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 Although the vacancy rate is at a record high, the data remains distorted by zombie offices (typically outdated corporate campuses); one of which was sold in October for more than $230 million.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.
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.
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.
First quarter 2022 closed with a direct vacancy rate of 3.9%, an overall vacancy rate of 4.26%, and an average asking direct rental rate reported at $7.79 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
First quarter 2022 closed with a direct vacancy rate of 20.59%, an overall vacancy rate of 22.00%, and an average asking direct rental rate reported at $19.39 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
Bringing more business activity back to Portland’s urban core will be essential for maintaining the city’s rising apartment profile. With most COVID-19 era restrictions lifted in March, dining, shopping and experiential offerings should draw more residents back to the central part of the city.
On March 12th, 2022, Oregon lifted its statewide mask mandate, marking an end to almost all of the State’s COVID-19 era business restrictions. As a result, retail demand in Portland is finally stabilizing and is positioning itself for a rebound in 2022. Barring any major setbacks from emerging variants, Portland might be heading back to a sense of normalcy in 2022.
The negative impacts of the COVID-19 pandemic continued to be felt deeply in the Portland metro office market. Demand for office space has continued to drop as a large segment of the workforce has shifted to a remote work model. Despite the drop in demand, year-over-year rent growth has returned with gains of 2.6%, while the national office rent gains are around 0.9%.
The rise in popularity of e-commerce and delivery services has greatly bolstered Portland’s industrial market during the COVID era. As a result, distribution and last-mile facilities will remain highly desired in the near- to mid-term. In order to combat supply chain issues that are impacting global markets, companies may look to shore up their domestic shipping assets. Several recent leases over 100,000 SF may be indicative of this trend.
Second quarter 2021 closed with a direct vacancy rate of 5.11%, an overall vacancy rate of 5.55%, and an average asking direct rental rate reported at $7.09 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
Second quarter 2021 closed with a direct vacancy rate of 19.90%, an overall vacancy rate of 21.46%, and an average asking direct rental rate reported at $18.52 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
Portland’s industrial market was better positioned than other markets to navigate the COVID-19 pandemic. This is thanks to the growth of e-commerce and delivery services in the wake of the pandemic. While vacancy and rent growth have softened by mid-year 2021, they are still at healthy levels.
The COVID-19 pandemic interrupted several years of sustained growth in the Portland market. Demand for office space in the Portland metro area remains low, as businesses continue to evaluate their space needs in the post-pandemic era. The central business district (CBD) was hit hardest by the pandemic. Many smaller businesses have sought to move out of downtown into areas such as Beaverton and Gresham, however, several major office leases have still been signed in the CBD in 2021.Portland’s office investment market has also remained slow through 2021 as a result of the pandemic. Annual sales volume exceeded $1 billion between 2015 and 2019, but that came to an end in 2020.
The COVID-19 pandemic brought immense challenges to the retail sector, which had already been struggling for years due to the growth of e-commerce. 16 months of intermittent lock downs and social distancing caused many retailers and restaurants to close. With the state officially reopened as of June 30th, Portland’s retail market could bounce back in response.
First quarter 2021 closed with a direct vacancy rate of 19.46%, an overall vacancy rate of 20.76%, and an average asking direct rental rate reported at $18.51 psf. In March, the Michigan unemployment rate was recorded at 5.1%, a decrease for the third straight month, yet still at an elevated rate compared to one year ago when recorded at 3.5%. While the U.S. unemployment rate was recorded at 6.0% in March, it continues to steadily decrease as the number of jobless claims dip as many job sectors continue to reopen. Optimism continues to grow as U.S. employers are expected to continue to add jobs as many states move towards easing business restrictions, creating confidence in paving a path toward strengthening the economic recovery in the coming months. Many other factors signal a strengthening economy including consumer spending, investing, and housing demand. Consumer spending increased at the fastest pace in 9-months and was recorded at 4.2% in March, while home prices in the U.S. increased by 11.9% in February, the fastest pace in close to 7- years as demand for housing continues to escalate. The Federal Reserve also announced they expect to keep the interest rate near zero with no rate hikes through 2023.
