Western Market Reports

Los Angeles’ Apartment Market Turns a Corner

by Jeff Shaw September 29, 2021

By Mark Ventre, Senior Vice President, Stepp Commercial As it turns out, COVID has once again delayed hopes of a return to normalized operations for apartment owners. Just when it seemed the shackles that have hindered the ability to raise rents and recoup lost income would be removed, it now appears the light at the end of the tunnel has grown more distant. Fortunately, there have been positive indicators that the economic environment in Los Angeles for the first half of 2021 has improved considerably from the second half of 2020. According to the California Labor Market, the unemployment rate lowered from 17.9 percent to 10.6 percent a year ago. Apart from the third quarter of 2020, which experienced an enormous economic bounce back of 33.4 percent, the second quarter of this year has seen a GDP increase of 6.5 percent, one of the strongest since 2003. This is great news for a city that was particularly hard hit, considering the amount of hospitality and leisure jobs. However, Los Angeles has still lagged the nation with respect to rent growth in 2021. Average asking rents have improved by 3.9 percent since the beginning of the year, far below the national average …

September 29, 2021

Arizona Life Sciences Market Reports Office Western Western Market Reports

Phoenix’s Life Sciences Market is on a Record Rise

by Jeff Shaw September 28, 2021

By Alexandra Loye, Senior Vice President, Healthcare & Life Sciences Services, Colliers Despite global and domestic market challenges from the pandemic, Phoenix continues to shine amongst its competitive Western cities. With Maricopa County being the fastest-growing county in the U.S., Phoenix offers employers a diverse, educated workforce, business-friendly environment and affordable housing options. Arizona’s economy is booming and experiencing record revenue growth, as well as personal income growth. From 2019 to 2020, Arizona led the nation (tied with Montana) in the category of highest personal income growth with a 7.1 percent increase. The state is also projected to add 325,000 jobs in the next 12 months. Phoenix’s life sciences industry has gained significant momentum during the past 12 months, with no slowdown in sight. The Phoenix Biomedical Campus (PBC) in downtown Phoenix is ground zero for life sciences development and tenant activity. The 30-acre campus is currently occupied by Arizona State University, the University of Arizona, Northern Arizona University, Translational Genomics Research Institute (TGen), OncoMyx Therapeutics, Calviri, Vidium Animal Health, and Exact Sciences, which recently acquired Paradigm Diagnostics and Ashion Analytics. The PBC is the ideal environment when it comes to collaboration and innovation for life sciences tenants. The 227,000-square-foot, …

September 28, 2021

Market Reports Retail Washington Western Western Market Reports

Outlying Seattle Submarkets Positioned for Retail Expansion

by Jeff Shaw August 31, 2021

By Hank Wolfer, First Vice President of Investments, and Derek Peterson, Associate, Marcus & Millichap National retail chains favor Seattle’s surrounding neighborhoods. Prior to the pandemic, retailers were taking notice of strong demographic trends in the submarkets surrounding Seattle. Between 2009 and 2019, the number of households across the metropolitan area grew by 13 percent, nearly double the national rate. High homeownership costs directed many of those new households to the suburbs where living expenses are lower. Following rooftops, multiple developers have pursued expansion opportunities in these areas, with recently opened projects in locations like Renton, Frederickson and Shelton. These new floor plans are drawing prominent retailers, including 7-Eleven and medical provider DaVita Dialysis, as well as fast food operators like Popeyes. Although initially challenged by lockdowns, these facilities are poised to benefit from the ongoing economic recovery. Suburban properties are outperforming urban counterparts. While no tenant was free of pandemic-induced challenges, operations outside the urban core proved more resistant on average. Vacancy in downtown Seattle rose 80 basis points over the 12-month period that ended in March. This is compared with a 60 basis point climb in Tacoma and a 20 basis point increase in the Southend. Moving through the rest of 2021, metro-wide vacancy is …

