MARKET UPDATE
2023 Q2
03 About Us 05 08 10 New & Closed Listings Retail & Office 13 New & Closed Listings Industrial Acquisition & Disposition, Landlord Representation, Tenant Representation, Consulting & Valuation Client Services 04 Our Team 06 Market Update TOWER IS IT SAFE TO LAND? Historical Market Data 11 Retail & Office Report 14 Industrial Report 09 17 Commercial Land Report 15 New & Closed Listings Commercial Land New & Closed Listings Business Client Partners 16 07 Historical Market Data 12 Industrial Report 18 Market Update TOWER IS IT SAFE TO LAND?
AboutUs
ColdwellBankerCommercialCBS
Our organization strategically combines a powerful national presence with the agility of a regional market innovator. Coldwell Banker Commercial CBS has the resources and insight to understand our local market and the expertise to convert this knowledge into tangible value for each client. Our professionals stand ready to help clients discover untapped Commercial Real Estate market opportunities and to deliver a range of services designed to add value to their businesses. Our professionals service a wealth of business categories, with clients representing established corporations to small businesses to individual investors.
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www.cbcmontana.com
04 406 671 0399 blaine@cbcmontana.com PARTNER 406 855 8946 george@cbcmontana.com MANAGING PARTNER, CCIM, MBA 406.794.3404 d@cbcmontana com PARTNER, CCIM, SIOR, MBA 406.869.0567 steve@cbcmontana.com BROKER 406 781 6889 nathan@cbcmontana com PARTNER, CCIM, MBA 406.208.7723 shaylee@cbcmontana.com BROKER, CCIM 406.656.2001 info@cbcmontana.com MARKETING SPECIALIST GEORGE WARMER BLAINE POPPLER DAVID MITCHELL NATHAN MATELICH STEVE KENNY SHAYLEE GREEN EMILY SPERRY TEAM OUR 406.570.8961 todd@cbcmontana.com AGENT 406.697.6176 mike@cbcmontana.com AGENT TODD SHERMAN MIKE BRUSCHWEIN
Market Update
TOWER…IS IT SAFE TO LAND?
As backdrop to the Fed’s most recent .25% increase in the fed funds rate, GDP sustained 2.4% growth in the last quarter completing the 4th consecutive positive quarter in a row. Durable goods rose 4.7% and inflation cooled slightly. Unemployment remains at a 20 year low of 3.6%. Talk is now of avoiding a hard landing and recession fears as consumer confidence reports are waning.
Is it time to declare a smooth landing? Like in all economic forecasts, it depends.
According to the Bureau of Business and Economic Research, they are no longer forecasting a recession in Montana or the U.S. in 2024 and 2025. But how does this correlate to certain commercial property types?
Let’s take a look at first quarter numbers for the main commercial market sectors. According to Dr. Glen R. Mueller at Denver University, commercial real estate market sectors stretch from the expansion to flashing recession signs.
*Source B.B.E.R. for migration trends.
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Market Update
TOWER…IS IT SAFE TO LAND?
See full report here: https://daniels.du.edu/assets/Cycle-Monitor-23Q1.pdf
According to Dr. Mueller, retail, hotels and industrial properties continued to expand in the first quarter. Industrial & retail rental rates increased 10.4% and 3.9% year over year respectively. Hotel revenues experienced 7.7% revenue growth year over year.
Apartments have moved into the “Hypersupply Phase” as occupancy declined 0.7% year over year. He projects slower demand this year as new supply hits record numbers not seen since the 1980’s. Office has clearly entered the “Recessionary Phase”. Occupancy is down 0.7% and is now lower than the 87% occupancy mark during the Great Recession. As this sector continues to slow, over 67 million SF of new office space has hit the market.
