Western Market Reports

Las Vegas Office Market Dynamics are Driven by Convenience, Quality

by Jeff Shaw June 16, 2023

— By Dan Palmeri, Senior Vice President, CBRE — As Las Vegas reinvents itself as the sports and entertainment capital of the world — while still maintaining the fun factor it has always been known for — the corporate world continues to look at Southern Nevada as a legitimate place to do business. The city saw a record number of Class A deliveries in 2022 and has shown no signs of slowing down through 2023. This is a reflection of the demand for new, functional and relevant office space. Like most markets, location and quality of buildings are the main drivers for employers as they focus on employee happiness and retention. As Las Vegas has grown from a small desert town in the ‘70s and ‘80s with 505,000 residents in 1983, to a market of more than 2.3 million residents today, the natural geographical growth outward has hit a point where the city has reached the Valley’s boundaries in all directions. What was once a five- to 10-minute commute to the center of town has now become a 20- to 30-minute commute for the mass of suburban dwellers. This has organically led to a focus on a 25-mile stretch from …

June 16, 2023

Arizona Market Reports Retail Western Western Market Reports

Phoenix Retail Is Flying High

by Jeff Shaw June 13, 2023

Ryan Desmond, partner, Western Retail Advisors in Phoenix Metro Phoenix’s population grew faster than any other major U.S. city between 2010 and 2020. By 2021, the Valley’s 1.48 percent population growth continued to far exceed the country’s .01 percent growth — the slowest annual growth rate in our nation’s history. For a community that has historically been criticized as being over-retailed on a per-capita basis, this has injected tremendous strength into the local retail market. Today, Phoenix ranks as a hotspot among U.S. cities for retail absorption. According to CoStar, Phoenix had absorbed 4.1 million square feet of retail space year over year — the strongest absorption since the start of the Great Recession — by the start of the second quarter in 2023. This reduced the market’s overall vacancy rate to 5 percent. This is impressive, but it doesn’t reflect the increased gap between demand for Class A product and all other retail classes. Much like the flight to quality happening in the office sector, tenants looking for retail space in metro Phoenix want excellence: high-traffic locations in a growth submarket with compelling demographics. As a result, we have seen more metro Phoenix Class A retail properties reach full …

June 13, 2023

California Market Reports Multifamily Western Western Market Reports

Opportunities Abound for Investors in Westside Los Angeles Apartment Market

by Jeff Shaw June 9, 2023

— By Kimberly Stepp, Principal, Stepp Commercial Group — Los Angeles’ Westside apartment market is poised to see a robust pipeline of transactions in 2023. Long-time owners have been increasingly seeking to trade into out-of-state assets, while 1031 investors or those looking to pay all cash seek to take advantage of opportunities in a high interest rate environment. Last year, Stepp Commercial Group saw a significant number of transactions with LA-area sellers who were frustrated with rent control and other problematic apartment legislation. They were looking to trade into states like Arizona, Florida and Texas because they provide a stronger ROI over the long-term and offer fewer landlord restrictions. We see that trend continuing into 2023 as owners want to enjoy a passive income as they achieve their individual investment goals and objectives. Additionally, while Measure ULA (“the mansion tax”) went into effect on April 1 — and impacts only homes and apartment complexes sold within the City of Los Angeles at $5 million or more — the overall sentiment has been sour from owners throughout the Greater LA area. They are justifiably concerned that similar legislation will soon be coming to their city, on top of other landlord-unfriendly restrictions …

