TCN Worldwide's State of the Market: Central Edition, 3rd 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: Eastern Edition, 3rd 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 3 Cs – Confidence, Caution and Concessions – Drive the CBD
The Manhattan office leasing market ended the third quarter with more than 9 million square feet newly leased. The average rental price was $65.70, an increase from Q2. Of note, Landlord incentives provided to Tenants have also expanded and increased.
Absorption totaled 18,745 sq. ft. in the Second Quarter 2017. Solid figures considering the run this market has enjoyed over the past several quarters.
AT THE MID-POINT OF 2017, THE EDMONTON MARKET POSTED A FOURTH CONSECUTIVE QUARTER OF RENEWED APPEAL TO COMMERCIAL REAL ESTATE (CRE) INVESTORS. AS A BONUS, 2017 IS WIDELY CONSIDERED THE YEAR ALBERTA WILL SEE ITS ECONOMY ENTER A RECOVERY STAGE. THE SENSE OF OPTIMISM THAT SET IN DURING THE LATTER PORTION OF 2016 CONTINUED AND WAS MANIFEST IN THE MORE THAN $1.08 BILLION BEING INVESTED IN COMMERCIAL PROPERTIES FROM JANUARY THROUGH JUNE.
DURING THE FIRST HALF OF 2017, RAYS OF LIGHT CONTINUED BREAKING THROUGH THE CLOUDS CAST BY A NEARLY THREE-YEAR LONG RECESSION. THOUGH THE ALBERTA ECONOMY GENERALLY CONTINUED MOVING AT A SLOWED PACE, A FEW KEY SECTORS EXPANDED AND SEVERAL LARGE FINANCIAL INSTITUTIONS MAINTAINED THEIR FORECASTS OF AN OVERALL RECOVERY THIS YEAR.
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.
VACANCY DOWN TO 11%
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: 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: Eastern 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: 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 Manhattan office leasing market ended the second quarter of 2017 with a negative absorption of nearly 630,000 square feet, more than 1,000,000 square feet stronger than Q1. The vacancy rate citywide is now 8.2% having ticked downwards by 0.2% almost 1.5% stronger than the national marketplace. Average rents across the Manhattan office market fell to just below $60psf. The pricing correction and significantly lower negative absorption rate indicates a leveling of the office leasing market.
CALGARY’S SUBURBAN MARKETS EXPERIENCED AN INTERESTING SECOND QUARTER AS SEVERAL NEW OFFICE DEVELOPMENTS WERE DELIVERED.
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 first quarter of 2016 closed with a total office inventory in Mexico City was 5.4 M SM (58M SFT) of Class A+ & A spaces what constitutes the largest in Latin America.
Welcome to Bilfinger GVA’s central London office analysis; our detailed review of the market in Q1 2016. Activity during the first quarter of the year has been relatively strong, with take-up well above the five-year quarterly average. Nevertheless, demand seems to have been dampened slightly with some occupiers looking to ‘wait and see’ for the time being.
There’s never been a better time in the last 10 years to be a Montreal tenant. With new space coming on the market and large tenants such as Deloitte and Rio Tinto Alcan moving into new premises, now is the time to either trade up to better space or get equivalent to your current space for less.
Net absorption for the year was at negative 1.9 million square feet. • Vacancy grew to 19.2%. • These dropping statistics were aided by Zurich moving into its new build to suit as well as Jim Beam and ConAgra moving from the suburbs downtown.
Net absorption for the year dropped to 833,000 square feet. • The vacancy rate reached 11.0%. • The first of Chicago’s two new office towers opened its doors, 444 West Lake had tenants move into around 140,000 square feet of the one million square-foot building.
As the third quarter for 2016 ends, the Texas economy gained momentum as recent data from the Federal Reserve Bank of Dallas shows. All indications are that Dallas has moved past the economic slump attributable to oil prices. Fort Worth has been slower to rebound, as they were deeply impacted by the dramatically lower oil prices. The Metroplex continues to experience job growth as reported by The Dallas Business Journal in November, and our in migration of residential remains strong. It appears that the Dallas/Fort Worth Metroplex has moved to a diversified economy and a lessening dependence upon the energy sector.
The Upper Tollway Sub-Market has seen a spike in Class A vacancy from 18.1% in Q3 of 2015, to 22.3% in Q3 of 2016. Although full-service rents continue to climb, prices have slowly began to mellow out as rates increased from $33.53 PSF to $34.57 PSF during the same time frame. The most alarming of the Q3 statistics is the fact that Class A total net absorption for Q3 2016 was -77,093 SF, with over 200,000 SF of new sublet space arriving to market just this quarter.
