Market Data

Regional Outlook

West

San Francisco’s Big Deal
The City by the Bay started the new year off right, with the highest price yet paid for an office property. Invesco bought 101 Second St., a 90 percent leased office building in San Francisco’s South Financial District, for $291 million, or $750 psf. Purchased from Hines, the deal’s cap rate was estimated at 3 percent, a new low for San Francisco, where the 4Q13 average cap rate was 4.9 percent, far below the national office average of 6.5 percent, according to Kidder Mathews. While transaction volume for San Francisco office properties was slow for most of 2013, 4Q picked up with 20 properties trading hands. The average price for 4Q13 office transactions was $459 psf.

Seattle Retail
A number of stabilized retail assets traded hands last year in the Seattle market as institutional investors targeted the area. Dollar volume of transactions topped out above 2007 while the number of transactions was about half as many. Cap rates rose from 7.0 percent at YE12 to 7.6 percent at YE13, reflecting increased activity for strong B and C product.

Source: Kidder Mathews

National

Top Commercial Real Estate Markets
Based on the percent change in vacancy and rental rates for the office, retail, and multifamily sectors from 3Q 2012 – 3Q 2013, as well as population and unemployment changes YOY

1. Orlando, Fla.

2. Portland, Ore.

3. Dallas

4. Houston

5. Minneapolis

Source: Coldwell Banker Commercial


East

“New York and Washington, D.C., accounted for more than 5 million sf of office space net absorption – well over a third of national absorption gains between October and December 2013 … The strong year-end showing reversed the previous four-quarter trend where more than 5 million sf was returned to the market.”

Jones Lang LaSalle, 4Q 2013 National Office Market Report

South

Midwest

Industrial Expansion
More than 71 million sf of industrial space is under construction with the Midwest making a strong showing. At least five Midwest cities have more than 2 million sf under construction: Chicago, Cincinnati, Dayton, Ohio, Kansas City, Mo., and Milwaukee.

Source: Cassidy Turley

High-Yield Apartment Investment Markets
Looking for a multifamily investment market with a little risk but great potential? Try Detroit, which tops Marcus & Millichap’s high yield markets in its 2014 Apartment Report. While Motor City has its economic troubles, apartment performance has been strong, the report says, adding “With the auto industry still building momentum, Detroit offers investors a unique operating environment at a modest entry point.” The list of cities where the economy is getting stronger but multifamily prices still remain reasonable is a virtual who’s who of secondary Midwest markets, including Detroit, Cleveland, Cincinnati, Pittsburgh, Indianapolis, Columbus, Ohio, and Louisville, Ky.

Recommended

Building Progress

Fall 2020

Moody's Analytics Reis Chief Economist Victor Calanog, Phd, CRE, outlines how construction in many sectors will fail to meet expectations for 2020.

Read More

This Is the Altered Normal

Fall 2020

Esri’s data on consumer behavior, demographics, and employment can help real estate adapt in the COVID-19 world.

Read More

The CMBS Stress Test

Summer 2020

The commercial mortgage-backed securities market is particularly vulnerable amid the COVID-19 pandemic, with borrowers and lenders looking for creative solutions to unprecedented problems.

Read More

Market Trends in Commercial Real Estate

Summer 2020

Office Renters Change Priorities in Wake of Pandemic | Recreational Real Estate on the Rise | Case Study: COVID-19's Impact on Eastern PA Big-Box Market | Hospitality Owners Have Reservations as Occupancy Drop | Seniors Housing Responds to Mounting Pressure from Pandemic | Mixed-Use Developments Can Keep It Local | Supply Chain Reacts to Social Distancing | Self-Storage Weathers Early COVID-19 Storm

Read More