2011
TABLE OF CONTENTS
NATIONAL MARKET OVERVIEW SECTION I - INTRODUCTION 03
Introduction
04
National Market Summary
06
Statistical Summary
2
SECTION II - CITY STATISTICS 07
Atlanta, GA
08
Birmingham, AL
09
Chicago, IL
10
Colorado Springs, CO
11
Dallas, TX
12
Denver, CO
13
Fort Myers, FL
14
Fort Worth, TX
15
Hampton Roads, VA
16
Kansas City, MO
17
Los Angeles, CA
18
Miami, FL
19
Milwaukee, WI
20
New York, NY
21
Northern New Jersey
22
Oklahoma City, OK
23
Orange County, CA
24
Phoenix, AZ
25
Portland, OR
26
Richmond, VA
27
San Antonio, TX
28
San Diego, CA
29
San Francisco Bay Area, CA
30
St. Louis, MO
31
Washington, D.C.
The National Market Overview is published by MB Real Estate, an active member of the CORE Network. To obtain additional copies or for further information, please contact:
Andrew J. Davidson
SECTION III - ADDITIONAL INFORMATION 32
Industrial Services
33
Board of Directors
EVP/Managing Director of Corporate Services & Tenant Advisory at MB Real Estate 181 West Madison Street, Suite 4700 Chicago, Illinois 60602 p: 312 726 1700 www.mbres.com
ADDITIONAL INFORMATION INCLUDED IN THIS REPORT WAS PROVIDED BY COSTAR GROUP WWW.COSTAR.COM
INTRODUCTION 2 0 1 1
NATIONAL MARKET OVERVIEW The National Market Overview was created to spotlight many of the active commercial real estate markets in U.S. cities within the CORE Network.
WHAT IS THE CORE NETWORK? CORE Network is an over 20-member organization of mid-sized commercial real estate companies that are hand selected to provide a full line of commercial real estate services to clients. With an international geographic reach and a full line of service capabilities, CORE is often compared to some of the largest commercial real estate providers in the industry. CORE offers its clients comprehensive real estate investment, management, development, strategic planning, tenant representation, acquisition, disposition, and financial services. It meets the varying requirements of its members’ clients by employing the expertise of industry-specific account teams and handpicked specialists from its growing body of member firms. This collective effort enhances the overall capabilities of CORE; however, each member is empowered and committed to providing its own clients with a single-point-of accountability. Member clients therefore have the best of all worlds, the capabilities and services of a highly organized Network with the flexibility and customization of a single-source provider. Please visit www.corenetworkcre.org for more information. â–
3
NATIONAL MARKET SUMMARY 2 0 1 1
OVERVIEW AND OUTLOOK The United States economy continued its slow recovery in 2011 as commercial real estate fundamentals showed improvement. Of the 24 markets that CORE Network affiliates track, 20 markets experienced positive net absorption. 18 out of 24 markets experienced a decrease in unemployment rate. But total employment in the United States is still 4.4 percent below peak 2007 levels, which continues to place pressure on the office market.
After remaining unchanged in 2010, CoStar’s National Office total vacancy rate fell 110 basis points to 12.3 percent. While a solid improvement, the total vacancy rate is still well above the 10.6 percent level seen in 2006. Total net absorption from markets that CORE Network affiliates track exceeded a positive 21 million square feet in 2011. A lack of new, speculative construction continued to aid the market. Only 31.8 million square feet of office space was delivered in 2011—the lowest yearly amount in more than 30 years. This is well below the historical average of roughly 150 million square feet. Another positive sign is that total available sublease space has fallen from 61.1 million square feet at the end of 2010 to 50.7 million square feet at the end of 2011. This 20.5 percent reduction is further evidence of increased corporate confidence and a recovering office market. Despite an improvement in leasing activity and occupancy, average asking rental rates remain down nationally, on a year-over-year basis. The average asking rate for Class A was $26.85, compared to $26.96 at the end of 2010. Class B and C average asking rates also decreased to $19.56 and $16.04, compared to $19.70 and $16.43, respectively, at the end of 2010. However, several costal markets including New York, San Francisco and Portland all reported increased asking rental rates in 2011, indicating that the trend may spread inland in 2012.
