Market Trends Online(9)

America’s Top 10 Best-Performing Cities

MSA 2007
Job Growth
Provo-Orem, UT 8 1.90 493,000
Raleigh-Cary, NC 10 3.56 1,048,000
Salt Lake City 18 2.20 1,100,000
Austin-Round Rock, TX 20 2.89 1,598,000
Huntsville, AL 16 2.11 387,000
Wilmington, NC 2 1.39 340,000
McAllen-Edinburg-Mission, TX 7 2.50 711,000
Tacoma, WA   50 2.29 773,000
Olympia, WA 37 3.09 239,000
Charleston-North Charleston-Summerville, NC 12 1.18 630,000

Source: Milken Institute

2008 Hotel Development Costs

Median costs per room

Sector Land Building and Site Improve-ments Soft Costs Fixtures, Furniture, and Equip-ment Pre-Opening and Working capital Total
Budget/ economy $14.4K $44.4K $2.3K $8.9K $3K $57.4K
Midscale without food & beverage $15.8K $67.4K $9K $10.2K $2.9K $93.6K
Extended-stay $14.4K $78.4K $11.3K $14.6K $2.6K $120.2K
Midscale with food & beverage $13.6K $69.2K $11.6K $12.9K $3.2K $112K
Full- service $17.1K $121.6K $16.2K $20K $6.1K $179.9K
Luxury/ resorts $111.8K $334K $103.9K $63.9K $20.3K $634.4K

Source: HVS

Worth Quoting

“For any component to succeed as part of a thriving mixed-use project, the market demand must certainly be there. But every mixed-use component also must take into account the character and context of other tenants and complementary uses; if something does not ‘fit,’ the odds of success can be significantly diminished, and the whole project may suffer.”

-- Jonathan Brinsden, chief operating officer, Midway Cos., Houston

Medical Office Trends, Midyear 2008

Region 2008 Supply (SF) Rent PSF Cap Rate (%) Median Price PSF
Northeast 1.9 million $24.06 6.5-6.9 $190
Southeast 2.3 million $23.25 7.5 $210
Midwest 4.5 million $20.13 7.8 $142
Southwest/Mountain 5.1 million $23.42 6.7-6.9 $198
West 3.7 million $28 6.1-6.5 $312

Source: Marcus & Millichap

Outlets Take Aim

Retail developers are seeking a safe haven in outlet malls during these tough economic times. Nearly 3.8 million square feet of outlet centers are scheduled for completion from 2009-10. Even those who have not tried their hands at off-price retail development are giving it a go, according to Shopping Centers Today. First-time outlet development projects include the following:

Developer Outlet Mall
Casandra Properties Waterfront Commons, Staten Island, NY
Continental Real Estate Cos. Designer Outlets of MidAmerica,
Council Bluffs, IA
Daniel Corp. Shops of Grand River, Leeds, AL
Dolphin Ventures Outlets of Corpus Christi, TX
Epsteen & Associates Gran Plaza Outlets, Calexico, CA
Kennedy Commercial Shoppes at Solstice, Mesquite, NV

Source: Shopping Centers Today

Industrial Investment Survey

Midyear 2008

Market Land Price ($PSF) Sale Price ($PSF) Cap Rate (%) Vacancy Rate(%); 3-Month Forecast Absorption YTD; 3-Month Forecast
U.S. total 10.98 7.83 7.33 - -
Atlanta 1.60 50.00 7.90 11.7; Up (251,000); Up
Indianapolis 11.50 39.50 7.75 8.0; Up 2,008,000; Down
Jacksonville, FL 3.50 40.00 8.00 7.1; Same (1,417,000); Same
New Jersey –central 15.00 85.00 7.00 7.8; Up 2,922,000; Down
San Diego, CA 9.15 110.95 - 8.5; Same 223,000; Up

Source: Colliers International

Keeping Everyone On Board

Tough times create nervous employees, colleagues, and staff members, and few industries are experiencing tougher times right now than commercial real estate. Anxiety in the office over possible downsizing can hurt overall productivity, according to Sirota Survey Intelligence, a research consulting company. To encourage company morale, companies and offices should adopt a resiliency strategy that includes the following steps:

  • Build a partnership culture.
  • Pay more attention to high-potential employees who are most likely to leave during difficult times.
  • Create ways for all employees to contribute to the company’s efficiency and effectiveness goals.
  • Don’t exclude employees from assisting with possible solutions.

The $3 billion expansion of the Texas Medical Center in Houston is the driving force behind Waterlights District, a $700 million mixed-use development in Pearland, Texas, about 15 minutes from the medical center. The 150-acre development, which recently broke ground, includes condominiums, retail space, a hotel, and an office building, along with a 30-acre lake.