How does this compare to our market? On the one hand, we cannot avoid the increase in interest rates. Commercial loans are now well into the 8% to 9% range. Like gravity, interest rates have a strong pull on market conditions. Counterbalancing this pull however is the increase in people and businesses moving to our market. This trend, coupled with the launch of a new $1 Billion dollar hospital project in downtown Billings, and demand for quality properties in superior locations, indicates the landing may be a soft one.
George Warmer, CCIM Managing Partner Coldwell Banker Commercial CBS
*Source B.B.E.R. for migration trends.
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 600 400 200 0 Commercial Sales Transactions Year-Over-Year Yellowstone County 0 100 200 300 Industrial Office Retail Q2 Average Bldg Price Per SQFT by Type (Existing) 0 5 10 15 Industrial Office Retail Q2 Average NNN Lease Rate by Type (Existing) $9.25 $13.90 $12.52 $95.22 $130.15 $289.40 192 272 277 317 271 324 296 420 576 567 *Thank you to Flying S Title for their assistance with data collection. 95 129 88 57 Q12022 Q1 2023 Q22022 Q2 2023 150 100 50 0 95 88 129 57 Commercial Sales Transactions Q1 & Q2 of 2022 & 2023
Historical Market Data
Historical Market Data
08 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 7,500,000 5,000,000 2,500,000 0
Improved Commercial Sq. Ft. Sold By Year (Millions) Yellowstone County 2.41 2.38 3.53 2.96 3.14 3.79 3.35 4.24 6.89 4.58 *Thank you to Flying S Title for their assistance with data collection. Q12022 Q1 2023 Q22022 Q2 2023 600,000 400,000 200,000 0 Improved Commercial Sq. Ft. Sold Q1 & Q2 of 2022 & 2023 498,080 599,062 366,824 178,325
09 Brian Nathan NEW ED Nathan 2376 Main Street 1643 24th St W, Suite 210 Nathan Danny's Gas Station, Broadview 1613AldersonAve ForLease:$1,450/mo +utilities 134 Grand Ave For Sale: $535,000 For Lease: $3,500/mo + utilities Shaylee 2702 Montana Ave, Suite 200 For Lease: $10.00/sf (MG) 848 Main St, Suite 4A For Sale: $350,000 711 Central Ave, Suite 110 For Lease: $497/mo (gross) Todd & Mike Shaylee Nathan & Todd
2525 6th Ave N For Lease: $250-$450/mo 711 Central Ave, Suite 111 For Lease: $795/mo (gross) Shaylee 2108 Broadwater Ave Nathan & Todd Shaylee & Todd 4120 King Ave W Blaine & George 1668 Gleneagles Blvd For Lease: $650-$2,000/mo (utilities included) Nathan 14 S 27th Street For Lease: $2,000/mo + utilities Shaylee 2950 King Ave Suite 2 & 4A George & Todd 2500 Grand Ave Suite D For Lease: $15/sf David 1215 24th St W Suite 225 For Lease: $16/sf David
Retail & Office
10 2015 2019 2022 $20PSF $15PSF $10PSF $5PSF $0PSF 2020 2021 2022 $20PSF $15PSF $10PSF $5PSF $0PSF 2020 2022 2023 $40PSF $30PSF $20PSF $10PSF $0PSF CAP RATE RANGE
8%
REPORT Class B Existing Average Office NNN Lease Rates (Under 3,000 SF) Average NNN Retail Lease Rates $8.50 $12.50 $16.00 $19.02 $17.04 New Construction Office/Retail $18 PSF $35 PSF $25 PSF $18.79
6% TO
Retail & Office
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Nathan
Industrial
2315
George
711 Blackhawk St B1 Nathan
Shaylee 706 S Billings Blvd For Lease: $11/sf NNN Nathan George
20 1st St NW, Park City
