Market Data

Market Trends(31)

New Orleans Markets Rated
New Orleans' apartment market garnered an investment conditions rating of 7.2 out of 10 points in a recent Real Estate Research Corp. study. Industrial came in second with a 6.4 rating and hotels third with a 5.6 rating. On Hurricane Katrina's first anniversary, nearly half of the survey's respondents rated the New Orleans commercial real estate market better than it was prior to the storm. "Growth in the commercial markets could easily go on for 10 years or more," says Kenneth P. Riggs, CCIM, RERC president and chief executive officer. Riggs pegs the going-in cap rate for New Orleans' apartment market at 7.6 percent, compared with the national average cap rate of 6.4 percent.



Log on to Market Trends Online at to see where your city ranks among the hottest job growth centers.

Briefly Noted

  • HOSPITALITY - U.S.-based hospitality companies are on a building spree in Asia, developing 188 projects in China, 78 in India, and 39 in Thailand, says Lodging Econometrics.

  • INDUSTRIAL - Newly formed niche lender AF C Self-Storage Finance Group arranged $94 million in equity and debt financing for Veritas Group's 380,000-sf institutional-grade self-storage portfolio.
  • MULTIFAMILY - More than seven months' worth of condominiums for sale nationally and project cancellations in Miami and Las Vegas indicate the condo boom is over, says Mortgage Bankers Association's Chief Economist Douglas Duncan.
  • OFFICE - Rising oil prices and slowing job growth are lowering office market expectations, although vacancy rates should fall to about 12.7 percent and rents should rise 4.4 percent by year-end, according to the National Association of Realtors.
  • RETAIL - Portland, Ore., Minneapolis-St. Paul, and Sacramento, Calif., are the three most underdeveloped U.S. retail markets based on current gross leasing area and projected income and population growth, according to Shopping Centers Today.


T
he Windy City's Taxing Situation
Culturally, Chicago has gained world-class status, but the Windy City's central business district office market has not followed suit. High taxes and operating costs may account for Chicago's stubbornly high CBD vacancy rate - around 18 percent, according to a Building Owners and Managers Association of Chicago study. Chicago's CBD has the highest commercial property taxes in the nation: 24 percent higher than New York and 72 percent higher than Los Angeles. Downtown Chicago office landlords pay $6.98 psf in taxes, compared to Atlanta's $2.40 psf, Dallas, $2.78 psf, Los Angeles, $1.98 psf, and New York, $5.31 psf. Chicago also has the second highest operating costs - after New York - $14.95 psf compared to Atlanta and Dallas, both around $9 psf. The study uncovered a couple of other unsettling facts: Only about 100,000 sf of new-tenant occupied space has been added in the past five years, and nearly 60 percent of downtown space is leased to one type of business: law firms.

Branding Through Architecture
As design consciousness enters the mass market, will consumers demand something other than a big box at which to shop? Maybe. Anyone who's shopped at one of Austria's 120 MPreis supermarkets certainly would. It's probably the only supermarket chain in the world chosen to represent its country at the prestigious Venice Architecture Biennale. The family-owned chain uses up-and-coming architects to design each of its stores individually to suit the site. The result is a distinctive brand based on unconformity and a tagline that garners even more attention: "The Seriously Sexy Supermarket."
photo credit: MPreis

New Retail Tenant Is Born
Renting out changing-room space to diaper manufacturers might be the next useful shopping-center service tenant. Turkey's well-known Evy Baby diaper brand has installed changing rooms in 12 shopping malls and expects to add more. The rooms are outfitted with sinks, changing tables, comfortable chairs for nursing mothers, and of course, samples of Evy Baby's products. It's the kind of brand opportunity a parent Luvs.

State Legislative Trends
In response to the U.S. Supreme Court's Kelo decision a year ago, many states have introduced legislation prohibiting eminent domain takings for commercial use, economic development, or tax revenue enhancement. To find out what your state legislators are doing about issues that affect the commercial real estate industry, check the CCIM Institute's database of state legislation at edchiryoyaku.info/members/gov_index.html.

Log on to Market Trends Online at for more state legislative updates and a link to the CCIM Institute's legislative database.

Required Retail Reading
If there's a retail mall redevelopment in your future, Urban Land Institute has a reading list for you. In "10 Principles for Rethinking the Mall," the first principle - grab your opportunities before they pass you by - recommends the following books to help mall redevelopers get a handle on changing consumer habits:

  • The Tipping Point: How Little Things Can Make a Big Difference

  • The Influentials: One American in Ten Tells the Other Nine How to Vote, Where to Eat, and What to Buy

  • The Great Good Place: Cafes, Coffee Shops, Bookstores, Bars, Hair Salons, and Other Hangouts at the Heart of a Community

  • The Mom Factor: What Really Drives Where We Shop, Eat, and Play

  • The Experience Economy: Work Is Theater and Every Business a Stage

  • A Whole New Mind: Moving from the Information Age to the Conceptual Age

  • Trading Up: The New American Luxury

  • Why We Buy: The Science of Shopping

Log on to Market Trends Online at to access the other nine principles of mall redevelopment.




Energy Prices Quell Optimism

Rising energy costs caused senior business execs to reconsider their capital improvement plans during 1Q06, according to a PricewaterhouseCoopers Management Barometer survey. Forty-nine percent said they are planning new investments, down from 55 percent in 4Q05. And they expect to spend less: 6.8 percent of revenues down from 9.5 percent. While expectations of facilities expansion decreased only 1 percent, plans for business acquisitions and geographic expansion each fell 9 percent.

Convention Center Earns Honors
The only building ever to win both the Urban Land Institute's Award of Excellence and the American Institute of Architect's national Honor Award for Architecture, the Convention Center in Washington, D.C., celebrates the economy of design, putting 2.3 million sf of convention and exhibit space on a 600,000-sf footprint. Located about a mile from the White House, the three-block-long center includes 703,000 sf of exhibit space and 150,000 sf of meeting rooms on multiple levels topped by a 52,000-sf ballroom. About 40 percent of its space is located below ground.
photo credit: Washington Convention Center



Student Housing Gets an A+
For growth potential, few niche properties match student housing demographics, according to Michael H. Zaransky, author of Profit by Investing in Student Housing: Cash in on the Campus Housing Shortage. The book looks at the convergence of factors contributing to campus housing's performance. Zaransky offers the following investment tips:

  • Look for schools with at least 10,000 full-time students in a high college-enrollment state that has a low university-owned-beds-to-total-enrollment ratio.

  • Avoid big-city schools. While the ratio of beds to students may be low, commuter and part-time students comprise most of the student population.

  • Think public, not private. Private institutions tend to restrict housing options and cap enrollment.

  • Don't underestimate students' unwillingness to walk: Properties located within a two-block radius of campus often perform better.

Recommended

International Beat

September.October.18

Bangkok’s big $310M deal by Singha Estate Public Co. Ltd. | Retailers expand in Hong Kong | CRE prices rise fastest in Sydney, Australia | London is the global market to watch for student housing

Read More

Market Trends

September.October.18

A new trend in pop-up retailing | Crafting cross-border fire safety standards | Multifamily goes green | Industrial property sale-leaseback  options on the rise | Work trends drive shift to lower-cost cities | Real estate costs top law firm expenses | Top five U.S. hotel development markets

Read More

Regional Outlook

September.October.18

Philadelphia’s big $130.5M deal by Liberty Propery Trust | 10 most popular states for international buyers | 34 percent of Realtors expect an increase in international clients buying commercial real estate in 2018 | Best small cities for job growth

Read More

Regional Outlook

July.August.18

 

Read More