4
Through the first three quarters of 2011, total sales volume reached $39.9 billion, compared to $19.6 billion over the same timeframe in 2010. The average cap rate dropped from 8.49 percent in 2010 to 8.13 percent. Cap rates have compressed in major central business districts, evidenced by the 3.39 percent cap rate resulting from the $1.77 billion sale of The Port of New York Authority Inland Terminal in New York City. The bifurcation of suburban and central business district markets became even more pronounced. More than 900,000 square feet of positive absorption in Chicago’s CBD was overshadowed by over 1.1 million square feet of negative absorption in the suburbs. On the other hand, Oklahoma City’s suburban market is much tighter than its downtown, with direct vacancies of 13.1 percent compared to 26.4 percent.
Markets with Largest Year-Over-Year Unemployment Rate Decrease Market
Unemployment Rate
Miami, FL Portland, OR San Francisco Bay Area, CA Kansas City, MO St. Louis, MO
10.0% 8.6% 9.1% 7.8% 8.6%
Decrease -1.8% -1.2% -1.0% -0.9% -0.8%
Markets with Largest Year-Over-Year Unemployment Rate Increase Market
Unemployment Rate
Chicago, IL San Antonio, TX Fort Worth, TX Hampton Roads, VA New York, NY
9.6% 7.5% 8.0% 7.0% 9.0%
Increase 0.7% 0.2% 0.0% 0.0% 0.0%
* Unemployment figures from the Bureau of Labor Statistics - non-seasonally adjusted
The national recovery will continue to slowly take shape 2012. New construction will remain near record low levels. More employers plan on adding jobs compared to the previous year, which should lead to increased leasing activity. The “flight-to-quality” trend will continue in markets with elevated vacancy until landlords are in the position to raise rental rates and reduce concessions. We expect the upcoming year to be similar to 2011 with a few more markets showing increased signs of improvement.
Total Vacancy by Market - Year End 2011 30% 25% 20% 15% 10% 5% Portland, O OR Richmond, VVA San Francisco Bay Area, C CA New York, N NY Denver, C CO Kansas City, M MO Los Angeles, C CA Hampton Roads, VVA Washington, D.C. Miami, FL Colorado Springs, C CO Fort Worth, TTX Northern/Central N NJ Fort Myers, FL San Diego, C CA Orange County, C CA St. Louis, M MO Birmingham, AAL Oklahoma City, O OK Atlanta, G GA Milwaukee, W WI San Antonio, TTX Dallas, TTX Chicago, IL Phoenix, AAZ
0%
5
OFFICE MARKET STATISTICAL SUMMARY CORE Network 2011 Vacancy Summary Size of Market (sf)
YTD Absorption (sf)
Direct Vacancy %
Sublease Vacancy %
Total Vacancy %
Metropolitan Unemployment Rate (Oct '11)
Atlanta, GA
208,578,790
163,986
18.6%
1.0%
19.5%
9.9%
Birmingham, AL
17,804,986
117,496
14.0%
3.8%
17.8%
7.3%
Chicago, IL
242,899,322
-226,023
19.2%
2.6%
21.8%
9.6%
Colorado Springs, CO
27,542,895
697,000
14.2%
0.5%
14.7%
8.6%
Dallas, TX
203,837,074
2,138,206
20.9%
0.8%
21.7%
8.0%
Denver, CO
183,171,525
1,863,615
12.5%
0.5%
13.0%
7.8%
Fort Myers, FL
31,187,746
-49,812
-
-
16.4%
9.8%
Fort Worth, TX
43,135,818
-300,786
14.1%
1.7%
15.8%
8.0%
Kansas City, MO
107,472,022
541,000
12.9%
0.3%
13.3%
7.8%
Hampton Roads, VA
46,847,785
-200,159
13.2%
0.3%
13.5%
7.0%
Los Angeles, CA
372,611,580
280,454
12.8%
0.6%
13.3%
11.0%
Miami, FL
223,023,729
1,909,514
14.2%
0.3%
14.5%
10.0%
Milwaukee, WI
27,438,439
199,966
19.7%
0.8%
20.5%
7.4%
New York, NY
450,000,000
2,134,000
10.3%
2.0%
12.3%
9.0%
Northern/Central NJ
147,556,295
1,191,500
14.9%
1.5%
16.4%
8.3%
Oklahoma City, OK
14,675,890
322,403
18.2%
0.0%
18.3%
5.8%
Orange County, CA
110,936,466
926,659
16.1%
0.8%
17.0%
11.0%
Phoenix, AZ
80,557,161
1,074,850
25.1%
1.1%
26.2%
8.1%
Portland, OR
27,623,780
407,761
10.6%
0.7%
11.3%
8.6%
Richmond, VA
60,194,994
488,875
10.7%
0.7%
11.4%
6.8%
San Antonio, TX
25,463,935
-141,733
20.8%
0.5%
21.3%
7.5%
San Diego, CA
79,803,900
700,373
15.8%
0.8%
16.6%
9.7%
San Francisco Bay Area, CA
381,165,900
6,472,161
11.1%
0.9%
12.0%
9.1%
St. Louis, MO
50,989,837
-178,750
16.1%
1.0%
17.0%
8.6%
Washington, D.C.
