Western Market Reports

Orange County’s Robust Demographics Keep Multifamily Assets in High Demand

by Jeff Shaw August 12, 2022

By Pat Swanson, Executive Vice President, Colliers Orange County Lack of supply remains most evident in the Orange County multifamily market, with vacancies trending near historic lows at 2.3 percent. As supply dwindles, we have seen the pressure felt by investors to ramp up and hunt for the elusive value-add opportunities in this marketplace. Many profit hunters actively seek properties with upside in rent, accessory dwelling unit (ADU) potential and inadequacies as part of the existing management. A recent example is a 12-unit, single-story Garden Grove asset on a large parcel of land that was purchased below replacement cost. The Florida-based seller operated and managed the building remotely and desired to move his assets closer to home. Due to the long-distance operations, the local buyer felt they could control the property more efficiently by adding improvements to generate higher rents, while also taking advantage of the open spaces that could accommodate additional ADU units. This was a perfect fit for both parties, and we were able to execute the deal. It shows the type of value-add complex that has become highly sought after. Like the investors who flocked to Garden Grove, similar buyers have reevaluated their wants for quality Class A …

August 12, 2022

Market Reports Office Oregon Western Western Market Reports

Portland’s Office Market Continues its Evolution

by Jeff Shaw August 5, 2022

By Mike Holzgang and Brad Christiansen, Executive Vice Presidents, Colliers Portland is seeing a number of employers reassess their post-pandemic workplace. Generally, this translates to companies downsizing to account for hybrid work models, with smaller/shared workstations and more conferencing space. New development has slowed in anticipation of an increased interest rate environment, historically high construction costs and supply chain constraints. Construction timelines are protracted due to all of those issues by as much as 50 percent to 100 percent. Most of the new construction coming online in Portland was initiated before the pandemic. Notable downtown projects include two mixed-use developments named 11W and Block 216. Both of these projects will add significant office space to the city’s popular West End district. The first, 11W, should deliver this year, while Block 216 will deliver in 2023. Construction in the suburban submarkets has also been slow, but we wouldn’t be surprised if it starts to pick up within the next 18 months or so. Interest and Effect Depending on where you are looking, the market is favorable for both landlords and tenants. It is a landlord’s market in the suburban areas, particularly in those south and southwest of Portland. The Central City …

August 5, 2022

California Market Reports Retail Western Western Market Reports

Despite Economic Headwinds, Orange County’s Retail Market Fundamentals Remain Sound

by Jeff Shaw July 29, 2022

By John R. Read, Senior Vice President, CBRE National Retail Partners-West It’s critical to go back to the basics in times of ever-increasing uncertainty. It is not new news that we are currently seeing inflation at a 40-year high, significantly higher interest rates and weaker economic growth expectations, including more talks of a pending recession, which is driving uncertainty in the U.S. market. These factors require us to consider a market’s fundamentals. For attractive fundamentals, look no further than Orange County’s retail market. Orange County’s unemployment rate was 2.7 percent in April 2022, down from a revised 3.1 percent in March 2022, and below the year-ago estimate of 6.8 percent. With California’s unadjusted unemployment rate at 3.8 percent and the nation at 3.3 percent (for the same period), Orange County outperformed both metrics. The county’s leisure and hospitality sector added 6,200 jobs, with 74 percent of these added between March and April of 2022, the most job additions of any sector. Food services and drinking establishments provided most of the employment increase in the subsector, with 4,000 more jobs. Arts, entertainment and recreation also added 1,600 jobs. Orange County boasts about 1,246 arts, entertainment and recreation destinations, along with 7,993 accommodations and …

July 29, 2022

California Hospitality Market Reports Western Western Market Reports

Should Hoteliers Stay in San Diego?

