Luxury Development Comes to Baltimore
The Bozzuto Group has secured $75 million to develop the Fitzgerald at UB Midtown in Baltimore. Located in the city’s Cultural District, the mixed-use community will occupy 4.6 acres of land owned by the University of Baltimore. The project includes 280 luxury multifamily units, 14,000 sf of retail, and a 1,245-space parking garage. It is adjacent to the Lyric Opera House and Mount Royal Transit Station. The Fitzgerald is scheduled for completion in 2010.
Secondary Market CBD Office Vacancy Rates
|Salt Lake City
Source: CB Richard EllisWEST
Southern California’s New Arena
Last October, Ontario, Calif., unveiled its new Citizens Business Bank Arena. The 37-acre, 225,000-sf sports and entertainment center in California’s Inland Empire is home to the Ontario Region, an East Coast hockey team. The arena is surrounded by the Piemonte at Ontario Center, a mixed-use urban development that includes class A office, retail, dining, and multifamily space.
Markets to Watch
Chicago - The economic downturn has slowed consumer spending, resulting in waning retail space demand, particularly among small retailers in 3Q08, reports Marcus & Millichap. Central business district fundamentals are softening but remain a key component in national retailers’ strategies. Cap rates in 3Q08 rose, averaging in the low 7 percent range for the single-tenant sector while multitenant properties posted in the low to mid-7 percent range. Overall, investors remained active downtown, and opportunities for value-add buyers are available south of the city.
Washington, D.C. - In 3Q08, the metro office sector absorbed 601,200 sf, up from 259,200 sf in 2Q08, according to Cassidy & Pinkard Colliers. Office vacancy was 7.8 percent, up 7.2 percent from last year. The Northern Virginia submarket absorbed 569,100 sf and logged a vacancy rate of 11.9 percent. The suburban Maryland submarket posted negative 142,200 sf absorption, and vacancy rose 2.2 percent from 3Q07. Through 3Q08, the D.C. metro area absorbed 1.8 million sf of office space with asking rents averaging $35.15 per sf, according to CoStar Group.
New York - Due to the collapse and mergers of several major financial institutions, New York City’s office market is headed for a two- to three-year downturn, Grubb & Ellis reports. Manhattan’s 3Q08 vacancy rate rose 60 basis points to 6.2 percent. Direct average asking rents for class A space declined to $89.43 psf while class B direct asking rents dropped to $57.52 psf. In 3Q08, sublease space increased to 8.9 million sf, now accounting for 25 percent of Manhattan’s available inventory.
San Francisco - Multifamily renter demand sustained occupancy levels in 3Q08 despite a job market slowdown, reports Marcus & Millichap. The quarter ended with vacancy at 3.9 percent, down 20 basis points from 3Q07. Up 7.4 percent year over year, average asking rents ended 3Q08 around $1,946 per month, while effective rents rose 7.5 percent year over year to $1,848 per month. While development activity was limited through year-end, a recently approved 2 million sf industrial rezone means multifamily construction most likely will increase over the next few years.
Phoenix - Despite 2Q08’s negative numbers, industrial sector absorption increased in 3Q08, according to Colliers International. The Southwest Valley submarket experienced the greatest activity with 1.2 million sf absorbed. However, overall industrial vacancy hit 14.9 percent and rates are expected to remain high. Major corporations Amazon.com and HD Supply have signed on to lease 513,000 sf and 174,796 sf respectively in the market.
Minneapolis-St. Paul - Even though many Twin Cities’ retailers and restaurants have closed or scaled back, several national chains such as Buffalo Wild Wings Grill and Bar, Noodles and Co., Sonic, Five Guys Burgers and Fries, and CiCi’s Pizza are looking to open locations in the metro area. In addition, discount automotive stores including AutoZone also are interested in coming to the Twin Cities. In 3Q08, retail asking rates continued to decline and the overall average asking rent was $17.86 sf, down 6 percent for the quarter, reports Colliers Turley Martin Tucker.
