Market Data
Regional Outlook
East
Washington,
D.C.’s Big
Deal
Washington,
D.C.’s office
market got a fourth-quarter shot in the arm with the $392 million sale
leaseback of PNC Place to TIAA-CREF and Norges Bank Investment Management from
PNC Financial Services Group. The property sold for $1,075 psf, a record for
the D.C. office market, which totaled $1.6 billion in office transactions for
4Q14, according to JLL, ending 2014 on a high note. The high-water mark was
short-lived as Jamestown Properties purchased another D.C. office trophy,
America’s
Square, for $500 million or $1,083 psf in February.
Southwest
North
Off-Target
in Canada
Target
Corp.’s
decision to close its 133 Canadian stores will return about 20 msf of retail
space to the market along with about 4.8 msf of distribution space, according
to the Toronto Star. Part of Target’s problem? Bad locations. The company bought a number of leaseholds
in older malls in secondary and tertiary locations. Most of those malls will
probably be forced to close, market watchers say, as other tenants suffer from
the loss of Target’s foot
traffic.
West
Tech
Drives LA Office Demand
Tech is
the sector that won’t stop.
After claiming the northern California markets, it is driving new office demand
in Los Angeles, where companies that wouldn’t have considered that location five years ago
are moving in, according to Cushman & Wakefield. Market fundamentals have
surpassed pre-recession levels, with overall vacancy dropping to 16.1 percent
in 4Q14, the lowest level since 2008. Leasing activity increased 5.5 percent
YOY to 13.6 msf, the highest total since 2007. “Overall absorption of 3.8 msf exceeded gains
from the past 14 years and offset the losses from both 2010 and 2011,” reports C&W.
Midwest
South
Orlando
Tops Multifamily Index
Three
Florida cities placed on the Multifamily Opportunity Index, indicating “outsized near-term upside potential in the form
of price appreciation,”
according to Marcus & Millichap’s 2015 Apartment Report. First-place Orlando, fourth-ranked
Tampa-St. Petersburg, and Fort Lauderdale at seventh place have seen
significant rent and occupancy gains unaccompanied by value appreciation. In
Orlando’s case, “per-unit prices in the metro are off more than
30 percent from their cyclical peak, despite a nearly 16 percent gain in
revenues,”
according to M&M.
National
“The Small Business Optimism Survey rose 2.3 points to 100.4 in
December 2014, its highest level since October 2006, a strong signal that
American small businesses could be finally shaking off the effects of the Great
Recession.”
Bill
Dunkelberg, NFIB Chief Economist
East
Boston
Joins the Big City Ranks
After a
year totaling $9 billion in office transactions — an 80 percent YOY increase —
Boston joins the ranks of major global investment cities, says CBRE’s 2015 New England Outlook report. A total of
32 class A office properties located in the greater Boston CBD area traded
hands in 2014, representing an influx of capital from foreign and other
out-of-market investors. One such transaction was the $2.1 billion sale of five
Boston office towers in the Blackstone/EOP portfolio to Canada-based Oxford
Properties. “Boston
represents a value investment compared to New York, San Francisco, and other
gateway cities,” says
the CBRE report, noting that outside investors have little interest in suburban
properties, creating opportunities for those investors priced out of the CBD.