The Richardson/Plano Sub-Market has shown an decrease in the direct Class A vacancy from 15.5% in the third quarter of 2016 to 12.3% at the beginning of the third quarter of 2016. Meanwhile, direct weighted average full-service rents increased from $24.16 to $26.12 per square foot during the same time. Class A net absorption in the past twelve months sits at 1,109,572 square feet. Class B vacancy remained relatively stable and sits at 20.9% with full-service rental rates jumping from $19.08 per square foot to $22.48 per square foot.
The Preston Center Sub-Market has seen an increase in the Class A vacancy from 6.6% at the end of third quarter 2015 to 6.8% at the end of the second quarter 2016. Average full-service rental rates of Class A space increased per square foot, from $37.40 to $37.67 during the same timeframe. Class A direct net absorption was at 51,053 square feet for the third quarter of 2016.
The North Central Expressway Sub-Market has seen a remarkable decrease in the Direct Class A vacancy from 17.3% at the end of third quarter 2015 to 12.4% at the end of the third quarter 2016. Average full-service rental rates of Class A space increased per square foot, from $27.67 to $29.30 during the same timeframe. Class A direct net absorption is currently at 37,268 square feet quarter to date. Meanwhile, Direct Class B vacancy has decreased by .6% since the third quarter of 2015 from 8.7% to 8.1% with full-service rental rates increasing from $23.12 per square foot to $24.81 per square foot. Direct net absorption in Class B space is negative at 9,444 square feet for this quarter.
Class A properties along the Dallas North Tollway remain full, hovering around a record-low 12% vacancy rate. We did however see a correction in Class A property rental rates, that decreased $.33 cents per square foot to settle at $29.02 at the end of the third quarter. We do not anticipate much, if any rental rate increases in the coming months. We are of the opinion that the rental rates for Class A product have topped out, and will likely decrease as companies like Fannie Mae and JP Morgan prepare to relocate to Plano.
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.
At the end of the third quarter of 2016, the flex market averaged a $8.87 psf triple-net rental rate, which is a significant increase from the third quarter average rental rate in 2015 of $8.07 psf triple-net. The vacancy rate for the second quarter of 2016 sits at 7.0%.
TCN Worldwide's State of the Market: Central Edition, 3rd 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
Bradford Allen is pleased to share with you our 2016 third quarter market report.This quarter in the downtown market: • Absorption for the quarter reached 806,000 square feet • Rental rates dropped a nominal $.09 to $36.14 • Vacancy dropped to 11.5% • Two companies, Duracell and Wilson Sporting Goods, announced that they will be moving their offices to downtown Chicago
To no one’s surprise the first half of 2016 was a rough period for the Oklahoma City office market. The market’s vacancy rate increased from 12.3% to 14.8% and the market suffered negative absorption of 179,000 square feet. The Mid-Year 2016 report is yet another lagging economic indicator of where the state’s economy and particularly the state of the petroleum industry currently stands.
Despite layoffs and bankruptcies in the oil and gas sector driven by drastically lower crude oil prices, The Oklahoma City multi-tenant industrial market is reporting lower overall vacancy than at this time in 2015.
The retail market is better than it seems like it should be. Given the continued layoffs & bankruptcies in the energy market, declining sales tax revenues, and general economic uncertainties, the expectation would be that the Oklahoma economy and the retail market would be in a recession. But, leasing activity, development and interest in our market remain strong.
The Dallas/Ft. Worth Office market ended the second quarter 2016 with a vacancy rate of 14.3%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 1,760,334 square feet in the second quarter.
The Preston Center Sub-Market has seen a 13.5% increase in the Class A vacancy from 7.4% at the end of second quarter 2015 to 8.4% at the end of the second quarter 2016. Average full-service rental rates of Class A space increased per square foot, from $35.75 to $37.30 during the same timeframe. Class A direct net absorption was a negative 22,979 square feet for the second quarter of 2016.
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. Rental rates for Class A properties have climbed a staggering 8% over the past year, and 15% over the last two years, to$29.57 full service.
At the end of the second quarter of 2016, the flex market averaged a $8.84 psf triple-net rental rate, which is a significant increase from the second quarter average rental rate in 2015 of $8.16 psf triple-net. The vacancy rate for the second quarter of 2016 sits at 7.1%.
The Richardson/Plano Sub-Market has shown an increase in the direct Class A vacancy from 5.9% in the second quarter of 2016 to 21.3% at the beginning of the second quarter of 2016. Meanwhile, direct weighted average full-service rents increased per square foot from $23.20 to $25.96 per square foot during the same time.