The Orlando office market has been recovering during the past 90 days in all aspects and classes. The vacancy rate has been improving. During the third quarter of 2011, it was between 16 percent and 18 percent, which is in line with the national average. According to REIS, the Sanford and Maitland submarkets have the lowest vacancy at 12 percent and 14 percent, respectively. Sales have been steady, especially bank-owned office buildings, which are trading around 20 to 30 percent below cost. One of the most noticeable sale transactions was $60.8 million sale of the 476,000-square-foot Bank of America Center in downtown Orlando, which Eola Capital sold to Parkway Properties Office Fund II LP in May of last year. Additionally, in October of 2011, Blackstone purchased Duke Realty’s office portfolio, totaling 10.1 million square feet for $1.08 billion. Included in that portfolio were a few assets in Orlando. There are also a few bank-owned office buildings that are under contract and expected close early next year. The Interstate 4 corridor from Disney to Sanford seems to be a hot spot for development as many companies are looking for more exposure and better access. Duke Realty is building the 133,000-square-foot Kirkman …
Southeast Market Reports
With low rental rates and available square footage, Atlanta’s industrial market remains a favorable environment for tenants and buyers interested in discounted real estate. Many are taking the opportunity to renegotiate leases on existing space or upgrade in terms of size, quality and location. With its close proximity to Hartsfield-Jackson Atlanta International Airport, CoStar Property reports South Atlanta’s Industrial Submarket is leading the metro area, with net absorption year-to-date in the third quarter of 2011 of 4.64 million square feet at an average quoted rental rate of $3.05 per square foot. The Northeast Atlanta submarket followed by posting year-to-date net absorption of 1.12 million square feet in the third quarter of 2011 at a higher quoted rental rates averaging $4.60 per square foot. Total year-to-date net absorption in the third quarter of 2011 for the metro area was 5.52 million square feet, with average quoted rental rates of $3.83 per square foot. This is in spite of the fact that flex space experienced negative net absorption, which accounts for approximately 10 percent of industrial inventory. The third quarter 2011 average vacancy rate of 13.3 percent has dropped relative to previous periods due in part to positive absorption and anemic new …
During the third quarter of this year, the Memphis multifamily market slowed down compared to the second quarter. Rent and construction were up, however, occupancy and sales fell during the third quarter. “We’re seeing continued improvement in our market,” says Tommy Bronson, III, vice president of the multi-housing group in CB Richard Ellis’ Memphis office. “Due to record low construction levels, we’re seeing positive rent growth, occupancy and concessions burning off.” The overall occupancy in the third quarter of 2011 was 91.6 percent, compared to 92.1 percent in the second quarter. The strongest submarkets are Germantown/Collierville, Downtown and Cordova, which all average in the low- to mid-90s for occupancy, Bronson says. “In those locations, we are often seeing no concessions now, which is a big deal in the Memphis market because we’ve been a concessionary market during the last few years,” he says. Bronson adds that Class A and B properties are pushing rents because concessions are burning off. Rents for new construction rose from $939 per unit in the second quarter of this year to $960 per unit in the third quarter of this year, an increase of 1.8 percent. Overall rents also increased slightly, from $733 in the …
I am pleased with this quarter’s findings, not ecstatic, but pleased. After adding more than 200,000 square feet of office space to the market in the last two quarters, I am happy to announce that we have absorbed nearly 60,000 square feet this quarter. This is the first decrease in the amount of office space since the fourth quarter of 2010. This was due in large part to the sale of the CH2M Hill building along Williston Road, which accounted for 31,000 square feet of the 60,000 square feet in this report. Nationally, we saw the largest absorption of office space since third quarter 2007 (12 million square feet). Office fundamentals have improved locally. Vacancies are decreasing, there are fewer concessions, rates are stable, and lease terms are increasing. Regarding concessions, for those being asked for by tenants, landlords are replying with a demand for longer-term leases. The good news is that tenants are agreeing to them, hopefully because they see a brighter future in their own business. In terms of vacancies, there is a notable difference in showing and lease activity, perhaps because there is less uncertainty in the business world. This is further evidenced by the longer-term deals …
Amid the current economic uncertainty, the office market continued to mark positive gains within the third quarter seeing 193,955 sq. ft. of positive absorption. Although well short of pre-recession levels, this quarter’s performance shows a steady increase in leasing velocity as the Orlando market has averaged only 119,881 sq. ft. of quarterly absorption over the past year. The Orlando economy has continued to stabilize. Monthly decreases in unemployment have become somewhat of a trend as the latest local unemployment statistics for August saw a year-over-year decrease from 11.7% to 10.3%. This sustained trend does wonders for local economic sentiment, especially among small business owners whose bottom line is highly dependent on the spending habits of other businesses within the local market. The Orlando CBD saw another quarter of positive absorption with Class B space leading the submarket to a total net gain of 26,352 sq. ft. Maitland Center is also beginning to show improvement with 31,289 sq. ft. of positive absorption. The majority of this quarter’s positive gains were seen in the Southwest submarket which absorbed 93,145 sq. ft. of space amid a mix of expansion and new tenants. Average rental rates rose slightly to $20.68 overall. Also noteworthy this …
