Market Reports

“Investors are back and active in Edmonton’s commercial real estate (CRE) investment market in a meaningful way. Led by a resurgence of interest in ICI Land and an uptick in demand for Multi-Residential properties and Industrial assets, total dollar volume invested rose by 8% year-over-year.” -- Doug Grinde, Vice President, Barclay Street Real Estate


“Investors are back in Calgary’s commercial real estate (CRE) investment market and their wallets are open. Fuelled by a continued desire for retail assets and renewed interest in ICI and Residential Land, total dollar volume invested rose by 23% year-over- year.” -- George Larson, Vice President, Investment Sales, Barclay Street Real Estate


The first half of 2018 brought expected results for the Oklahoma City Central Business District with increased vacancy due to the addition of the BOK Park Plaza Building to available inventory and negative absorption of 84,000 square feet. However, there are continued signs of improvement in the suburbs as 157,000 square feet was absorbed in those submarkets. The net absorption for the entire market was a positive 73,000 square feet; the first positive absorption total in the past seven semi-annual reports.


AT THE MID-POINT OF 2018, CALGARY’S RETAIL MARKET CONTINUED TO GRAPPLE WITH A FLOOD OF VACANT SEARS RETAIL SPACE THROUGHOUT THE CITY.


The retail market in Portland did not experience much change during the second quarter. With the vacancy rate at 3.2%, net absorption was a positive 83,327 square feet and vacant sublease space increased by 29,737 square feet. There was a slight increase in quoted rental rates, ending at $17.35 per square foot per year. Seven buildings were delivered to the market and 1,129,274 square feet are still under construction.


The second quarter in the Portland Office market ended with a 6.6% vacancy rate. While net absorption totaled a positive 1,160,537 square feet, vacant sublease space increased to 334,810 square feet. The quarter finished with rental rates at $23.81, which remained the same from the first quarter. Five buildings were delivered to the market with 2,503,330 square feet under construction at the end of the quarter.


The second quarter has come to a close with a vacancy rate of 3.7%. Net absorption totaled a positive 713,455 square feet and vacant sublease space increased. Rental rates increased to $8.16 and nine buildings were delivered to the market. Those nine buildings totaled 552,369 square feet and 4,846,902 square feet remain under construction at the end of this quarter.


The past twelve months have seen a rise in multi-tenant industrial vacancy from 17.63% in 2017 to 20.13% in 2018.


The second quarter saw a slight increase in vacancy from 6.3% in Q1, to 6.4% in Q2, indicating that the market continues to move forward at a healthy pace.


At the end of the first quarter of 2018, the industrial market of the Mexico City Metropolitan Area recorded an inventory of 9.6M SQM or 103.7M SQFT of Class A warehouses, concentrated mainly in the Cuautitlan 30%, Toluca 19%, and Tultitlan 17% submarkets.


The Mexico City Metropolitan Area Inventory for Class A+ and A Office buildings closed the 1Q of 2018 with a total inventory of 6.4 M SQM or 69.2M SQFT. This represents an increase of 11% equivalent to 603k sqm or 6.5 M SQFT.


Bradford Allen is pleased to share with you our 2018 first quarter office market report.This quarter in the downtown market:• Office market activity in River West is officially tracked as the most recent submarket to join the CBD. • Net absorption was positive 720,640 sf. • The direct vacancy rate dropped to 11.85% from 12.1%, and the average gross asking rent decreased to $39.38psf from $40.69psf, both compared to the previous quarter.


Vacancy for Q1/2018 remains at 6.3% and rates were largely unchanged for industrial, with a slight increase from $5.88 SF in Q4/2017 up to $5.92 SF at the end of the first quarter. Demand continues to outweigh supply and the majority of submarkets continue to experience low vacancy rates.


Absorption over the fourth quarter totalled positive 86,000 square feet (sf).


Absorption for the fourth quarter totaled negative 41,000 square feet (sf).


The Beltline market witnessed a net negative absorption totaling 72,000 square feet (sf) during the fourth quarter.


After another quarter characterized by strong leasing activity, the industrial market’s positive trend continued with vacancy decreasing by another 0.50% in the fourth quarter to 6.52%.


Residential Land, Multi-Residential and Industrial sales led Calgary’s commercial real estate investment market in a continued recovery during 2017. Multi-Residential and Residential Land investments both grew more than one-third year-over-year, demonstrating the health and strength of the Greater Calgary Area.


Edmonton’s commercial real estate (CRE) investment market was remarkably stable during 2017, with total dollar volume down just 2.9% year-over-year. There was a game of musical chairs among some asset classes; office investment dominated the year while industrial investment faded. Retail stayed put.


The Mexico City Metropolitan Area Inventory for Class A and A+ office buildings closed the 4Q of 2017 with a total office inventory of 6.3 million square meters. This represents an increase of 10% equivalent to 607 thousand Sq.M.