by Jeff Shaw July 22, 2022

Western Real Estate Business sat down with two hotel experts to discuss what the future holds for tourism-heavy markets like San Diego. They include Robert A. Rauch, managing partner of the locally based Hilton Campus Del Mar and Fairfield Inn & Suites San Marcos and a faculty associate at Arizona State University, as well as Gary H. London, senior principal of Carlsbad, Calif.-based London Moeder Advisors, which prepares commercial market and financial feasibility studies and analyzes real estate investments for prospective investors. WREB: How is San Diego’s hospitality and tourism industries stacking up to other markets that are similar in either size or tourist popularity? London: Because of an ongoing slowdown in international travel, many American travelers divert to San Diego as a favored domestic destination. San Diego’s tourism sector has been very strong since the perceived end of the pandemic-induced recession almost a year ago. Rauch: Over the nine months spanning from July 2021 to March 2022, San Diego has been in the top five of the 25 largest U.S. markets in all three categories of occupancy, average rate and RevPAR. Hotel occupancy comes in at 67.6 percent, average rate per night is $179.85 and RevPAR (revenue per available room) stands at …

July 22, 2022

Industrial Market Reports Nevada Western Western Market Reports

Las Vegas Industrial Market Shows No Signs of Stopping

by Jeff Shaw July 19, 2022

By Paul Sweetland, Senior Vice President, Colliers After a record year in 2021, Southern Nevada’s industrial market does not appear to be slowing down. The first-quarter vacancy decreased to 1.7 percent with 2.9 million square feet of net absorption. This is the lowest vacancy rate we have ever recorded in Southern Nevada. For comparison, vacancy only went as low as 3.1 percent during the boom that preceded the Great Recession. Demand was positive for all industrial subtypes for the first quarter, while rents for warehouse and distribution space increased 46 percent year over year. All industrial sectors added jobs on a year-over-year basis, with the largest increase being in logistics, which added 8,100 jobs. The current industrial boom has been driven by the influx of relocations and expansions from all over the U.S., but primarily from California. Southern Nevada’s strategic location, with its ability to service 12 markets within one day, has also made it an ideal location for regional and national distribution. New industrial completions totaled 2.1 million square feet this quarter, almost all of it being warehouse/distribution product. Southern Nevada is in its third major wave of post-Great Recession industrial development, with more than 8 million square feet now under …

July 19, 2022

California Market Reports Retail Western Western Market Reports

San Diego Retail Momentum Continues in 2022

by Jeff Shaw July 15, 2022

By Chad Iafrate, Executive Director, and Phil Lyons, Managing Director, Cushman & Wakefield Retail leasing and investment sales transaction volumes continue to increase in 2022. This growth trend began to surge in the second part of 2021 following the pandemic recovery. Retail vacancy rates in San Diego County have decreased quarter over quarter to 5.9 percent, with vacancy lowest among power centers and strip centers. Asking rental rates, meanwhile, have increased across the county. This is primarily driven by significant rent growth at lifestyle centers (+5 percent from the previous quarter) and neighborhood centers (+2.8 percent). All major retail use categories seem to be back in expansion mode after four consecutive quarters of positive absorption. Pent-up consumer demand, stimulus and liquidity have all helped fuel growth plans in the retail sector with tenants continuing to try to make up for the lost year during the 2020 pandemic-related lockdowns. Suburban shopping centers have been the beneficiary of the work-from-home model as employees who would typically frequent retailers near their offices have pivoted to restaurants and shops closer to their residences. Investor confidence in retail centers also continues to increase, most notably from rising REIT activity and exchange buyers. Local retail investment …

July 15, 2022

Market Reports Multifamily Nevada Western Western Market Reports

Luxury Dominates Vegas’ Multifamily Market

by Jeff Shaw July 12, 2022

By Adam Schmitt, First Vice President, CBRE | Multifamily Investment Properties The multifamily construction pipeline in Las Vegas has ramped up in recent years and continues to be robust. Apartment developers have long capitalized on the growth of the Las Vegas market, and with the vast potential remaining in the city, multifamily builders are continuing to place their bets in Vegas. Our team at CBRE tracked a total of 4,317 multifamily units constructed in 2021, and are projecting more than 8,000 in 2022, with at least 16,000 in 2023 and beyond. For reference, over the past 10 years, the Las Vegas multifamily market has delivered about 3,700 annual units on average. The projects being built in Las Vegas are predominately luxury, Class A developments that tend to cater to the lifestyle renter or renter-by-choice demographic. The locations of these developments are mostly concentrated in the Southwest and Henderson submarkets, comprising 62 percent of the construction pipeline. Developers have historically flocked to these submarkets because of the areas’ respective demographics, perpetual growth and strong multifamily fundamentals. More recently, multifamily developers have found opportunities in the Northwest and North Las Vegas submarkets as those regions have seen years of high rent growth, and the rent …