325,459,013
760,184
13.0%
1.2%
14.2%
5.7%
Location
6
* Unemployment figures from the Bureau of Labor Statistics - non-seasonally adjusted
COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
ATLANTA, GA
MARKET OVERVIEW The Atlanta Office Market saw a drop in the overall vacancy rate for the first time since 2006. The vacancy rate fell to 19.5 percent, driven by 490,000 square feet of net absorption in the fourth quarter. Currently 1.5 million square feet of office space is under construction. Quoted rental rates averaged $19.32 at the end of the fourth quarter, up from $19.11 in the previous quarter. Though the vacancy rate is declining and rental rates are up, tenants looking for space in the current market still have the upper hand.
TRENDS & ECONOMIC CONDITIONS The Georgia Department of Labor reports that the preliminary unemployment rate for Metro Atlanta as of November 2011 is 9.2 percent, down 1.3 percent from June 2011. This drop can be attributed to the more than 13,000 jobs added regionally as well as fewer layoffs in construction, manufacturing, wholesale trade, administrative support services and accommodation & food services. The decline in the Atlanta Office Market’s vacancy rate is indicative of the recent stabilization of these sectors. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
600 Peachtree St 3438 Peachtree Rd 1075 Peachtree St 950 E Paces Ferry Rd 55 Park Place
570,371 385,313 373,035 369,583 340,146
Downtown Buckhead Midtown Buckhead Downtown
7
Major New Developments Adddress
Size (sf))
Delivery Date
675 NE Ponce De Leon Ave. 3120 Breckinridge Blvd
750,000 344,476
January 2014 April 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
66,369,069 142,209,721 208,578,790
200,411 (36,425) 163,986
Direct Vacancy % 18.5% 18.6% 18.6%
Sublease Vacancy % 1.1% 0.9% 1.0%
Total Vacancy % 19.6% 19.5% 19.5%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
Suntrust Bank GE Consumer Finance InComm Coca Cola Alston & Bird, LLP
Downtown North Fulton Downtown North Fulton Midtown
285 Peachtree Center Ave Windward Plaza - Bldg 300 250 Williams St Oak View III One Atlantic Center
254,619 203,245 184,824 148,229 132,856
ACKERMAN & CO. WWW.ACKERMANCO.NET COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
BIRMINGHAM, AL
MARKET OVERVIEW Birmingham ended the year with 117,500 square feet of positive absorption. Only 2 out of the 6 submarkets reported negative absorption, so hopefully the positive trend will hit the overall market in 2012. Leasing activity has been slow for new deals, but landlords have made sure to keep existing tenants in place. Rents are flat and renewing tenants are able to negotiate market rates with reasonable refurbishment improvement allowances. The only development announcement is a 170,000 square foot building in Midtown. Sublease space still presents problems and is expected to weigh down the market in 2012.
