Office

New Chicago Office Markets Shape Perception of the City

by Kristin Harlow June 14, 2018

It’s an exciting time to be part of the action in Chicago’s real estate market. While Illinois remains an “outflow” state, construction cranes dot the Chicago skyline and the city’s inflow numbers remain positive. Large employers are considering Chicago for campus-like headquarters operations and exciting markets are continuing to grow. In particular, west side blight continues to be replaced by residential growth in the West Loop, with retail services finally gaining momentum despite slow adoption by soft goods merchants. The West Loop’s immediate neighbor to the north, Fulton Market, maintains its buzz as the popular new kid in town, demonstrated by its ability to attract office tenants. Yes, office tenants. Transportation for workers, the primary objection to Fulton Market that has previously knocked it out of contention, will continue to be a challenge as public options slowly catch up to the development in the area. Employers will have to be creative in providing alternatives for new talent not within reasonable cycling or ride-sharing range. How did this happen when a decade ago the notion of office space west of the expressway was thought to be an absurd one? Because Chicago is not landlocked to the west by any natural barriers, …

June 14, 2018

Florida Market Reports Office Property Type Southeast Southeast Market Reports

Miami-Dade County’s Office Market Fueled by Solid Local Economic Fundamentals

by John Nelson June 11, 2018

Driven by population and job growth, Miami-Dade County is one of the strongest and most sought-after commercial real estate markets in the Southeast. As of February 2018, the county’s unemployment rate stood at 4.7 percent, which, while only a 10-basis point decline from the rate in February 2017, represents continued positive movement. The metro’s economic stability and growing employment base are significant factors when analyzing the tightening office market. Miami-Dade County ended the first quarter with an overall office vacancy rate of 9.67 percent, a 106-basis point decline from the previous year. Also, net absorption was positive with suburban areas such as Airport/Doral, Coral Gables and South Gables/South Miami remaining primary contributors to the county’s growing office sector. The trend continued from 2017, as the year ended strong with nearly 1.5 million square feet of total net absorption countywide. As overall vacancy declines and rental rates rise, development in Miami-Dade remains active with 717,000 square feet under construction, 657,000 square feet of which is being developed within the top five most in-demand submarkets for corporate growth. Projects such as Two MiamiCentral, Giralda Place and Mary Street are redefining South Florida’s office landscape as mixed-use environments become more ubiquitous. Record-Low Vacancy …

June 11, 2018

Market Reports Nevada Office Western Western Market Reports

Reno’s Office Market Successfully Rebounds From The Great Recession

by Taylor Williams June 5, 2018

I have had the pleasure of selling commercial office space in Northern Nevada for nearly 15 years. During this time, I saw the peak of the market from 2003 to 2008 wherein construction was at an all-time high, lease rates were reaching unseen heights and absorption was setting records. Then we all got to experience the Great Recession from 2008 through 2012. This saw nearly half of the buildings that were constructed during the previous peak become empty. Vacancy rates hit 20 percent, lease rates dropped to levels well below where they were in 2003, and construction came to a screeching halt. Then, magically, at the beginning of 2013 the economy took a turn and the Northern Nevada office market began its recovery. This was expedited in 2014 with Tesla making its announcement of the Gigafactory in the Tahoe Reno Industrial Center and the Tesla Effect created a national buzz that hasn’t slowed. Unfortunately, this has created a new problem. The Reno office market sits at 10.1 percent vacancy, down from 20.7 percent during the recession, as net absorption has been positive year over year since 2012. The absorption has been primarily in second-generation space as there has been relatively …

