If you’ve spent time in quaint New England cottages, you know that unique indoor environment can conjure feelings of warmth, happiness and comfort. Exposed wood inside of houses provides sensations of coziness and security that have been emulated in biophilic design — a term referring to the human connection with nature — across America. So why hasn’t this warm and healthy feeling spread to America’s offices? We’ve seen the mill brick buildings and the steel and concrete office developments scattered along America’s highways and suburban areas. Some of us may have even worked in them. They are reliable, cost-effective and provide tenants with the basic amenities needed to get their work done. But the American office building is changing. Today’s companies demand more for their employees and are recognizing that comfortable offices with exceptional amenities are quickly becoming the new standard to attract top, young talent. According to Cushman & Wakefield’s 2019 “CRE Perspectives on Coworking” report, nearly two-thirds of companies are utilizing some form of coworking space. Look at the most popular coworking spaces in the country — many provide biophilic design elements to keep occupants happy. In early October, building owner Farley White, along with Cushman & Wakefield, …
The overall Las Vegas office market has seen steady positive absorption since 2012. Vacancy rates peaked in 2012 and have been declining year over year. The market vacancy rate is 11.7 percent, as of the third quarter. Occupiers are looking at higher-density options with outdoor collaborative areas and walkable amenities. There are projects planned in several submarkets that can accommodate these requirements, however, with those submarkets tightening, these new projects will be at the upper-end spectrum for rental rates. As Las Vegas has grown and continues to sprawl out, office users have moved to the suburbs to live and work within closer proximity to one another. This has made it increasingly difficult to find larger blocks of available space in the more popular suburban submarkets, thereby causing occupiers to look at other mature submarkets, including Downtown. Downtown serves as Las Vegas’ Central Business District for government, law and civic uses. At one point, it was home to Nevada’s oldest law firm. Downtown is evolving and, in true Vegas fashion, re-inventing itself. The city designed an Innovation District in the Downtown core with an emphasis on emerging technology in the areas of public safety, mobility and environmentally conscious solutions for the …
New York City is one of the priciest office markets in the world, with Manhattan housing the core business district of the city. The borough has always been the place to be — the ultimate live-work-play destination that houses the big corporations and the talent that recruiters look for. Overall, office asking rents in Manhattan fell only slightly during the third quarter to $74 per square foot, per Cushman & Wakefield, while rents in some submarkets continued to rise. In highly appealing office clusters like Hudson Yards or the Plaza District, asking rents often exceed $100 per square foot, meaning small- to mid-sized tenants are often priced out of these areas. Historically, areas outside Manhattan have not been as desirable for office users. Yet with rising housing prices, many New Yorkers have been priced out of the borough, forcing them to either downsize or get off the island. Developers have taken advantage of this trend and started investing in residential projects in Brooklyn and Queens in order to attract homebuyers. Businesses soon started to take notice, and many office-using tenants have since migrated or expanded into the outer boroughs, primarily Brooklyn and Queens. Small Leases Drive Brooklyn Brooklyn has always …
While rumors of a looming recession dot the mainstream media landscape and pervade conversations at bars and water coolers, Dallas-Fort Worth (DFW) and Austin are humming along with the kind of healthy job growth that reduces that talk to little more than a whisper. Growth in office-using sectors like tech, finance, engineering and business services in both the state’s capital and largest metropolis continues to fuel demand for space, push rents to new levels and drive price appreciation on office assets. According to CoStar Group, the Dallas area has added about 90,000 new jobs over the last 12 months, and currently boasts a 3.4 percent unemployment rate, which is lower than both the state and national averages. And based on the most current data from the Austin Chamber of Commerce, payrolls in the state capital grew by about 23,000 between June 2018 and June 2019, while unemployment currently sits below 3 percent. While strong population growth is enough to jumpstart development and absorption in the multifamily, industrial and retail sectors, it’s pure job growth that drives the office space. So it’s not a bad time to be an owner of core properties in desirable submarkets in both cities. But these …
Office vacancies are falling across the big metros of the Northeast as robust user demand outpaces the supply of new construction. Deliveries in the last year have primarily been limited to Class A, build-to-suit properties and mixed-use developments. Meanwhile, office tenants are seeking high-end amenities at favorable prices. Nationally, the office vacancy rate stood at 16.8 percent in the second quarter, up slightly from 16.6 percent a year ago, according to real estate research firm Reis. Net absorption for the quarter totaled 3.2 million square feet, down from 3.9 million square feet a year ago. The average asking rent was $33.79 per square foot, up 2.2 percent on a year-over-year basis. Approximately 11.1 million square feet of office space was under construction at the end of the second quarter across Philadelphia, New York and Boston, according to CoStar Group. Helped by approximately 8.3 million square feet of absorption in the second quarter, the average vacancy rate across all three markets was 8.1 percent. Rather than undertake costly new ground-up construction projects, many developers are choosing to redevelop existing assets and efficiently incorporate office space into mixed-use projects. Coworking tenants occupied 54.2 million square feet of office space nationally at the …
