Sale/leaseback transactions are an option for obtaining maximum equity and accessible working capital from owned real estate. This type of transaction allows the owner of a property to sell it and then lease it back from the buyer at a rental rate and lease term that is acceptable to the new owner, typically on terms consistent with the given market’s rates. The primary purposes of this strategy are to raise money or to free up the owner’s equity for other uses, while retaining use of the facility.
While leasing volume accelerated in the first quarter of 2024, it remains muted relative to pre-pandemic levels. Just over 315,000 SF of space was leased over the past 12 months, which is well below the annual average in the five years leading up to the pandemic. As tenants continue to relocate and downsize, net absorption remains in the red over the near term, even in what is considered one of Pittsburgh’s most active submarkets pre-pandemic. Although vacancy rises at a gradual pace, there are no projects under construction in the Greater Downtown submarket which will provide for a hedge against dramatic increases in vacancy for the foreseeable future.
Despite noticeable cooling at the national level, Pittsburgh’s industrial market is holding up well and looking strong in the second quarter of 2024. Though absorption levels remain positive, vacancies are rising across the country as tenants reduce their footprint in the nation’s largest shipping nodes in response to a variety of economic pressures. Nationally, the average industrial vacancy rate is close to 6.3%, representing a 2% climb YOY. With several hundred million SF of space underway, this figure will likely continue to climb as the year progresses.
Calgary Market Summary • January-April 2024
Overall availability – and particularly the vacant component – of Calgary’s suburban office market decreased everso- slightly through the first quarter of 2024 due to approximately 45,000 square feet of positive absorption. We saw tenants making a substantial shift in mindset as the quarter progressed – opting for both good-sized spaces in the 5,000 sf – 10,000 sf range but also in their approach to choosing locations based on Landlord reputation and investment in their properties.
Overall availability – and particularly the vacant component – of Downtown office space decreased through the fourth quarter of 2023 on approximately 395,000 square feet of positive absorption. Calgary’s Downtown office market is indeed getting healthier as observed by the ongoing, albeit slow, increase in staff returning to their offices on Mondays and Fridays.
Overall availability – and particularly the vacant component – of Calgary’s suburban office market decreased slightly through the final quarter of 2023, posting a 1% drop due to approximately 288,000 square feet of positive absorption. We saw tenants making leasing decisions based on two primary considerations: finding locations that make the to-and-from-work commutes easier for staff and acting on necessity to secure spaces in the size ranges they wanted while still available, especially in A-Class properties.
Calgary’s retail vacancy rate remained stable through the fourth quarter of the year, showing no overall change despite significant activity and changes within its constituent parts. Several new developments were added to our inventory, with notable additions including the final phase of The Shops at Buffalo Run, plus smaller retail plazas like New Brighton Landing and mix-use developments such as Shawnessy Station and Solo on 4th.
Investors’ interest in the Calgary market remained remarkably strong through the final quarter of 2023, during which an additional 88 transactions closed at or above $1 million, for a total of $719.2 million. For the year, total dollar volume invested reached just under $3.4 billion. While this represents a decrease of approximately $153 million or 5% percent year-over-year, the negative calculation is due entirely to the 2022 sale of The Bow (sale announced in 2021, finalized in 2022) inflating last year’s investment numbers. Removing that outlier, we see investment up year-over-year (y-o-y) across the board.
Edmonton’s commercial real estate (CRE) market was awash with investor activity during 2023. Tracking sales equal to or exceeding $1 million, the number of sales increased among each of the office, retail, industrial, multi-residential and ICI/ residential land asset classes, driving year-overyear transaction numbers up by 18%. Total dollar volume increased to more than $3.02 billion, a substantial 36% boost compared to investment in 2022.
The Greater Harrisburg Market made significant gains in the First Quarter of 2017 as absorption totaled 55,196 sq. ft. As we enter the Second Quarter the suburban markets boast occupancy rates between 92% and 96%. We are encouraged by the increase in activity from our small business users and remain impressed with the outlook for owners of premier properties as opportunities dwindle for first class options.
TCN Worldwide's State of the Market: Eastern Edition, 1st Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends
Markets continued their advance in 2016 as absorption totaled 250,333 sq. ft., its highest total in over 20 years. Since the First Quarter of 2010 the market has gained over 948,000 sq. ft. Rental rates have stabilized and market fundamentals have continued to strengthen.
TCN Worldwide's State of the Market: Eastern Edition, 4th Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Conditions in the Central States –Commercial Property Investment Trends
Going forward we expect continued firming of rates, steady demand and further modest improvement in most segments of the Greater Harrisburg marketplace.
Third quarter 2022 closed with a direct vacancy rate of 3.53%, an overall vacancy rate of 3.95%, and an average asking direct rental rate reported at $6.98 psf. In June, the Michigan unemployment rate was recorded at 4.1%, a decrease of 0.5 percentage points compared to this time last year. In August, U.S. job openings declined to 10.1 million, the lowest since June 2021, while adding 528,000 jobs, more than double economist’s original estimates of 258,000 jobs. In September, the hiring pace slightly declined due to higher rates and slower company growth with 263,000 jobs added and an unemployment rate of 3.5%, a decrease of 1.3 percentage points compared to one year ago. Year to date the Federal Reserve has increased the interest rate five times. The Federal Reserve has announced they will continue to aggressively institute rate increases until inflation declines and are confident that balance among the economy is being restored. Wall Street closed out the month of September down 9.3%, the worst month since March of 2020. Interest rate hikes have taken a toll on the housing market as home prices have decreased at an accelerated rate, long-term mortgage rates increased for 6 straight weeks by the end of September, and a 30-year rate was recorded at 6.7%, the highest in 15 years. Consumers, employers and the overall market remain aware and cautious heading into the fourth quarter as anticipation builds as the year is ready to close out.
First quarter 2022 closed with a direct vacancy rate of 3.9%, an overall vacancy rate of 4.26%, and an average asking direct rental rate reported at $7.79 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
First quarter 2022 closed with a direct vacancy rate of 20.59%, an overall vacancy rate of 22.00%, and an average asking direct rental rate reported at $19.39 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
Second quarter 2021 closed with a direct vacancy rate of 5.11%, an overall vacancy rate of 5.55%, and an average asking direct rental rate reported at $7.09 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
Second quarter 2021 closed with a direct vacancy rate of 19.90%, an overall vacancy rate of 21.46%, and an average asking direct rental rate reported at $18.52 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
TCN Worldwide's State of the Market: Western Edition, 2nd Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide. In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends
TCN Worldwide's State of the Market: Western Edition, 1st Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends
The Denver retail vacancy rate decreased in the fourth quarter, ending the year at 4.6%. Overall, the retail market has seen a decrease in vacancy rate, with the vacancy rate starting at 4.9% in Q1 2016, to 4.8% in the end of Q2 2016, remaining 4.8% at the end of Q3 2016, down to 4.6% in Q4 2016.
The Denver industrial vacancy rate slightly increased in the fourth quarter, ending the year at 4.8%. Specifically, both industrial-flex projects and warehouse projects experienced an increase in vacancy over the last quarter but slightly fluctuated throughout all four quarters.
The Denver office market ended the year with a vacancy rate of 9.8%. The market continued its upward climb in vacancy for the second consecutive quarter after six quarters that consistently posted a decrease.