The Atlanta industrial market is in the beginning stages of its third growth cycle since 1990. Vacancy has declined over the past 18 quarters, and asking rates have seen a positive trend over the same time period, increasing by 14.9 percent. These improving metrics should come as no surprise to those familiar with the history of Atlanta’s industrial market. Although the Atlanta metro is the nation’s ninth-largest metropolitan area, its industrial market represents the fourth-largest by volume. Total vacant space in the market has fallen to a 13-year low 8.7 percent, meaning the metro is once again poised for industrial expansion. Cycles One, Two and Three Atlanta’s growth cycle in the 1990s lasted just under 8 years, from 1994 until 2002, where 135 million square feet of new product was added to the market. That constitutes almost a quarter of the total 549 million square feet in the metro today. Total vacancy had fallen to 9.2 percent in the middle of 1994 and asking rates hit what was then an all-time high of $3.26 per square foot. These factors triggered a 40 percent rise in construction volume. As this cycle closed in 2001, vacancy rose back above 10 percent in …
Atlanta is experiencing an influx of human capital, corporate relocations and development of distribution networks that are combining to create a robust expansionary cycle in our real estate markets. One of the most positive elements of this expansion is that it appears the underlying structure of the growth is creating stability for our city and state well into the future. It is the structure of the growth that will be a long-term difference maker. CNBC annually conducts a study and ranks the top states for doing business. These rankings are a result of assessing various criteria, including but not limited to the cost of doing business, workforce quality, access to capital and business friendliness. CNBC’s results in 2014 were very telling. Four of the top 10 states are located in the south. The South’s top 10 finalists in CNBC’s study were Georgia (1), Texas (2), North Carolina (5) and Virginia (8). In addition to these empirical studies, major corporations are voting as well. The verdict is that many organizations are choosing to relocate corporate headquarters to Atlanta. Recently, marquee brands such as Mercedes-Benz USA and State Farm all have made plans to open or expand major corporate centers in our …
Birmingham’s retail market remained steady in 2014, with approximately 10 percent of the total 24 million square feet available for lease. Birmingham is tracking above national averages relative to new ground-up and rehab projects that are announced or underway. Downward pressure on rents have challenged developers pro-formas, though the very friendly city and state incentives environment has allowed developers to creatively meet tenants conservative occupancy cost requirements. While the Birmingham metro area is challenged by the threat of major closings by retailers like JC Penney, Sears and Kmart, there is a pipeline of first-to-market national retailers eyeing the growth submarkets, including Highway 280, Hoover/ Riverchase and Trussville. New Grocers Enter Market Trader Joe’s recently unveiled plans to open a 12,600-square-foot store at The Summit shopping center in the second half of 2015. Trader Joe’s provides a destination food option for the market. The Summit is leased and managed by Bayer Properties. Arizona-based Sprouts Farmers Market recently announced it would be entering the Birmingham metro as well. Sprouts’ first local offering will be at Brook Highland Plaza on U.S. 280. The 22,457-square-foot store will serve an array of fresh produce and meats. Additionally, GBT Realty is developing a 25,000-square-foot Sprouts location …
Spring has come to Birmingham, and with it the sound of multifamily developers breaking ground. Their success in finding tenants for these properties — numbering more than 1,000 units — will be a litmus test for the future of the Birmingham market. Right now, the market activity leads one to be cautiously optimistic. Work on the $66 million renovation of the historic Pizitz Building in downtown commenced in March, which will add 143 apartments to the market in fall 2016, and the newly dubbed 20 Midtown project is finally underway. This mixed-use project, featuring a Publix and a Starbucks, will have at least 122 apartments when completed. Construction has also started on the $22 million renovation of the Thomas Jefferson Tower, another mixed-use project that will yield 96 apartments. These projects join the 236-unit Venue at the Ballpark, which broke ground last year and promises views over the outfield fence into Regions Field. The cranes are also busy east of the expressway in Lakeview. Work there has started on the 67-unit Iron City Lofts and is slated to begin later this spring on the 260-unit Metropolitan Apartments. Testing the Millennial Market Taken together, these developments highlight a number of facts …
Manufacturing was instrumental in driving the United States economy out of the recession. With Greenville-Spartanburg having a high ratio of manufacturing to warehouse space, the region’s industrial market has been ahead of the national market in terms of growth. Greenville-Spartanburg is first and foremost an industrial market with approximately 160 million square feet of manufacturing, warehouse and flex space. This is larger than the industrial markets in Columbia and Charleston combined. For five consecutive years vacancy has declined and absorption has been consistently positive. Vacancy currently sits at a record 7.3 percent and has been there for several quarters, not moving down further mostly due to lack of product. Annual net absorption topped 4.3 million square feet in 2012 and 2013, and dropped down to 2.5 million in 2014. Space that does not exist cannot be absorbed. Developers are aggressively responding to this lack of product with more than 3 million square feet of space expected to be built in 2015. Over 1.3 million square feet of that space is considered speculative, meaning construction started before occupancy was achieved. Both numbers represent the highest amounts of construction since CBRE began tracking the Greenville-Spartanburg industrial market in 2001. Absorption in 2015 …
