Fourth quarter 2022 closed with a direct vacancy rate of 3.74%, an overall vacancy rate of 4.24%, and an average asking direct rental rate reported at $7.20 psf. In December, the Michigan unemployment rate was recorded at 4.3%, a decrease of 1.3 percentage points compared to this time last year, while the U. S. unemployment rate was recorded at 3.5%. Despite the Federal Reserve’s intentions to slow the demand for labor, wage gains and inflation with their continued interest rate hikes, the number of U.S. job openings in December was recorded at 11M, up from 10.46M in November as employers continued hiring at a solid pace. During fourth quarter, the U.S. economy grew by 2.9% and 2.1% throughout 2022, recording six straight months of stable growth. In December, indicators pointed towards the easing of inflation as consumer spending decreased by 0.2% from November along with a decline in consumer prices. It is expected the Federal Reserve will raise the key interest rate during 2023, with the number of increases to be determined. As inflation reached a 40-year high, seven interest rate increases were recorded during 2022 with the final increase of the year by half a point reaching the highest level in 15 years. Inflation remains one of the top economic concerns as consumers remain cautious, re-evaluate their spending habits and outlook towards saving and borrowing.
SUPPLY, MEET DEMAND. Multi-Tenant property has had its hay-day since first dropping N of 45% of vacancy from 2020-2021 (14.93% vacancy to 8.38%). With the vacancy rate bottoming out at a record shattering figure of 4.64% in 2022, it appears we may be headed towards stabilization. As any reasonable investor should expect, this sub-sect of the Industrial Market has seen its fair share of renovation and a large amount of spec construction. This race to meet the demand in tandem with a questionable political and economic outlook for the Country has been met with a marginal raise in vacancy to 5.42%. While this figure doesn’t swing the needle to indicate a over-supply in the market, it isn’t something to ignore either. With the Medical Cannabis industry tightening regulations and interest rates rising, this percentage may continue to creep up for a time. Regardless, this market is showing resilience and we believe it will continue to do so.
The multi-family market, more than any other, has been driven by the money funneled into the economy during the course of the pandemic. The shear level of money provided to renters through various pandemic programs combined with the broader economic stimulation led to some of the largest multi-family rent increases in our history. Oklahoma City has historically seen slow but steady rent growth; two to three percent annually. You could always count on it. In 2021, rent increased 12 percent. The increase was cut in half but still historically high in 2022, at 6 percent, with most of this moderation coming in the second half of the year. Clearly this wasn’t sustainable. What isn’t clear is where do we go from here.
Third quarter 2022 closed with a direct vacancy rate of 20.71%, an overall vacancy rate of 22.46%, and an average asking direct rental rate reported at $19.16 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.
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.
THE BELTLINE MARKET WITNESSED NET POSITIVE ABSORPTION DURING THE FOURTH QUARTER OF 2016, TOTALLING 135,000 SQUARE FEET (SF).
THE OVERALL VACANCY RATE IN SUBURBAN CALGARY WAS ESSENTIALLY FLAT DURING THE FOURTH QUARTER, RISING A FRACTION OF A PERCENT TO 22.6% FROM 22.3% IN Q3 2016.
Over the course of 2016, 2.5 million square feet (msf) of office space was returned to the market, causing the vacancy rate in downtown Calgary to increase by 6.2% year-over-year from Q4 2015. Downtown vacancy sat at 23.5%, representing 9.8 msf of space available for lease within a 41.6 msf inventory. Despite renewed activity among A Class and B Class headlease spaces, the overall trend of negative absorption continued, though as a slowed pace when compared to 2015 and early 2016. It should be noted that 3.9 msf were vacated during the previous year.
The ongoing economic downturn continued to exert pressure on Landlords and Tenants, leading to several store and restaurant closures. Therein, however, lay opportunity for others to take advantage of decreasing market rental rates, which led to the opening of multiple new franchise locations.
Investor sentiment regarding the Calgary market showed signs of renewed confidence as 2016 progressed.
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
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.
VACANCY DOWN TO 11%