June 9, 2023

California Market Reports Mixed-Use Office Western Western Market Reports

Office Leasing Remains Robust in California’s Mixed-Use Projects

by Jeff Shaw June 6, 2023

The pandemic has done a lot to the office sector, not the least of which is convince employees they don’t need to sit in a cubicle eight hours a day, five days a week. Turns out, unsurprisingly, many people appreciate the freedom and flexibility that comes with working from home. The average U.S. office vacancy rate was 18.6 percent in the first quarter of 2023, according to Cushman & Wakefield. This was 5.9 percentage points higher than fourth-quarter 2019. Three California regions are also listed on the “Bottom 10 Performers of 2022” list (according to vacancy rate) put out by the National Association of Realtors. These include San Rafael (19.3 percent vacancy), San Francisco (16.4 percent) and Los Angeles (14.4 percent). Yet, leases are still getting signed, particularly at urban mixed-use projects throughout the state. Sean Slater, senior principal in RDC’s San Diego office, thinks this type of environment is a no-brainer for companies looking to bring employees back to the office. “Office workers want choice, especially with the current work-from-anywhere trend,” he says. “For a long time, suburban office parks have lacked choice of food and beverage, a diverse population of tenants, and a meaningful connection to their community. …

June 6, 2023

California Industrial Market Reports Western Western Market Reports

Supply Constraints Continue to Drive Value for LA’s Industrial Market

by Jeff Shaw June 2, 2023

— By Tony Solomon, Senior Vice President, District Manager, Marcus & Millichap — Industrial continues to be one of the most sought-after asset classes across the Los Angeles County commercial real estate market. This year, the metro will maintain its position as one of the tightest industrial markets in the nation. It also ranks fifth in rent growth among major markets west of the Mississippi. For the 17th time in the past 18 years, the Los Angeles metro’s industrial stock will increase by less than 1 percent, as 4.3 million square feet is slated for delivery. Supply additions will be concentrated in the South Bay and San Gabriel Valley, leaving less than 1 million square feet to come online in the rest of the county. While vacancy was below 2 percent in four of the metro’s biggest submarkets to start 2023, speculative completions and industrial users re-evaluating their space requirements will push vacancy to 3 percent by year end. This is a rate 80 basis points under the long-term mean. Rents are projected to grow by 7.6 percent as a result, bringing the average asking rate to $21 per square foot. Part of this rise in vacancy can also be …

June 2, 2023

California Market Reports Multifamily Western Western Market Reports

Apartment Market Fundamentals Remain Strong in Los Angeles Despite a Shifting Market

by Jeff Shaw May 26, 2023

— By Priscilla Nee, Executive Vice President, CBRE — The Los Angeles apartment market started showing signs of cooling as supply has risen to meet demand. Rents decreased marginally year over year as last year’s apartment demand decreased following pent-up pandemic demand. In response to decreased prices, renter demand for space has seen an increase in the first few months of 2023. Across the market, vacancy is sitting just below 4.5 percent as of first-quarter 2023, which is up from all-time lows of around 3.7 percent one year prior. Concessions for new renters are present. They have been steady and increasing since the third quarter of 2022 as landlords work to attract great renters to new and existing projects. Additional new supply is outpacing present demand, despite early upticks in demand for the year. That, paired with a strong development pipeline and an additional 27,000 units under construction, may continue to drive vacancy rates up should demand not increase in kind. This could lead to potential reductions in lease rates if a property sits vacant on the market long enough. Most current development and construction is centered in Downtown LA, Koreatown and South LA. Markets like Inglewood are setting themselves …

May 26, 2023

California Market Reports Office Western Western Market Reports

Success in Los Angeles’ Office Market Means Strategic, Proactive Repositioning

by Jeff Shaw May 19, 2023

— By Sean Fulp, Vice Chair & Head of Office Capital Markets, U.S. Southwest, Colliers — Office sales, leasing and development activity are at historic lows for Los Angeles County. With interest rates rapidly increasing, few active developments, and office vacancy and availability at an all-time high, the office market is in discovery mode. One of the major trends in development is creative, state-of-the-art studio/office campuses. These developments have broken ground in West Hollywood, Burbank, Santa Monica and Culver City. Developers in this space have the mindset of “if you build it, they will come.” Office sales activity is down more than 50 percent in the past year due to a high interest rate environment and a divide between buyer and seller pricing expectations. As loans become due, landlords will have decisions to make, and distress will occur in the market. Office availability is at an all-time high in Los Angeles at nearly 30 percent — likely the new norm going forward. Companies have figured out that employees like to have the flexibility of where and even when they work. With that said, companies are downsizing their office space by 25 percent to 50 percent and, in some cases, by …

