Western Market Reports

An Inflection Point for the Greater Los Angeles Office Market

by Jeff Shaw June 23, 2021

By Nico Vilgiate, Executive Vice President, Colliers Greater Los Angeles has one of the largest office development pipelines in the nation, which includes new construction and some sizeable adaptive reuse projects. There is currently more than 6 million square feet in this pipeline with nearly 2.7 million square feet scheduled to deliver this year. This will increase overall vacancy throughout 2021. The most significant developments are occurring in Downtown and West Los Angeles, which contain more than 55 percent of all new office construction. One of the most prominent projects is One Westside, a shopping mall conversion that will contain 584,000 square feet of creative office space in West Los Angeles. Google will be moving into the building upon completion. The greater Los Angeles overall vacancy rate of 18.3 percent is 50 basis points higher than the previous peak in 2013 when it reached 17.8 percent. Sublease availability has increased over the past four quarters due to the work-from-home mandate. However, there has been an increase in the overall average asking rate in the past few quarters. The rate has increased by 4.4 percent year-over-year to about $3.54 per square foot, per month. Asking rate rental growth during this period was strongest …

June 23, 2021

Industrial Market Reports New Mexico Western Western Market Reports

New Mexico is Primed for Industrial Growth

by Jeff Shaw June 16, 2021

By Tim With, Senior Vice President, Colliers The amount of empty space in New Mexico’s industrial market has shrunk to unforeseen levels. Albuquerque, the state’s largest MSA, reported a total of 41.5 million square feet of industrial space and only a 2.4 percent vacancy rate at the end of 2020. Absorption levels have increased through the first quarter of 2021, and available inventory is becoming difficult to find as the vacancy is down to 1.9 percent. Albuquerque has been on the brink of new construction for some time, with the need for new Class A space far outweighing the current availability. The nationwide industrial supply posted record deliveries in 2020 that totaled more than 300 million square feet. This represents about a 2 percent year-over-year increase in total inventory. In comparison, Albuquerque’s inventory grew by less than 1 percent over the past five years, while vacancy rates decreased by almost 550 basis points. Most new construction has been build-to-suit activity. Tenants, meanwhile, are challenged with a lack of choice as a considerable amount of the existing vacant space is functionally obsolete. The average overall asking lease rates for existing warehouse/distribution space was $6.58 per square foot, triple net, at the end of …

June 16, 2021

Colorado Industrial Market Reports Western Western Market Reports

Industrial Leasing Activity Outpaces New Construction in Denver

by Jeff Shaw June 10, 2021

By Tyler Smith, Managing Director, Cushman & Wakefield While the office and retail sectors in Denver continue to grapple with pandemic-related disruptions, the industrial sector remained the dominant performer within the commercial real estate market through the early part of 2021. The Denver industrial market recorded more than 718,000 square feet of positive net absorption, and nearly 3.8 million square feet of leasing activity during the first quarter of 2021. However, with metro-wide vacancy trending above the five-year average and 1.8 million square feet of speculative development delivering vacant during the first quarter of 2021, the discussion in the Denver market remains focused on whether industrial supply has begun to outstrip demand. The maturation of Denver’s industrial market has closely mirrored the city’s population growth over the past decade. Denver experienced a population boom of nearly 20 percent from 2010 to 2020. Fueled by the resulting uptick in consumer demand and increased economic diversification, Denver’s industrial inventory skyrocketed as well, growing by 19.4 percent during the same period. Since 2017 alone, over 22 million square feet of new development has delivered in the market. Despite robust leasing activity and nearly 10 years of uninterrupted positive net absorption, industrial vacancy in Denver has been …

