Market Data

Regional Outlook

East

Boston’s Big Deal

Boston traversed the $1,000 psf mark for office properties last fall when JP Morgan Chase and Oxford Properties Group closed on the $1.3 billion sale of two Back Bay office buildings, 500 Boylston St. and 222 Berkeley St., purchased from Blackstone Group. The 1.3 million-sf deal topped off a good year for Boston CBD office sales, when nearly $12 billion in assets changed hands, according to the Boston Business Journal.

North

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National

“Co-working is now the fastest-growing segment of the leasing market in many U.S. cities; in 2005 there was only one co-working space nationally, while today there are over 3,000.”
JLL
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Are You Ready for Generation Z?

A slowdown in job growth and household formation forecast by Moody Analytics may give pause to some multifamily developers. While the majority of new apartment stock is expected to come online in 2017 and 2018, most of it is concentrated in 12 major metros. Moody’s predicts that job growth will slow in 2020 and 2021, to about 750,000 per year, well below the more than 2 million jobs created every year since the recession. And it is expected to stay below 1 million per year for several years. Will there be a mismatch between metros with new apartment stock and those with healthy job growth? That, plus the smaller size of Generation Z, about 70 million, may cause an oversupply of units in some markets. However, after 2021, household formation should accelerate, but the question remains: Will Generation Z want to live in the urban centers so favored by their older millennial siblings? Or will their mastery of technology and social media allow them to live anywhere? Future multifamily demand may pop up where it’s least expected.

West

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Midwest

“Capital investment in the Indianapolis industrial market last year included 25.8 msf valued in excess of $1.1 billion, a 40 percent volume increase over 2014. Indianapolis will remain an attractive target for investors in 2016, as current owners seek to expand their holdings and new-to-market buyers, especially from outside the U.S., relish Indianapolis’s stability and transparency.”
Jeff Castell, CCIM, Cushman & Wakefield Senior Managing Director
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South

Florida Office Markets Tighten

Florida’s largest office market by square footage, Tampa-St. Petersburg, along with Fort Lauderdale and West Palm Beach all offer value in office investment, according to Marcus & Millichap, due to rising office employment, rising rents, and limited new construction. In the Tampa area, “reduced construction will contribute to vacancy falling 400 bps from the cyclical peak and rents will rise at the fastest pace in a decade.” Office-using tenants are targeting space in downtown Fort Lauderdale and Hollywood, Fla., but investors are looking for value-adds plays, where “a location currently occupied by an underperforming office property can be redeveloped as mixed-use or residential.” In West Palm Beach, “investors bid for a foothold in surging Florida markets, but at a much more attractive price. Cap rates average 8.3 percent, with rents set to tack on 4.2 percent over the coming year.”

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