After emerging from the downturn, Denver’s industrial market is well and truly back on its feet. As options for large, Class A industrial users of more than 200,000 square feet dwindle, build-to-suit projects are popping up at levels last seen in 2006 and 2007. This is a great sign for the overall health and recovery of the state’s industrial real estate market. Polystrand has almost completed a 120,000-square-foot manufacturing facility in southeast Denver; Interline Distribution is underway with a more than 200,000-square-foot warehouse project along the I-70 corridor scheduled for delivery in August 2012; and U.S. Foods recently purchased land in Eastgate Park where it plans to build a 400,000- to 500,000-square-foot building. There are several other users that have either made similar land purchases or are in the market for large portions of land. In fact, there is a healthy inventory of well-located development sites available, which can be purchased at prices that make sense for users choosing the build-to-suit route. Although large blocks of quality Class A space are sparse in the Denver region, rental rates have not yet risen to a level that would compel developers to start speculative development. Also, there is little guarantee that their …
Western Market Reports
The Denver office market ended the first quarter of 2012 with an overall vacancy rate that fell to 13.1 percent. According to CoStar, the vacancy rate was down from the previous quarter of 13.2 percent. Net absorption was more than 1.6 million square feet, which included 900,000 square feet in the central business district (CBD), and 700,000 square feet in the suburban markets. Sublease vacancies also declined from 950,000 square feet to 900,000 square feet. Overall rental rates averaged $19.98 per square foot for full-service buildings. Class A properties averaged $23.81 per square foot for full service, while Class B averaged $17.73 per square foot. Both these rental rates were both up slightly, while Class C buildings remained flat at $13.50 per square foot. Leasing activity will continue to improve in 2012, with net absorption remaining positive throughout the entire market. The majority of submarkets are slowly shifting from markets that favor tenants to neutral markets with rental rate stability and decreased tenant concessions, including less free rent. As you can see, the outlook continues to be positive. There are several major indicators that market fundamentals are strengthening activity with limited new supply on the horizon. Additions/development projects that are …
Retail leasing in the Inland Empire is slowly meandering its way back to a healthy stride. The gamut of activity is still centered around the best opportunities and the strongest centers, but occupancy levels are stabilizing and overall there is a sense of cautious optimism. The retail vacancy rate has remained flat for the past two quarters of 2011 at 8.8 percent. This is a positive trend, however, compared to rates of 11 percent and higher over the past few years. We have also seen new tenants expanding within this market, taking advantage of a lenient leasing climate and landlords anxious to fill their centers. Tenants like Family Dollar, Dollar General, Fallas Paredes, Chase, America’s Tire, O’Reilly, Autozone, Pep Boys, $99 Cents Only, Planet Fitness and Crunch Fitness are actively pursuing junior anchor and pad buildings in shopping centers. Meanwhile, Forever 21, T.J. Maxx, Steinmart, Hobby Lobby and even Kaiser Permanente have absorbed some of the largest vacancies in this market over the past year. Wal-Mart has broken ground on sites in the Victorville trade area and more are on the way, including a few Neighborhood Market locations that Wal-Mart has secured over the past year. While this is positive …
The southern New Mexico industrial sector remained strong in 2011 and we expect 2012 to be a year of continued expansion and growth. The largest concentration of growth in the industrial arena has taken place in Santa Teresa and the immediate surrounding area. The industrial market in this trade area has benefited greatly from its proximity to the border with Mexico and work done by Gov. Susana Martinez in attracting industrial tenants to the area. We have also seen an influx of manufacturing companies that moved their operations to Asia who are now looking to relocate back in North America, specifically to those trade areas that benefit from a geographic link to Mexico. Large box property owners gained the most in 2011 with the recent expansion of companies and businesses locating in the area. In 2011 Alaska Structures leased about 350,000 square feet of industrial space on the west mesa in Las Cruces. The company occupied one of the last remaining big boxes in the market, leaving little available big box space in the greater Las Cruces market. While 2011 was a good year for large boxes, landlords for mid-size and smaller boxes felt the pinch as tenants were able …
Property performance improved meaningfully with both vacancy and concessions trending lower in 2011. Asking rents ticked up 2.7 percent to $1,084 per month during that span. Furthermore, the 6,400 fewer jobs recorded during the first half of 2011 was offset by the hiring of 29,000 workers over the final two quarters. These gains supported a 29.5 percent increase in deal flow to 57 sales. However, the prevalence of small acquisitions caused a 13.2 percent dip in dollar volume to $500.5 million last year. New apartment completions, as well as permits issued, were the lowest annual total on record in more than 15 years. The Inland Empire will follow economic growth patterns more reflective of national trends through 2012 and into the future. It will not be returning to the iconic growth that characterized the region from the early years of the past decade up to 2007, when the last notable expansion firmly cemented the metro area as one of the nation's top economic engines of the time. As the region continues to mature, with vast swaths of land developed over the past decade for infrastructure, housing and distribution centers, one of its key growth drivers, construction, is apt to remain …
