Local Market Details
CCIMs consider the effects of a slack economy and the credit crunch on their hometown markets.
Long Island, N.Y.
by Tom Attivissimo, CCIM, senior director, Greiner-Maltz Co.
My market segment is flex/industrial users and my client base on Long Island experiences a different dynamic compared to the rest of the country. We still have a tight market with respect to quality inventory of high-ceiling [properties] with adequate parking. There still is pent-up demand and more clients are looking for space than there is space available. The difference from last year is market perception due to bad press, making clients more cautious.
Locally, clients in the industrial sector still looking to expand their businesses are adapting lean manufacturing principles to improve efficiency. Financing has not been a factor in the manufacturing arena because there are many grants as well as low-interest-rate Industrial Development Authority and Small Business Administration loans available.
This combined with conventional financing reduces risk to the banks. New development in the industrial sector is mostly user-based with the exception of five new permits for small multitenant industrial from 1,000 to 5,000 square feet -- a sector of the market that has not seen new development since the late 1980s.
Western Massachusetts/Northern Connecticut
by Mark A. Berezin, CCIM, president, Infinity Real Estate Group
Sales have fallen considerably over the past 12 to 18 months. Owner/users are still in the market for industrial and flex properties, and relatively speaking, office and industrial are holding up better than multifamily and retail.
Generally, we are seeing sales prices stable to declining by no more than 5 percent. It is the volume that is not holding up. Investors buying for return are still out there, but are seeking higher capitalization rates than in 2006-07. Several multifamily properties have sold in foreclosure over the last six to nine months, and we expect this trend to continue. Financing seems to be available, albeit with terms tightening up. Local banks still are willing to lend money to stable borrowers with projects that make sense for the long term.
Albuquerque, N. M.
by John R. Ransom, CCIM, SIOR, senior vice president, Grubb & Ellis New Mexico
Large master-planned developments are driving the market. One of the biggest, Mesa Del Sol, is a mixed-use project focused on bringing economic-based jobs to the city. Mesa Del Sol built more than 1 million sf in less than two years and has another 400,000 sf underway. It has more than 12,000 acres of land with a 30-year roll out.
The film industry also is booming in Albuquerque. Albuquerque Studios, a 500,000-sf facility in Mesa Del Sol, has been booked since opening while other properties are receiving short-term benefits as they support set construction, storage, and film locations.
Office properties have seen the most sales activity over the last six months. Investors are finding value in purchasing existing inventory rather than developing new product. Sales prices have stopped rising but are holding steady. Scarce inventory on the market should keep prices steady. Market fundamentals remain strong: Vacancy is less than 12 percent, asking rates are increasing by 4 percent to 5 percent per year, and new construction starts are below historical averages. We are seeing cash buyers forming partnerships that are preparing for opportunities that won't require financing.
Virginia Beach, Va.
by Martin S. Welsh, CCIM, president, Sam Segar & Associates
Sales activity is about the same: slightly lower transaction volume and not as many 1031 transactions. All property types are in demand, but hospitality is reaching saturation as many new hotels have been built in our market in the last few years. Overall, properties are holding their values. Good deals in good locations sell quickly when they become available. Office space in town centers -- retail shopping centers serving the outlying residential areas that sprung up during the housing boom -- and industrial properties serving the ports of Hampton Roads are mainly what's being built in our market.
by Howard Kong, CCIM, associate, CB Richard Ellis
As Tucson recently eclipsed the 1 million population mark, there is a noticeable increase in activity from national and regional players, both occupiers and investors, who are looking for opportunities to enter the market or expand upon an existing presence. Tax-deferred exchanges continue to drive the market in the $1 million to $2 million range, a sweet spot. Larger transactions are handicapped by financing, and in some instances, are requiring greater upfront equity requirements to achieve acceptable returns. All properties remain active; however, quality projects are in high demand and low supply. Investor makeup continues to consist of private investors who are local or California-based, but institutional buyers are starting to aggressively sniff the market.
Build-to-suits and owner-occupied deals are driving new construction, but there is no speculative construction. We recently represented three major tenants that closed land transactions for new sites - Target for a 925,000-sf target.com regional distribution center in Rita Ranch, Afni for a 50,000-sf office at River and La Cholla, and Davis Selected Advisors for a 50,000-sf office at the airport.