Southeast Market Reports

Richmond’s Industrial Market Fires on Most Cylinders, Save for Large Spec Projects

by John Nelson December 7, 2015

Greater Richmond’s industrial market is as strong as it has been in a generation. Given the overall growth of the economy, including industrial employment and investment, it appears that the engines driving industrial economic growth will remain steady and the need for industrial real estate will continue to be steady. Greater Richmond’s industrial market is moving fast and on most cylinders, with the only laggard being pure speculative development of high-bay large block industrial and small incubation flex product. All other cylinders are pumping, including industrial and flex leasing, design build-to-suits, land sales, freestanding occupier building sales and investment sales. Absorption and general growth activity is coming not only from local existing companies and start-ups, but also by companies outside of the area looking to relocate or open additional facilities here. The flavor of the demand has been relatively diverse reflecting the Greater Richmond area’s stable economy and Mid-Atlantic location with its superior logistic opportunities. Economic Trends Greater Richmond’s population is nearly 1.3 million people, and total employment is more than 650,000 in the Richmond metro area. The diverse economy includes 10 Fortune 1000 headquarters; pharmaceutical, chemical, biotech and other 21st century manufacturers; financial and information technology services; Fifth District …

December 7, 2015

Market Reports Retail Southeast Southeast Market Reports Virginia

Grocery Stores, Restaurants, Fitness Are Driving Richmond’s Retail Market

by John Nelson November 30, 2015

This year is shaping up to be very exciting and productive for the Richmond retail market. The Richmond retail market has started at a brisk pace for the first half of 2015, similar to the end of 2014 as it absorbed 111,889 square feet. The vacancy rate has continued to decline over the past 12 months as well. The overall retail vacancy rate in Richmond tightened to 6.6 percent, a 50 basis point improvement over last year. The main drivers of retail activity throughout the Richmond MSA continue to be grocery stores, fitness centers and restaurants. Early this year we saw the commencement of construction at two Wegmans-anchored developments in Richmond, one in Short Pump and another in Midlothian. The Midlothian Wegmans will anchor the new Stonehenge Village and is on pace to open in early 2016. The Short Pump Wegmans will join Cabela’s in the new West Broad Marketplace, a 400,000-square-foot development on the western edge of Short Pump. There has also been solid activity in the market from several other grocers, including Walmart Neighborhood Market and Aldi. Each of these concepts has opened four new stores in the market. Another grocer poised to enter the market is LIDL, …

November 30, 2015

Market Reports Multifamily Southeast Southeast Market Reports Virginia

Richmond’s Multifamily Market Couldn’t Look More Attractive to Investors

by John Nelson November 23, 2015

The Richmond metropolitan area, with a population of 1.3 million, is bursting with multifamily development. The growing MSA contains more than 72,000 apartments units (45 percent Class A) and has 2,018 units under construction with another 5,826 in various stages of pre-development. On top of all this activity, the overall market occupancy remains at 96 percent. The fuel for these conditions comes from the many amenities in the market, from the University of Richmond and a robust sports scene to the proximity to Atlanta, the Atlantic coast and Washington, D.C., as well as the encouraging employment picture. The city’s unemployment stands at 5 percent compared to the U.S. average of 6.3 percent; since 2000 the city’s population has grown by nearly 15 percent. These conditions allow property owners to leverage this diverse and sustainable market for multifamily investments. Richmond development also benefits from the attractive interest rates, which remain low despite having climbed 80 basis points since late January. Along with monitoring this upward trend, news earlier this month from the Federal Reserve of a rate hike will serve as a caution sign for investors. Whether we see this hike in the next couple of months, or not until 2016, …

