Second quarter 2023 closed with a direct vacancy rate of 21.42%, an overall vacancy rate of 23.81%, and an average asking direct rental rate reported at $18.66 psf. In June, the Michigan unemployment rate was recorded at 3.6%, a decrease of 0.7 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 3.6%. Although inflation persists, interest rate hikes have remained consistent over the past year, and as employers target cost cutting measures, the labor market continues to maintain strength with fewer Americans applying for jobless benefits. 253,000 job openings occurred in April, 339,000 openings in May and a slight decrease in June to 209,000 openings, closing the quarter with 9.8 million total job openings in the U.S. In April, U.S. consumer confidence declined for the 3rd time in four months and again in May as individuals continue to become more discouraged by inflation, and by yet another increase of the key interest rate by the Federal Reserve totaling a quarter point to the highest it’s been in 16 years; however, they have indicated there may be a pause in further increases after 10 rate hikes which have had a costly impact on both businesses and consumers. Consumer price growth slowed in May rising only 0.1% from April, while mortgage rates approached a 7-month high, the quarter closes on an uneasy note as to how the remaining half of the year will unfold.
Second quarter 2023 closed with a direct vacancy rate of 3.69%, an overall vacancy rate of 3.95%, and an average asking direct rental rate reported at $7.36 psf. In June, the Michigan unemployment rate was recorded at 3.6%, a decrease of 0.7 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 3.6%. Although inflation persists, interest rate hikes have remained consistent over the past year, and as employers target cost cutting measures, the labor market continues to maintain strength with fewer Americans applying for jobless benefits. 253,000 job openings occurred in April, 339,000 openings in May and a slight decrease in June to 209,000 openings, closing the quarter with 9.8 million total job openings in the U.S. In April, U.S. consumer confidence declined for the 3rd time in four months and again in May as individuals continue to become more discouraged by inflation, and by yet another increase of the key interest rate by the Federal Reserve totaling a quarter point to the highest it’s been in 16 years; however, they have indicated there may be a pause in further increases after 10 rate hikes which have had a costly impact on both businesses and consumers. Consumer price growth slowed in May rising only 0.1% from April, while mortgage rates approached a 7-month high, the quarter closes on an uneasy note as to how the remaining half of the year will unfold.
The Chicago suburban office market showed signs of strength through the second half of 2022 as rental rates increased, absorption levels turned positive, and vacancy rates stabilized at approximately 27%. Although the vacancy rate is at a record high, the data remains distorted by zombie offices (typically outdated corporate campuses); one of which was sold in October for more than $230 million. The 1.4 million-squarefoot- campus in Northbrook, formerly the long-time home of Allstate, is being redeveloped into an industrial mega site. Developers must determine the highest and best use for these vacant office campuses, whether into more digestible-sized office product or into an entirely new asset class. These decisions will help mitigate oversupply issues while contributing to the long-term stability of Chicago’s suburban market.
In Q4/22, Chicago’s downtown office market vacancy rates and rental rates remained relatively unchanged compared to Q3/22. Absorption levels deteriorated, however, totaling 800,000 square feet of negative net absorption through the quarter. As a result, absorption levels through 2022 were negative 1.2 million square feet—an improvement relative to the negative 3 million square feet seen in 2021.
A number of leases were signed during the fourth quarter. First in Livonia, Cabinetworks Group, LLC inked a deal totaling 89,543 sq. ft. of Class B office space located at 20000 Victor Parkway. In Bingham Farms, Hondros College of Nursing signed a deal for 48,035 sq. ft. of Class B office space located at 30700 Telegraph Road in the Bingham Office Center. Lastly, in Ann Arbor, Tetra Tech, Inc., a global provider of consulting and engineering services leased 21,890 sq. ft. located at 1136-1138 Oak Valley Drive in the Valley Ranch Business Park.
At the end of the first trimester of 2017, the industrial market of the Metropolitan Area of Mexico City recorded an inventory of 8.8M Sq.M of industrial ships class A, mainly in the submarkets of Cuautitlan (32%) and Toluca (20%).
The first trimester of the year closed with a total office inventory of 5.8 million Sq.M in class A+ and A offices. This means an increase of 339 thousand Sq.M.
Interesting things happened in the Downtown market over the first three months of the year; notably in leasing trends at the smallest end of available options.
A pleasant surprise! While expectations were that CRE investment in the Edmonton market would decline, we have seen strong overall demand and spending, particularly on Retail properties over the course of 2016, shifting from ICI Land the previous year. The remaining asset classes largely remained stable and generally exceeded analysts’ expectations.
The entrance of institutional investors in the Calgary market, during a down period, demonstrates a renewed confidence in the future of the city. Adding additional appeal is the advanced process of industry diversification. The results of 2016 are of no surprise to prudent investors and to us Calgarians.
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.
The 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 the most stable period of success in its history.
The third quarter ended with an overall office vacancy of 14.5%, which is up from 14.4% in the second quarter, and down from 14.6% in the first quarter; so, it is fair to say we have remained steady this year with vacancy.