Market Data

Regional Outlook(14)

Highlights by State

  • Alabama - In Loxley, outside Mobile, Atlanta-based PEC Development Group acquired 3,900 acres for a mixed-use development including multi- and single-family homes, retail, office, and industrial space, according to
  • Arkansas - Close to 500,000 sf of commercial space is vacant in Bentonville, but the glut won't last long as locally based Wal-Mart headquarters creates demand for office, retail, and service businesses, according to the Arkansas Times.
  • Florida - Downtown Miami has seen no new speculative office construction in more than 10 years, and with some class B and C properties converting to condos, the office rental market increasingly is favoring landlords, reports CB Richard Ellis.
  • Georgia - Atlanta continues to experience high demand for industrial space, although more than 2 million sf of speculative construction - most of which was vacant -- came online during 3Q06, reports Grubb & Ellis.
  • Kentucky - The Lexington multifamily market is thriving. Only 1,000 units were constructed during the last two years and occupancy hovers near 90 percent, according to Southeast Real Estate Business.
  • Louisiana - Shreveport industrial properties undamaged by Hurricane Katrina still are in high demand. Damaged industrial properties are easier to rehab than other property types and also are selling well, says Re/Max Commercial Brokers in Metairie.
  • Maryland - Two urban-themed hotels are rising in Hanover, five miles south of Baltimore/Washington International Thurgood Marshall Airport, in a joint venture between Chesapeake, Va.-based LTD Management Co. and Starwood Hotels & Resorts Worldwide, reports
  • Mississippi - Jackson's thriving medical and financial markets are contributing to high office occupancy rates for the metropolitan area, according to NAI Mark S. Bounds Realty Partners.
  • North Carolina - Since the 2001 technology industry downturn, Raleigh-Durham office vacancy has been high, peaking at 17.7 percent in 2003. But at year-end 2006, vacancy hovered around 4 percent with improvement expected this year, according to CB Richard Ellis.
  • South Carolina - The Greenville multifamily market has rebounded from a 2000 downturn, according to Titan Real Estate Investment Group. In Columbia, occupancy has risen and is more than 90 percent, reports NAI Avant.
  • Tennessee - Nashville industrial construction was strong through 3Q06. At 2006 year-end, 1.8 million sf were under construction with more than 1.5 million sf of warehouse space, reports Grubb & Ellis.
  • Virginia - Close to 1 million sf of absorption occurred during 3Q06 in Northern Virginia's office market, despite 544,471 sf of new space added to the market at the same time, reports CB Richard Ellis.
  • West Virginia - Huntington's 95-acre business and technology development called Kinetic Park has been slow to find tenants with only a medical office and accounting firm signed. A $20 million retail center also is in the works, according to the Huntington Area Development Council.


Landmark Property Coming Soon

The tallest building to be constructed in Atlanta in more than 15 years, 3344 Peachtree, is on pace to deliver its 50 stories over the next 18 months, according to Atlanta-based Regent Partners. The 635-foot mixed-use property is part of a new pedestrian corridor in Atlanta's Buckhead neighborhood and will feature 500,000 square feet of class A office and retail space in addition to 93 luxury residences occupying the top half of the tower.

As of September 2006, 100,000 sf of the building was pre-leased with additional space in negotiation. Office and retail tenants include First Horizon Bank and the Buckhead Club, a 20,000-sf private club that will feature a spa and fitness center.

In addition to the office, retail, and residential space, a 9,000-sf restaurant is planned for the ground floor, and a private sky terrace with pool, outdoor lounge, meeting space, club room, and views of the Atlanta skyline is planned for the property's 28th floor. The entire project is expected to be ready for occupancy in spring 2008.

Rendering credit: Regent Partners

Office Improvement

Orlando's office market saw unprecedented growth throughout last year. Overall vacancy fell to 8 percent in 3Q06, the lowest in recent history according to GVA Advantis. Year-over-year class A vacancy nearly was cut in half while class B and C properties fell 2 percent over the same period. Rental rates are increasing: Class A rents improved 10 percent from 2Q06 to 3Q06 while class B and C improved 2 percent and 5 percent respectively over the same period.

