Technology growth in the southern portion of the Salt Lake Valley is prompting additional development of multifamily properties. A new Adobe campus in Lehi, located between Utah’s major employment areas, has led to further technology sector investment in this region. The company expansions and job creation that is occurring in Lehi is certainly driving the need for new housing. In Bluffdale, located about 20 miles south of Salt Lake City, several hundred acres are being developed into two mixed-use apartment projects. The recently acquired Aclaime at Independence development is expected to include 1,000 residential units and 21 acres designated for mixed-use commercial structures. Adjacent to this development is Independence at the Point, a master-planned community containing 294 acres. This project will include 1,900 single-family homes, townhomes and apartments, as well as 27 acres of commercial development. Overall, steady demand for housing will continue to draw investors and developers to the region as vacancy remains limited and rent growth outpaces the rest of the metro. Metro employers are expected to add 29,900 new jobs by the end of 2013, an annual growth of 4.6 percent, which pushes employment nearly 6 percent above the pre-recession peak. Completions are set to total 2,100 …
Western Market Reports
The San Francisco Bay Area’s major warehouse/distribution and manufacturing hub can be found along the I-880 corridor in the East Bay. This region’s industrial market has enjoyed steady growth with both overall vacancy rates and asking rental rates improving by about 10 percent year-over-year. The overall vacancy rate in the first quarter of 2013 was 10.22 percent — a three-year low — while the asking rental rate was $7.44 per square foot, triple-net, annually. Interestingly, the most significant growth this year came from the market’s largest segment: the warehouse sector. The warehouse market’s vacancy rate dropped by more than 25 percent year-over-year, to just 8.27 percent. In fact, the vacancy rates in all I-880 warehouse submarkets, aside from Newark, now sit at less than 10 percent. Asking rental rates in the warehouse market increased by nearly 8 percent to $4.80 per square foot, triple-net, annually. Several properties were listed during the second quarter of 2013 and therefore not included in these statistics. However, these properties boast asking rates as high as $5.76. Cornish & Carey Commercial Newmark Knight Frank believes these latest trends indicate an imminent spike in asking rates in the warehouse market. Third-party logistics providers, or 3PLs, are …
National retailers have slowed their progress into the market now that City Creek and Fashion Place Mall have completed the majority of their renovations. The discount segment continues to expand in infill locations along the Wasatch Front. Ross, TJ Maxx and Marshalls continue to lead the charge in this category, with Rue 21 and Dress Barn as the larger tenants. Rural areas are the new frontier within the State of Utah. Many small communities are riding the wave of the energy boom, from natural gas, oil and wind power. These smaller towns are growing at a rapid pace, and with the influx of expendable income, retailers are flocking to these areas. The challenge that many developers face in these towns, however, is the lower rent numbers that national tenants can afford due to the immediate lack of population within the trade areas. Ross, JoAnn Fabrics, Petco, Sportsman’s Warehouse, Sports Authority, Rue 21 and Dress Barn are the retailers that lead the charge in these areas. The grocery sector continues its movement within the state, with Walmart’s Neighborhood Market, Sprouts and Smith’s being the most active. Smith’s is in the process of remodeling many of its existing locations and is looking …
Much like the economy in general, commercial real estate has experienced its share of ups and downs over the past 10 years. However, the strength of Utah’s economy, established infrastructure and strategic regional location are sustaining the Salt Lake industrial market and securing its position as one of the most resilient in the nation. For three consecutive years, Utah has been ranked as the “Best State for Business” by Forbes magazine. It was also recently designated as a boom state by the U.S. Chamber of Commerce. The strength of the local economy has convinced many national and international companies to relocate to Utah, and new construction has followed close behind. By the end of the first quarter of 2013, there were 1.4 million square feet of industrial space under construction, 70 percent of which was pre-leased. Although overall market activity slowed during that quarter, as compared to 2012, the Salt Lake market continues to experience growth. Consequently, industrial availability remains below the average for the Western region. Another sign of market strength is the improvement in lease rates. Utah’s industrial market experienced increasing lease rates and positive net absorption. In fact, from March 2012 to March 2013, the overall achieved …
Apartment development is ramping up across the U.S., creating significant concerns for multifamily operators in 2013 and 2014. Nevertheless, there is pent-up apartment demand. Slow but steady job creation is allowing college graduates to move out of their parents’ homes or to shed the extra roommates who assisted with living expenses. Additionally, construction averaged fewer than 70,000 rentals in the past three years, compared to 130,000 units annually prior to that span. Yet more than 100,000 apartment are expected to come on line nationwide this year alone. While many of the Northern California apartment markets are typically high barrier-to-entry metros for developers, supply concerns are mounting in some areas. Fortunately for apartment operators in the region, a majority of this construction is occurring in the largest metro areas. Elevated populations and job creation in these metros will bolster demand and ease supply-side vacancy pressure. Although construction activity will elevate for the foreseeable future, the biggest Northern California inventory additions will occur in 2014. About 10,000 units will come on line in the region next year. Deliveries will be greatest in San Jose and San Francisco between 2013 and 2014 as 7,000 units and 6,700 units are delivered, respectively. The surge …
