Western Market Reports

Industrial Owners Delight in Phoenix’s Thriving Market

by Camren Skelton October 11, 2016

The Phoenix industrial market is thriving, despite more than 5.6 million square feet of new construction set to deliver this year. There is enough demand in this market to keep the average vacancy rate at a near eight-year low of 9.7 percent, while absorption is on pace to exceed 6 million square feet for the third year in a row. Tenants have more choices than ever thanks to all this new inventory. Many are making a flight to quality, upgrading to next-generation space featuring wide column spacing and clear heights of up to 36 feet. This is particularly valuable in the West Valley, where large, efficiency-focused, third-party logistics firms and e-commerce companies must maximize how they manage vast amounts of product. Some of these needs are so specific that corporations have opted to custom build, as is the case with the recently completed 400,000-square-foot REI distribution center and the 384,377-square-foot IRIS USA facility, both situated in Surprise. These projects rank as the Valley’s two largest owner-builder completions of the year and have propelled the Northwest submarket — the third smallest industrial submarket in metro Phoenix — into the “hot” category. Meanwhile, owners and builders have gotten more creative in centralized …

October 11, 2016

Arizona Market Reports Multifamily Western Western Market Reports

Renter, Investor Demand on the Rise in Phoenix’s Multifamily Market

by Camren Skelton October 4, 2016

The Greater Phoenix multifamily market continues to thrive in a high-demand environment, driven by strong tenant volume and investor interest. As the local economy expands, employers are adding workers at a steady pace while demand for housing is on the rise. Apartments remain the preferred choice for many, pushing multifamily vacancy rates low even as new units are added to inventory. We fully anticipate these conditions to continue in the year ahead. Multifamily vacancy in the Greater Phoenix market ended the second quarter of 2016 at 5.9 percent, 20 basis points lower than one year earlier. Vacancy typically ticks higher in the second quarter, as some part-time residents escape the summer heat wave. This trend occurred again this year. Despite the recent seasonal rise, vacancy has been below 6 percent for the past four quarters, and the rate will undoubtedly tick lower in the second half of this year. The low-vacancy conditions are fueling robust rent growth. Asking rents have spiked by more than 8 percent in the past year, while the pace of gains is accelerating. Asking rents rose more than 5 percent in the first half of 2016, with additional increases anticipated in the months ahead. More than …

October 4, 2016

Market Reports Western Market Reports

A New Demand for the IE’s Office Market

by Nellie Day December 8, 2015

Things have been steadily moving forward in the Inland Empire office market. Consistently the fastest-growing, non-farm job market in Southern California, the region’s exceptional growth in professional and business service positions provides a compelling reason for investors to view this office market as opportunistic. There is a high demand for Class A and B property investments. We are also seeing overseas buyers, mostly from China, showing interest in the region. Unlike Los Angeles and Orange County, which have been popular with foreign investment for the past several years, this is a new trend for the Inland Empire. It also suggests global investors are looking to the region as an attractive alternative to some of the pricier Southern California markets. The Inland Empire is now on the map. The good news is there is still room to add value by leasing up vacant space and realizing future rent growth. We have recently seen many investors buying risk-oriented projects, anxious to secure some of these affordable assets before rates and pricing rise. Some of the strongest submarkets for leasing and investment are the CBDs of Corona, Riverside, Rancho Cucamonga and Temecula, as well as the Ontario Airport area. There is a high …

December 8, 2015

Market Reports Western Market Reports

Seattle Tech Boom Creates Next-Generation, Culture-Focused Campuses

by Nellie Day December 1, 2015

Developers are doing everything they can to make their projects attractive to corporations and their brokers as competition in Seattle continues to increase for high-growth tech tenants. And they’re doing it with good reason: Seattle was recently ranked the No. 1 city in the country for technology jobs. Seattle’s tech industry has grown by 12 percent over the past two years, according to Forbes, outpacing Silicon Valley, Boston and other tech markets. Experts point to a diverse local economy – Microsoft, Amazon and Boeing – and more-affordable housing that, together, enabled Seattle to fare better than other technology hubs. With tech business booming, Seattle’s real estate market is simply trying to keep up. Projects are starting every week, it seems, by developers looking to capture the unprecedented supply of tech businesses. Some are trying to attract anchor tenants with equity, naming rights or aggressive TI allowances. No matter the approach, smart owners realize their buildings must be created in a way that enables tenants to gain a competitive advantage in attracting top industry talent. Surveys show culture is by far the biggest draw when it comes to recruiting and retaining tech workers. How a company’s owners and employees think, feel …

December 1, 2015

Market Reports Western Market Reports

Sound Market Fundamentals: The Source of Seattle’s Multifamily Strength

by Nellie Day November 17, 2015

The underlying forces bolstering the strength of the Seattle metro multifamily marketplace are robust job growth, new development projects and the short supply of single-family houses. While these factors also slightly impact vacancy levels, property prices and sales activity are expected to continue to rise. New and expanding companies, particularly in the tech sector, have sustained job growth in the Seattle-Tacoma region over the past five years. They have put more than 115,000 people to work since the pre-recession peak. This influx of workers, strong housing demand and a number of new development projects contributed to the construction sector posting the region’s strongest 12-month job gain of 14,600 new jobs. Company expansions are anticipated to generate an additional 65,000 jobs this year alone. Construction of both single-family and multifamily housing projects is expected to continue at an accelerated pace over the next several years. Limited inventory and affordability issues associated with single-family houses are preventing many people from transitioning to homeownership, thus fostering intense demand for apartment rentals. Roughly 12,000 rentals are expected to come online this year – with about 2,600 apartments delivered in the second quarter of 2015 alone. This represents the second-largest quarterly gain in more than …