November 23, 2015

Market Reports Multifamily Southeast Southeast Market Reports Virginia

Apartment Supply in Richmond’S CBD Attracts Young, Economically Powerful Residents

by John Nelson November 16, 2015

Richmond has become a multifamily safe haven with unemployment rates below the national average and the second-best annual rental returns in the nation at 20.42 percent. Richmond’s high annual returns are due in large part to its population. The city has become a mecca for young adults as 32.2 percent of the population is in its 20s and 30s — well above the national average of 22 percent. This population’s drive for an urban, walkable lifestyle is generating a great deal of development in the CBD, as well as the Manchester submarket where Virginia Commonwealth University’s (VCU) Institute for Contemporary Art is located. VCU’s art institute is the No. 1 art and design school in the country, and continues to draw in Millennials looking to take advantage of the open and historic downtown district surrounding the James River. Richmond’s flourishing, younger population is demanding adaptive re-use and new development and developers in Richmond are answering the call. Areas such as Scott’s Addition, Shockoe Bottom and Manchester have all seen new mid and high-rise developments in recent months that are attracting a plethora of new tenants. Highlights of Richmond’s apartment market include: • 1,000 units are currently under construction with an …

November 16, 2015

Florida Market Reports Office Southeast Southeast Market Reports

Innovation Assists Orlando Office Market in Fighting its Way Back

by John Nelson November 9, 2015

After six painful years, vacancy is finally declining in the Orlando office market. Effects of the Great Recession on real estate markets have been thoroughly examined here before, but outside factors that have played such a prominent role in reshaping the office market are creating significant impact. These changes might appear to be negative, but they will ultimately prove positive. Quantum advances in communication and data storage, new attitudes regarding workplace culture, workspace sharing centers and virtual offices have stirred the submarkets that comprise the greater Orlando area. While they are affecting all sectors of commercial real estate, they are felt most acutely in the office markets, slowing employment growth and corporate expansion, which have always powered the rate of change in quarter-to-quarter vacancy declines. Cloud-based data storage and paperless transaction platforms have shrunk the size of private offices with file storage rooms. Text messaging, email and file sharing platforms such as Dropbox have reduced the need for face-to-face meetings and demand for conference rooms and private offices. Real estate closings that once involved several parties in a conference room are antiquated now. Over the past five years, staffed reception areas have given way to scaled down waiting salons with …

November 9, 2015

Florida Industrial Market Reports Southeast Southeast Market Reports

Small Tenants Causing Big Demand for Industrial Product in Orlando

by John Nelson November 2, 2015

The industrial market in Orlando has undoubtedly experienced robust leasing activity over the first half of 2015, especially among the smaller users ranging from 3,000 to 10,000 square feet. With an average industrial vacancy rate of 9.3 percent throughout Southeast / Southwest Orlando according to second quarter 2015 market reports, quality space for smaller tenants is becoming more and more scarce and available dock-high small space is virtually nonexistent. Industrial is Rebounding Two specific factors can be directly linked to the current industrial shifts in Central Florida: construction spending and theme park growth. The construction industry is booming, in particular within the single-family and multifamily sectors, allowing construction companies of all sizes market share due to high demand for services. Industrial parks are welcoming back smaller construction business owners that may have downsized and operated out of their homes during the downturn but are now looking for larger warehouses and mixed-use spaces for business. Secondly, theme park expansions, spurred by the record year of tourism in Orlando in 2014, have caused many businesses that were on the back lots of the parks to be pushed back out into the marketplace. Higher tourism rates represent a boost in consumer confidence and …

November 2, 2015

Florida Market Reports Multifamily Southeast Southeast Market Reports

Job Growth Key to Orlando Apartment Market’s Strong First-Half Performance

by John Nelson October 26, 2015

Orlando’s multifamily market is in the midst of a golden era of sorts, as it sits squarely at the intersection of strong employment growth, an increasing population, a major demographic shift and a variation in lifestyle preferences. Together, these factors provide a tremendous tailwind for future strength in the local apartment market. While the national multifamily market continues to perform at a high level, Orlando is starting to show up on the radar of more institutional investors due to its recent outperformance and tremendous growth prospects. According to recent data from MPF Research, Orlando is on pace to see 5.6 percent rent growth in 2015, followed by 4.7 percent growth in 2016. The strong momentum in the MSA is being driven by a rapidly expanding and increasingly diversified job market. Going forward, the picture looks even brighter. MPF Research ranks Orlando as the No. 1 metro in the nation for job growth through 2020, with a growth rate (2.7 percent), more than twice the national average (1.1 percent). Unlike previous cycles, today’s growth is spread more evenly across employment industries, resulting in a more diverse, dynamic labor market. The highest growth sectors are forecast to be construction, healthcare/bio-tech, business services, …

