Highlights by State
- In anticipation of Hartford's downtown
revitalization, which includes a convention center and residential and
entertainment developments, more than 1,300 new housing units have been completed
or are currently under contract in the central business district, says
Northeast Real Estate Business.
- More than 1 million sf of office space is in
development in Wilmington with more than 800,000 sf under construction in the
central business district alone, reports Grubb & Ellis.
- Bayside, a Portland submarket, is
set to see an increase in development. Approximately $244 million is expected
to be spent rehabbing the area's scrap yards and industrial sites into
mixed-use developments throughout the next decade, reports Northeast Real
- Small industrial flex space
(10,000 sf or less) is experiencing high demand in Baltimore where small users accounted for 127
flex deals in 3Q06 alone. More than 400,000 sf of flex space was absorbed
during 3Q06, reports Trammell Crow Co.
- Strong demand for quality laboratory
space in Cambridge pushed vacancy rates down as 98,000 sf were absorbed in
3Q06, says CB Richard Ellis.
- In Nashua, several multifamily projects have been approved for development
downtown, which is a new phenomenon for the area. The largest project, Cotton Mill Square,
includes 162 units, 20 percent of which are affordable housing, as well as
9,000 sf of retail space, according to New Hampshire Business Review.
- Both the
office and industrial markets are thriving in northern New Jersey. Close to 1 million sf of office
space was absorbed and 5.7 million sf of industrial space changed hands during
3Q06, Cushman & Wakefield reports.
hospitality chains are building hotels in New
York City to appeal to business travelers. Projects
include the redeveloped 369-room Hilton Garden Inn
Times Square and the 532-room Holiday Inn Martinique, says Commercial Property
landlords are raising rents amid low vacancy rates and high demand:
R&D/flex space rental rates rose 64 cents to $8.92 psf/year NNN from 2Q06
to 3Q06 and standard industrial rents rose 38 cents to $5.46 psf/year NNN
during the same time span, according to Grubb & Ellis.
the purchase of seven buildings in downtown Providence,
Brown University plans to expand the
university's life science and medical programs. The purchase of 232,000 sf and
a 400-car parking lot is valued between $40 million and $50 million, according
to the Providence Journal.
Approximately 21,000 additional affordable housing rental units are needed in Vermont and 12,300 more
owner-occupied units will be needed in the next five years, according to a 2006
Vermont Housing Council and Vermont Housing Awareness Campaign study.
Promising Office Overture
• Net absorption is at its highest rate in 10 years, approximately
640,000 sf for 3Q06.
• Class A space is becoming increasingly rare as the
vacancy rate continues to fall. Vacant space fell to 11.7 percent of total
inventory during 3Q06.
• Landlords have the upper hand in downtown Stamford as rents are
rising - especially class A properties.
• Major 3Q06 transactions include Phillips Electronics'
lease of 47,000 sf and Webloyalty.com's lease of 31,158 sf.
• Sublets are starting to be more actively pursued, as
are class B properties, as construction costs and rents continue to rise.
This year New
York will add 5,000 new or renovated hotel rooms to
its hospitality inventory, which includes several luxury properties, such as
the Soho Grand Hotel (pictured). There will be approximately 75,000 hotel rooms
in New York
by year-end 2007, reports NYC & Co.
NORTHERN NEW JERSEY
Office Market Snapshot
"... During the third quarter of 2006, we witnessed nearly
1 million sf of absorption and a 1.4 percentage point drop in the overall
vacancy rate - now 17 percent. This represents a strong three-month performance
for the northern New Jersey
office market. In New Jersey's
central counties, market conditions also improved, with a slight decline in the
overall vacancy rate (now 18.6 percent) and 223,000 sf of positive absorption.
A strong New York economy
has directly benefited the Hudson River waterfront and appears to be positively
impacting New Jersey's
economy. The Manhattan
market has become extremely tight, and rents there are on a steep incline.
Currently, the cost of doing business in New Jersey
is about one-third to one-half the cost of operating in New York."
-- Gualberto Medina, executive managing director, New Jersey operations, Cushman & Wakefield, East Rutherford, N.J.
A two-building, 2 million-sf warehouse complex is under
construction at the intersection of Routes 33 and 248 in Lower Nazareth, Pa.,
at the east end of the Lehigh Valley industrial market. ProLogis Park 33,
strategically situated equidistant from New York
is one of several industrial developments cropping up along northeastern
distribution corridors. In fact, the Philadelphia
metropolitan statistical area showed "explosive growth" at the close
of 3Q06, says CB Richard Ellis. For eight consecutive quarters, the
Philadelphia MSA has seen positive net absorption and speculative warehouse
construction continues to be strong.