June 5, 2018

Florida Market Reports Office Property Type Southeast Southeast Market Reports

Tampa Bay’s Office Market is Evolving with New Spec Construction on the Horizon

by John Nelson May 28, 2018

Economic growth in Tampa Bay continues at an impressive pace, driven by strong population and employment growth over the past several years. The unemployment rate has steadily declined, dropping 110 basis points from December 2016 to a current 3.4 percent, and the strong pace of job growth continues with a rise in non-farm employment of 35,000 new jobs during the trailing 12-month period ending December 2017. As a result, leasing activity has increased, rental rates continue to show incremental growth and there is a strong likelihood of new speculative office construction in the coming year. Major corporations continue to reaffirm their confidence in Tampa with significant announcements of planned corporate expansions by MetLife, Pricewaterhouse Coopers (PwC), AAA and USAA during the second half of 2017. In fact, the Tampa Bay metropolitan area ranked as one of the top 20 “U.S. Markets to Watch” for overall real estate prospects in the Emerging Trends in Real Estate 2018 report published by PricewaterhouseCoopers and the Urban Land Institute. Investment Activity Many investors who in years past were seeking opportunities in gateway markets are now turning their attention to secondary markets like the Tampa Bay area in search of higher yields. There were several …

May 28, 2018

Market Reports Office Texas Texas Market Reports

Fate of NAFTA, Foreign Trade to Shape Rio Grande Valley Office Market in 2018

by Taylor Williams May 25, 2018

The economy of the Rio Grande Valley (RGV) has always been closely linked to foreign trade. The region’s numerous port markets and its proximity to Mexico — in particular, the robust industrial market of the Mexican border city of Reynosa — have always ensured that international commerce plays a key role in the economic success of the RGV. Manufacturing and distribution have always been major drivers of growth in the RGV. We often analyze the performances of these sectors when gauging the health of the region’s office market, as the performance of the office market tends to trail the performance of the industrial sector, usually by a period of 12 to 18 months. The office market of the RGV consists mostly of small, Class B properties developed in the 1980s and 1990s. There are no true skyscrapers or trophy assets in this region, as office users in the RGV simply don’t demand the level of amenities and quality of space as their counterparts in major markets. Small and steady as the office market may be, it is not immune to the influence of larger political movements. Everyone with a vested interest in RGV commercial real estate is keeping a close …

May 25, 2018

Market Reports Office Texas Texas Market Reports

Texas Office Markets: Who’s Hot, Who’s Not

by Taylor Williams May 11, 2018

From Dallas-Fort Worth’s (DFW) explosive rate of corporate relocations and expansions to Houston’s reliance on oil prices to Austin’s strong supply of tech talent, there’s very little common ground among the office sectors of Texas’ biggest cities. And whereas the pace of sales, development and absorption for certain property types — industrial, multifamily, self-storage — are strong across DFW, Houston, Austin and San Antonio, it’s the office sectors of these metros that truly capture their differences. The office markets of the Lone Star State’s four major metros each have a different story to tell — a narrative that speaks to their core demand drivers, as well as their projected performances for the rest of the year. In this piece, we take a closer look at the crucial factors underlying each of the Big Four’s office markets. DFW: Slowing But Stable The DFW office market isn’t as hot as its multifamily or industrial sectors, which are seeing record volumes of new construction and absorption, respectively. But the metro’s ability to create 100,000-plus jobs per year ensures that its strong office fundamentals can be maintained. The metro posted year-over-year rent growth of 2.2 percent, according to CoStar Group, right on par with …

May 11, 2018

Market Reports Michigan Midwest Midwest Market Reports Office

Investors Take Notice of Office Rebound in Detroit’s CBD and Suburbs

by Kristin Harlow May 10, 2018

Metro Detroit’s office recovery continues to steadily march forward. Local and national commercial real estate investors are showing a renewed appetite for buying and renovating existing buildings, and even developing new product. The City of Detroit has experienced the quickest recovery, going from near stagnant activity with a vacancy rate of 21.5 percent to a single-digit vacancy of 8 percent with multiple new developments in the past eight years, according to CoStar Group. Dan Gilbert, founder of Quicken Loans and Rock Ventures, invested in about 90 Detroit properties, totaling 15 million square feet, which kicked off Detroit’s rehabilitation. This prompted several other companies to stake an interest in Detroit’s Central Business District. The resurgence continues, and today numerous projects are in development that appeal to millennials and empty nesters alike. Most of these projects are situated on Woodward Avenue, which has been the center of the area’s rebirth. Within a few blocks of this avenue reside most of the renovated office buildings, the stadium district, new shops, restaurants, entertainment venues and cultural institutions like the Detroit Institute of Arts, Charles H. Wright Museum and The Detroit Opera House. Currently, there are several multifamily projects in downtown Detroit such as Midtown …