Salt Lake City’s retail market will post modest occupancy growth through year’s end, though performance will vary considerably by location, as weak housing conditions weigh heavily on parts of the metro. For example, many shopping centers in the Midvale/Sandy/Southeast, Southwest and Weber and Davis counties submarkets, which were home to significant residential and retail construction during the housing boom, will post vacancy in the mid-teens this year. While weakness will persist until the housing market enters a formidable recovery, outer suburbs may offer strong long-term growth opportunities, particularly in the south, as the final leg of Trax extends from Sandy to Draper. In the near term, however, close-in submarkets will outperform. In the South Central area, which experienced limited construction ahead of the recession, vacancy will hover around 5.5 percent. Within the submarket, discount stores, such as Savers, Goodwill and Dollar Tree, along with fitness centers, have started to backfill vacant spaces, taking advantage of discounted rents. Investors will seek healthy returns in Salt Lake City, though limited for-sale inventory will hamper velocity. Private buyers, mostly from Utah or the Western region, will favor performing strip centers and smaller single-tenant deals, such as fast food and drugstore assets, along with …
As all of us in the retail market know, the past few years have been downright tough. It’s safe to say that we all felt a slight shift in mid-2011 where it seemed that we may — just may — have stabilized. With Tivioli’s success, Sportsman’s Warehouse re-entering the market and Hobby Lobby taking the plunge into Las Vegas, it seems we may have overcome the black “X” looming over our market. Our asking rent numbers are hovering around $1.50 per square foot, and retailers like Nima Accessories, Firestone Tires, Children’s Place, Winco and Dollar General are taking advantage of these rents and expanding valley wide. More than half of the leases completed in the past year were local retailers either relocating or expanding. The retail vacancy rate valley wide is about 11 percent, up from the fourth quarter of 2010. The Southwest submarket shows the lowest vacancy rate, about 9 percent, with the West Central submarket at the highest, about 15 percent. The market absorbed more than 119,000 square feet of retail product throughout the year. Two new Winco stores add 195,000 square feet to our retail inventory, and to the net absorption for 2012. Retail sales also picked …
The apartment market in the Greater Salt Lake area continues to be strong and vibrant. The past two quarters of 2011 demonstrated an upward pressure on rents. Overall occupancy is at 94.9 percent, up from 93 percent in 2010. Vacancy presently hovers around 5 percent and appears as though it will remain so, which is evidence of a tight rental market. These signs enable managers/owners to increase rental rates and drop concession offerings with exception to newly constructed projects during their initial lease up. Apartment development also remains robust in the downtown Salt Lake market where the City Creek project, being developed by the Church of Jesus Christ of Latter Day Saints, will be adding more than 1,000 new units. These units will be a part of a significant redevelopment of several downtown city blocks that will add new office and retail product in addition to multifamily. With this kind of unit increase in the immediate downtown market, nearby small and large projects will soon be able to raise rents as the new units will command the highest rates. The total amount of new units expected to come onto the market in the next year is approximately 1,900, with the …
Multifamily development has come to a near halt in Las Vegas. In 2011, only two market rate properties finished their deliveries with a total of 682 units, most of which had already been completed in 2010. Only one market rate property was started in 2011. This 156-unit project was originally started as for-sale townhomes, but after a foreclosure, the development is being completed by Alliance Residential as a rental property. Other development is limited to affordable or senior housing. We are expecting a limited number of market rate starts this year, but at numbers that will not significantly impact existing inventory. The most active market rate developers in Las Vegas over the past years have been Picerne Real Estate Group, Alliance Residential, Fairfield Residential, Ovation Development, Trammel Crow Residential and Nevada West Development. Fore Property Company has been active in both the market rate and affordable sector, and Nevada Hand remains active in the affordable and senior sector. Between 2003 and 2007, 47 properties totaling 13,483 units were converted to condos. The combination of unsold units from these conversions, as well as the unsold units from properties built as condos during that time, has added 4,625 units to today’s rental …
The Las Vegas market has a total office inventory of 60.7 million square feet in 3,820 buildings. There were 13 buildings completed in 2011 totaling 724,535 square feet. An additional 550,000 square feet was still under construction at the end of the fourth quarter. Net absorption in 2011 was a positive 402,712 square feet, largely due to the Metropolitan Police Department moving into their new 390,000-square-foot facility during the third quarter. The total office vacancy rate valley wide was 19.4 percent at the end of the fourth quarter, which did not include shadow inventory. As this article was being submitted, Auction.com was completing another round of asset sales. Of the 25 property deed sales on the block in Las Vegas, four were office projects totaling about 204,000 square feet. Two of the14 non-performing notes were secured by office product totaling 103,000 square feet. The largest office project sold in the auction was the 124,082-square-foot Sahara Plazas. Sahara Plazas is located in the central portion of Las Vegas and consists of 10 individually parceled Class B buildings situated on 7.87 acres. The largest non-performing note secured by an office product was Charleston Valley View at 86,586 square feet. This property is …