One of the newest trends in Phoenix office leasing is the spur in technology and creative space requirements, especially for tenants moving in from Northern and Southern California. These companies are searching for a more favorable market — one with lower labor costs and rental rates, more affordable housing, an educated workforce from which to draw, less traffic and an overall higher quality of life — and the Phoenix area fares well comparatively. I expect this trend to continue, especially in the downtown markets of Phoenix, Tempe and Scottsdale. Strong leasing activity throughout the Phoenix market this year resulted in robust absorption, with Class B product leading the way. There are numerous large tenants currently in the market seeking to lock up space, which will keep demand elevated throughout the remainder of the year. Healthcare and financial services industries are committing to the market, especially with larger-scale operations centers. Parking needs for these users are 6:1000 and greater. Tempe remains a hot spot for development, with two new high-profile speculative projects underway — the Grand at Papago Park Center (213,055 square feet) and 2100 Rio Salado (102,819 square feet). Two new buildings were completed this quarter at Tempe’s Marina Heights …
It is a fascinating time for the Detroit office market. Downtown neighborhoods and suburban markets alike are being transformed thanks to years of positive economic trends marked by healthy job growth and the desire of several companies to locate in the city. Landlords, tenants and investors are looking to consolidate gains and position themselves for success in an evolving marketplace. On the leasing front, we are still seeing activity in Detroit proper with small to mid-sized firms, punctuated by a handful of larger deals that have taken place. The higher profile moves include Detroit-based auto lender and bank holding company Ally Financial taking approximately 320,0000 square feet on 13 floors at One Detroit Center, now known as the Ally Detroit Center. A number of law firms have inked leasing deals. For example, longtime Detroit tenant Miller, Canfield, Paddock and Stone PLC renewed its lease at 150 W. Jefferson, a 25-story skyscraper formerly known as the Madden Building, where the law firm occupies approximately 97,000 square feet. Southfield, Mich.-based Redico LLC recently acquired the 500,000-square-foot tower, built in 1989, from Piedmont Office Realty Trust for $81.5 million. While leasing activity is strong in the central business district (CBD) — driven in …
The Raleigh-Durham office market has not only recovered from the Great Recession, it is solidly in expansion mode, and tenants are facing market conditions not witnessed in 15 years. The current cycle has been marked by a prolonged period of limited development activity. While job growth in the local market has been rebounding for more than five years, the construction pipeline has only recently filled in a meaningful way, and a large portion of the development activity in 2014 and early 2015 was driven by build-to-suits. With Class A vacancy now at a 15-year low, speculative development is heating up again. While projects totaling 1.4 million square feet were underway in the first quarter, most of this product will not be delivered until 2017 or later, and approximately half of the space has already been spoken for. In the near term, the market heavily favors landlords. The Triangle office market began 2016 with strong activity as tenants absorbed 453,997 square feet, driving vacancy down by 40 basis points to 12.1 percent. This figure is down by 180 basis points on a year-over-year basis and has fallen from a cyclical high of 18.7 percent. Class A vacancy ended the first quarter …
CHICAGO — Even as the technology industry begins to normalize after two years of major growth, the nation’s tech markets remain winners in the race for talent and, by extension, office leasing. This according to JLL’s recently released Tech Office Outlook report. From the second quarter of 2015 to the second quarter of 2016, tech office leasing volume fell 9.6 percent. However, despite tech industry growth hitting a relative plateau, it will continue to outpace the national economy and is creating strong real estate conditions across the country, according to the report. “The technology sector is the leading industry for real estate expansion in the U.S. and is driving nearly 25 percent of office leasing activity across the nation over the past two years for leases of 20,000 square feet or more,” states the report. “Also, 63 percent of these tech companies are in growth mode. And this demand is driving office rents up. The most expensive rents can be found in San Francisco Peninsula’s Menlo Park, at $102.16 per square foot, followed by Palo Alto in Silicon Valley ($100.79); San Francisco’s Mission Bay/China Basin ($84.70) and Hudson Square in New York ($83.11).” The 9.6 percent year-over-year dip in second-quarter leasing …
From Cleveland to Cincinnati, speculative Class A office development is on the rise in Ohio for the first time in at least five years. Primarily occurring in the suburbs, 3 to 4 million square feet of spec development is driven by a lack of office space as well as pent-up demand for new space with an urban feel that contains retail and multifamily components. Most spec office development reflects the demands of both Millennials and Baby Boomers. These significant population groups seek to locate in live-work-play neighborhoods that offer cool office and residential spaces, walkability and common green spaces. Because these components are important to Millennials — now the largest share of the American workforce — they have become important for companies in their efforts to recruit the best and the brightest. Quality talent is more of a factor than cost. In competing for talent, these companies must look for and include such office amenities as game rooms, outdoor patios and walking trails. Not only are the retail and residential components to an office project important, but companies are also expressing genuine interest in branding, signage opportunities, naming rights and modern amenities. Cost of financing guides developers in Cleveland While downtown …
