Southeast Market Reports

Infill, Transit-Oriented Developments are Driving Charlotte’s Retail Market

by John Nelson September 26, 2016

As Charlotte’s employment surpasses the pre-recession peak of 2007 and the metro swells to almost 2.4 million residents — growing three times faster than the national average — Charlotte is on every retailer’s radar and poised for continued retail growth. Retailers seeking customers with disposable income benefit from Charlotte’s strong affordability index, relative to similarly sized cities, and have enjoyed a positive trend in household incomes, which increased 8 percent between 2010 and 2015. This income growth is bolstered by the 35- to 54-year-old “big-spender” segment, which makes up approximately 30 percent of Charlotte’s population, and is expected to continue to grow in spite of shrinking nationally. Retail developers and investors are also big fans of these fundamentals, which have yielded positive retail absorption over the past 12 months, impressive rent growth of 4.3 percent year-over-year, and vacancy of 5.5 percent, well below the historical average. Similar periods of growth in Charlotte’s history have delivered traditional grocery-anchored neighborhood centers, garden-style apartments and mid-rise office buildings, primarily surface-parked to accommodate the vehicle-centric nature of Charlotte. That trend is changing as Charlotte adapts to the cultural shift and increased density that now prioritizes proximity, access and convenience over McMansions and white-picket-fenced suburbia. …

September 26, 2016

Industrial Market Reports North Carolina Southeast Southeast Market Reports

New Industrial Construction is Easing the Supply Squeeze in Charlotte

by John Nelson September 19, 2016

In recent years, the fundamentals in Charlotte’s industrial real estate market have continued to improve. Overall, the market can be characterized by an increase in tenant activity and the emergence of new submarkets more active on the development front than in the past. Tenant growth can be attributed to organic growth from users expanding, velocity of new deals, as well as emerging submarkets within the market. Charlotte’s central location near the transportation arteries of I-77 and I-85 continues to make the city’s industrial space very attractive to logistics and distribution companies. Charlotte is growing by approximately 20,000 residents per year, according to U.S. Census Bureau data. The population growth, coupled with the trend of brick-and-mortar retailers transitioning portions of their business to e-commerce, makes for a positive outlook on Charlotte’s industrial fundamentals. The strongest tenant activity is in the 25,000- to 75,000-square-foot range, with tenants looking to upgrade the quality and functionality of their space. Beginning in fourth-quarter 2015 and continuing into first-quarter 2016, there was noticeable activity among tenants relocating from owner-occupied facilities to leased spaces. This trend has been driven by a limited supply of options for purchase, historically high construction prices and a steady economy. Furthermore, the …

September 19, 2016

Market Reports Retail South Carolina Southeast Southeast Market Reports

Columbia’s Retail Market is Uniquely Equipped to Meet the Needs of Millennials

by John Nelson August 29, 2016

It is impossible to have a discussion about retail commercial real estate without considering the implications of shifting demographics. This is true both nationally and in the Columbia market. The unique demographic characteristics of the local market serve as an explanation for the current situation in retail real estate. The trends in retail real estate in Columbia echo those on that national level, although with the local market’s heavy concentration of Millennials (one of the highest in the Southeast), the opportunity for disproportionately high growth is significant. Those trends involve the sector being the last to emerge from the recession with low levels of retail development on a broad scale, but increasing activity and viability in urban and infill environments, especially for restaurants. Much of the retail activity in the market uniquely caters to that 20 to 34 age demographic. At this stage in their lives, the overwhelming majority of the younger demographic is focused on living in an active lifestyle, preferably in urban environments. This is making the prospect of infill retail, particularly as a component of mixed-use development, more feasible. This is resulting in increasing retail and multifamily development in Columbia’s downtown. For urban retail, there are three …