First quarter 2021 closed with a direct vacancy rate of 5.18%, an overall vacancy rate of 5.60%, and an average asking direct rental rate reported at $7.02 psf. In March, the Michigan unemployment rate was recorded at 5.1%, a decrease for the third straight month, yet still at an elevated rate compared to one year ago when recorded at 3.5%. While the U.S. unemployment rate was recorded at 6.0% in March, it continues to steadily decrease as the number of jobless claims dip as many job sectors continue to reopen. Optimism continues to grow as U.S. employers are expected to continue to add jobs as many states move towards easing business restrictions, creating confidence in paving a path toward strengthening the economic recovery in the coming months. Many other factors signal a strengthening economy including consumer spending, investing, and housing demand. Consumer spending increased at the fastest pace in nine months and was recorded at 4.2% in March, while U.S. home prices increased by 11.9% in February, the fastest pace in close to seven years as demand for housing continues to escalate. The Federal Reserve also announced they expect to keep the interest rate near zero with no rate hikes though 2023.
The tri-county area commercial market began the year trending positive with strong market fundamentals for all property types. Looking back at the quarter, and similarly to 2019 and 2020, the largest commercial sales in the market involved multi-family properties.
The industrial vacancy rate for the first quarter of 2019 has shown a minimal increase to 5.50%, up 0.02% from Q4 2018, which was 5.48%.
“As we review and analyze 2018 Investments Sales activity and results in Calgary, one quote comes to mind: “Your big opportunity may be right where you are now.” by Napoleon Hill. Though 2018 results are better than 2017 and 2016 investment sales numbers, we still have a long way to go. The arrow, however, is pointing in the right direction.”
“Investors came back to Edmonton’s commercial real estate (CRE) investment market and liked what they saw in 2018. Total dollar volume invested exceeded $2.65 billion, driven by renewed interest in ICI Land, plus strong demand for Multi-Residential properties.”
“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
AT THE MID-POINT OF 2018, CALGARY’S RETAIL MARKET CONTINUED TO GRAPPLE WITH A FLOOD OF VACANT SEARS RETAIL SPACE THROUGHOUT THE CITY.
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.
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 close of the fourth quarter of 2017, the Metropolitan Area of Mexico City’s Industrial Market recorded an inventory of 9.5M Sq.M. of industrial ships class A, mainly in the submarkets of Cuautitlan (19%), Tultitlan (17%) and Tepotzotlan (13%).
At the end of 2017, Calgary’s overall retail market reflected the onset of the economic recovery and benefited from several corporate expansions.
Investors continued to demonstrate interest and confidence in the Edmonton market.
Vacancy in Calgary’s Downtown remained relatively steady over the third quarter of 2017, rising by 0.4% to 25%. Q3 proved quiet in comparison to the preceding 11 quarters, posting negative net absorption totaling Downtown Market Beltline Market 193,000 square feet (sf).
Investors continued to demonstrate confidence in the Calgary market through the third quarter of 2017.
The tri-county area commercial market began the year trending positive with strong market fundamentals for all property types. Looking back at the quarter, and similarly to 2019 and 2020, the largest commercial sales in the market involved multi-family properties.
The tri-county area commercial market posted strong market fundamentals during the fourth quarter of 2020 for all property types. Looking back at the year and similar to 2018 and 2019, the largest commercial sales in the market involved multifamily properties. Although office tenants are evaluating what their mid- to long-term office footprint will look like in the future, overall office rents increased throughout the year. With the growth of consumer online shopping, industrial/flex tenants are continuing to increase their warehouse/distribution space. The retail market will continue to be supported by residential development. As we move into 2021, the continued expansion of the area driven by the steady population growth will see an influx of commercial real estate activity. Read on for more of the latest in the region’s commercial real estate market.
