Market Data

Regional Outlook(29)

National Stats

Most Improved Hospitality Markets (1/08–9/08)

Market Index Value (measures changes in room supply and demand, ADR, and RevPAR)
New Orleans 111.6
San Francisco 104.7
New York 103.3
Houston 102.7
Denver 101.9

Source: Marcus & Millichap Research Services, Smith Travel Research

Markets to Watch

  • Austin, Texas — The office market experienced 156,069 sf of positive absorption in 3Q08 with a total net absorption of 27,687 sf for the year, according to Cushman & Wakefield. Austin’s overall office vacancy rate increased to 17.6 percent from 13.8 in 3Q07, raising concern about a glut of product in the market.
  • Kansas City, Mo. — Kansas City’s 183 million-sf industrial market kept a strong pace through 3Q08 with year-to-date net absorption at 4.4 million sf, according to Colliers Turley Martin Tucker. By 3Q08’s end, the vacancy rate dropped to 5.6 percent, 1.4 percentage points lower than 3Q07. New construction totaled approximately 3.1 million sf at year-end. Although the city’s distribution space is in great demand, Kansas City industrial may see a slowdown this year.
  • Miami — While the projected softening of multifamily fundamentals spread across the nation in the second half of 2008, Miami-Dade County’s multifamily market still ranks as one of the strongest markets in the U.S., reports Marcus & Millichap. The county’s rental inventory increased by 335 units last year with less than 900 units under construction. Asking rents of $1,118 per month were 0.7 percent greater than 3Q07 despite a 0.2 percent reduction in 3Q08. Meeting the needs of the majority of Miami residents, class B and C units are currently in high demand.
East

Boston 3Q08 Office/R&D Snapshot

Market Supply (SF in millions) Vacancy (%) Absorption 3Q08 (SF) YTD 3Q08 Absorption (SF)
CBD 57.2 9.3 151,950 225,339
Cambridge 19.8 12.2 (42,539) (96,680)
Suburbs 125.5 17.8 (269,776) 735,422
Total 202.5 14.8 (160,365) 864,081

Source: Colliers Meredith & Grew

East

Multifamily Sale in Upstate New York

Watertown, N.Y.’s Woodcreek Apartments have sold for $4.25 million to Conifer Realty, a real estate development and management company based in Rochester, N.Y. The 13-building, 104-unit, garden-style apartment community is located near the Fort Drum military base, according to the seller, GMH Capital Partners of Newtown Square, Pa. The property was 100 percent occupied at the time of the sale.

Midwest

Cincinnati’s Office Market Loses Momentum

The Cincinnati office market posted more than 333,000 sf of positive net absorption by 3Q08, according to Grubb & Ellis. Suburban class A office space gained more than 700,000 sf of new space since 1Q08, with 222,000 sf completed in 3Q08. However, due to additional inventory, vacancy rates rose from 19.6 percent midyear to 19.8 percent. The CBD also saw an increase in vacancy rates from 17.2 percent to 17.9. CBD class A rental rates increased from $21.88 psf to $22.03 psf at the end of 3Q08. Class B rates remained steady, averaging $15.82 per sf. Overall, 386,410 sf of additional space is set for completion during the next six months, with less than 15 percent preleased.

South

Class A Office Finally Comes to Pearland

Bringing more than 1,000 jobs to Pearland, Texas, the ZT Shadow Creek Business Center is the first class A office development in the nearby Houston suburb. Built on 7.5 acres, the two-building development’s first phase is a four-story, 80,000-sf property slated to be finished in mid-2009. The second building will total 100,000 sf. The business center includes sustainable features such as a low-reflective surface roof, light pollution and water flow reduction fixtures, energy-efficient heating, ventilating, and air-conditioning systems, water-efficient landscaping, and specific parking spaces for energy-efficient and low-emission vehicles. ZT Shadow Creek also is located near the Texas Medical Center, two major ports, downtown Houston, and the Hobby Airport. Currently, both buildings are being pre-leased.

Photo credit: Ziegler Cooper Architects

Midwest

Attractive Student Housing Sale

A 353-bed student housing portfolio at the University of Notre Dame in South Bend, Ind., sold for $13.75 million to Gross & Cohen Real Estate Investors, a Massachusetts-based student housing investor, reports REJournals.com. The portfolio includes 47 properties located within a mile of the campus and is 100 percent occupied.

West

San Francisco’s Office Market Takes a Hit

Because of the current economic downturn, San Francisco’s office market has suffered, especially in 3Q08, according to GVA Kidder Mathews. The overall vacancy rate increased to 10.6 percent, up from 9.6 percent in 2Q08. Average effective rents fell across all office building classes as landlords aggressively courted tenants with lower rental rates, free rent, and more tenant improvement allowances.

Midwest

Chicago 4Q08 Office Statistics, All Classes

Market Current Stock (SF) Year-to-Date Direct Net Absorption Direct Vacancy (%)
CBD 132,316,265 462,707 10.51
Suburbs 96,094,776 (1,168,018) 19.32
Market Totals 228,411,041 (705,311) 14.21

Source: Jones Lang LaSalle

National Stats

Secondary Market Retail Transactions (10/01/07–9/30/08)

Market Volume ($ in Millions) Median ($ PSF) Average Cap Rate (%)
Baltimore 236 150 7.0
Cincinnati 217 95 7.0
Denver 744 143 7.1
Detroit 298 109 8.2
Philadelphia 418 123 6.9
San Diego 491 258 6.2

Source: Real Estate Research Corp.

West

Las Vegas Multifamily Year-Over-Year Comparison

  3Q08 3Q07
Average asking rent per unit ($) 890 883
Average asking rent per sf ($) 0.99 0.99
Annual rent growth (%) 0.8 2.6
Average occupancy rate (%) 93.7 93.5

Source: Applied Analysis

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