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
ATT Colonnade Regions Plaza Meadow Brook 300 Wells Fargo Tower Woods point II
410,000 218,000 101,000 58,000 48,000
280/I-459 CBD 280/I-459 CBD Hoover
8
TRENDS & ECONOMIC CONDITIONS The Birmingham metropolitan unemployment rate is currently 7.3 percent compared to the national average of 8.2 percent. The Birmingham market is also being affected by the municipal bankruptcy of Jefferson County. Birmingham is still growing in healthcare sectors but is losing jobs related to banking. The area is home to a dozen hospitals and over 700 technology related companies. â–
Major New Developments Adddress
Size (sf))
Delivery Date
Colonial Brookwood 2
170,000
2nd Quarter 2013
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
CBD Suburban Total
3,971,562 13,833,424 17,804,986
18,023 99,473 117,496
Direct Vacancy % 14.0% 14.0% 14.0%
Sublease Vacancy % 3.0% 4.0% 3.8%
Total Vacancy % 17.0% 18.0% 17.8%
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
FEMA (6 month; tornado relief) Cahaba Govt Benefit (renewal) Allstate (renewal) Baker Donelson (renewal / expansion) Brown Mackie College
CBD 280/I-459 280/I-459 CBD Oxmoor
Regions Plaza Meadow Brook 500 Meadow Brook South Wells Fargo Vulcan Building
140,000 135,000 75,000 67,700 50,000
HARBERT REALTY SERVICES WWW.HARBERTREALTY.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
CHICAGO, IL
MARKET OVERVIEW Leasing activity and absorption showed unexpected, but marked improvement in Chicago’s CBD with direct vacancy falling 90 basis points during 2011. Rental rates grew slightly in Class A buildings as the “flightto-quality” trend continues. The Suburbs continued to struggle and experienced more than 1.1 million square feet of negative absorption. No speculative construction is underway in the CBD or Suburbs.
TRENDS & ECONOMIC CONDITIONS The Chicago metropolitan unemployment rate is currently 9.6 percent, well above the national average of 8.2 percent. Despite a decline in total employment of 6.2 percent since January 2008, the total amount of occupied space is down just 0.3 percent in the CBD. This is largely due to Chicago-based companies such as Groupon rapidly expanding their space requirements. Numerous tenants are relocating to the CBD from the Suburbs as they desire access to the younger labor force. However, due to jobs lost during the recession and sluggish job growth, vacancy rates are forecasted to increase slightly in 2012. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
500 W Monroe 200 E Randolph 233 S Wacker 111 W Illinois 10 S Dearborn
369,207 340,959 299,514 141,503 139,165
West Loop East Loop West Loop River North Central Loop
9
Major New Developments Adddress
Size (sf))
Delivery Date
1000 W Fulton (redevelop.) 400 S Jefferson (redevelop.)
450,000 304,000
January 2013
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
130,649,210 112,250,112 242,899,322
913,519 (1,139,542) (226,023)
Direct Vacancy % 15.4% 23.6% 19.2%
Sublease Vacancy % 2.2% 3.0% 2.6%
Total Vacancy % 17.6% 26.6% 21.8%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Aon Corporation (Renewal) GE Capital (Renewal/Expansion) Wells Fargo (New) PricewaterhouseCoopers (Renewal) American Medical Association (New)
Submarket
Adddress
Size (sf))
East Loop West Loop West Loop West Loop North Michigan Ave
200 E Randolph 500 W Monroe 10 & 30 S Wacker 1 N Wacker 330 N Wabash
400,000 370,000 293,000 279,000 275,000
MB REAL ESTATE WWW.MBRES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
COLORADO SPRINGS, CO
MARKET OVERVIEW Absorption reached 741,000 square feet in 2012. However, it took 2.2 million square feet of leasing and multiple owner-occupied building purchases to produce this absorption figure. Even the healthy leasing figure of 2.2 million included several hundred thousand square feet of “charity leasing” to tax exempt philanthropic entities.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS Asking rental rates have been falling for the last three years. However, many lease deals are being done at 25 to 40 percent below the published asking rates. Previous downturns produced average asking rents in the $5.50 triple net range, but the current asking rate of $9.72 is not reflective of market conditions. For whatever reason, there remains a concerted reluctance to publicly advertise lower asking rents. ■
Adddress
Size (sf))
Submarket
9910 Federal Dr 9965 Federal Dr 565 Space Center Dr 555 Middle Creek 10807 New Allegiance Dr
100,000 100,000 90,099 90,000 60,936
Northeast Northeast Southeast Northeast Northeast
10
Major New Developments Adddress
Size (sf))
Delivery Date
NONE
Vacancy Rates Location
697,000
Direct Vacancy % 14.2%
Sublease Vacancy % 0.5%
697,000
14.2%
0.5%
Size of Market (sf)
Net Absorption (sf)
City
27,542,895
Total
27,542,895
Total Vacancy % 14.7% 14.7%
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
El Paso County Children's Hospital Aeroflex Colorado Springs Conservatory McGinnis/GMAC Real Estate
Northwest Northeast Northwest CBD Northeast
Garden of the Gods Corporate Point Garden Gateway Plaza - Bldg 2 Cimarron Law Building Vantage Point
300,000 60,000 25,625 17,696 11,055
CAMERON BUTCHER COMMERCIAL REAL ESTATE WWW.CAMERONBUTCHER.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
DALLAS, TX
MARKET OVERVIEW The city market contains almost 33 million square feet and is currently showing a vacancy rate of 29.5 percent, while the suburban market contains just over 173 million square feet and is showing a vacancy rate of 21.8 percent. There currently is almost 460,000 square feet of new development to be completed within the next year.