July 12, 2022

Market Reports Nevada Office Western Western Market Reports

Las Vegas Tops List of National Office Performers

by Jeff Shaw June 29, 2022

By Ryan Sarbinoff, First Vice President and Regional Manager, Marcus & Millichap A growing, educated local labor force and lower rents compared to other office hubs in the region are driving office tenants to Las Vegas. The metro registered the largest drop in office vacancy among major U.S. markets over the 12-month span that ended in March, as tenants absorbed more than 2 million square feet. Much of this space was at Class B/C properties, with the subsector noting the strongest four-quarter span for demand on record. The resulting 330-basis-point reduction in overall availability during the year-long period slashed vacancy to a more than 15-year low of 12.4 percent, enhancing the sector’s outlook heading into the second quarter. The metro’s second-largest submarket by inventory, Southwest Las Vegas, exemplifies the strength of the local office sector. During the past year, the area accounted for half of the metro’s 20,000-square-foot-plus lease executions. International Gaming Technology’s sublease of a three-story building highlighted recent activity, with VisCap Media, Agilysys, DraftKings, Kiewit and Molina Healthcare all making notable commitments that dropped vacancy to 9.4 percent in March. Apart from leasing, this submarket is also the center of development. Roughly 60 percent of the space slated for completion …

June 29, 2022

California Market Reports Retail Western Western Market Reports

L.A. Retail: A Tale of Two Pandemics

by Jeff Shaw June 22, 2022

By Nellie Day All of Los Angeles County might have been under the same restrictions throughout the pandemic, but their emergence from this period reveals a lot about the localized retail environments. “Los Angeles’ retail market has weathered COVID better than many other markets around the country,” says Matthew May, founder of May Realty Advisors in the Los Angeles submarket of Sherman Oaks, Calif. “However, the recovery has favored a diverse group of suburban markets.” Certain Suburbs Stand Out Markets like East Hollywood/Silver Lake, Inglewood/South LA and Santa Clarita boasted the highest 12-month rolling net absorptions in the county, according to CoStar — something May doesn’t believe was expected. “LA is known as a melting pot and this is reflected in the geographic and ethnic makeup of the top submarkets based on net absorption,” he says. “Vacancies in many of the suburbs were substantially less than in the Central Business Districts and tony retail areas from Beverly Hills to Abbott Kinney. These emerging markets were quite a surprise.” On the other hand, metro markets like Santa Monica, Downtown LA and Koreatown each had more than 100,000 square feet of negative absorption. Santa Monica’s Third Street Promenade has been one of …

June 22, 2022

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Industrial Market Reports New Mexico Western Western Market Reports

After a Long Pause, Spec Industrial Returns to Albuquerque

by Jeff Shaw June 15, 2022

By Alex Pulliam, Land & Industrial Advisor, NAI SunVista It’s been a long time coming. Albuquerque hasn’t built speculative distribution warehouses in nearly two decades. However, the recent strength of the market is giving developers confidence to break ground – and investors are paying attention. Industrial activity has been lively, thanks to accelerated macro trends from the pandemic, as well as the legalization of recreational cannabis. Albuquerque’s industrial vacancy rates have remained below 1 percent for over two quarters. Prior to that, vacancy rates hovered around a then “historic low” in the 2 percent range since September 2019. The demand from users has continued to climb and tenants are facing lease rate increases. While needing more speculative warehouses should be a matter of basic economics, it is not always easy to build in a tertiary market that lacks the memory of growth. Historically, Albuquerque would only secure a few 50,000-square-foot users per year, along with the occasional 100,000-plus-square-foot user. This deterred developers from taking a chance on new construction. But times are changing. Large tenants are taking note of Albuquerque’s access, affordability and workforce, while existing users are seeking modern buildings for efficiency and growth. These factors, combined with rental rate …

June 15, 2022

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