June 10, 2021

California Market Reports Multifamily Western Western Market Reports

Affordability, Jobs Drive Multifamily Residents to the High Desert

by Jeff Shaw June 9, 2021

By Bob Basen, Executive Vice President, Coldwell Banker Commercial Real Estate Solutions The High Desert’s multifamily market remained surprisingly strong during the pandemic. Historic low vacancies in the High Desert apartment market, combined with low cap rates in Los Angeles and Orange counties, have made this market a favorite for “down the hill” investors. With the exception of three substantial multifamily projects in Hesperia, there has been no real apartment development in the High Desert since the mid-2000s. The recently completed The Villas, a 96-unit, age-restricted project developed by Eagle Hesperia 55 LP, has had phenomenal success with a waiting list prior to completion. With the success of this project, there will be a second phase containing another 96 units. Frontier Homes’ Las Casitas Apartment Homes and the 200-unit West Main Villas, developed by Bruno Mancinelli, were also very successful with two-bedroom apartments renting for more than $1,600 per month. This is a number that was unheard of prior to these projects. With those kinds of rents, we can and should expect to see increased apartment development in the High Desert. Hesperia has decreased its development impact fees, which may have spurred the above-mentioned developments within that city. There are currently …

June 9, 2021

California Industrial Market Reports Western Western Market Reports

Industrial Demand is Unabated in the High Desert

by Jeff Shaw May 27, 2021

By Joseph W. Brady, President, Bradco Cos. The High Desert portion of San Bernardino County, also known as the Mojave River Valley, is anticipating exceptional industrial development growth in the upcoming years as the balance of the Inland Empire builds out and has no significant land to further develop. The Mojave River Valley region contains more than 22 million square feet of industrial space. The City of Hesperia has recently experienced a mass grading project — probably the largest grading project in the High Desert’s history. Covington Capital is mass grading 232 acres where it intends to build a 3.5-million-square-foot industrial complex. The first building (1,055,360 square feet) will be developed for Modway. It will increase the major furniture distributor’s ability to serve regional and national distribution requirements from its current 310,555-square-foot facility in Fontana. The 60-acre site is being developed by Exeter Property Group. Big Lots opened its new distribution center in north/east Apple Valley in late 2019. This 1.3-million-square-foot facility sits just south of Walmart’s distribution center. Brightline West has also acquired property in north Apple Valley near Dale Evans Parkway for a high-speed rail station that will move passengers from Southern California to Las Vegas in 90 minutes at speeds …

May 27, 2021

Market Reports Retail Washington Western Western Market Reports

Seattle Companies Are Watching Three Top Retail Trends

by Jeff Shaw May 24, 2021

By Tory Glossip, Managing Director, Colliers Puget Sound has 553,566 square feet of retail under construction, comprising 0.4 percent of existing inventory. The market dynamic will keep retail property values in the Pacific Northwest higher than most U.S. markets that are overbuilt. Puget Sound’s retail market posts rents 30 percent above the national average at $20.71 per square foot. Pricing is traditionally a function of supply and demand. In the retail world, that demand relies partially on income. The most expensive markets to lease retail space also happen to have the highest incomes…by far. Despite ideas in some circles that retail is dead, physical footprints will continue to be an important part of the retail landscape, although less so in downtown areas until workers return to the office. Most consumers have retreated to submarkets, leaving retailers to explore alternative options to use their property more effectively. Brands are expanding their reach with small-format stores and cross-promoting their products and services in showrooms. Many are leveraging smaller footprints into touch-and-feel locations that seamlessly blend online browsing and in-store purchasing. The shopping mall as we know it will have a different look and feel post-COVID. With big box retail reallocating existing space into localized …

May 24, 2021

Industrial Market Reports Washington Western Western Market Reports

Strong Market Fundamentals, Ecommerce Expansion Fueled Seattle’s Industrial Market in 2020

by Jeff Shaw May 10, 2021

By Kaden Eichmeier, Director, JLL Capital Markets Strong economic fundamentals bolstered market dynamics in the Puget Sound over the past 12 months. This market is driven in part by significant amounts of capital targeting industrial, the availability of low-cost debt and strong tenant demand. There were 125 industrial transactions totaling nearly $1.9 billion closed last year, and the outlook for 2021 looks even brighter. Competition has stiffened through the first quarter of 2021. Investors have increased allocation requirements, and the list of new entrants targeting the Seattle industrial market continues to expand. With growing demand, the core market is growing geographically as supply constraints push investors and developers further north and south. For example, Panattoni recently announced it will build a 2.1-million-square-foot, five-story warehouse for an ecommerce company on a 75-acre site just south of the Arlington Airport. Northpoint Development also announced the 4.1-million-square-foot Cascade Business Park in Arlington. To the south, Panattoni is also developing Big Freddy Logistics, a three-building park that will total 771,855 square feet, while Logistics Property Co. is developing the 352,801-square-foot Frederickson One speculative project. There is currently nearly 7.5 million square feet under construction. This includes 3.2 million square feet in Pierce County and …

