the usual period as immense demand from investors is causing an incredible scarcity of Class A product, and the lifestyle preferences of millennials are intersecting with the luxury condo boom. Opportunities, Challenges In 2005 and 2006, adequate inventory kept the multifamily market in balance. Today, buyers are plentiful, capital is available and interest rates are affordable. What we don’t have is product, a phenomenon not exclusive to Miami and Fort Lauderdale. Why? Sellers have few options. They’re thinking, “If I sell at a premium and I want to stay in a similar market, I’m going to pay a premium. So, what’s the point of selling?” Therefore, owners are putting properties on the market …
Looking ahead to the rest of 2017, we can expect to see continued improvement of Miami’s office market based on strong market fundamentals and employment growth. Key trends to watch in 2017 that will help drive and shape the market, include: • Steady, modest growth in office rents • Declining available office supply • New transit-oriented mixed-use developments that include office space in both Miami’s downtown urban core and other connected walkable neighborhoods such as Coconut Grove, Coral Gables and Wynwood • Tenants adopting new office design standards • Increased moves between submarkets and new-to-market companies positively impacting net absorption Office demand will continue to be fueled by vibrant population growth of young professionals and Miami’s appeal as a growing, global and entrepreneurial city. Miami-Dade County’s population has grown 8 percent in the past five years, making it the seventh-largest county in the United States. In 2016, more than 20,000 jobs were added in the county, predominately in the construction, real estate, professional services and financial services industries. This economic growth has fueled expansion activity in the office market and should hold steady in 2017. Miami’s focus on cultivating innovation and entrepreneurship has also positively impacted the office market. In …
There are two major trends affecting retailers across South Florida: the reduction of affluent foreign tourists in the market and the internet, which is forcing retailers to shift their concepts at an accelerating pace. Both factors have led to a slight decline in market conditions, specifically a deceleration of growth rates, but not significantly enough to cause great concern or to feel South Florida has become a “falling market.” Instead, much like origami, one must shape retail concepts to adapt to the new online reality. The American dollar is still very strong against Latin American and most foreign currency. This has created a downward spiral for hotel occupancy and retail sales in South Florida’s tourist driven areas such as South Beach and Lincoln Road. Miami-Dade County hotel occupancy was down 0.6 percent year-over-year to 83.5 percent in February/March 2017. This tourism decline has also created a shift in foreign investing. While large foreign investors are still active in the market, there has been a noticeable exit of smaller foreign investors. This has created an unusual twist in the South Florida market as now domestic (primarily from the Northeast) and Canadian investors are actively looking and purchasing retail opportunities given they …
In 2016 and the first quarter of this year, Atlanta’s economy boomed, showing several positive signs that point to another banner year for the multifamily market. From December 2016 through February 2017, Atlanta added 96,700 total non-farm jobs, an increase of 3.7 percent over the same time the previous year. Additionally, in 2016 the city experienced 3 percent wage growth overall. This translates to a robust multifamily market with solid fundamentals. According to Axiometrics, Atlanta’s average effective rent broke the $1,000 ceiling in second-quarter 2016 and has not stopped climbing since, reaching $1,068 as of first-quarter 2017. Rents are projected to increase by just under 5 percent in 2017. While the market’s rent growth rate is slowing, we cannot forget that Atlanta is breaking historical rent records while maintaining an occupancy rate in the 94 percent range for the last 11 consecutive quarters. Throughout the city, all asset classes — from Class C suburban properties to trophy Class A properties in the urban core — are posting strong performances. One trend we are keeping an eye on is single-family development, which is starting to come back as rental rates continue to rise and renters look to make a more permanent …