November 17, 2015

Market Reports Western Market Reports

Record-Setting Employment Figures Fuel NorCal’s Strong Multifamily Market

by Nellie Day November 10, 2015

Fueled by record-setting employment, the San Francisco Bay Area multifamily market is performing at its highest level in recent years in terms of low vacancy rates, strong rental growth, and new apartment communities coming online, under construction and planned. The San Francisco metropolitan area – which accounts for half of the San Francisco Peninsula, San Francisco, Marin and Oakland – added about 4,100 jobs during September, according to Beacon Economics. This number is on par for most of the year. Sources from the City of San Jose reported the Bay Area added more than 40,000 new jobs during the 12-month period from October 2014 through September 2015. A further report from the Association of Bay Area Governments stated that “by spring of 2013, the region had regained all of the jobs lost in the 2007 to 2009 recession, while estimates indicate that the jobs lost since the higher peak in 2000 were finally regained by the end of 2014. This rebound has spread unevenly throughout the region, with counties as diverse as San Francisco and Napa each having passed the two previous peaks in employment.” Unemployment is running as low as 3.7 percent in the San Jose/Sunnyvale-Santa Clara MSA. It …

November 10, 2015

Market Reports Western Market Reports

Grocers, Dollar Stores Take Center Stage in OC

by Nellie Day November 3, 2015

The Orange County retail market remains active due to declining vacancies and increasing job creation and housing starts. As a result, enthusiasm was evident at the recent ICSC Western Division Conference in San Diego, as industry colleagues discussed opportunities and challenges associated with the strength of the local market. There has been very little new development recently in Orange County, which has seen more than 3 million square feet of vacant space absorbed since 2011, according to CoStar. There continues to be an unbelievable demand for retail investment properties, while the Fed’s announcement to maintain existing interest rates will only increase competition in this limited market. A dynamic investment market offers both challenges and opportunities for retail leasing. Limited local new development is directly connected to continued instability among major grocery stores and big-box retailers. We might never see another ground-up traditional power center again because of post-recession downsizing and shakeouts among major retailers. While many of the major national retailers remain active, the focus has turned to expansion in smaller urban environments, which are limited in Orange County. Grocery-anchored daily needs centers remain a Class A asset type, though instability within the local grocery sector continues to challenge the …

November 3, 2015

Market Reports Western Market Reports

OC’s Tight Industrial Market Leads to Bidding Wars, Rising Lease Rates

by Nellie Day October 27, 2015

Orange County’s industrial market highly favors the seller and landlord for properties of all sizes and conditions due to a tight vacancy rate and lack of available product. Vacancy rates have been on the decline, ending the second quarter of this year at 3.9 percent. Average asking rents rose to $0.83 per square foot – an increase of 9.2 percent over the 12-month span of the second quarter of 2014 to the second of quarter of 2015. The county continues to hit new pricing highs as well, with many transactions receiving multiple offers. Full-price offers are oftentimes not enough anymore, as bidding wars have driven prices above the listing. Demand remains extremely strong for owner/user industrial buildings in North Orange County. Several recent smaller sales transactions in the 10,000-square-foot range have sold for around $170 per square foot. Most of these properties received multiple offers within days of going to market. Industrial buildings in this size range were trading for about $125 per square foot just three years ago. On the leasing side, rates are escalating as product is in limited supply. User demand a year ago wasn’t as strong as it is now. This will likely continue to grow …

October 27, 2015

Market Reports Western Market Reports

Santa Monica Multifamily Market Thrives Amid a Few Challenges

by Nellie Day October 20, 2015

Santa Monica is Los Angeles County’s most stable beachside apartment rental location. The prices this market commands as the year progresses continue to surprise our brokerage team. No longer the sleepy beach town of old, we are seeing capitalization rates below 3 percent on 30- to 40-plus-year-old product with stringent, and at times almost suffocating, rent control laws. There have been multiple record-breaking transactions that have taken place in Santa Monica this year, including one mind-blowing apartment deal at 537 San Vicente Blvd. that sold for $16.1 million this past March. It was then sold to another party three months later for $19 million. The old adage about location rings true for Santa Monica as buyers consider future returns in this beachside enclave. The question right now on everyone’s mind is: how long can this last? It has been our opinion that this upward trend in pricing cannot last forever. It is inevitable that the Federal Reserve will raise interest rates soon. However, as rates rise, we will see a minimal effect on Santa Monica multifamily investment, as this “real -estate safe haven” makes investment even more desirable as stability is attractive to owners seeking long-term returns. Even though some …

October 20, 2015

California Market Reports Retail Western Western Market Reports

Retail Rents on the Rise in Los Angeles

by Nellie Day October 13, 2015

The retail market in Los Angeles is demonstrating exponential growth. Rents are going up, cap rates are going down and occupancy is soaring. Naturally, as lease prices rise, so do sale prices. As such, it is becoming increasingly difficult for investors to find opportunities where substantial rent growth is possible. Tenant competition is also fierce, and landlords are benefitting from extremely high demand throughout the market. Competition Abounds It’s only natural that retailers are competing over space as occupancy rises. One trend that has emerged in Los Angeles is competition among not only direct competitors, but indirect competitors as well. For example, a small grocer might compete with a Ross Dress 4 Less for the same location. Fueling this competition is an increase in large national retailers seeking out smaller urban spaces in downtown areas. Target, for example, is opening a store in LA’s Koreatown on Vermont and 6th streets at the base of a high-rise apartment building. When national soft goods chains open in urban hubs, there will be an evolution of retail surrounding those stores. Smaller discount stores and mom-and-pop retailers will likely suffer, which will lead to vacancies that tend to open the doors for new specialty …

October 13, 2015

Newer Posts

Older Posts