May 10, 2021

Market Reports Multifamily Washington Western Western Market Reports

Multifamily Market Signals Stability in Seattle

by Jeff Shaw May 3, 2021

By Dylan Simon, Kidder Mathews As we left 2020 behind, we collectively hoped that turning the calendar to 2021 would stem to tide of COVID and bring about a V-shaped economic recovery. Alas, we enter this spring with many of the same hold-over concerns from a very rocky 2020. Thankfully, stability is right around the corner! A comprehensive and broad recovery may not be immediately recognizable, but there are signs economic stability is imminent for the Seattle apartment market. Big Tech is Getting Back to Work Big Tech evacuated urban centers in March 2020, taking with it urban-dwelling apartment renters. Apartment rental rates across Seattle, San Francisco and New York City plummeted more than 30 percent in the ensuing months. Once these “occupiers” return, that light-switch will once again flip in the positive-growth position. Facebook announced in March that it is reopening its Seattle offices. Just as Big Tech was quick (and smart) to shut down in-office operations at the outset of COVID-19, it will act similarly quickly (and intelligently) in reopening its offices. Expect the reopening trend to spread throughout Big Tech in a coordinated and swift fashion as that industry tends to know it is more innovative and competitive …

May 3, 2021

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Arizona Industrial Market Reports Western Western Market Reports

Phoenix’s Industrial Market Remains Busier than Ever

by Jeff Shaw March 8, 2021

By Peter Batschelet, Principal, Lee & Associates In a year of unknowns, hypotheticals and uncertainties, the Phoenix metropolitan area and Maricopa County were the complete opposite. In fact, 2020 was a record-setting year in this region’s industrial market for several reasons. For starters, there was nearly 14 million square feet of new construction delivered. This is twice as high as any year in the past decade and roughly equivalent to the deliveries from the past two years. In addition, Phoenix set record absorption numbers to the tune of, ironically, 14 million square feet. Meanwhile, vacancy rates have decreased to roughly 7.7 percent and rents continue to see moderate growth. There does not appear to be an end in sight to the impressive growth. There is an additional 15 million square feet currently under construction. This space is both speculative development and build-to-suit opportunities from household names like Merit Partners, Prologis, Trammell Crow Majestic Realty and others. Ecommerce sales represent roughly 15 percent of the national retail industry, which means there is plenty of capacity for additional investment and capital into the Greater Phoenix area based on our population and anticipated growth. There remains plenty of upside for the bulk …

March 8, 2021

California Market Reports Office Western Western Market Reports

Inland Empire Office Demand Stagnates, Medical Office Leasing Remains Strong

by Jeff Shaw March 1, 2021

By Drew Sanden, Senior Managing Director, Newmark The Inland Empire office market boasted very strong fundamentals heading into 2020. The vacancy rate across the 28.3 million-square-foot base was 9.5 percent, lease rates were reaching peak levels and developers were again exploring larger spec developments. Like many markets across the U.S., COVID-19 has greatly impacted the Inland Empire’s office market. Office usage, demand, absorption and leasing transactions are down year-over-year. Large back-office transaction volume has been the most impacted as companies struggle to manage the social distancing guidelines. With that said, the suburban nature of the Inland Empire has helped insulate the office market. The combination of affordable housing (relative to Southern California’s coastal communities) and remote work opportunities have strengthened the overall workforce. This pandemic has acted as an accelerator for the hub-and-spoke trend where companies have larger regional offices in CBDs like Los Angeles and Irvine, while maintaining smaller satellite offices in suburban markets. We’ve seen an influx of small satellite offices in Corona, Ontario, Rancho Cucamonga and Riverside. Demand for medical office building (MOB) leasing and sales has remained strong. This trend was highlighted with the pre-sale of two medical office buildings at the Rincon in Chino Hills, …

March 1, 2021

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