The first of the ProLogis Park 33 buildings, which is
speculative and divisible, was set for completion by the end of last year and
has more than 1 million sf of leasable space. The second building, which is
being marketed as build-to-suit, is slightly larger with 1.4 million sf and
will be completed later this year.
Resort Brings Luxury to Costa Rica
A luxury mixed-use development - featuring the Hyatt
Regency Azulera Resort & Spa, a championship golf course, shops,
condominiums, town houses, villas, and private homes - broke ground in
Guanacaste, Costa Rica, in July. The $300 million development, financed by
Global Financial Group in Morristown, N.J., overlooks Brasilito
Bay on Costa
Coast and is surrounded
by 47 acres of tropical rainforest. The entire development, including the 214
resort guest rooms and the 18-hole Greg Norman-designed golf course, will
emphasize preserving the surrounding natural beauty. The first phase of the
development including the resort and golf course are scheduled for completion
Rendering credit: Azulera Resort Village
Apartment Market Remains Robust
With many residents priced out of condominiums and
single-family homes due to rising purchase prices, the Washington, D.C.,
apartment market continues to experience high demand. The vacancy rate fell to
less than 4 percent in October 2006 and showed no signs of increasing.
As condo sales are decreasing, investors are expected to
purchase properties as rental units rather than condos. Rents are going up
along with demand and asking rents were expected to reach $1,244 per month by
year-end 2006, an increase of 4 percent year-over-year. Effective rents
have increased even more, 4.4 percent
year-over-year, to $1,195 per month.
While transaction velocity for the market overall has
slowed, transactions in Washington and Maryland submarkets have increased, offset by fewer
transactions in the Virginia
submarket. The per-unit median sales price has increased significantly in all
submarkets in the past year. In 2006, it was $100,000, which is a 9 percent
increase over 2005. Cap rates range between 5.3 percent and 7.0 percent,
compressing more than 20 basis points in 2006.
Source: Marcus & Millichap
Photo caption: Rental properties are becoming incrasingly lucrative investments as single-family and condo prices continue to rise in Washington, D.C., and the surrounding submarkets.
Photo credit: Washington, D.C., Convention and Tourism Corp.
Retail Follows the Crowd
As people flee the rising housing costs in the New York City metropolitan area, Hudson Valley's
population is beginning to swell. Lured by less expensive home prices and a
reasonable commute, urban expatriates are making themselves at home in upstate New York. And where the
people go, so goes the retail.
New and redeveloped retail centers are popping up along
Route 9, which runs through Dutchess County, and Route 22, which runs through northeastern
Putnam County, reports Northeast Real Estate
Business. While some developments, such as Ulster Crossing in Kingston, include stores such as Coldwater
Creek, Barnes & Noble, Panera Bread, and Ann Taylor Loft in a lifestyle
type setting, others include big boxes such as Target, Wal-Mart, and Costco,
reports the Poughkeepsie Journal.
Poughkeepsie Galleria, the largest retail center in Dutchess County, added several stores this year
including Target, Banana Republic, and the Body Shop.
Photo caption: While upstate New York may be better known for scenic views and quaint villages, big boxes and retail centers increasingly are moving into towns such as Poughkeepsie.
Photo credit: Dutchess County Tourism
Make Way for Condos
The Flyer Comet, a wooden roller coast that was the last
remnant of the more than 100-year-old Whalom Park amusement park, located 45
miles west of Boston, was dismantled in November 2006 as the property was
cleared for development. Bridgewater, Mass.-based Global Property Developers
Corp. bought the 30-acre amusement park in 2003 with plans to turn the
waterfront property into a resort-style community called Emerald Place at Lake Whalom.
The $80 million to $100 million development will have 240
condominium units and up to 12,000 sf of commercial space including a bank,
restaurant, convenience store, and other service shops. Condos will range in
size from 1,200 sf to 2,000 sf and will be developed in two different phases.
Phase one will break ground in spring 2007. Condo prices range from the mid-
$200,000s to $600,000, and each will feature a water view.
The residential portion will be a gated community with a
lakefront clubhouse, pool, and walking paths. Reminders of the property's
previous use will take the form of photographs of Whalom Park's
most successful times placed around the development.
Park opened in 1893 and
featured a dance hall, carousel, and other rides, but closed in 2001 due to
competition from larger, more modern amusement parks.