Western Market Reports

Albuquerque’s Industrial Market Sees Strong Absorption From Warehouse, Manufacturing Users

by Taylor Williams August 28, 2018

The metro Albuquerque industrial market reported more than 39 million square feet of total industrial space as of year-end 2017. The two largest categories of occupied space were warehouse/distribution (12.5 million square feet with 5.5 percent vacancy) and manufacturing (12.55 million square feet with 3.5 percent vacancy). The overall market vacancy rate at the end of 2017 was 5.7 percent for all industrial uses in buildings with more than 10,000 square feet. New Mexico added about 11,000 non-agricultural jobs from February 2017 through February 2018. The Albuquerque MSA added 5,800 jobs — a 1.5 percent increase — over this period, or more than half of the new jobs added in New Mexico. Albuquerque’s unemployment rate was 5 percent as of February, which is a notable improvement over the 6.2 percent unemployment rate in February 2017. During this period, the private service-providing industries grew by 3,100 jobs, or 1.2 percent, while the goods-producing industries (warehouse and manufacturing users) added 2,300 jobs, representing a gain of 6.2 percent. Albuquerque’s industrial market experienced positive net absorption of more than 261,000 square feet during the fourth quarter of 2017. This was the highest net absorption since the fourth quarter of 2015, and the second-highest …

August 28, 2018

Market Reports New Mexico Retail Western Western Market Reports

New Mexico’s Retail Market Gives Steady Performance

by Taylor Williams August 21, 2018

The New Mexico commercial real estate market continues to be a safe play for owners and developers in the Southwest. Albuquerque, which contains 50 percent of the state’s population, continues to drive the market with more than 80 percent of the commercial real estate transactions. A moderate supply-demand imbalance currently exists. This imbalance will allow vacant real estate to be matched up with occupier requirements relatively quickly, taking the vacancy rate lower or continuing to place upward pressure on the need for new construction. The New Mexico market, like many others, has experienced little to no development on the periphery of the city. Instead, owners and occupiers remain focused on the core areas of the market where density can be increased for a more efficient use of retail or office space. Albuquerque’s tech sector is also picking up momentum through the organic growth of existing companies and a large push from the University of New Mexico in partnership with the business community. New Mexico has one of the highest per capita concentrations of doctorate degrees in the U.S. The vacancy rate for retail space sits at 12.5 percent as of the first quarter of 2018. The outlook will be trending …

August 21, 2018

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Market Reports Multifamily New Mexico Western Western Market Reports

New Companies Bring Larger Needs for Multifamily Housing to Albuquerque

by Taylor Williams August 14, 2018

Albuquerque is a hidden gem. It isn’t a huge market when compared to places like Seattle, Austin or Denver, but that doesn’t mean there isn’t room for growth and development. The Urban Land Institute predicts Albuquerque’s development will trail other metros with stronger economies in 2018. But there are positive trends and developments for Albuquerque and the surrounding areas, which can make us competitive. A new Facebook data center was built in Los Lunas, a 30-minute drive from Albuquerque. This has created new jobs for the Los Lunas and Albuquerque areas. Anywhere from 800 to 1,000 workers go through the data center every day, and 80 percent of them are from New Mexico. The center will have a $2 billion impact on the state and metro areas, leading to more jobs and opportunities for the region. Albuquerque will also take part in the “Facebook Community Boost Program.” The program helps the community by offering free workshops, business training and networking to boost careers. More companies like Facebook can be recruited to New Mexico as long as we make the area business-friendly and retain talent so everyone can succeed. With more jobs and opportunity, there will be an immediate need for …