May 19, 2023

Market Reports Multifamily Nevada Western Western Market Reports

Reno Multifamily Market Soars to New Heights in Past Decade

by Jeff Shaw May 12, 2023

— By Aiman Noursoultanova, Senior Vice President, CBRE — Reno has become an increasingly attractive market over the past decade for multifamily investors due to its continued strong performance, fueled by a desirable business and regulatory climate. Rents have doubled since 2013, while vacancy has continued to remain healthy despite robust construction activity. Multifamily investors took notice once noteworthy companies like Apple, Google, Microsoft and Tesla began to increase their investments in the region. Strong Population, Job Growth Fuel Investment Reno’s population grew by 15.3 percent in the past decade. The area is projected to see 51.6 percent population growth by 2060, the 40th highest of all 384 U.S. metro areas, according to Washington D.C.-based economic and demographic data firm Woods & Poole Economics. As a testament to the area’s growth, the Reno-Tahoe International Airport recently announced a $500 million development and expansion project to accommodate airport traffic. The area’s rise in population is attributed primarily to job growth and a desirable quality of life. This started with Tesla’s initial Gigafactory investment in the region, then continued with Apple’s 1.1-million-square-foot data center campus. Google also purchased 1,210 acres and plans for a future data center development. Meanwhile, Tesla announced a $3.6 …

May 12, 2023

Pacific-Summit-Logistics-Center-Salt-Lake-City-UT

Industrial Market Reports Utah Western Western Market Reports

Salt Lake City’s Industrial Market Sees 2023 as the Year of the Sublease

by Jeff Shaw May 9, 2023

— By Wick Udy, Senior Managing Director, JLL — Salt Lake City’s industrial market continued its exceptional performance in 2022. Last year was the third consecutive year of above-average leasing and the second-highest volume of annual absorption on record. The largest volume of completions was recorded in 2022 with 13 million square feet delivered. However, leasing and absorption volumes were both below 2021 levels, which is something industry leaders are watching in 2023. Developers were forced to push pause on new building projects toward the end of 2022 due to rising interest rates and tighter capital markets. Because of this, JLL predicts 2023 could be the year of the sublease. What was a landlord-favorable market for many years is slowly leaning toward a tenant-favorable market. Based on current activity within the marketplace, absorption should be positive in first-quarter 2023. Companies are signing leases on existing buildings instead of waiting for new builds, which will keep vacancy low for the foreseeable future. The market has remained as robust as it has because companies from California are relocating to Salt Lake City. They want to take advantage of its affordable real estate, quality of the workforce and the market’s proximity to large …

May 9, 2023

Market Reports Nevada Retail Western Western Market Reports

Northern Nevada Retail Market Sees New Tenants, Significant Development

by Jeff Shaw May 5, 2023

— By Tad Loran, Vice President, Retail Specialist, Avison Young | Western Alliance Commercial — The Northern Nevada retail market has been performing well. New tenants are entering the marketplace and the area experienced positive absorption. Rental rates have increased for the year, but there has been a decrease in commercial sales due to higher interest rates. The retail vacancy rate is currently at 4.7 percent, while asking rental rates are at $1.70 per square foot on a monthly basis. Many submarkets have shown improvement, including South Virginia, Meadowood, South Reno and the North Valleys. Tenants that have recently entered or are expanding in Northern Nevada include Colombia Sportswear, Voodoo Brewing Company, Jamba Juice, the Human Bean, Starbucks, Cracker Barrel, Mountain Mike Pizza, Pet Station, Take 5 Oil Change, AutoZone and Five Below. Tenants with closures include Bed Bath & Beyond, Sizzler Steakhouse, Food Source Grocery Store, Campo, California Pizza Kitchen, Long John Silver’s, Rounds Bakery and Claim Jumper. Unemployment in Nevada fell to 3.4 percent in December 2022. This low unemployment rate has led some prospective new businesses to either delay or cancel expansion plans in this region. From a development perspective, Reno has many new projects in the …

May 5, 2023

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