August 29, 2016

Florida Market Reports Office Southeast Southeast Market Reports

Miami’s Office Rents Continue to Rise, Create New Opportunities for Investment

by John Nelson August 22, 2016

Miami’s four major office submarkets — Brickell, Downtown, Coral Gables, and Airport West Dade — are enjoying record growth in Class A asking rental rates, an emerging trend that is further strengthening the city’s positioning as a highly desirable market for local, national and foreign investors. In the city’s Brickell/Downtown business district, Class A office rents have skyrocketed more than an average of 14 percent per square foot during the past year — a significant difference from the historic average annual increases of 2 to 3 percent per square foot. In fact, the disparity in Class A and B rents in the urban core, where Class A rents range from 40 to 70 percent higher per square foot than Class B rents, is much greater than in submarkets, where Class A rents are approximately 24 percent higher than Class B rents. This creates further incentive for Class B buildings in the urban core to raise asking rental rates and stay apace with Class A, making it a strong business case for investors who are looking for a long-term play with maximum ROI. The rent growth is attributed to several factors. While we have seen strong net absorption by local companies …

August 22, 2016

Florida Market Reports Retail Southeast Southeast Market Reports

Miami’s Overall Growth Fuels Major Retail Projects in City’s Development Pipeline

by John Nelson August 15, 2016

Miami is coming into its own as an increasingly international city that continues to attract new residents, visitors and investment and development activity. The city’s urban core is flourishing, with residents gravitating toward a downtown area that allows them to live, work and play in the same neighborhood. The Miami retail market is experiencing a development surge to accommodate the city’s growth. Through the end of the first quarter of 2016, about 2.3 million square feet of retail space was under construction, according to CoStar. The developments are bringing a new class of retailers to the market. Major projects include Brickell City Centre, a 500,000-square-foot shopping center with a roster of tenants that includes Armani Collezioni, anchor tenant Saks Fifth Avenue and Valentino. North of downtown Miami, the $1.7 billion Miami Worldcenter project will introduce a high-street retail concept that is similar to the popular Lincoln Road open-air mall in Miami Beach. In Miami’s Design District, the $1 billion redevelopment of the neighborhood is attracting luxury retailers like Hermès, Louis Vuitton and Cartier. Downtown residents will have easy access to all of these retail destinations. Retail operating fundamentals remain strong in the Miami market. Vacancies closed the first quarter of …

August 15, 2016

Florida Industrial Market Reports Southeast Southeast Market Reports

Miami’s Industrial Market Poised to Benefit from Panama Canal Expansion, Cuba

by John Nelson August 8, 2016

Given a handful of macro-factors in the Miami industrial market including the Panama Canal expansion nearing completion, PortMiami expansion, strong American dollar, and improving relations with Cuba coupled with the country’s new mega-port project, it is a unique time to be an industrial real estate service provider. To succeed in this environment, it takes deep local knowledge and a global understanding of how Miami, the Caribbean and Latin American economies and infrastructure are intertwined into global commerce. The first macro-factor is the Panama Canal expansion, its first major renovation since the 1914 opening. The expansion is set to have a major impact on global trade; specifically, the way cargo will be handled and transported throughout the Western Hemisphere. The larger canal will accommodate the new line of Post-Panamax vessels — supertankers, container and passenger ships too large to previously pass through the canal. Miami is a prime location for these vessels and offers a tremendous expansion opportunity for the local industrial market provided the vessels have a port to dock. In response to the Panama Canal expansion, PortMiami completed a deep dredge project to allow the Post-Panamax vessels full access, which is the second macro-factor affecting Miami’s industrial market. The …

August 8, 2016

Georgia Market Reports Retail Southeast Southeast Market Reports

Atlanta Retail Market Experiences Demand in Hottest Submarkets

by John Nelson August 1, 2016

The Atlanta retail market continues to be robust, with vacancy tightening in key submarkets and rents trending upward. Overall vacancy fell slightly from 7.1 percent during the fourth quarter of 2015 to 7 percent in the first quarter of 2016, according to CoStar. However, the decline is greater in hot submarkets such as Buckhead and Central Perimeter that boasted vacancy rates as low as 2.8 percent and 3.2 percent, respectively, in the first quarter. Demand Up, Supply Tightens There is still a disconnect between supply and demand, especially in strong trade areas, and many retailers that wish to enter or expand in the market are finding it difficult to do so. Rents are escalating by 10 percent to 15 percent because of the increased competition for space and the high cost to build new developments is attributable to escalating land costs. During the first quarter, 21 buildings totaling 300,174 square feet were delivered, according to CoStar, and at the end of the first quarter, 1.73 million square feet of retail space was under development. As Atlanta can deliver more of the space that’s under construction and open up availability, rent is expected to continue to climb. Health and Fitness Food …

