When it comes to national economic cycles, Baltimore has always led a charmed existence. Its proximity to our nation’s capital, sustained strong consumer demographics and the presence of diversified industries have contributed to Baltimore entering recessionary times late and emerging early. New Centers Underway Five significant retail sites are either recently opened, under construction or nearing approval to initiate development. McHenry Row, positioned adjacent to the headquarters of the rapidly expanding Under Armour, is open and features a Harris Teeter grocery store. Baltimore City will also welcome a premier power center in 2013, as well as Canton Crossing, a 320,000-square-foot Harris Teeter- and Target-anchored center. This project is located east of the Inner Harbor on Boston Street and will be home to fast-casual restaurants and soft good retailers such as DSW, Michaels, Loft, Five Below, Ulta, Red Robin, Jimmy John’s and Chick-fil-A. In 2015, Baltimoreans on the north side of the city will begin shopping in the redeveloped Rotunda; D.C.-based Mom’s Organic Market is rumored to be the lead anchor. This renovation was spurred by the relocation of Giant Food to a larger footprint in the former Super Fresh at Green Spring Tower Square. Whole Foods is making whispers about …
Southeast Market Reports
Over the past decade, Baltimore City has seen a gradual shift in office market activity. Demand for office space has become increasingly focused on the waterfront properties of the Pratt Street Corridor and Harbor East. Many older buildings in the traditional Central Business District (CBD) with smaller footprints have become less attractive for office use. The CBD has also experienced a surge in both population and apartment demand that has pushed the residential supply to its occupancy limit. This balance between vacant office space and demand for residential space in the CBD has created a prime opportunity for redevelopment. The CBD has struggled to recover from the economic recession, when office vacancy rates spiked to almost 23 percent. It has, however, experienced small amounts of positive absorption over the past few years. Demand for space has been focused on Class A inventory as a “flight to quality” trend has emerged in the CBD. Net absorption for Class A inventory in the CBD has increased each year since 2008 and has been a primary factor in stabilizing the overall Baltimore City vacancy rate. Mid-year 2013 numbers suggest that this trend of increasing demand for Class A office space will continue for …
While out national and local news outlets inundate us with what is going on in Washington, D.C., these days, word may not be on the street yet that the industrial real estate market just north of D.C. has begun to see significant improvement, something that has been slow in the making. This market has always been on the radar of the top real estate investors and remains a sought-after destination for industrial investment. The Baltimore-Washington (BW) Corridor industrial real estate market, historically one of the strongest in the country, received a gut punch in 2008 much like the rest of the real estate markets throughout the country. Defined as mostly Howard and Anne Arundel counties, this 46 million-square-foot market is essentially the area between the Baltimore Beltway and the Washington Beltway, a distance of 25 miles along Interstate 95. This market acts as the “last mile” of distribution to the affluent suburbs of the Capital Region. Prior to the fourth quarter of 2012, most leasing activity in this market consisted of tenants downsizing or shopping their renewals to anxious owners looking to fill recent holes in their portfolios. The results were lower rental rates, more concessions and generally lower investment …
Columbia is is considered a tertiary market by definition, with more than 47 million square feet of industrial space. In the past few years, national and international companies have recognized Columbia as having a strategic position in the Southeast. While most markets struggled in the downturn, Columbia’s steady industrial announcements demonstrated stability. Today, the city’s industrial vacancy rate is hovering at 10 percent. The Columbia market has remained attractive due to its low cost of doing business, non-union affiliation and quality of life. The city’s employment base is diverse, ranging from traditional sectors such as agriculture and manufacturing to emerging sectors such as health services, insurance and financial markets. The region is home to the state government, Fort Jackson and the University of South Carolina. Rental rates for Class A industrial space have decreased significantly since 2008. Today, we have a 184,000-square-foot LEED-certified building with a quoted rate of $3.95 per square foot. At delivery, this building had a published rate of $4.75 per square foot. Another competing Class A property in the market is the former Lamson Sessions building, a 350,000-square-foot, cross-docked facility listed at $3.35 per square foot. The reduction in rates has been necessary to stay competitive …
Baltimore's government- and defense-driven neighbor, Washington, D.C, has historically overshadowed the city’s apartment market. Yet setbacks caused by sequestration and concerns of oversupply across the Washington metropolitan area have recently unveiled a new light on Baltimore. After six decades of continuous population decline, the city has finally turned the corner, registering positive growth for the first time since the city’s peak in 1950. Strong market fundamentals driven by improving economic trends and favorable demographic shifts have begun to attract a new cast of institutional investors and top-level developers, establishing Baltimore as a top-tier investment market. The city’s new attraction has resulted in a significant increase in both ground-up apartment developments and residential conversion projects that continue to reshape the character of the downtown area. Predominantly driven by education and life sciences, the Baltimore economy maintains a significant employment base of 1.3 million payroll jobs. Following a loss of 100,000 jobs during the downturn, the metro has rebounded to pre-recession levels registering positive year-over-year employment growth for the past 37 consecutive months. Additionally, the region is expected to add 70,000 new jobs by year-end 2015, according to Moody’s Analytics, helping to further decrease the current unemployment rate of 6.7 percent. The …
