With the local economy recovering from the Great Recession, the commercial real estate industry in Cincinnati is heating up. Strong office leasing activity in recent quarters has driven down the vacancy rate. From a high of 21 percent in the first quarter of 2011, total vacancy has steadily dropped to its current rate of 19 percent, the result of approximately 700,000 square feet of positive absorption, according to Jones Lang LaSalle. The real estate services firm tracks Class A and B office properties greater than 20,000 square feet, excluding owner-occupied medical and government buildings. The growth of Cincinnati businesses has sparked increased demand for office space, leading to approximately 1 million square feet of product currently under construction or planned for the next year. Meanwhile, the lending climate has improved greatly since the depths of the recession. Cincinnati has welcomed corporate relocations and expansions during the past year. Following several years of short-term lease renewals and tenants giving space back, this is welcome news that is already improving market fundamentals. Driving the increase in office demand is job growth in the healthcare industry as well as the professional and business services sector. The three largest leases within the last year …
Office
The end of last year ushered in an increase of activity, a higher absorption of existing space and lower overall vacancy rates for Boise’s office market. In 2008, the economy went into a tailspin. It led to an increased supply of vacant commercial space in Boise as companies retrenched and downsized. Jobs and customers were also lost throughout the region. Unfortunately, there were a few submarkets that were dramatically affected. In fact, the Boise CBD (central business district), or downtown core, was the only local market that didn't experience a significant increase in vacancies or a huge drop in rents. Other areas listed below were negatively affected: The area near the intersection Cloverdale and Chinden, adjacent to the Boise HP campus that is known as the Boise Research Center, was hit particularly hard. HP downsized, re-trenched it operations and its sub-contract suppliers cut back. This created a vacancy rate of almost 30 percent. The Boise Research Center region was also hit by the bankruptcy of DBSI, a large real estate investment firm that put about 75,000 vacant square feet back into the local market. The area known as Eagle River, between the new Eagle bypass and the Boise River, experienced …
The Chicago downtown office market is on a roll. Vacancies have fallen for more than 12 months straight as corporations pull the trigger on new or rehabbed office space in marquee locations to accommodate consolidation and growth. One of the big stories is that the market is far more geographically diverse today. We are seeing the suburban sprawl in reverse as corporations leave far-flung business parks to seek out trendier 24-hour neighborhoods such as River North (Chicago’s tightest submarket), the West Loop and the Millennium Park/East Loop-area. Where you work is also increasingly where you live. Chicago’s 136.7 million-square-foot office CBD market reported a 14.9 percent vacancy rate at the end of the first quarter, a welcome decline from the 15.4 percent reported during the fourth quarter of 2011. According to CBRE Group, downtown vacancy has fallen in every quarter since the end of 2010, when the rate was 17 percent. It peaked at 17.3 percent midway through 2010. Overall vacancy numbers include sublease space. Direct vacancy was 13.6 percent in the first quarter of 2012, down from 14 percent in the prior period. Compare that to the suburbs, where the first-quarter vacancy rates rose to 24.6 percent after consecutive …
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 …
We've all said time and again that the key to recovery in office real estate is continued and significant increase in employment rates. Like much of the rest of the country, Memphis has begun to see an uptick in employment in the professional and business sector. In the Memphis MSA, employment in this all-important sector for office real estate jumped from 73,400 to 87,100 during 2011, approaching pre-recession highs of 88,800. Additionally, on May 3, the U.S. Bureau of Labor Statistics reported that productivity in the U.S. fell at an annual rate of 0.5 percent for the first 3 months of 2012, after steady growth during 2011. This is the first sign that corporations have achieved the efficiency they desired and needed to weather the latest economic storm. As demand increases, corporations will be forced to hire to fill the gap between demand and capacity, so the good news for the market is that employment rates, the most fundamental drivers of office real estate, should continue to improve. There are a couple of black swan events, the outcomes of which will shape the immediate future of the office market in Memphis, and specifically the Central Business District. The first is …