August 14, 2018

Colorado Market Reports Retail Western Western Market Reports

Investors Continue to Pay a Premium for STNL Retail Properties in Colorado

by Taylor Williams August 7, 2018

Single-tenant, net leased (STNL) retail properties continue to be among the most highly sought-after real estate investments. This is particularly true in Colorado and California where supply and demand constraints have created sales with significant premiums. Investors are accustomed to paying low cap rates for single-tenant assets within California as these properties have historically traded for a significant premium in comparison to the rest of the nation. However, the premium associated with Colorado STNL retail properties is a fairly new phenomenon. This Colorado premium can be attributed to a considerable supply and demand imbalance. There are very few available STNL properties within Colorado, and substantial capital actively chases this product type. California-based 1031 exchange investors seeking higher yields and Colorado-based 1031 exchange investors selling multifamily properties at historic pricing (due to significant appreciation in rents and historically low cap rates) are spurring the increased demand. Colorado’s strong economy and recent population growth has also led to a lot of new development. This has impacted the quality of available properties, many of which are new construction with long-term leases. The median sold cap rate for a STNL retail property in Colorado was 6.02 percent in 2017. This represented a 38 basis …

August 7, 2018

Colorado Industrial Market Reports Western Western Market Reports

Industrial Investors, Developers Turn Up the Heat in Denver

by Taylor Williams July 31, 2018

Denver industrial assets are achieving record pricing as cap rates compress well below 5 percent for Class A product. As this is happening, developers are taking on hefty projects, signaling that Denver’s industrial real estate cycle is stretching its legs instead of winding down. Among the headlines: • Denver’s single largest investment transaction on record occurred in the first quarter of 2018. The Pauls Corporation sold 14 Class A, highly functional assets totaling 1.9 million square feet to Clarion Partners in the Airport submarket. • The largest speculative build of 701,900 square feet is underway by Majestic Realty. Prologis is building more than 500,000 square feet in the Central submarket, while Hyde Development kicked off the 1.8-million-square-foot 76 Commerce Center project in the “less than proven” I-76 Corridor. • Industrial land pricing has doubled in recent years to now double-digit pricing as triple-net asking lease rates approach $8 per square foot. Despite these impressive headlines, here are three reasons we expect further expansion in Denver’s industrial sector into 2019. Investor Preferences Align CBRE’s 2018 Americas Investor Intentions Survey revealed a dramatic increase in the popularity of industrial investments compared to years prior. Half of investors in the Americas are seeking …

July 31, 2018

Colorado Market Reports Multifamily Western Western Market Reports

Denver’s Multifamily Market Tests Its Limits

by Taylor Williams July 24, 2018

An interesting metric was reached in the Denver multifamily market during the first quarter of 2018 — and that’s record absorption. The city already boasts accolades for quality of life, talks of strong in-migration and speculation of becoming the location for the second Amazon headquarters. After these, the most common topic of conversation for multifamily professionals is the unprecedented construction pipeline and just when will we hit an inflection point where the market won’t accept any more Class A, market-rate apartments. It seems we’re still not there. As of the first quarter of 2018, the trailing 12-month absorption was more than 10,000 units. That’s more units than what was completed in 2017 and the highest absorption on record. The result was metro-wide vacancy dipping year-over-year to 5.79 percent, limited concessions and metro-wide annual rent growth at 3.8 percent. Denver’s average rent now stands at $1,405 per unit and $1.62 per square foot. The Central Business District (CBD) experienced the most absorption this quarter, accounting for nearly 25 percent of total metro absorption. Annual rents also grew by 2.7 percent, leading the CBD to regain its title for most expensive rental submarket in Denver with rents per-unit averaging $1,835. But development …

July 24, 2018

Colorado Market Reports Office Western Western Market Reports

Denver’s Dynamic Office Market Changes Face of Downtown

by Taylor Williams July 17, 2018

Denver’s office market has been riding a wave of expansion, entering its ninth straight year of growth, with net absorption totaling 186,826 square feet in the first quarter of 2018. While vacancy ticked up — ending at 15.9 percent, up from 15.1 percent in the prior quarter and from 14.6 percent one year ago — it is expected to fall over the next several quarters as tenants continue to absorb space in both new and existing buildings. The Denver office market’s impressive expansion has lasted 33 consecutive quarters, resulting in a total of 9.7 million square feet of absorption, 7.4 million square feet of new deliveries and a 409-basis-point plunge in vacancy. The majority of the 9.7 million square feet absorbed between the first quarter of 2010 and the first quarter of 2018 occurred in three key submarkets. This included the Southeast Suburban (SES), Downtown and Northwest (NW) markets, which recorded 3.3 million, 2.9 million and 1.3 million square feet of absorption, respectively. The Downtown market ended the quarter with absorption of 214,317 square feet, and Class A median asking rates were up 39.5 percent from year-end 2009 to $39.76 per square foot. Asking rates in some of the newest …