The demand for quality office space in Salt Lake City is higher than ever. According to Forbes, Utah’s economy continues to lead the nation, and more employers are looking to expand into the Salt Lake market. Large companies like eBay, Adobe and Boeing are setting up shop along the Wasatch Front, and more corporations will be coming soon. Several new Salt Lake office projects are in the planning stages, while others have already broken ground. With lower vacancy rates in Class A and B spaces, new developments — which vary from build-to-suit to spec projects — are encouraging. Overall Class B and C rates are hovering between 15 percent and 17 percent and inching downward as 2013 progresses, according to Newmark Grubb Acres’ research. Valley-wide, Class A properties are averaging about 11 percent, and will likely level off until more product is built. A big change is currently taking place in the office market. The past few years have been predominantly tenant-driven, but trends now show a decrease in generous landlord incentives. Property owners who were previously given four to six weeks of annual free rent may now only receive two to four weeks. Landlords are also looking at tenant …
Fueled by an increase in population and job growth, Denver’s robust housing market and the constant influx of young professionals to the region has attracted some attention. Both new and existing retailers and investors are now looking to either penetrate or expand within this ever-growing market. Metro Denver added a total of 37,300 jobs last year. This was an increase of 2.7 percent from 2011, according to the Metro Denver Economic Development Corp. The region’s growth rate has consistently outpaced the national rate in every decade since the 1930s. By 2020, the region’s population is expected to increase from 2.9 million today to more than 3.2 million. Retailers are definitely taking note. Cabela’s, a Nebraska-based outfitter of hunting, fishing and outdoor gear, has two stores under construction that should be completed in the third quarter of this year. These will represented Cabela’s second and third Colorado locations. The chain already has a Grand Junction outpost. THF Realty also recently completed the 147,806-square-foot Walmart in the Lakeside Shopping Center redevelopment area. Metro Denver has seen quite a few Walmart Neighborhood Markets pop up throughout the region recently. Also new to the Denver market is Trader Joe’s. The California-based specialty grocer plans …
The Inland Empire apartment market improved slowly since the end of the recession, as apartment demand received little help from the local job market. In the past year however, an economic recovery finally began to take shape, boosting expectations for accelerated improvements in apartment fundamentals. Prior to 2012, local payroll growth significantly lagged state and national gains. After the U.S. shed more than 8.7 million jobs, employers rehired nearly 66 percent of workers so far nationally. Meanwhile, as 53 percent of laid-off Californians returned to work, the Riverside-San Bernardino metro recouped just 31 percent of the jobs lost. Despite the slow overall recovery in the employment market, Inland Empire job creation surged in 2012. Metrowide employment increased by 34,400 workers last year. This represented a gain of 3 percent and was the largest 12-month rise since September 2006. In comparison, state and national headcounts expanded just 2.3 percent and 1.7 percent, respectively. Hiring has accelerated so far in 2013 with both public and private employers announcing hiring plans. The Riverside County Sheriff’s Department will add 500 deputies, while AT&T plans to add 500 California workers. Many of these workers will be based in Riverside. With job creation expected to build …
In 2012, Hawaii’s major economic indicators continued on a positive trajectory. The tourism sector, on which Hawaii’s economy is centered, showed growth in both visitor arrivals and visitor expenditures in every month of the year. According to the Hawaii Tourism Authority, total visitor expenditures for 2012 were a record high of $14.3 billion, an 18.7 percent increase over 2011, while the total visitor arrivals of 7.99 million exceeded the previous record of 7.63 million in 2006. Wage and salary jobs, personal income, and state general fund tax revenues all also increased in comparison to 2011. According to the latest reports from the Bureau of Labor Statistics (BLS), job growth accelerated during 2012 in Honolulu, with similar improvements taking place statewide. The construction sector, along with hospitality and leisure employment, both increased at a higher rate than any other sectors with increases of 5 percent and 3.7 percent, respectively. Improvement to the hospitality and leisure sector is notable due to the fact that leisure and hospitality jobs represent the third largest employment block in the state and its largest metro area. With respect to construction, this sector plays an important role in driving consumer confidence. This, in turn, gave retailers the …
With its central, accessible location, relatively affordable prices and strong labor pool, the Inland Empire’s office sector is poised for steady growth. The Inland Empire is actually considered one of the top markets in the country in terms of population growth, job creation, construction and industrial space absorption — all of which bode well for the commercial office sector. The Inland Empire market is composed of two submarkets: the East, containing Riverside, San Bernardino and Corona, among others; and the West, which includes Ontario, Rancho Cucamonga, Fontana and Chino/Chino Hills. Transaction volume is on the rise in both, and vacancy rates have been at some of the lowest levels seen in three years. This is partially due to some exceptionally large transactions recorded in 2012. The largest and most significant was a 232,176-square-foot office lease transaction at the Atrium building in Rancho Cucamonga for Inland Empire Health Plans (IEHP). The lease was valued at nearly $100 million. IEHP currently serves more than 575,000 residents of Riverside and San Bernardino counties and is anticipating continued growth, which prompted the need for this space. With IEHP now occupying the building, the previous 60 percent vacancy has all but been eliminated. This lease …