The effects of the coronavirus on the tri-county area commercial market remain unclear. Although data from the third quarter is providing greater clarity about local conditions and the short-term real estate outlook, there remains uncertainty surrounding market dynamics and long-term effects. Office Tenants are evaluating what their mid- to long-term office footprint looks like in a post-COVID world. With the growth of consumer online shopping, Industrial/ Flex Tenants are increasing warehouse/distribution space. The retail market will continue to be supported by residential development in our tri-county area.
The effects of the coronavirus outbreak on the tri-county area commercial market remain unclear. Although data from the second quarter is providing greater clarity about local conditions and the short-term real estate outlook, there remains uncertainty surrounding market dynamics and long-term effects.
The effects of the coronavirus outbreak on the tri-county area commercial market remain unclear. Prior to the coronavirus outbreak, the tri-county area had strong economic momentum, and the current report largely reflects the environment before the pandemic. It is too early to provide a quantitative assessment or forecast of the ultimate market impact of COVID-19. As with previous reports, our analysis focuses on the market activity reflected in current quarterly statistics. The overnight halt to the tourism industry will likely have repercussions for the local economy. In a year of evident political and economic uncertainty, we expect to see additional tempering in metrics — including asking rent growth and construction starts — as companies look for additional signals of where their businesses are headed this year.
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 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.
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
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.
The Greater Harrisburg Market made significant gains in the First Quarter of 2017 as absorption totaled 55,196 sq. ft. As we enter the Second Quarter the suburban markets boast occupancy rates between 92% and 96%. We are encouraged by the increase in activity from our small business users and remain impressed with the outlook for owners of premier properties as opportunities dwindle for first class options.
TCN Worldwide's State of the Market: Eastern 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
Markets continued their advance in 2016 as absorption totaled 250,333 sq. ft., its highest total in over 20 years. Since the First Quarter of 2010 the market has gained over 948,000 sq. ft. Rental rates have stabilized and market fundamentals have continued to strengthen.
TCN Worldwide's State of the Market: Eastern Edition, 4th 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
Going forward we expect continued firming of rates, steady demand and further modest improvement in most segments of the Greater Harrisburg marketplace.
TCN Worldwide's State of the Market: Eastern 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 Eastern States –Commercial Property Investment Trends
THE NEW YORK CITY ECONOMY has not only kept pace with the national rebound; it has exceeded the U.S. measures throughout this decade. The most recent data, through the 2nd Quarter of 2016, shows New York outpacing the U.S. Gross City Product growth this year 1.7%, versus the national 1.2% rate in the second quarter. The City however, had stunning results in the prior three quarters, growing at 3.2% and 3.1% in the third and fourth quarters of 2015, and at 4% in the first three months of 2016.
TCN Worldwide's State of the Market: Eastern Edition, 2nd Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN WorldwideIn this edition: –National and Macroeconomic Overview –Regional Conditions in the Eastern States –Commercial Property Investment Trends
Absorption totaled 27,101 sq. ft. in the First Quarter of 2016, solid numbers for a market which had tens of thousands of square feet come on line due to the Deloitte relocation this spring. We continue to remain cautious with our expectations for properties just out of receivership and anticipate potential volatility as new availabilities are introduced to the Suburban West Shore Marketplace.
TCN Worldwide's State of the Market: Eastern Edition, 1st Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCNIn this edition: –Overview of National Economic Context –Regional Conditions in the Eastern States –Commercial Property Investment Trends
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.
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.
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.
First quarter 2022 closed with a direct vacancy rate of 3.9%, an overall vacancy rate of 4.26%, and an average asking direct rental rate reported at $7.79 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
First quarter 2022 closed with a direct vacancy rate of 20.59%, an overall vacancy rate of 22.00%, and an average asking direct rental rate reported at $19.39 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.
Second quarter 2021 closed with a direct vacancy rate of 5.11%, an overall vacancy rate of 5.55%, and an average asking direct rental rate reported at $7.09 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
Second quarter 2021 closed with a direct vacancy rate of 19.90%, an overall vacancy rate of 21.46%, and an average asking direct rental rate reported at $18.52 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.
