Market Data

Regional Outlook

South

South Florida’s Big Deals

Institutional buyers are dipping into smaller markets for strong retail assets: Iowa-based Principal Global Investors, along with Woolbright Development in Boca Raton, Fla., purchased the Pompano Marketplace in Pompano Beach, Fla., for around $30 million. The 239,200-sf, 90 percent leased grocery-anchored center sold for about $125 psf, making it the second largest retail sale of 2013. The largest deal was Heitman Capital Management’s purchase of Miracle Marketplace in Coral Gables, Fla., for $92 million or $370 psf.

East

Capital Tremors

Although at 10.6 percent, Washington, D.C.’s 4Q12 downtown office vacancy rate is almost two percentage points below the national CBD average of 12.4 percent, the nation’s capital is now a tenant’s market, with class A space leasing for close to class B rates, according to CBRE. Gross asking rental rates decreased 2.9 percent YOY. Conditions may favor tenants for a while: D.C.’s CBD has more than 5 msf available in 22 blocks larger than 100,000 sf, with another 3.5 msf breaking ground and under construction in the next two years. Suburban D.C. has more than 16 msf in 87 large blocks of space, with more than 3 msf under construction.

Midwest

A New Kind of Big Box

Demand for warehouse and distribution centers larger than 250,000 sf is driving the industrial market, and Chicago tops the list of top “big box” markets, with more than 200 million sf of product larger than 500,000 sf, according to Jones Lang LaSalle’s U.S. Big Box Outlook. Emerging Midwest big box markets include Indianapolis, Memphis, Tenn., and Kansas City, Mo., due to location and a large stock of facilities 250,000 sf and larger. Phoenix and Houston also make the list as emerging big box markets. E-tailers such as Amazon are pushing the size of big boxes, with clear heights now reaching 36 feet for greater functionality. In addition, as labor-intensive operations, e-tailers require more parking spaces and other infrastructure upgrades. Unlike the speculative development in the 1990s and 2000s, developers today employ a more-cautious build-to-suit strategy to meet the specific requirements of users.

South

South Florida Multifamily Strong

Miami-Dade, Broward, and Palm Beach, Fla., counties boast some of the strongest multifamily fundamentals in the country. With occupancies averaging around 95.6 percent, rents are forecast to grow between 13 percent and 16 percent during the next five years. Even with the addition of 14,000 units by 2014, “new supply will barely keep pace with demand,” says CBRE, due to large-scale condo conversions, falling home ownership rates, and strong population growth. Lack of class A product and 5 percent cap rates are sending investors to look at value-add B and C properties.

Office Leasing Dominates Gainesville Market

Office leasing is up in the Gainesville, Fla., market, a sign that small companies in tertiary markets are forming and expanding. Nearly 50 percent of Gainesville’s office space is under 2,000 sf, and 74 percent is under 4,000 sf. Office leasing accounted for 54 percent of transactions in 2012, and more than 30,000 sf of office space was absorbed from June to December 2012, says Beau Beery, CCIM, owner/broker of Coldwell Banker Commercial M.M. Parrish Realtors in Gainesville.

West

“Interest still remains high from national tenants looking at the Boise market. An entire city block in the heart of downtown Boise is the target of one such national chain.”

—Year-End 2012 Market Report, Thornton Oliver Keller Commercial Real Estate

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