In terms of investment, Orlando saw decreased sales activity in 3Q06, but total sales volume for the quarter, $162 million, and total square feet, 1.4 million sf, outpaced previous quarters due to three large transactions.

Multifamily Gets Millions

In December 2006, the Louisiana Housing Finance Agency approved $80 million in tax credits for the construction of 7,000 new apartment units, 79 percent of which will be in New Orleans. The remaining tax credits will be divided up between Jefferson, St. Tammany, and three other parishes in southwestern Louisiana.

Four of the projects that will benefit from the tax credits are creating some local controversy: The mixed-use, mixed-income projects will replace public housing units that rented for around $85 per month. Some of the new units will charge more than $1,000 per month, according to a Times-Picayune report.

While the housing agency usually grants around $8 million of tax credits a year, the additional millions were allocated to the area by Congress in accordance with the Gulf Opportunity Zone Act.

The need for multifamily housing in New Orleans is clear; inventory is down nearly 10,000 units, according to Southeast Real Estate Business. Rental rates have increased 20 to 30 percent and the demand for multifamily housing is sparking investor interest in the region.

Well-Situated Resort Destination

A 15-minute drive from the glitz of Dollywood - Dolly Parton's eponymous theme park - Knoxville, Tenn.-based DionasWhelchel Commercial Group is developing the $95 million Image Hotel and Conference Center. Featuring a sleek, modern design, the 2.62-acre resort includes a 31,000-sf indoor waterpark, a 30,000-sf conference center, 272 suites, and 11 penthouses.

Pigeon Forge, the resort's location, hosted 12 million visitors in 2005 and expected an additional 9 percent in 2006. In addition to Dollywood, local attractions include the Great Smoky Mountains, the most-visited U.S. national park.

DionasWhelchel expects high occupancy for the Image Hotel, as there currently are 26,166 rooms available in the Pigeon Forge area and indoor waterparks have a 26.9 percent higher occupancy rate than hotels without them. Resort construction will begin in spring 2007 and finish in winter 2008.

Rendering credit: DionasWhelchel Properties

Industrial Flourishes

Even as industrial markets surrounding the area start to cool off, sales activity and investor interest remain high in Tampa. Overall vacancy has decreased in every subsector and year-over-year asking rents are up from $6.32 in 3Q05.

Building Bridges

This spring, Wal-Mart's hometown will break ground on a new museum. Work will begin on the Moshe Safdie-designed Crystal Bridges Museum of American Art in Bentonville, Ark. The 100,000-sf museum will house a permanent art collection, traveling exhibits, a 250-seat auditorium, library, meeting space, office space, and both indoor and outdoor reception venues.

Intended to attract tourists to northwest Arkansas, the museum expects close to 250,000 visitors annually. The museum will be built on a 100-acre forested plot with gardens and pathways that connect to downtown Bentonville.

Crystal Bridges was founded by Alice Walton, daughter of Wal-Mart founder Sam Walton who lived in Bentonville. The project is funded by the Walton Family Foundation.

Rendering credit: John Horner

Hotel Chain Moves Into China

Hilton Hotels Corp., RREEF, the real estate and infrastructure investment management arm of Deutsche Bank, and private equity firm H&Q Asia Pacific have joined forces to introduce Hilton Garden Inn to China. The new partnership will acquire and develop or convert 20 sites into 5,000 new rooms under the Hilton Garden Inn flag.

"China is an outstanding market whose booming economy and growing tourism both domestically and inbound will ensure a strong demand for focused-service hotels," says Ian Carter, executive vice president of Hilton Hotels Corp. and chief executive officer of Hilton's international operations. Hilton Garden Inn will be the corporation's first focused-service hotel to move into the Chinese market.

Locations under consideration for hotel construction include: Shanghai, Beijing, Tianjin, the Yangtze River Delta, and the Bo Hai Bay region.

"We believe long-term prospects for real estate market fundamentals in China are very good and are proactively pursuing investment opportunities, which are supported by China's long-term economic growth prospects, rising middle class, and urbanization," says Brian Chinappi, RREEF's head of acquisitions in East Asia.


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