First quarter 2021 closed with a direct vacancy rate of 19.46%, an overall vacancy rate of 20.76%, and an average asking direct rental rate reported at $18.51 psf. In March, the Michigan unemployment rate was recorded at 5.1%, a decrease for the third straight month, yet still at an elevated rate compared to one year ago when recorded at 3.5%. While the U.S. unemployment rate was recorded at 6.0% in March, it continues to steadily decrease as the number of jobless claims dip as many job sectors continue to reopen. Optimism continues to grow as U.S. employers are expected to continue to add jobs as many states move towards easing business restrictions, creating confidence in paving a path toward strengthening the economic recovery in the coming months. Many other factors signal a strengthening economy including consumer spending, investing, and housing demand. Consumer spending increased at the fastest pace in 9-months and was recorded at 4.2% in March, while home prices in the U.S. increased by 11.9% in February, the fastest pace in close to 7- years as demand for housing continues to escalate. The Federal Reserve also announced they expect to keep the interest rate near zero with no rate hikes through 2023.
First quarter 2021 closed with a direct vacancy rate of 5.18%, an overall vacancy rate of 5.60%, and an average asking direct rental rate reported at $7.02 psf. In March, the Michigan unemployment rate was recorded at 5.1%, a decrease for the third straight month, yet still at an elevated rate compared to one year ago when recorded at 3.5%. While the U.S. unemployment rate was recorded at 6.0% in March, it continues to steadily decrease as the number of jobless claims dip as many job sectors continue to reopen. Optimism continues to grow as U.S. employers are expected to continue to add jobs as many states move towards easing business restrictions, creating confidence in paving a path toward strengthening the economic recovery in the coming months. Many other factors signal a strengthening economy including consumer spending, investing, and housing demand. Consumer spending increased at the fastest pace in nine months and was recorded at 4.2% in March, while U.S. home prices increased by 11.9% in February, the fastest pace in close to seven years as demand for housing continues to escalate. The Federal Reserve also announced they expect to keep the interest rate near zero with no rate hikes though 2023.
"The good news about 2020 is that the pandemic’s effect on the multifamily market doesn’t appear to be sustained, rather, more of a temporary pause."
2020 was a year for the ages. Election years are always uncertain, but this was the most contentious in recent history. Add to this a once in a century style global pandemic, a stock market crash, a recession, record job losses, civil unrest, and negative oil prices. It was a year that will be recalled for many decades to come. 2021 is welcomed with renewed optimism, some sense of clarity and stability, as well a light at the end of the Covid-19 pandemic in the form of a vaccine. In spite of all of the distractions, Texas continued to plod along, albeit at a slower pace than the previous year.
2020 was a year for the ages. Election years are always uncertain, but this was the most contentious in recent history. Add to this a once in a century style global pandemic, a stock market crash, a recession, record job losses, civil unrest, and negative oil prices. It was a year that will be recalled for many decades to come. 2021 is welcomed with renewed optimism, some sense of clarity and stability, as well a light at the end of the Covid-19 pandemic in the form of a vaccine. In spite of all of the distractions, Texas continued to plod along, albeit at a slower pace than the previous year.
"2021 will be the year of retail recovery, but it will be a very uneven, choppy recovery."
"2020 is a year that will long be remembered as one of significant upheaval and uncertainty and the Oklahoma City office market was certainly not immune to that."
According to the U.S. Census Bureau, retail sales during May 2020 were up 17.7% seasonally adjusted from the prior month but down 6.1% year-over-year. That follows a record-setting 14.7% drop in April 2020 (month-over-month).
The last 12 months have been marked by dramatic changes. As of this writing, these events have not seriously affected the Oklahoma City multi-tenant industrial market. Overall, multi-tenant industrial properties have continued the declining vacancy trend seen over the past two years. The bulkwarehouse sector is the exception this year.
During the first half of 2020 the market vacancy rate rose from 20.9% to 23.5% in the first half of 2020. The rise in vacancies has been market-wide with the Central Business District vacancy rate rising from 21.8% to 23.6% and the suburban submarkets rising from 20.8% to 23.4% vacant. Market-wide rental rates showed a slight dip from $19.53 per square foot to $19.45 per square foot. The market experienced negative absorption of nearly 536,000 square feet which was market-wide in nature rather than limited to one or two submarkets. The CBD experienced negative absorption of 146,000 SF and the suburban submarkets totaled nearly 390,000 SF of negative absorption.