August 31, 2021

California Market Reports Retail Western Western Market Reports

Outlook is Bright as Orange County Retail Continues to Heal

by Jeff Shaw August 27, 2021

By Terrison Quinn, Managing Principal, SRS Real Estate Partners Despite a recent uptick in vacancy from 4.07 percent to 4.5 percent and a softening of rents from $32.99 to $32.55 per square foot, Orange County remains Southern California’s tightest retail market. And retail investors remain bullish for good reasons. Theaters, gyms and other uses shuttered by the pandemic have reopened to greater-than-expected customer demand. In fact, several health club chains have reported they are back to pre-COVID membership numbers. A multitude of entertainment groups and theaters are also communicating positive messages about demand and expressing an interest in expanding. Theater operators have generally said their limitation is more related to content than demand. The reopening success is even more obvious in categories like grocery stores and drive-thru restaurants. This is apparent in nearly every Orange County city as parking lots are visibly impacted and cars continue to spill out of fast food drive-thru lanes. Most notably, Amazon Fresh is aggressively opening new stores, while fast feeders like Raising Cane’s, Chick-fil-A and Starbucks can’t seem to open new stores fast enough. Sit-down restaurants have also experienced a resurgence in demand with many national and regional groups setting record same-store sales. Clearly, …

August 27, 2021

Market Reports Multifamily Washington Western Western Market Reports

Seattle’s Apartment Market Roars to Life

by Jeff Shaw August 23, 2021

By Dylan Simon, Executive Vice President and Multifamily Specialist, Kidder Mathews It’s always easy to pick on the new kid. Seattle has enjoyed its emergence as a global city and, as such, exemplified “New Kid-itis” — yet it’s roaring back to life, and critics should take notice. It was only 18 months ago that Seattle could do no wrong. The city was teeming with young, upwardly mobile and highly employable apartment renters clamoring for places to live while selecting high earning jobs of their choice. Skyrocketing demand across nearly all sectors of commercial real estate was palpable, especially apartments. The impacts of COVID-19 and social unrest that ravaged the nation had a disproportionate impact on many urban centers. Arguably, its effects on Seattle lingered the longest. Demand for high-rise office space remained questionable as apartment renters second guessed urban living altogether. Civic dysfunction amplified the questioning of downtown Seattle’s livability, causing the apartment market to noticeably suffer. Yet spring is a time for regeneration and growth, and spring 2021 marked a turning point for the Seattle region and the entire apartment market. Occupancy Returns to Pre-Pandemic Levels The Seattle region’s multifamily market unquestionably enjoyed a bull run this past decade. Average …

August 23, 2021

Life Sciences Market Reports Office Oregon Western Western Market Reports

Portland Office Demand Returns as the City Reopens

by Jeff Shaw August 18, 2021

By Tim Harrison, Research Manager, JLL After one the strictest and longest shelter-in-place orders in the nation, Oregon is officially back open for business and all signs point to a strong recovery in Portland. People are travelling again, with airline passengers through Portland International Airport totaling more than 1 million in May. This represents about 63 percent of the normal 2019 monthly average, according to the Port of Portland’s aviation stats. Perhaps most importantly, people are returning to the downtown core for both business and pleasure with weekly visits through Pioneer Mall — the center of downtown — up to about 70 percent of 2019’s average weekly visits, per Placer.ai. This optimism is transferring to the office market, where Portland leasing activity is up more than 33 percent year over year. The recovery is being led by industries old and new. Out in the suburbs, Portland’s largest apparel companies are expanding on campus, while new leases were signed by Lululemon and On-Running in newer creative spaces on the urban fringe. Portland’s life sciences sector is approaching a critical mass as Bay Area company Twist Biosciences entered the market by absorbing 215,000 square feet. Meanwhile, Vancouver, Wash.-based AbSci raised more than …

August 18, 2021

California Market Reports Multifamily Western Western Market Reports

Investors Look to Orange County Multifamily Sector for Stability, Diversification

by Jeff Shaw August 11, 2021

By Dan Blackwell, Executive Vice President, CBRE Demand for multifamily properties in Orange County continues to show great strength. This is driven by steady rent collections and favorable interest rates as apartments in the region have performed well during the pandemic. As investors look to buy stable, income-producing assets in Southern California, the focus on the multifamily sector in our region has intensified. We have witnessed increasing interest from first-time buyers over the past few weeks, in addition to continued interest from 1031 exchange investors and those who sat on the sidelines during much of 2020. This demand is buoyed by willing lenders offering favorable interest rates in the low 3 percent range due to the area’s excellent rent collection track record. Most buyers are looking for 50 percent to 60 percent leverage, with in-place capitalization rates typically ranging between 3.75 percent and 4.25 percent, depending on location. However, given the limited supply, we are seeing buyers bid pricing higher and cap rates compressing for many assets. Private investors continue to be the predominate buyers, mainly driven by the need for diversification and a stable cash flow. We are receiving more requests from LA County investors that may have sold a multifamily …