At the end of the third quarter of 2016, the industrial market Class A of Mexico City recorded an inventory of 8.3M Sq.M. with the Cuautitlan submarket covering a larger share of that inventory (33%) followed by Toluca (20%).


Since mid-year 2016, Beltline vacancy has increased by 1.4%% to end Q3 at 19.7%. Given that negative absorption occurred among headleases versus subleases at a ratio of 2:1, the distribution between headlease and sublease space was adjusted to 74% and 26%, respectively. This quarter witnessed net absorption of negative 102,878 sf.


Overall vacancy increased by 1.1% during the third quarter to 22.3%. The distribution of vacancies by suburban building class changed slightly as a result of 106,000 sf of B Class vacancies, plus approximately 158,000 sf of unleased A Class space among several new Suburban developments. An additional 159,000 of sublease space was also placed on the market.


Over the third quarter of 2016, the vacancy rate in Calgary’s Downtown market exceeded 22.%. This represents a record high, comprising 9.2 million square feet of space available for lease within a 41.6 million square foot (msf) inventory. Despite some activity among A Class and C Class sublease spaces, the overall trend of negative absorption continued at roughly the same pace as we’ve seen since the beginning of 2015.


Welcome to Bilfinger GVA’s central London office analysis; our detailed view of the market in Q2 2016. The B word—It actually happened! Despite the fact that the EU referendum has cast a shadow over the last year, when the results came through, it seems that nobody actually expected it. The fallout of the decision to leave the European Union is still to be fully understood but there has clearly been quite a shock wave throughout the whole of the UK and the central London office market.


There are several types of commercial leases and terms, but a common thread among them is that the devil is in the details. Commercial real estate lease contracts are notoriously tricky documents, and a good or bad lease can mean manageable versus inflated real estate costs or even the difference between success or failure for businesses. With so much riding on a single document, it’s wise to consult a professional commercial real estate broker. Many Tenants don’t realize that a commercial real estate broker can also be retained for lease renewals. Tenant representation during lease renewal negotiations helps ensure that the terms are in line with the market and often leads to competitive concessions being received on lease rates and premises improvements. When the economy is soft, Landlords with near term rollover are further motivated to lock-in Tenants rather than risk losing them. This is a critical opportunity to not only renew the lease, but improve the lease.


Stubbornly low energy prices during the first half of 2016 kept the Alberta economy moving at a sluggish pace.The slowed market kept a lid on investment activity in Calgary and prolonged the ‘wait and see’ attitude in the investment market, for major and minor players alike. Many investors continued patiently waiting on the sidelines, looking for opportunities while current owners held onto properties of consequence.


At the end of the second quarter of 2016, the industrial market Class A of Mexico City recorded an inventory of 8.3M Sq.M, with the Cuautitlan submarket which covers a larger share of that inventory (33%) followed by Toluca (20%).


Year-to-date commercial real estate (CRE) investment in the Edmonton market proved resilient against the backdrop of a second recessionary year.


Since Q1 2016, Beltline vacancy has increased by approximately 0.7% to end Q2 at 18.3%. Given that sublease absorption for the quarter totaled positive 30,000 sf the current distribution between headlease and sublease space was adjusted to 75% and 25%, respectively. This quarter witnessed net absorption of negative 51,000 sf.


Vacancy in Calgary’s industrial real estate market has hit an all-time high of 7.49% at the end of the second quarter 2016. A combination of construction completion, major occupant shuffling, and a negatively impacted oil and gas manufacturing and service sector have all combined to continue vacancy’s slide upward from 4.30% at the end of 2014.


Historically speaking, office condo units have traditionally been developed in small quantities in suburban markets and geared towards professional and medical service industries. The office condo concept has created an opportunity for occupiers to own their office space with the advantages of having fixed and clear costs, full control over the design within the premises and, significantly, tax benefits not available leasing tenants.


Over the second quarter of 2016, the vacancy rate in Calgary’s Downtown market reached 21.2%. This represents a record high, comprising 8.8 million square feet of space available for lease within a 41 million square foot (msf) inventory.


THE OVERALL VACANCY RATE IN SUBURBAN CALGARY INCREASED DURING THE SECOND QUARTER TO 21.2%.


At the mid-point of 2016, Calgary’s overall retail market showed initial signs of strain against the pressures exerted by the economic downturn. Retail vacancy sat at 3.4%; slightly above the previous high water mark of 3.1% which was set in the third quarter of 2008. To place these statistics in perspective, Calgary’s retail inventory at that time was approximately 25 million square feet (msf); 63% of current volume.


A Canadian Retail Market White Paper by Barclay Street Real Estate & Primecorp Commercial Realty- National Outlook - Retail Trends in Calgary - Retail Trends in the National Capital Region


As can be expected, the effects of low priced oil, combined with a dramatically changed political landscape in Alberta, affected investor sentiment and caused the investment market in Edmonton to quiet significantly in 2015.