July 17, 2018

California Industrial Market Reports Western Western Market Reports

The Inland Empire: A Premier Southern California Industrial Market

by Taylor Williams July 10, 2018

The Inland Empire continues to be one of the most dynamic industrial real estate markets in the country from both a user and investor perspective. Rent growth remains exceptionally strong, boasting a growth rate of more than 50 percent in the past five years, with a 10.1 percent increase in 2017. Although current average asking rents are at record highs, they remain at a 40 percent discount when compared to the neighboring infill markets of Los Angeles and Orange County, indicating ample room for further growth. Vacancy remains unchanged at 3.7 percent, despite 20 million square feet of deliveries last year, a testament to the market’s unrivaled user demand. Leasing momentum continues to outpace supply, particularly for recently constructed distribution space. This is demonstrated by the 46 percent pre-lease rate for deliveries greater than 1 million square feet last year. The Inland Empire’s proximity to world-class transportation infrastructure, combined with a relatively large supply of recently delivered distribution facilities, creates a highly optimistic future outlook when considering the projected exponential growth of e-commerce. The Inland Empire’s e-commerce primacy of location as it relates to underlying market fundamentals are attracting best-in-class domestic and global capital. This is creating a hyper-competitive buyer …

July 10, 2018

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California Market Reports Office Western Western Market Reports

Lower Rents, Relocations Attract Investors, Users to Inland Empire’s Office Market

by Taylor Williams June 26, 2018

The Inland Empire office market got off to a slow start in 2018, continuing a trend of positive momentum with little excitement. The average asking rent registered $1.81 per square foot, down 3.7 percent from the fourth quarter of 2017 and $0.01 below the first quarter of 2017. Preliminary sales and lease volumes are off 39.1 percent over the prior year. However, the Inland Empire is seeing one of the lowest vacancy rates since 2007, with more than 108,000 square feet of new construction added to the market this quarter. As of the first quarter of 2018, vacancy was 7.9 percent, down 30 basis points over the quarter and 90 basis points below last year at this time. Nine projects totaling 201,671 square feet are under construction, with the largest being Rady Children’s Medical Plaza at 60,000 square feet. Much of the new growth in the office sector is being driven by the healthcare industry. Office medical space comprised more than half of the space under construction, as the education and health services sector employment has grown by 4 percent between January 2017 and January 2018. This has accounted for 8,800 of the 13,500 new jobs in the office-occupying sectors. …

June 26, 2018

Market Reports Multifamily Nevada Western Western Market Reports

Reno Multifamily Rent Growth Among Nation’s Highest as Vacancy Remains Low

by Taylor Williams June 19, 2018

Reno’s proximity to the Bay Area is supporting an economy beyond the gaming industry. The area’s lower cost of living is also attractive for Bay Area transplants attempting to further stretch their income. Tesla is the most notable utilizer of the metro’s favorable location and business-friendly environment. The company pulled 112 permits last year to build out internal areas of the factory. The introduction of Tesla’s electric semitruck necessitates a further expansion of production in the coming years. On the supply side, development is ramping up quickly as builders finally move away from primary markets to relieve housing pressure in tertiary metros. Inventory will expand by more than 4 percent this year, representing the largest increase on record. The South Reno submarket contains a majority of the completions slated this year. More than 1,400 units are underway in the submarket, including nearly 1,000 scheduled for delivery in 2019. Builders are also active in the Sparks submarket, where 600 units are underway and scheduled for completion. The introduction of new units has pushed up the percentage of properties offering leasing incentives to 16 percent. Still-tight conditions are limiting the average incentive to just nine days of free rent. An influx of …

June 19, 2018

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