TRENDS & ECONOMIC CONDITIONS Business and consumer confidence remains low due to the current economy, causing the market to operate cautiously. There is a strong concern for the office market as companies merge and put space on the market for sublease. Recently, the completion of vacant new office space has reduced or negated the benefits of positive net absorption. Large office users have streamlined their space needs and have vacated large blocks of space in favor of newer, more efficient layouts. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
13737 Noel Rd 5601 Legacy Dr 350 N Saint Paul St 1601 Elm St 1011 Galatyn Pkwy
378,203 354,482 301,391 299,005 280,800
Quorum/Bent Tree Upper Tollway/West Plano CBD CBD Richardson
11
Major New Developments Adddress
Size (sf))
Delivery Date
5851 Legacy Cir 315 E I-30 Stacy Rd @ State Hwy 121
281,600 110,000 100,000
July 2012 July 2012 December 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
29,467,747 174,369,327 203,837,074
(298,338) 2,436,544 2,138,206
Direct Vacancy % 31.0% 19.3% 20.9%
Sublease Vacancy % 1.0% 0.7% 0.8%
Total Vacancy % 32.0% 20.0% 21.7%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Fossil Ericsson JP Morgan Chase American Home Mortgage TracyLocke
Submarket
Adddress
Size (sf))
Richardson Richardson Lewisville Quorum/Bent Tree CBD
901 S Central Expy 2201-2221 Lakeside Blvd 2777 Lake Vista Dr 16675 Addison Rd Harwood Center
535,771 460,000 240,000 137,992 111,548
SWEARINGEN REALTY GROUP, LLC WWW.SWEARINGEN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
DENVER, CO
MARKET OVERVIEW The Denver Office market ended 2011 with a total vacancy rate of 13.0 percent. The vacancy rate was down over the previous quarter, with net absorption totaling positive 556,275 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 913,403 square feet.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS Rental rates ended the fourth quarter at $19.78, an increase over the previous quarter. A total of four buildings were delivered in the quarter totaling 71,388 square feet, with 872,660 square feet still under construction at the end of the quarter. â–
Adddress
Size (sf))
Submarket
1801 California St 1801 California St 1900 16th St 3190 S Vaughn Way 1801 California St
398,612 267,206 159,186 157,721 134,640
CBD CBD Platte River Aurora CBD
12
Major New Developments Adddress
Size (sf))
Delivery Date
Davita Headquarters Eos St. Anthony Medical Building II
270,000 185,000 100,000
3rd Qtr 2012 4th Qtr 2012 1st Qtr 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
33,134,886 150,036,639 183,171,525
312,384 1,551,231 1,863,615
Direct Vacancy % 11.7% 12.7% 12.5%
Sublease Vacancy % 0.8% 0.4% 0.5%
Total Vacancy % 12.5% 13.1% 13.0%
Largest Tenant Transactions In 2011 Tenant URS Corporation Bridgepoint Education Jacobs Engineering Group Inc. Children's Hospital ProBuild Company
Submarket
Adddress
Size (sf))
Denver Tech Center CBD CBD Aurora Denver Tech Center
Denver Corporate Center II Park Central 707 17th St Fitzsimons Village 100 Crossroads DTC
185,988 151,331 143,877 120,000 86,937
CAMERON BUTCHER COMMERCIAL REAL ESTATE WWW.CAMERONBUTCHER.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
FORT MYERS, FL
MARKET OVERVIEW The outlook for the Southwest Florida office market indicates stability and additional improvement. Overall vacancy rates are expected to remain relatively stable, with a slight rise in vacancy rate predicted. Leasing activity showed a positive increase and quarter over quarter leasing followed suit between the third and fourth quarters of 2011.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS Unemployment in Southwest Florida continues to decline. In Lee County alone, one of the hardest hit areas in Florida, January 2011 rates were at 12.7 percent dropping to 11.6 percent in July and to 10.2 percent in December 2011. Topping 600,000, Lee County’s population is now dominated by working-age people. Forbes, Inc. and Money magazines have recognized Cape Coral-Fort Myers as one of the top places to live and do business in the country. Lee and Collier counties saw a decrease in the number of existing single-family home sales, but an increase in the median price. ■