From farmland in the early 1970s to a major economic center in Georgia and the Southeast today, Central Perimeter has evolved into the dominant office submarket in metro Atlanta and an employment center larger than the downtowns of Nashville, Charlotte or Jacksonville. A corporate hub, Central Perimeter contains the headquarters of nearly 50 companies, including four that are Fortune 500s. During 2012, Central Perimeter also was the most active submarket in metro Atlanta, accounting for more than half of the region’s total office space absorption at 1.7 million square feet. The largest lease transaction in metro Atlanta in 2012 was in Perimeter. State Farm opened a new customer service center in nearly 500,000 square feet of space in two buildings in Dunwoody, which created 500 jobs. Metro Atlanta’s largest office sale in 2012 was the $300 million purchase of the 2.1 million-square-foot Concourse Corporate Center that includes the landmark King and Queen buildings. Additionally, Cox Enterprises added two buildings totaling 600,000 square feet to its Perimeter campus, delivering the largest office construction project last year. Central Perimeter is maintaining this strong activity in 2013, with State Farm leasing nearly 200,000 square feet of additional office space, adding 800 jobs. Also, …
Charlotte's retail sector has been robust with activity in the past several months, with positive signs on the horizon. Residential development in Charlotte has been driving a rise in retail projects, particularly in the city’s infill areas, such as SouthPark and the South End. For instance, more than 1,200 apartment units are under construction or planned in the South End area. This has led to more urbanized retail, including a 55,000-square-foot Publix that is under construction on four acres at South Boulevard and Iverson Way. The site will also include structured parking and additional shops. Publix has also announced a new location in Ballantyne Town Center, located at Providence Road West and Johnston Road, which is scheduled to open in early 2014. When Harris Teeter announced that it had hired JP Morgan to sell the company, rumors were rampant and there has been a lot of speculation that Publix was a likely buyer. Most industry insiders do not think that this is likely, so it will be interesting to see how this dynamic plays out. In the meantime, Publix continues to scour opportunities for new locations throughout the Charlotte market, adding a new player in the highly competitive grocery sector. …
Charlotte has become one of the most desirable and sought-after investment markets in the nation with a diverse economy fueling job growth, attracting new talent and enticing investors. In fact, Charlotte had the largest population growth rate for urban areas of 1 million people or more in the decade from 2000 to 2010 and is expected to increase its population by another quarter-million people by 2020, fueled by diverse industries such as banking, energy, healthcare, manufacturing and transportation. With 37,000 jobs created in 2012, Charlotte’s employment has added back every job lost during the recent recession, eclipsing its previous high-water mark set in 2007. Approximately 50 companies have announced major expansions or relocations in the Charlotte area over the past year-and-a-half. Highlights include Metlife announcing plans to establish a hub for its U.S. retail business in Charlotte bringing 1,300 jobs to the city and Convergys, the business process outsourcing giant, announced plans to create 1,600 jobs. From a multifamily operations perspective, the Charlotte MSA has seen outstanding performance over the last two years with both total occupancy and average rents at their highest levels in the past 10 years. With current occupancy levels above 95 percent (increased by approximately 490 …
While most office markets are bifurcated between Class A and the rest, the Triangle market has a particularly pronounced disparity that is driving market trends. In the first quarter of 2013, Class A vacancy was 12.7 percent — nearly half that of both Class B (24.7 percent) and Class C (23.0 percent). The playing field, in terms of both tenant desires and rental rate differential economics, is skewed heavily in favor of Class A space, which currently only has six options for tenants seeking blocks 50,000 square feet or greater. Not even projects currently under construction, including the NC State Employees Credit Union’s downtown Raleigh headquarters and Diamond View III in downtown Durham, offer available space in that range. Class A vacancy is at its lowest rate in nearly five years and is only slightly above the 11 percent range that spurred the office building boom between 2005 and 2007. The lack of available large blocks has already resulted in lost opportunities and market timing mismatches for potential preleasing or build-to-suit tenants, such as Wyrick Robbins Yates & Ponton. The law firm recently renewed and expanded its lease in place at The Summit in the West Raleigh submarket, due to …
The Washington, D.C., area boasts the lowest unemployment rate among major metros, at 5.5 percent as of February 2013, which is about two percentage points below the total U.S. unemployment rate of 7.6 percent. In the 12 months prior to February 2013, the area fell only behind New York, Los Angeles Basin and Houston in terms of job growth, with 39,700 new jobs created. At the same time in 2012, retailers shed approximately 1,100 jobs. While the effects of sequestration legislation are still unknown, the projected job growth from 2013 to 2017 is estimated to average 48,100 per annum. Two rapidly growing industry sectors are cybersecurity and healthcare. The Washington area also has an average household income of $108,400, making it an impressive 59 percent higher than the U.S. average. Incomes grew by 43 percent from 2000 to 2012, compared to 20 percent nationally. By 2017, the area’s average income is estimated to rise 14 percent, still higher than 13 percent nationally. Retail inventory (all types) for the Washington metro area totals approximately 220 million square feet. As of March 2013, the overall vacancy rate was 4.8 percent — the lowest in the nation. The market has seen no overall …