Attention retailers — Baton Rouge is the place to be. For the first time in the area’s history, the Baton Rouge MSA is expected to exceed 400,000 overall jobs in 2015 according to economists Loren Scott and James Richardson. The surge in employment is being fueled by numerous projects including $16 billion in industrial construction projects in the Baton Rouge MSA, along with $1 billion in public construction. Construction is underway downtown on a $55 million office tower and residential complex, which will be the home of the new IBM Technology Center where 800 highly skilled computer savvy individuals will be employed. Construction is also underway on a state-of-the-art water research facility in downtown Baton Rouge. The “Water Campus” situated on 30 acres next to the Mississippi River will initially consist of three buildings totaling $45 million in construction costs. This research park will provide an opportunity for academics and private-sector scientists and engineers to collaborate in producing the best available science on water management and coastal issues. For a state heavily weighted in the energy and petrochemical sectors, this will be a catalyst for economic diversification. Newsworthy Projects Juban Crossing: The most significant new mixed-use project to come on …
When it comes to grading commercial office space, there is no doubt that location is still king — and other factors such as price, architecture, functionality and amenities all take a back seat to the property’s location. Since we assign buildings letter grades (A and B), let’s take a look at what these letter combinations mean and the relationship of quality to location. In these scenarios, the first letter describes the building’s class (A or B) and the second letter represents the desirability of its location (A or B). The A/A designation refers to Class A buildings in Class A locations. It’s no surprise that this is the first category of office space absorbed when a market heats up and leasing volume intensifies. During this stage of the cycle, rental rates to inch upward, and more importantly, lease renewal terms tighten as landlords sense a shift toward the middle. For Memphis, Tenn., the total vacancy for Class A space in the East Memphis submarket decreased from 2.9 percent during third quarter 2014 to 2 percent in fourth quarter 2014. Almost 24,000 square feet of Class A office space in the East submarket was leased during fourth quarter 2014, and this …
By the numbers, 2014 was a pretty good year for the Memphis retail market. With over seven million square feet of rentable retail space, the overall vacancy rate decreased roughly one percent since the end of 2013 while rental rates were relatively flat. Not bad. Not great either. It is important to note, however, that Memphis retail is not classified into A, B and C properties like their office and industrial counterparts, so we don’t often get an accurate snapshot of the market’s product availability. The truth is that Memphis is simply running out of space – desirable Class A space, that is. Because of this lack of available product, new construction is once again on the rise, as is redevelopment of existing structures within the city’s urban core. The good news doesn’t stop there. The willingness of local government entities to support development progress has proven to be instrumental to some very key wins for the Memphis MSA. This January, Tanger Outlets, a major player in the outlet mall industry, confirmed that it would partner with Poag Shopping Centers to develop a 310,000-square-foot outlet center in Southaven, Mississippi. Southaven and DeSoto County officials approved a $15 million tax increment …
Memphis has acquired many nicknames since its establishment in 1819: Blues City, Birthplace of Rock ‘N Roll, and Bluff City just to name a few. However, one name that has managed to work its way to the top of the list in recent years is America’s Distribution Center. Metropolitan Memphis, located in the southeast corner of Tennessee, northwest Mississippi and eastern Arkansas, contains approximately 4,598 square miles and is inhabited by approximately 1.3 million people. As one of the few MSAs to include three states, the Memphis region plays an integral role as the cornerstone of the Mid-South area. With a central location and rich transportation infrastructure, Memphis transformed into the regional and national distribution and logistics hub. Memphis’ transportation infrastructure is comprised of the four Rs: runway, rail, river, and road. Memphis International Airport was named the largest air-cargo airport in the United States for 18 consecutive years. It is now tied for first in the world with Hong Kong International Airport. Memphis is one of only three cities in the US that has five of the seven Class I railroads: Union Pacific/Southern Pacific, Burlington Northern Santa Fe (BNSF), CSX Corp., Norfolk Southern and Canadian National Railroad (CN). The …
Nashville has quickly become one of the most active Southeast markets for multifamily, both in terms of development and sales. Driven by tremendous job growth, strong population increases, a pro-business climate and an educated workforce, Nashville’s remarkable multifamily growth is not overstated. From 2014 to 2017, more than 12,300 units are projected to enter the market, with another 9,000 that are planned or proposed. Concerns have arisen that Nashville’s supply will outpace the demand in the medium term. However, job growth indicators, sales activity and lease-up velocity indicate the contrary. Nashville’s economy has surpassed the $100 billion mark with a 5.1 percent unemployment rate and a 4.2 percent GMP growth rate that is double that of the rest of the nation. Notable recent expansions include General Motors (1,800 jobs), Under Armour (1,500 jobs), Magna International (357 jobs), and FedEx (347 jobs) — all of which were announced in the second half of 2014. In addition, Bridgestone America has announced that it will consolidate its operations in Nashville adding 600 jobs. These expansions combined with immense foreign direct investment continue to fuel the area’s growth. According to IBM’s 2014 Global Location Trends Report, Tennessee ranks first in the nation in terms …