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.

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