Richmond, Va., Industrial Market Stable
Richmond’s industrial market vacancy rates dropped from 7.3 percent in 2Q08 to 7.0 percent during 3Q08 as several large lease deals hit the market, according to CB Richard Ellis. Overall industrial asking rates dropped from $3.88 to $3.86 while the weighted average asking rates for the city’s overall flex space rose from $8.60 to $8.75. A little more than 200,000 sf of new industrial space came on line from two different developments. Currently 905,000 sf of new construction is underway.NATIONAL STATS
Warehouse/Distribution Asking Rental Rates, 3Q08
|Orange County, CA
|Long Island, NY
|Broward County, FL
Source: Grubb & EllisEAST
Boston Office Market Remains in Check
Class B transactions ranging from 62,000 sf to 100,000 sf have helped the Boston market to post 200,000 sf of positive absorption in 3Q08, CB Richard Ellis reports. Additional sublease space on the market may lead to slowing rent increases and high vacancy in the next six to 12 months, but stalled new development will keep supply in check. The market should return to strong fundamentals once the financial market is stable.MIDWEST
Casino Wins Big in Kansas City
Beating out two other bids, a joint venture of Baltimore-based Cordish Co. and the International Speedway Corp. will build and manage a new state-owned casino in northeastern Kansas, reports NewsBlaze.com. When completed, the $705 million Hard Rock Hotel and Casino will include a 300-room hotel, a casino with 3,000 slot machines and 140 gaming tables, 275,000 sf of retail, and meeting and convention facilities.MIDWEST
Detroit Office Update, 3Q08
Total SF (in millions)
Source: Grubb & Ellis
Asia Pacific Hospitality Update
With 2,226 projects in the works as of midyear 2008, the Asia-Pacific region is the second largest hotel development market, following the U.S., according to Business Travel News and Lodging Econometrics. Approximately 828 new hotels with 134,673 rooms were expected to deliver in 2008. Additionally, 1,304 hotels with 311,203 rooms are projected in the next two years. Outside of China and India, the cities with the largest construction properties in the region are Bangkok, Thailand, and Jakarta, Indonesia.
Twinpalms, Phuket, Thailand - Photo credit: LeonardoSOUTH
Candy Company Moves to Nashville
The former Collins & Aikman Corp. manufacturing plant in Nashville, Tenn., is being converted into a $6.6 million office/warehouse distribution center by Holladay Properties. The 170,000-sf space will be anchored by Standard Candy Co. — the makers of Goo Goo Clusters.
Photo credit: Holladay PropertiesWEST
Seattle’s Industrial Highlights
3Q08 Vacancy Rate (%)
3Q07 Vacancy Rate (%)
2Q08 Year-to-Date Net Absorption (SF)
Source: Colliers InternationalSOUTH
Condo-Hotel Towers Over Miami
The 67-story Marquis condominium-hotel will be the second-tallest building in Miami upon completion in February. Designed by architectural firm Arquitectónica, the development includes 306 condos, an 8,000-sf spa and fitness center, private spa suites, a fine dining restaurant, and building-wide wireless Internet. Prices range from $1 million to $15 million.
Photo credit: The Apple Org.SOUTH
Dallas-Fort Worth’s Lowest Retail Vacancies, 3Q08
Vacancy Rate (%)
Year-Over-Year Basis Point Change
|Southwest Tarrant/North Johnson
Source: Marcus & MillichapMIDWEST
GE Aviation Consolidates
Seeking to merge its office space in the Cincinnati market, GE Aviation signed a $55 million long-term lease with Duke Realty Corp. for a 403,800-sf build-to-suit office campus in West Chester, Ohio, according to InsideIndianaBusiness.com. Formerly the Queen City Sports Complex, the 43-acre campus includes two four-story, 201,900-sf buildings with room for future expansion and is located near GE’s manufacturing facility on Interstate 75. With site work and construction underway, GE Aviation plans to occupy the campus in fall 2009.SOUTH
Orlando, Fla., Retail Leasing Overview
Inventory (in millions)
Midyear 2008 Occupancy Rate (%)
Year-End 2007 Occupancy Rate (%)
Source: HFF LP Proprietary Research/International Council of Shopping Centers
Denver Office Building Changes Hands
Cornerstone Real Estate Advisors of Connecticut purchased Regency Plaza One in the Denver Tech Center for $55.5 million from Crescent Real Estate Equities of Fort Worth, reports the Denver Business Journal. The 15-story, 310,000-sf class A office building has a seven-level parking structure and is near several restaurants, banks, stores, and exercise facilities.