August 11, 2021

Industrial Market Reports Washington Western Western Market Reports

Puget Sound’s Industrial Leasing Activity is Explosive in 2021

by Jeff Shaw August 9, 2021

By Brian Cagayat, Research Analyst, Cushman & Wakefield Washington officially reopened at the end of the second quarter of 2021, lifting most of the COVID-19 restrictions that had been in place for more than a year and bringing a mixture of relief and uncertainty to residents and businesses. Workers in the industrial sector were mostly considered essential, so many continued to work onsite through the pandemic. The industrial sector was also instrumental in helping aid and support everyone through the pandemic conditions, with some of those leading industrial users based here in the Puget Sound. New leasing activity in the Puget Sound region has been explosive in 2021, totaling 14.1 million square feet in the first half of the year. This has nearly equaled the 15 million square feet of annual activity tracked in all of 2020. Net occupancy growth still remains a bit in the red through the first half of 2021 with a negative 423,000 square feet of absorption. However, we expect a considerable portion (of over 10 percent) of the 29.1 million square feet of leasing activity signed since 2020 to translate into net growth in future quarters once those companies officially take occupancy. Ecommerce and 3PL firms have been …

August 9, 2021

California Life Sciences Market Reports Western Western Market Reports

Orange County Solidifies Itself as a Leading Life Sciences Market

by Jeff Shaw August 4, 2021

By Bob Caudill, Executive Vice President, Colliers International From public and private funding increases to the demand created by the COVID-19 pandemic and the vaccine rollout combatting it, the life sciences sector is continuing to see a significant increase in interest from both developers and investors across the country. Rapid growth in advanced therapy medicinal products (ATMP) science, which includes gene therapy, is also driving demand for lab and manufacturing space from both early and mid-stage biotech companies. All-important leasing data points, such as vacancy and net absorption, further compare favorably to the challenged office market, suggesting even more positive days are ahead for this sector. Orange County boasts world-class life sciences innovations and is continuing to grow its educational, employment and investment footprint. Given the amount of medical device and diagnostic equipment companies in Orange County that occupy office, research and development and industrial properties, life sciences has now become the largest industry in the market. In fact, Biocom’s 2020 California Economic Impact Report has Orange County generating $37.2 billion in economic activity and supporting more than 150,000 jobs. Orange County’s growth is attributed to several factors, such as UC Irvine’s $1 billion expansion of its Medical and Health Sciences Complex. UC …

August 4, 2021

Market Reports Oregon Western Western Market Reports

COVID Impacts Central Oregon’s Commercial Real Estate Market

by Jeff Shaw August 3, 2021

By Pat Kesgard, Compass Commercial Real Estate Services When COVID-19 hit Central Oregon in April 2020, commercial real estate transactions effectively came to a halt. Transactions were either delayed or canceled and virtually no new deals started. We were back to almost normal by the beginning of the third quarter of 2020. Miraculously, the fourth quarter was above the previous year’s activity. Hospitality The hospitality industry suffered tremendously through the pandemic. The labor shortage extended the challenge of operating at full capacity, and this is still impacting businesses today. Fortunately, landlord and government subsidies helped many in the industry survive. Retail Transactions in 2021 Compass completed more than 31 retail leases that totaled more than 85,000 square feet since January 1, 2021. The current retail vacancy rate is 5.86 percent with 264,077 square feet available for lease. We noted some softening in rents in 2020, and are now starting to see asking rates returning to normal. The redevelopment of older properties continues, along with new localized projects in areas outside of downtown Bend. We expect to see this trend continue for the unforeseeable future. Large retail spaces opened up when the former Sears and Shopko closed in 2020. Both buildings were eventually …

August 3, 2021

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