Overall, the first quarter of 2012 brought improving market trends to the office sector in Philadelphia and Delaware. The number of tenants in the market has increased, although this has not translated into a significant increase in occupancy. Some tenants are growing, but it is still common for companies to make lateral space moves or take smaller, more efficient offices. In CBD Philadelphia, occupancy decreased slightly during the first quarter from 88.6 percent to 88.4 percent. The main reason for the loss in occupancy during the first quarter was due to banking sector tenants Citizens and Wells Fargo consolidating space in the Market East submarket. The Lehigh Valley also had a decrease in occupancy, mainly due to the closing of a 100,000-square-foot T-Mobile call center. On the other hand, the Pennsylvania suburbs, Southern New Jersey and Northern Delaware all registered low, but positive absorption for the first quarter. Numerous large tenants are looking in the market. However, many of these leases are likely to be renewals or moves without significant additional occupancy. With the exception of a rumored 145,000-square-foot Capital One lease in Wilmington, Delaware, which is a new requirement, none of the deals in the market are anticipated to …
Like other markets in the country, the Fort Worth office market began its decline in 2007, got worse in 2008 and 2009 and then visibly rebounded by the end of 2010. The ‘bottom’ of the market, by general consensus of local brokers, was in mid-2010. Without the booming energy business, conditions would have been much worse. Additional market drivers that helped support the local economy and office market during the recession were healthcare and government. The Central Business District Class A sector is comprised of 13 projects with 5.39 million square feet, while the Class B inventory includes 31 buildings with 3,726,829 square feet. Including Class C buildings, total office inventory is a little more than 10 million square feet and the current overall vacancy rate is 12.1 percent. The reported Class A rent averages $26.87 per square foot, plus electricity. The Class B reported average rent is $18.38 per square foot, plus electricity, according to the most recent CoStar Market Report. Other Fort Worth submarkets include Northside, Southside, Alliance, Wise County and Hood County. The downturn and recovery has looked like the classic hockey stick pattern — slow downturn and sharp upturn toward the previous high when things started …
Gloom and doom. Doom and gloom. Those words were interchangeable and prevalent during the last few years in both economic and office real estate market analysis. But in the words of 1960s legendary rock group The Buffalo Springfield, ”Something’s happening here.” That something is very good. While there will be setbacks, and it may take a year, it will be something very good. And that something is without the freewheeling lending market of the 1980s, without the sometimes illogical boom of the 1990s, and without the volatility of the past decade. The Milwaukee office market is absorbing space, creating excitement with a vibrant downtown (especially in housing and dining) and ready for a positive rebirth. Now let me tell you what didn’t happen in 2011, and what won’t happen in 2012. And then allow me to tell you why 2013 will be spectacular. The total inventory of the Milwaukee office market is nearly 28.2 million square feet. With approximately 6.4 million square feet available and nearly 5.8 million square feet vacant, the direct vacancy rate for the market as a whole is 19.7 percent. But in the financial area east of the River downtown market, the vacancy rate is only …
The Greenville-Spartanburg office market includes more than 10 million square feet of leasable office space located along Interstate 85 between Charlotte, North Carolina, and Atlanta. The market is expected to enjoy increasing absorption levels with a modest drop in vacancy, which currently stands at just over 16 percent. The biggest news on the construction front is Hughes Development’s ONE building in the Greenville CBD. The property will deliver 370,000 square feet of Class A office space to the market in its two phases. Phase I is expected to be completed by the end of 2012. Phase II is expected to be completed by third quarter 2013. Anchor tenants for the property include CertusBank, Haynesworth Sinkler Boyd and Clemson University, which is relocating its Master’s of Business Administration program to the project. Banking is one sector that stands to be a high-growth industry in the local market through the end of 2013. In addition to rapidly growing CertusBank in the new ONE building, TD Bank recently announced its intention to permanently occupy the Interstate 85 campus the company acquired with the purchase of a regional bank, The South Financial Group. This removed 150,000 square feet of vacant Class A space from …
Driven by robust demand from tech and media companies, operations in Manhattan will recover at a moderate pace, though trouble looms in the financial industry. Turbulence in the global economy, a political gridlock in Washington, D.C., and new regulations will prompt hedge funds and investment banks to shed jobs. A few of these users will offer space for sublease to cut costs, which will encourage landlords in Midtown to offer lucrative concessions to compete for tenants. Midtown South will boast the tightest vacancy in Manhattan in 2012 as media and tech firms backfill space, while the redevelopment of Hudson Yards will ignite leasing activity in the area. Tenants priced out of Midtown will target downtown, where Condé Nast expanded its lease at One World Trade Center to 1.2 million square feet. In Brooklyn, the New York City Human Resources Administration will consolidate operations into 400,000 square feet near Atlantic Yards this year, which will further transform the area. New York City fundamentals remain among the best in the country. Citywide, payrolls will grow 1.5 percent this year, or 56,000 jobs, while office-using sectors will gain 15,000 positions. In all five boroughs, approximately 1 million square feet of office space will …