Market Data
Regional Outlook
South
Nashville’s Big Deal
In June, Nashville cut the ribbon on
Tennessee’s most expensive municipal project: the $600 million Music City
Center. With the new 1.2-msf convention center, Nashville hopes to corner the
market on trade shows and events, adding to its already $4.2 billion tourist
trade. Along with the six-block-long center, more than 1,000 hotel rooms have
been built, with 3,000 more planned, and 1 msf of additional commercial space
expected, according to Cassidy Turley. Already the center has booked 123
meetings, representing more than 1 million hotel rooms, according to The Tennessean.
Multifamily Investors Zero In
on Atlanta
A strong employment outlook has multifamily investors
targeting Atlanta, squeezing downtown cap rates and pushing investors into
outlying submarkets in search of better deals, according to Marcus &
Millichap’s 3Q13 report. Almost 58,000 jobs were created since 3Q12 — the
largest increase since 2007 — and 61,000 jobs are being added this year,
pushing local employment close to its prerecession peak. As a result, apartment
sales in Atlanta are up 23 percent since 3Q12, with institutional deals up 32
percent. Institutional cap rates are hitting the 5 percent mark, while B and C
class properties are in the 6 to 7 percent range. Inventory will expand by 1.4
percent this year; however, more than 50 percent of young professionals are
priced out of the most desirable housing markets, providing a ready supply of
renters.
East
“After a relatively quiet first
quarter, investors jumped back into the Manhattan market in the second quarter
yielding an increase in commercial property sales volume of more than 30%. …
The prices paid for properties increased dramatically in the quarter,
especially for office properties and development sites.”
— Eastern Consolidated
Real Estate Investment Services
Is New Jersey on a Diet?
While nearly every state in the Union added eating and
drinking establishments in 2012, New Jersey lost 111, the largest numerical
decline, according to the National Restaurant Association. Kansas (78),
Massachusetts (66), Wisconsin (39), Maine (38), South Dakota (8), and Idaho (7)
rounded out the biggest (and only) losers, while Florida (1,751), California
(1,721), and Texas (1,296) opened the most locations. Tennessee saw the largest
percentage growth in restaurants — 9 percent —
followed by Florida, Louisiana, Minnesota, and Indiana. Overall, the
U.S. added 12,371 eating locations last year, the largest increase since 2007.
Midwest
West
California Office Development to Increase
Nearly half the office
developers surveyed in the San Francisco Bay Area plan to begin a new project
in the coming year, while only one-third of Southern California developers are
planning new office construction, according to the Allen Matkins/UCLA Anderson
Forecast California Commercial Real Estate Survey. The May survey suggests “a
slower but still positive growth rate of nonresidential construction in 2016
and 2017 as the new office space is absorbed.”
Lowe’s Enters Small-Format Market
With the purchase of 60 Orchard Supply Hardware Stores in
California and Oregon, Lowe’s is positioned to compete in the smaller-size
neighborhood home improvement and garden center market. Purchased in bankruptcy
for $205 million and debts, Orchard’s 36,000-sf stores with 8,000-sf outdoor
garden centers give Lowe’s a presence in a number of high-density California
markets. Lowe’s will maintain the separate Orchard Supply brand, plus its
current management. Eight underperforming stores in California markets will
close as part of the bankruptcy proceedings.
National
Hotel Investors Sleep Easier
Hotel prices rose by 12 percent last year, surpassing all
other property types, according to CoStar. While most of the gains were in six
major markets, investors are now looking to secondary markets, fueled by
positive occupancy forecast for 2013–17. Phoenix, Minneapolis, Atlanta, Las
Vegas, and Charlotte, N.C., are all expected to increase occupancy by more than
3 percentage points in the next three years.