August 1, 2016

Georgia Market Reports Office Southeast Southeast Market Reports

Talent, Innovation Are Driving Today’s Real Estate Decisions in Atlanta

by John Nelson July 25, 2016

There has been a seismic shift in the way that companies throughout America make their relocation decisions, and it applies to Atlanta as well as its competitors. Companies are driven to locations that can provide a robust pipeline of talent and tight-knit innovative communities. This focus has created new demands on cities that want to build and sustain competitive economies. Companies have always taken talent into consideration but ultimately there was a belief that the talent would follow the company. This is no longer true. Millennials first choose where they want to live and then where they want to work. Today’s sought-after talent is closely tied to a city’s ability to provide a high quality of life. This means a connected transportation system, plenty of entertainment activities and accessible, affordable housing. All of this can be found in Atlanta. Companies that have recently chosen to call Atlanta home are a testament to this. From NCR (3,600 employees) to Kaiser Permanente (900 employees) to Worldpay (1,266 employees), all of these prestigious business newcomers have emphasized the critical role that access to highly qualified talent played in their decision to relocate here. Tight-knit, innovative communities do not just appear and cannot be …

July 25, 2016

Georgia Industrial Market Reports Southeast Southeast Market Reports

Atlanta’s Industrial Market Passes a New Milestone, Again

by John Nelson July 11, 2016

It looks like 2016 is carrying on where 2015 left off. During 2014 and 2015, Atlanta set record after record for activity, positive net absorption and new construction; and the first quarter of 2016 didn’t disappoint. Activity during the first quarter of 2016 was over 13.5 million square feet, which contributed to a four-quarter total of 59.3 million square feet — the highest four-quarter total for activity ever seen in the Atlanta industrial market. We also witnessed the 16th consecutive quarter of positive net absorption with 3.1 million square feet of space absorbed during the quarter. Added to the last three quarters, net absorption totaled 16.5 million square feet of positive net absorption. Even with a large industrial inventory of 642 million square feet, that’s a significant achievement. Demand for warehouse and distribution space is fueled by Atlanta’s continued economic growth and employment. Unemployment in the Atlanta metro area is 6.1 percent and down from 6.3 percent that we reported last October (U.S. Bureau of Labor Statistics). Although construction slowed during the fourth quarter of 2015 with only 1.5 million square feet launched, it was only a short lull. New construction moved forward again for the first quarter of 2016 …

July 11, 2016

Alabama Market Reports Retail Southeast Southeast Market Reports

New Publix, Apartment Projects in Downtown Birmingham Spur on Retail Growth

by John Nelson July 4, 2016

The real estate market in downtown Birmingham has followed the “chicken and egg” trend. Over the last few years, over a dozen multifamily projects have been announced, but the major hurdle is proving the demand as people moving downtown have wanted a downtown grocer. While some multifamily developers decided to proceed with construction, others waited on the sidelines hoping a grocer would announce a new downtown location. On the other hand, major grocers put off locating in downtown Birmingham due to the lack of people living in the general area. Problem solved when construction started last year on a new 30,000-square-foot Publix with a full-service pharmacy in downtown Birmingham. Developers Scott Bryant and Dick Schmalz announced that the Publix will anchor a new multi-story, mixed-used development. Publix considered a store in downtown Birmingham in 2007 and again in 2009 before finally deciding to bring a store downtown now. The development of the Parkside District with Railroad Park and Regions Field, along with existing and planned apartment projects in the area, contributed to the timing. With the addition of Publix, several other multifamily projects are well underway or completed, such as the 228-unit LIV Parkside, 332 total units next to Regions …

July 4, 2016

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