The overall vacancy rate in Suburban Calgary was essentially flat during the first quarter, rising a fraction of a percent to 18.47% from 18.33% in Q4 2015.


As the first quarter of 2016 unfolded, uncertain energy market conditions and a soft economic environment continued to effect office leasing decisions in Calgary’s downtown market.


The industrial market of Mexico City Metropolitan Area at the end of the first quarter of 2016 has 8.2M SM (88.2M SFT) in Class A industrial buildings, mainly concentrated in the Submarkets of Cuautitlan (33%) and Toluca (20%).


The 3 Cs – Confidence, Caution and Concessions – Drive the CBD


This quarter in the suburban market: Net absorption for the year was negative 824,740 square feet, down from the first quarter’s positive 661,382 square feet. The overall vacancy rate was 20.7%. Available space in large (over 100,000 square feet), true Class A properties are most prevalent in the North and Northwest markets.


This quarter in the downtown market: Net absorption for the year was positive 642,176 square feet. The overall vacancy rate was 13.2%. The West Loop continues to be the Central Business District’s darling with 7 of the 11 proposed and under construction office buildings within its confines.



Regardless of High Vacancies, Construction Progresses


The Richardson/East Plano Sub-Market has shown a decrease in the direct Class A vacancy from 24.7% in the second quarter of 2016 to 22.8% for the start of second quarter 2017. Meanwhile, direct weighted average full-service rents increased from $26.91 to $27.38 per square foot during the same time. Class B vacancy decreased from 15.6% to 13.3% and as a result, full-service rental rates increased from $18.88 per square foot to $19.48 per square foot.


19% VACANCY RATE REACHES A FOUR-YEAR HIGH


The LBJ Corridor is one of the last remaining safe havens for companies that are seeking rent relief. With submarkets like Central Expressway and the Lower Tollway experiencing 10-12% vacancy rates, the East LBJ Corridor has a vacancy rate of just below 25%. We expect this to change drastically in 2017 with companies fleeing surrounding submarkets for the best valued office space in the entire DFW- Metroplex.


The second quarter ended with a vacancy of 14.3%, virtually no change from the first quarter of 14.2%. Rental rates for all property classes on a full-service basis increased marginally to $24.64 up from the first quarter of $24.52. Year-to-date absorption totaled 2,401,965, on pace for another very respectable year assuming the back half of this year reflects the first half of the year.


TCN Worldwide's State of the Market: Central 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


The first quarter of 2017 saw vacancy move up from 14.2% in the 4th quarter 2016, to 14.3%. Rental rates increased from $24.13 in the 4th quarter to $24.52 this quarter when considering all classes of properties.


18% VACANCY RATE REACHES A THREE-YEAR HIGH


Deliveries Outweigh Net Absorption for 4th Straight Year


TCN Worldwide's State of the Market: Central 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


This quarter in the downtown market: Absorption for the quarter reached 315,000 square feet; Rental rates dropped a nominal $0.19 to $36.44; 150 North Riverside officially opened and welcomed Polsinelli, Studley and Linden Capital as tenants; In the largest deal of the quarter, Context Media signed a lease for 400,000 square feet at 515 North State Street.


The Upper Tollway Sub-Market has consistently been one of the two main hubs of office real estate activity in Dallas. With relocations of large corporate campuses, such as Toyota, FedEx, and JP Morgan Chase, the area is becoming even more appealing as the influx of developers continue to attempt to capitalize on the enticing market. This recent construction has resulted in a surprisingly large vacancy rate for a market with such an “awe factor.”


The North Central Expressway Sub-Market is defined geographically as the area that is bordered by Hillcrest Avenue to the West, N Haskell Avenue to the South, Greenville Avenue to the East, and Forest Lane to the North. This analysis is focused on Class A and B office buildings that are existing or under construction and contain a minimum of 75,000 rentable square feet.


The Lower Tollway Sub-Market is defined by the geographic boundaries of Alpha Road on the south, President George Bush Turnpike on the north, Preston Road on the east, and Midway Road on the west.


The East LBJ Corridor Sub-Market is defined geographically as the area that is bordered by Midway Road to the West, Forest Lane to the South, TI Boulevard to the East, and Alpha Road to the North. This analysis is focused on Class A and B office buildings that are existing or under construction and contain a minimum of 50,000 rentable square feet.


This East Plano Sub-Market covers the area east of US-75, south of 14th Street, west of Northstar/Los Rios Boulevard and north of President George Bush Turnpike, until it turns south, at which point the southern border of the sub-market becomes Lookout Drive. The included statistics cover industrial and flex buildings that have more than 30,000 square feet of space. The East Plano Sub-Market is experiencing a gradual change making it a more mature and technology focused area.