Bringing more business activity back to Portland’s urban core will be essential for maintaining the city’s rising apartment profile. With most COVID-19 era restrictions lifted in March, dining, shopping and experiential offerings should draw more residents back to the central part of the city.
On March 12th, 2022, Oregon lifted its statewide mask mandate, marking an end to almost all of the State’s COVID-19 era business restrictions. As a result, retail demand in Portland is finally stabilizing and is positioning itself for a rebound in 2022. Barring any major setbacks from emerging variants, Portland might be heading back to a sense of normalcy in 2022.
The negative impacts of the COVID-19 pandemic continued to be felt deeply in the Portland metro office market. Demand for office space has continued to drop as a large segment of the workforce has shifted to a remote work model. Despite the drop in demand, year-over-year rent growth has returned with gains of 2.6%, while the national office rent gains are around 0.9%.
The rise in popularity of e-commerce and delivery services has greatly bolstered Portland’s industrial market during the COVID era. As a result, distribution and last-mile facilities will remain highly desired in the near- to mid-term. In order to combat supply chain issues that are impacting global markets, companies may look to shore up their domestic shipping assets. Several recent leases over 100,000 SF may be indicative of this trend.
Portland’s industrial market was better positioned than other markets to navigate the COVID-19 pandemic. This is thanks to the growth of e-commerce and delivery services in the wake of the pandemic. While vacancy and rent growth have softened by mid-year 2021, they are still at healthy levels.
The COVID-19 pandemic interrupted several years of sustained growth in the Portland market. Demand for office space in the Portland metro area remains low, as businesses continue to evaluate their space needs in the post-pandemic era. The central business district (CBD) was hit hardest by the pandemic. Many smaller businesses have sought to move out of downtown into areas such as Beaverton and Gresham, however, several major office leases have still been signed in the CBD in 2021.Portland’s office investment market has also remained slow through 2021 as a result of the pandemic. Annual sales volume exceeded $1 billion between 2015 and 2019, but that came to an end in 2020.
The COVID-19 pandemic brought immense challenges to the retail sector, which had already been struggling for years due to the growth of e-commerce. 16 months of intermittent lock downs and social distancing caused many retailers and restaurants to close. With the state officially reopened as of June 30th, Portland’s retail market could bounce back in response.
The Denver retail market has been a cyclical winner. Trade area demographics are supporting retail sales, with the metro's superior growth in population, employment, and income increasing buying power.
The Denver office market is in the midst of a moderate rebound. Rent growth slowed sharply throughout 2015 and 2016 as the market felt the full brunt of the collapse in oil prices, and rents at 4 & 5 Star properties briefly turned negative.
Several indicators emerged or firmed over the past year that point to rebounding demand in Denver's apartment market.
A confluence of events has led Denver to become one of the hottest industrial markets in the country. Robust demand in this regional market with a strong local economy is stemming from the growth of retail sales, employment, and industrial production in the metro area and the greater Colorado region.
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.
TCN Worldwide's State of the Market: Western 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: 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: Western 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
The Denver retail vacancy rate decreased in the fourth quarter, ending the year at 4.6%. Overall, the retail market has seen a decrease in vacancy rate, with the vacancy rate starting at 4.9% in Q1 2016, to 4.8% in the end of Q2 2016, remaining 4.8% at the end of Q3 2016, down to 4.6% in Q4 2016.
The Denver industrial vacancy rate slightly increased in the fourth quarter, ending the year at 4.8%. Specifically, both industrial-flex projects and warehouse projects experienced an increase in vacancy over the last quarter but slightly fluctuated throughout all four quarters.
The Denver office market ended the year with a vacancy rate of 9.8%. The market continued its upward climb in vacancy for the second consecutive quarter after six quarters that consistently posted a decrease.