Market Data

Regional Outlook(28)

Highlights by State

  • Connecticut - 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.
  • Delaware - 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.
  • Maine - 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 Estate Business.
  • Maryland/Washington, D.C. - 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.
  • Massachusetts - Strong demand for quality laboratory space in Cambridge pushed vacancy rates down as 98,000 sf were absorbed in 3Q06, says CB Richard Ellis.
  • New Hampshire - 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.
  • New Jersey - 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.
  • New York - Several 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 News.
  • Pennsylvania -Philadelphia's industrial 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.
  • Rhode Island - With 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.
  • Vermont - 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'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.

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.

Welcoming Warehouse

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 and Philadelphia, 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 Rica's Pacific 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 by 2008.
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.

Whalom 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.


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