Employers throughout Orange County continue to seek ways to attract and retain the best and brightest talent as unemployment dropped to 2.4 percent in the second quarter, below both the California and U.S. rates. That, in turn, has resulted in landlords reinvesting in their properties, providing creative and flexible work spaces, and offering a variety of onsite amenities and service that help companies fulfill that goal. Landlords continue to seek out creative competitive advantages by improving the actual employee experience within the workplace. This often results in amenities like gyms, fitness classes, outdoor work areas, restaurants and collaborative open spaces. Add to that complimentary concierge and personal services, dog-friendly campuses, onsite hosted events and entertainment opportunities and it’s evident to see that property owners are stepping up their tenant services game, thereby enhancing employee innovation and productivity in the workplace. With all that in mind, three new office projects completed construction in the second quarter. FLIGHT at Tustin Legacy added 457,217 square feet of unique, creative office space with 26 percent already pre-leased. The major warehouse-to-office conversion project at 2722 Michelson was delivered fully leased to Anduril, an aerospace defense firm, which subsequently subleased 47,733 square feet to advertising technology …
Even in the context of a sustained stretch of national economic growth and a Midwest region where there are plenty of high-performing markets, Minneapolis-St. Paul stands out. The commercial real estate market in and around the Twin Cities is thriving, in large part due to some impressive structural fundamentals. Metrics and measurables The state of Minnesota — especially the Minneapolis-St. Paul metro area — has a very diverse base of employment, with a long list of significant Fortune 500 companies, including familiar and even iconic names like Target, Best Buy, 3M, U.S. Bancorp, General Mills, Medtronic, C.H. Robinson and United Health Care. United Health Care alone generated $226 billion in revenue in 2018. The economic and market diversity of the Twin Cities stands in contrast to some other Midwest markets, even some that are experiencing significant growth. The market has also experienced an exciting and ongoing uptick in workforce numbers and population growth, elevating Minneapolis-St. Paul far ahead of U.S. averages for both numbers — surpassing cities like Seattle, Atlanta and Washington, D.C. Forbes lists the state of Minnesota as among the nation’s top 10 “Best States for Business.” With 65 percent of the state’s population living in the Minneapolis-St. …
As we enter the fourth quarter, Houston’s office market remains sluggish due primarily to uncertainty in the energy industry. With the price of West Texas Intermediate crude fluctuating between $45 and $60 per barrel, the market has seen minimal oil company expansions. With the pricing outlook remaining on a bleak to flat trajectory, little growth in office occupancy is expected in the next 18 to 24 months. The cycle favors tenants, now and for the foreseeable future. Should energy pricing return to higher levels, there will undoubtedly be higher occupancy through positive absorption, making the next six months an ideal time to lock in rental rates and construction/build-out costs for the next five to seven years. Through the third quarter of 2019, Houston has seen 217,000 square feet of overall net absorption, including sublease space returning to the direct market. The bright spots are new Class A downtown properties like Bank of America Tower, 609 Main and Texas Tower, whose current and future tenants have demonstrated their willingness to pay the higher base rates and operating expenses associated with new development. Companies are using office space more efficiently due to technological advances and transformations in mobility and are demanding more …
Office buildings that have been newly constructed or recently rehabilitated are fielding the greatest demand from large companies, which are banking on the idea that lifestyle-enriching amenities and a vibrant surrounding neighborhood create advantages in attracting and retaining talent. According to the Bureau of Labor Statistics, during the 12-month period ending in July, the four major office markets of Texas added more than 200,000 new jobs combined. The state’s unemployment rate was 3.4 percent at the time of this writing, 30 basis points below the national average. The job market clearly favors applicants, and the competition between major office-using companies to secure the best applicants is fierce. Of course, some job seekers still base their employment decisions based on traditional factors like salary and commute time. But all other factors being held equal, employees with multiple job offers are placing greater emphasis on what kind of working environment they can get with one employer versus another. “It’s all about what amenities a building can offer to its tenants,” says Jackie Marshall, first vice president in CBRE’s Dallas office. “Many tenants are willing to pay more to be in buildings that help them recruit and retain talent, and amenities that make …
Denver was one of the top major metros targeted by commercial real estate investors in 2018. This year is proving to be no different as the third quarter closes out with a flood of office deals. Office investors are being forced to look for deals outside Denver’s urban core. Value-add acquisitions are mainly redevelopments driven by tenant demand for “cool” workspace and talent wars. There is no arguing Denver’s office market is maturing, but there appears to be no threats of an impending plateau or decline. The headlines this year have been dominated by large office lease transactions, including WeWork tying up 220,000 square feet at McGregor Square in LoDo. WeWork has taken a commanding stance with 2 million square feet in Denver and counting. Much of that space is dedicated to enterprise office space solutions and headquarters locations. This year has also marked the notable expansion of coworking outside of Denver’s urban core into Midtown, Cherry Creek and Southeast Denver. Occupancy levels within WeWork locations historically ebb and flow with direct vacancy rates per submarket performance. For example, WeWork at Civic Center Plaza in Upper Downtown Denver has been slow to fill with memberships and term. A WeWork desk …