Nashville’s economic growth has remained positive throughout 2011, strengthening Nashville’s position as one of the more resilient and dynamic metropolitan areas in the southern U.S. Through August of 2011, the metro has recovered more than half of the jobs lost during the recession, having added nearly 22,000 jobs since the beginning of 2010. Currently the unemployment rate in Nashville is hovering around 8.4 percent, compared with 9.1 percent at the national level. The area has become a prime relocation destination for major corporations, bringing well-paying jobs to the area. In 2009, Nissan relocated its headquarters from Los Angeles to Cool Springs, and now employs more than 1,300 people. Amazon recently announced two new major facilities that will bring more than 1,500 jobs to the area. GM plans on restarting assembly at its Spring Hill plant, creating 1,700 jobs as part of the new labor deal. The area has become more than just the country music capital. It is now a hub for higher education and healthcare, as the three largest employers are Vanderbilt, HCA and St. Thomas Health Services. Like many markets across the U.S., the Nashville multifamily market has now rebounded beyond pre-recession levels in terms of both occupancy …
During the second quarter of this year, the Memphis multifamily market showed signs of growth. Occupancy, rent, absorption and sales were all up from the first quarter of this year. Construction remains relatively flat; however, after three consecutive quarters of no new units coming on line, 114 units were delivered in the second quarter. “We’re seeing continued improvement in our market,” says Tommy Bronson, III, vice president of the multi-housing group in CB Richard Ellis’ Memphis office. “Due to record low construction levels, we’re seeing positive rent growth, occupancy and concessions burning off.” The overall occupancy in the second quarter was 92.1 percent, compared to 91.6 percent in the first quarter of 2011. The strongest submarkets are Germantown/Collierville, Downtown and Cordova, which all average in the low- to mid-90s for occupancy, Bronson says. “In those locations, we are often seeing no concessions now, which is a big deal in the Memphis market because we’ve been a concessionary market during the last few years,” he says. Bronson adds that Class A and B properties are pushing rents because concessions are burning off. Rents for Class A and B properties rose from $803 per unit in the first quarter of this year …
Market Overview Unlike most major markets across the U.S., the retail real estate landscape in the Washington, D.C. MSA, which includes the inner-city core as well as Northern Virginia and nearby Maryland, looks quite similar to that of 2006. While most big cities face the issue of too much supply and not enough demand, D.C. is busy developing new centers to keep up with demand. For example, Hines’ CityCenterDC project in downtown D.C., now under construction on the 10-acre site of the District’s old convention center, is a 2.5 million-square-foot mixed-use project that promises to have a major impact on the East End of downtown. The 1.3 million-square-foot first phase, slated for completion in late 2013, is set to include office buildings, condos, apartments, 185,600 square feet of retail, a park and a central plaza. Upon completion, the retail portion will total about 400,000 square feet. Inside the Beltway, 10-acre sites aren’t easy to come by and, given its critical mass, CityCenterDC has the potential to be a game-changer in this market. Two of the city’s waterfront areas are also seeing major development. Thanks to the efforts of Forest City Washington and a host of other developers, the Southeast Waterfront …
The Atlanta retail market took a slight hit in the second quarter of 2011, but is still seeing improvement. Although available space in areas is starting to fill up, absorption in the second quarter of 2011 fell from positive absorption of 648,692 square feet in the first quarter to negative absorption of 726,174 square feet, according to CoStar Group’s Mid-Year 2011 Atlanta Retail Report. However, the vacancy rate only rose slightly, from 10.1 percent to 10.4 percent. Greg Eisenman, associate with Colliers International’s Atlanta office and a member of the Retail Services Group, says many tenants are looking to do deals. While speculative development is on hold, he expects the available amount of space to drop. Tony Cerniglia, vice president of retail services with CB Richard Ellis’ Atlanta office, says recovery has been spotty, although there are pocketed areas of the city that are doing well. Buckhead, Midtown and Cobb County have seen the most traffic, which Cerniglia says is not surprising because of the solid demographics and good locations. Some retailers have even been competing for space in these markets. Cobb County has seen some leasing traffic. In fact, according to Colliers International’s Atlanta Retail Market Report, the two …
The city of Huntsville, Alabama, is no stranger to threats of economic disaster, so overcoming it is a matter of pulling together a team of commercial brokers and economic development professionals who will see office and industrial buildings half-full, rather than half-empty. In 1948, the U.S. Army hung a ‘For Sale’ sign on Redstone Arsenal, only to remove it for a team of rocket scientists. In the 1970s, Huntsville’s space industry packed its bags after the last Apollo launch, leaving the city like a bad divorce, before the hands of fate reached out in the form of missile defense. In 2005, the Base Realignment and Closure (BRAC) initiative set Huntsville on a fast track to economic growth and commercial prosperity. Three hard years of unprecedented national financial crashes played havoc with the market, but what remains is a handful of proverbial optimists. The North Alabama Commercial Brokers Association (NALCOM) meeting in February entertained a loyal group of survivors who at this point are unlikely to fail. They believe an increase in inquiries is a positive sign, even if they aren’t at 2007 levels. Rather than analyzing high vacancy rates and crying over companies who left two years ago, they shifted …