It is no secret that Atlanta has been a booming market in the post-recession era. Metro Atlanta added more than 85,000 jobs in 2016, while the unemployment rate has dropped to 4.9 percent, back to a prerecession level (2007). Atlanta has ranked near the top of the largest 10 office markets in annual job growth, outpacing the likes of New York, Los Angles and Chicago. There was 3.3 percent job growth in 2016, outpaced by only one large metropolitan peer, Dallas-Fort Worth. Rent Growth The Atlanta office market has shared this success as rents have continued to climb to record levels and vacancy levels have dropped. Since the end of 2012, overall gross asking rents have risen 22.1 percent, or $4.41 per square foot. Thanks to major relocations by companies such as Honeywell, GE Digital and Synovus, and major expansions by Kaiser Permanente, Sage, Anthem and Kabbage, among others, Atlanta’s overall office vacancy rate has plummeted 540 basis points from the end of 2012 (from 22.3 percent to 16.9 percent in the first quarter of 2017). Construction With market fundamentals in a stronger state than at any other time in recent history, the introduction of new product presents a litmus …
The Atlanta industrial market continues to grow in popularity when it comes to real estate investors’ appetite. Industrial assets are “hot items” in current investment sales transactions as the region’s economic momentum continues to position Atlanta as one of the healthiest industrial markets in the Southeast. Some of the major local and macro-economic trends affecting the industrial market include the ongoing growth of infrastructure, logistics and manufacturing industries. Furthermore, the Port of Savannah’s new Post Panamax facilities, its ongoing investment and expansion plans and its increasing activity are also beneficial to the Atlanta industrial market. Investment sales professionals, especially individual investors, remain attracted to Atlanta’s industrial market as e-commerce continues to transform how and where products are stored and shipped, not to mention the simplicity of owning and managing industrial properties, compared to retail and office. In 2016, the Atlanta industrial market experienced over 17 million square feet of net absorption. The forecasted absorption for 2017 ranges between 12 and 14 million square feet, with approximately 12 million square feet of new product being delivered this year. Over 90 percent of the new product comprises warehouse/distribution product, and less than 10 percent consists of new flex and shallow-bay buildings. Most …
It’s long been known that Atlanta, along with many other markets in the United States, is over-retailed. However, not all retailers are “overstored.” With the recent number of store closings announced (Sports Authority, hhgregg, Kmart, Sears, JC Penney, to name a few), it’s understandable that some have concerns over the current state of retail. That said, for many retailers, these closures become opportunities to enter certain markets or grab better positions within an existing market. As some retailers forfeit locations, these Atlanta vacancies will be absorbed. Burlington Stores recently backfilled the former Sports Authority adjacent to the Mall of Georgia in Buford, and will do the same with the former Best Buy adjacent to The Mall at Stonecrest in Lithonia. Ashley HomeStore will backfill the former Staples in Snellville. In Alpharetta, American Signature Furniture opened in the former Sports Authority box, and entertainment destination Dave & Buster’s is set to open in a former AMC Theatres. The retail industry is undergoing a shift as a result of the emergence of e-commerce and morphing consumer habits. It’s the retailers that are able to adapt and evolve along with changes in technology and consumer attitudes that will thrive, as very few are …
Urban submarkets have largely carried the Birmingham multifamily market’s recovery. However, going forward investors will look to capitalize on greater yields in suburban submarkets. Despite rising rents, absorption continues to climb and concessions are falling off. Greater absorption metrics will be a recurring theme this year as rising construction costs and tightening access to capital constrain new development. Supportive Economy Birmingham’s economy added 8,000 net jobs year-over-year as of December 2016, growing at an accelerated rate of 1.6 percent. Further, unemployment remains low at 5.4 percent. Industries such as transportation, education, healthcare, government, and finance are at the forefront of job growth in the market, accounting for 75 percent of the net jobs added. Moody’s projects that the metro will add more than 24,000 net jobs through 2020, expanding by approximately 4.7 percent. Recent expansion announcements in the market reaffirm this trend, including the Project Sunrise deal that will create 746 manufacturing jobs via a $120 million investment in the former Meadowcraft facility. Another needle-moving deal is Mercedes-Benz U.S. International’s $1.3 billion plant expansion in Vance, which has resulted in automotive suppliers growing their footprint in the market. For instance, Eissmann Group Automotive recently added 200 jobs in nearby Pell …