Market Data

Market Trends

Briefly Noted

  • Hospitality — "The gates are opening for eager private equity and institutional buyers to take calculated risks in primary and secondary markets, says Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels. He adds that foreign investors will define the market in several gateway cities. JLL expects American hotel transaction volume this year to match last year's $15 billion, which was a four-year high and a 24 percent increase over 2010.
  • Industrial — Sales of industrial properties improved significantly in 2011, up 67 percent in the first 11 months over the previous year, according to Cassidy Turley. While cap rates have remained around 7.8 percent to 8 percent, strong demand and low interest rates may push them down during 1Q12.
  • Multifamily — Class B apartment properties will play a bigger role in 2012 as rising rents — with increases averaging around 4.5 percent — force renters to settle for lower-quality digs, according to Greg Willett, MPF Research vice president. Occupancy averages 94.6 percent in the nations 64 largest markets, with Pittsburgh topping the chart at 97.8 percent.
  • Office — In 2011, vacancy rates fell in about two-thirds of the office markets tracked, says Jon Southard, director of forecasting, CBRE-EA. "Although total employment growth was lackluster in 2011, office-using sectors, such as professional and business services, have been among the best performers in this regard and have provided just enough support to keep the office market moving toward recovery," he says.
  • Retail — The retail market is playing both sides against the middle in 2012, according to Lane4 Property Group's Kansas City Retail Report. Luxury and discount retailers are upping leasing activity, at the expense of mid-tier retailers. So look for more dollar stores, off-price apparel shopping, and automotive parts stores as well as luxury retailers in major markets. Other trends noted by Lane4 include the increase of "dining, medical services, training and exercise, and education" tenants in retail centers.

Booyah for Mooyah

Mooyah is moving up the better burger chain, hoping to match national brand recognition with Five Guys and Smashburger. Mooyah has contracts in place for opening 300 units this year, according to FastCasual.com, adding outlets in Alabama, Arkansas, Florida, Kansas, Louisiana, Oklahoma, Virginia, Maryland, and Washington, D.C. The chain is opening 14 units in first quarter alone. Started in 2007, the chain has 22 stores in Texas, along with single outlets in Connecticut, California, and Tennessee.

"Given the relatively small investable universe in Canada, we continue to notice a growing trend of Canadian buyers heading south of the border."

— Mark E. Rose, chair and CEO of Avison Young

Warehouse Winners

Top 5 markets for warehouse space net absorption, 2011

  1. Dallas (10.9 msf)
  2. Phoenix (7.8 msf)
  3. Detroit (5.7 msf)
  4. Indianapolis (5.4 msf)
  5. Atlanta (5.4 msf)

Source: Cassidy Turley

"In the coming year, expect self-storage to continue its migration toward a more retail-style property, … focused on location, demographics, and construction quality."

—Stephen Mellon, national director of self storage, Grubb & Ellis

Multifamily on a Roll

Apartment building sales rose 27 percent in 2011, ringing up close to $57 billion. The second-largest transaction category — properties between $10 million and $20 million — was up 63 percent. And the median per unit sales price for properties priced $1 million to $10 million increased 12 percent, the first increase since 2005.

2012 Outlook: Sellers will bring more properties to market by midyear; buyers will target class B and value-add assets and core properties in secondary markets.

Source: Marcus & Millichap

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