Todd 909 E Man Cave St Unit For Lease: $800.00/mo
4th Ave N
5229 King Ave W A1 George & Todd 1005 Main Street For Sale:
$1,400,000
Shopworld 406 For Sale: $45,500 313 Sheridan Ave - Plentywood For Sale: $199,000
Nathan Shaylee & Todd
George
Nathan
NEW D
526
Moore
Ln For Lease:
$3,150/mo
+ utilities Nathan 4148 1st Ave S For Sale: $499,000 For Lease:
$8.50/sf/yr(NNN)
Shaylee 320 N 17th St 5229 King Ave W C2
3450 Duck Creek Rd
1006 Custer Ave Nathan 3750 Wise Ln For Lease:
$2,000/mo
Nathan
716 Wagon Trail W
George & Todd
6607 Western Way For Lease: $11 PSF NNN (Net $1.85 PSF)
George
723 Wagon Trail For Lease: $11/sf (NNN)
Nathan
12 2016 2019 2022 $10PSF $7.5PSF $5PSF $2.5PSF $0PSF 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 200 150 100 50 0 Total Industrial Sales By Year (Yellowstone County)
7% TO 9%
Industrial NNN Lease Rates Under 5,000 SF (Yellowstone County) 52 59 68 76 55 81 85 109 159 175 $6.50 $7.35 $10 2020 2022 2023 $150PSF $100PSF $50PSF $0PSF $75 Industrial Sales Under 5,000 SF (Yellowstone County New Construction) $138 $145 *Thank you to Flying S Title for their assistance with data collection.
CAP RATE RANGE
Industrial REPORT
13 Industrial REPORT
Q12022 Q1 2023 Q22022 Q2 2023 60 40 20 0 31 15 Total Industrial Sales Q1 & Q2 of 2022 & 2023 Q12022 Q1 2023 Q22022 Q2 2023 400,000 300,000 200,000 100,000 0 ImprovedIndustrialSq.Ft.Q1&Q2of2022&2023 Q12022 Q1 2023 Q22022 Q2 2023 200 150 100 50 0 IndustrialAcreageSold Q1&Q2of2022&2023 126,097 93,534 346,367 77,255 42.715 43.624 166.713 129.318 22 57
*Thank you to Flying S Title for their assistance with data collection.
Commercial Land
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Nathan
Blaine
George
Clarks Fork Canyon Ranch For Sale: $1,300,000
Shaylee & Todd
George
Nathan & Todd
10520
S Frontage Rd For Lease: $1,000 -$4,000/sf MG
4449
For Sale: $5,349,330 727
For
-
Blaine
Central Ave
Bench Blvd
Sale: $374,900.00
$749,800.00 10940 S Frontage Rd For Sale: $5,500,000
Brian
3250 Hannon Ln
NEW
240
Harmony Meadows Lot 9 For Sale: $5.26/sf
CLOSED 130 Moore Ln For Sale: $360,000 For Lease: $3,900/mo
Nall Ave For Sale: $1,195,000
Shaylee
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 75,000,000 50,000,000 25,000,000 0 Total Commercial Acreage Sold By Year (Millions of SF Rounded) 11 7 35 7 24 15.8 22 6 14 1 66 6 61 21.3 46 9 *Thank you to Flying S Title for their assistance with data collection. Q12022 Q1 2023 Q22022 Q2 2023 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Total Commercial Acreage Sold Q1 & Q2 of 2022 & 2023 (Millions of SF Rounded) 20.7 10.6 4.6 4.7
Commercial Land REPORT
04 16 Nathan Nathan Todd Inspection Business For Sale: $40,000 Nathan Todd Nathan NEW CLOSED World Class Travel Agency Business Performance Auto Parts For Sale: $950,000 Java Downunder Coffee Shop For Sale: $50,000 Beer & Wine License For Sale: $40,000 Auto Repair Business For Sale: $2,600,000 Nathan & Mike Sunny Day Cleaning For Sale: $40,000 Shaylee Brian Specialty Retail Business For Sale: $1,000,000 McFiny's Convenience Store UNDERCONTRACT Nathan Manufacturing Business For Sale: $1,275,000
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