October 26, 2015

Florida Market Reports Retail Southeast Southeast Market Reports

Tourism Industry Has Orlando Retail Market Firing on All Cylinders

by John Nelson October 19, 2015

Underpinned by a $50 billion tourism industry that drew a record-breaking 62.3 million visitors in 2014 in addition to strong job, population and residential growth, there is no question that Orlando’s retail real estate market is stronger than ever. According to 2014 U.S. census data, Orlando outpaced 99 of America’s 100 most populous MSAs in year-over-year population growth. The City Beautiful also recently ranked as the No. 1 U.S. city for job growth by Fortune Magazine following a 3.7 percent increase in its employment base in the same year. The Orlando retail market has also benefited heavily from healthy gains in the housing sector, powered by Central Florida’s tourism and construction industries, which stimulate economic development in the region. Orange County Property Appraiser, Rick Singh, reported that average home sale prices were up more than 10.5 percent in 2014, while residential construction rose 79 percent in the same period. With this type of growth, Orlando is experiencing strong consumer spending and an increase in demand for retail space. The Orlando region’s Index of Retail Activity rose 8.5 percent year-over-year in the second quarter of 2015, while the metro-wide retail vacancy rate decreased to 6.5 percent, down from 8.2 percent at …

October 19, 2015

Market Reports Maryland Retail Southeast Southeast Market Reports

Baltimore City’s Retail Market Remains Hot, But Watch Out for the Suburbs

by John Nelson October 12, 2015

An apartment building boom is encouraging a consistent march of new residents to select sections of Baltimore City, and the construction of new retail venues to support this emerging audience has followed in lockstep. The last several years has seen the opening of stylish shopping centers featuring national anchor tenants such as Harris Teeter and Target, including The Shops at Canton Crossing, a 330,000-square-foot retail shopping center situated within the city’s east side, as well as McHenry Row, located in the Locust Point section of the city (next to Under Armour’s headquarters). Other notable retail developments underway in Baltimore City are the capital improvement and re-invention program at Harborplace; The Stadium Square, a $250 million mixed-use project situated near M&T Bank Stadium; the $25 million facelift being given to Lexington Market, a collection of 100 food vendors; the ongoing retail build-out of Harbor East (the recognized “place to be and be seen” spot of the city); and the initiation of construction on Harbor Point, the site of the new Exelon Corp. headquarters (the company merging with Constellation Energy). Baltimore County is Booming Owings Mills, Towson and White Marsh are the sites of four significant projects, several of which have been …

October 12, 2015

Market Reports Maryland Office Southeast Southeast Market Reports

Shifting Blocks of Space, Apartment Conversions Help Shape Baltimore’s Office Market

by John Nelson October 5, 2015

Three major storylines are playing out in Baltimore, the northern part of the one-two city punch that combines for more than 9 million people and forms the fourth-largest metropolitan region of the country. These three sub-plots each contribute to the larger vernacular of the Charm City story. The activity in the office sector is occurring against the backdrop of a robust warehouse/industrial market, as national companies are recognizing the attractiveness of the Port of Baltimore and access to the Eastern Seaboard. Baltimore is also enjoying the healthiest retail environments seen in years, highlighted by the construction of new large-scale shopping centers to service Millennials and empty-nesters moving downtown. 1. Shifting Blocks of Space Two separate 200,000-square-foot blocks of prime office space are moving to the now-under-construction Harbor Point overlooking Baltimore’s Inner Harbor, the development centerpiece of the Constellation Energy Group merger with Exelon Corp. Upon completion, the former industrial brownfield site will feature more than 1.6 million square feet of commercial office space. Add in a separate 200,000-square-foot move by the Baltimore headquarters of M&T Bank from 25 S. Charles St. (with sources indicating the company may back-fill the space themselves) and you have pretty large shoes to fill in …

October 5, 2015

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