May 10, 2018

Market Reports Multifamily Office Texas Texas Market Reports

Downtown Renaissance Drives El Paso Office Market, Multifamily Growth

by Taylor Williams May 4, 2018

For decades, El Paso was a big, sleepy town nestled on the banks of the Rio Grande that relied on a slow-paced, but consistent economy. In those days, housing was always affordable. Pricing levels for single- and multifamily properties were below national averages, but so too were wages. The city’s office market, which has traditionally served as a leading indicator for multifamily growth, hummed along without ever experiencing strong asset appreciation or interest from outside investors. Taken at face value, this activity would suggest that there was a firm ceiling for new development and rent growth for both of these markets. In recent years, however, El Paso natives have seen their city experience enormous growth fueled by exceptionally low crime rates and expanding population at Fort Bliss Army base. Development of both single- and multifamily product really took off between 2011 and 2014, causing rent growth to subside and vacancies to rise from 5 percent a few years ago to roughly 9 percent today. The market returned to a more sustainable pace of new development in subsequent years. Looking ahead, the metro’s job growth should remain a factor of its population of military personnel and federal employees. As El Paso …

May 4, 2018

Market Reports Office Property Type Southeast Southeast Market Reports Tennessee

Memphis Office Market Grows Its Existing Inventory by Nearly 6 Percent

by John Nelson April 23, 2018

Memphis ended 2017 with an overall vacancy rate of 14.8 percent, which is up slightly from where the year started at 14.5 percent — the highest level in three years. As the saying goes, “don’t judge a book by its cover,” and this especially applies to the Memphis office market. In 2017, 600,000 square feet of office space was absorbed. Developers also started 2017 with more than 1.2 million square feet of new office space in the pipeline, with 800,000 square feet delivered last year and the other 400,000 square feet expected to be delivered by the end of the first quarter this year. So within just six months, nearly 6 percent of Memphis’ total office market size was added to the overall available space. That is more new product being delivered than the city has seen in over a decade. Of this 1.2 million square feet, nearly 80 percent will come from adaptive reuse projects, where previously non-functioning properties located in non-core submarkets have undergone significant repurposing. The Sears Crosstown building was erected in 1927 as a 1.5 million-square-foot, mail-order processing warehouse and Sears retail store. The project was the largest building in Memphis at the time of its …

April 23, 2018

Market Reports Midwest Midwest Market Reports Office Ohio

Cincinnati’s Over-the-Rhine District Makes Way for Larger Office Developments

by Kristin Harlow April 5, 2018

Cincinnati’s Over-the-Rhine (OTR) neighborhood has come a long way since it served as the location for gritty scenes in movie director Steven Soderbergh’s 2000 film Traffic. Gone are the 500 vacant buildings and 700 vacant lots. The disadvantage of having the highest crime rate in the city is no more. Thanks to efforts by prominent Cincinnati companies such as Kroger Co. and Procter & Gamble, as well as the Cincinnati Center City Development Corp. (3CDC), efforts to revive the historic neighborhood have exceeded expectations. Located just north of downtown Cincinnati, OTR is one of the largest urban historic districts in the United States and is known for its abundance of architecturally significant buildings and homes. The area has a rich cultural scene due to its proximity to the Art Academy of Cincinnati, the Cincinnati Symphony Orchestra, the Cincinnati Opera, the School for Creative and Performing Arts, Memorial Hall and other artistic points of interest. OTR was named one of the top 15 “cool streets” in Cushman & Wakefield’s Cool Streets of North America report. A new breed of urban, experiential and independent mid-market retailers catering to millennial consumers has led to the rise of 100 Cool Streets across the United …

April 5, 2018

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