CHICAGO — Tribune Media Co. (NYSE: TRCO) has agreed to sell the iconic Tribune Tower in downtown Chicago to Los Angeles-based CIM group for $205 million in cash at closing. The buyer could pay up to an additional $35 million based on contingencies and conditions, which could bring the total up to $240 million. The sale is expected to close by the end of September. Built in 1925, the building features 35 stories and nearly 740,000 square feet. The sale also includes a 36,000-square-foot development site located directly to the east of Tribune Tower, fronting Cityfront Plaza. “Tribune Tower has been a unique part of Chicago’s skyline since the 1920s,” says Peter Liguori, Tribune Media’s president and CEO. “It is a gem of architectural and structural accomplishment and a constant reminder of the important role that Tribune has played in the development of the city itself.” Since the beginning of the year, Tribune Media has sold several smaller properties in markets ranging from South Florida to Seattle for gross proceeds of approximately $89 million. Earlier this year, the company agreed to sell the north block of the Los Angeles Times Square property and the nearby Olympic printing plant, both in Los …
CHICAGO — Hertz Investment Group has purchased four office buildings in the Midwest for $416.9 million. Equity Commonwealth sold the 3.1 million-square-foot portfolio. The transaction includes 111 Monument Circle and 101-115 West Washington Street in Indianapolis, North Point Office Complex in Cleveland, and 100 East Wisconsin in Milwaukee. The portfolio was 86.5 percent leased at closing. Formerly known as Chase Tower, 111 Monument Circle is now referred to as Salesforce Tower in honor of its newest tenant. At 48 stories high, it is the tallest building in Indianapolis. The PNC Center sits at 101-115 W. Washington St. It features a 16-story atrium. The center houses the Hyatt Regency Indianapolis hotel, along with PNC Bank. North Point Office Complex includes a five-story and a 19-story office building connected through a nine-story atrium. It is home to Jones Day law firm, among other tenants. The Faison Building sits at 100 East Wisconsin Ave. The 37-story tower is the second highest building in Wisconsin, behind the U.S. Bank Center. It’s home to Wells Fargo Bank, Michael Best & Friedrich, Marcus Corp. and PricewaterhouseCoopers. Equity Commonwealth, a Chicago-based REIT, also sold a 121,901-square-foot office property at 8701 North Mopac in Austin, Texas, earlier this …
Fairfield County, Connecticut, which has traditionally been home to many multi-national financial tenants, is transitioning to become one of the most diverse business environments in the region and attracting some of the biggest names from the TAMI (technology, advertising, media and information), creative, engineering and corporate arenas. This shift in the fabric of the business community may be attributed to major investments made by a number of owners to improve and reposition their office properties to meet the demands of this new type of tenant. Owners are virtually creating new tenant experiences in their buildings, with office space boasting technological efficiencies and tenant amenities designed to support a balance between professional and personal needs. The “if you build, he will come,” quote made famous in the movie Field of Dreams is certainly apropos when looking at the trend of newly renovated properties attracting some of the best tenants in the market. A perfect example is the success at Merritt 7, a six-building, 1.4 million-square-foot office complex that recently completed more than 600,000 square feet of new leases — including a recent 133,000-square-foot lease by Datto Inc., one of the fastest- growing information technology firms in the world for its global …
Miami’s four major office submarkets — Brickell, Downtown, Coral Gables, and Airport West Dade — are enjoying record growth in Class A asking rental rates, an emerging trend that is further strengthening the city’s positioning as a highly desirable market for local, national and foreign investors. In the city’s Brickell/Downtown business district, Class A office rents have skyrocketed more than an average of 14 percent per square foot during the past year — a significant difference from the historic average annual increases of 2 to 3 percent per square foot. In fact, the disparity in Class A and B rents in the urban core, where Class A rents range from 40 to 70 percent higher per square foot than Class B rents, is much greater than in submarkets, where Class A rents are approximately 24 percent higher than Class B rents. This creates further incentive for Class B buildings in the urban core to raise asking rental rates and stay apace with Class A, making it a strong business case for investors who are looking for a long-term play with maximum ROI. The rent growth is attributed to several factors. While we have seen strong net absorption by local companies …
The Madison office market finally emerged from its post-recession stupor in 2015 and chalked up its best performance since the early 2000s. The 430,000 square feet of positive net absorption recorded last year exceeded the combined total of the previous three years. This strong trend continues in 2016. Nearly 150,000 square feet of office space was leased during the first quarter, driving the vacancy rate down to 10.2 percent. The Madison office market was slow to recover from the Great Recession. As recently as 2014, office vacancies increased, and only 67,000 square feet of net positive absorption was tallied that year. As the state capital and home to the University of Wisconsin, the local economy depends on government and education as base industries — sectors where employment and spending had been retreating until recently. Insurance, financial services, medical services, research, information technology and software development are also important and growing sectors in Madison, accounting for a lot of new office leasing activity. Who’s taking space? Among the large lease deals in recent months: Arrowhead Research inked a deal to occupy 68,000 square feet in University Research Park; M3 Insurance completed and moved into its building at 828 John Nolen Drive; …