Adddress
Size (sf))
Submarket
University Park Metro Centre
346,413 77,272
College Corridor Metro North
13
Major New Developments Adddress
Size (sf))
Delivery Date
Eastlinks V (Gateway) 8860 Salrose Lane
56,700 29,837
1st Qtr 2012 1st Qtr 2011
Vacancy Rates Location City Other Total
Size of Market (sf)
YTD Absorption (sf)
4,764,648 26,423,098 31,187,746
(36,358) (13,454) (49,812)
Direct Vacancy % -
Sublease Vacancy % -
Total Vacancy % 13.9% 16.9% 16.4%
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
GSA Sony Source Medical Andrew Hill Investments Embarq/CenturyLink
I-75/Colonial Gateway College North Naples North Naples
8860 Salrose Lane 12451 Gateway Blvd 12871 Univsersity Drive 4081 North Tamiami Trail 3530 Kraft Road
29,837 29,096 21,112 16,130 12,953
CAMERON BUTCHER COMMERCIAL REAL ESTATE WWW.CAMERONBUTCHER.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
FORT WORTH, TX
MARKET OVERVIEW The city/CBD market contains just over 9.5 million square feet of office space and is currently showing a vacancy rate of 13.1 percent, while the suburban market contains over 33.5 million square feet and is showing a vacancy rate of 16.6 percent. The Fort Worth market brought on line almost 42,000 square feet of new office space in 2011. There are no new office developments happening in the Fort Worth market.
TRENDS & ECONOMIC CONDITIONS The Fort Worth market continues to be at equilibrium. Leasing activity should pick up in 2012, as tenants’ real estate needs become clearer. Landlords remain aggressive in negotiations by offering concessions in order to sign new tenants and to keep their existing tenants. Rental rates are expected to stabilize in 2012. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
1 E Kirkwood Blvd 3 Campus Cir 8 Campus Cir 5 Campus Cir 801 Cherry St
381,376 120,243 101,516 100,738 45,910
Westlake/Grapevine Westlake/Grapevine Westlake/Grapevine Westlake/Grapevine CBD
14
Major New Developments Adddress
Size (sf))
Delivery Date
None
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
9,582,955 33,552,863 43,135,818
(49,472) (251,314) (300,786)
Direct Vacancy % 12.8% 14.5% 14.1%
Sublease Vacancy % 0.3% 2.1% 1.7%
Total Vacancy % 13.1% 16.6% 15.8%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Pier 1 Imports, Inc. Mercedes-Benz Financial Services Alcon Laboraties, Inc. Practitioners Publishing Company US Health Group
Submarket
Adddress
Size (sf))
West Southwest Ft Worth Alliance West Southwest Ft Worth Ft Worth CBD Ft Worth CBD
100 Energy Way 13650 Heritage Pkwy 7000 Calmont Ave 801 Cherry St 801 Cherry St
255,103 164,331 94,362 78,293 63,478
SWEARINGEN REALTY GROUP, LLC WWW.SWEARINGEN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
HAMPTON ROADS, VA
MARKET OVERVIEW 2011 began and ended with a positive net absorption rates. A positive 117,950 square feet were leased in the first quarter. The fourth quarter recorded only 11,800 square feet of positive net absorption but it was very much welcomed after two quarters of negative results, (196,135) square feet in the third quarter and (133,774) square feet in the second quarter. An increase in leasing activity with negative net absorption suggests that many tenants downsized their space requirements throughout the year.
TRENDS & ECONOMIC CONDITIONS The vacancy rate increased to 13.5 percent after the delivery of five buildings that added 103,103 square feet to the market’s inventory. Year-to-date deliveries in eight new buildings totaled 255,878 square feet. Four more buildings are under construction to bring an additional 218,780 square feet. Rental rates also increased slightly, however at $21.41 per square feet, the averages are still over a dollar below the region’s peak rents at the end of 2009. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
5701 Cleveland St 5800 Northampton Blvd 7023-7025 Harbour View Blvd 1313 Executive Blvd 1434 Crossways Blvd
90,000 72,167 59,226 26,417 21,800
Virginia Beach CBD Airport/Northampton Harbourview/N. Suffolk Greenbrier Greenbrier
15
Major New Developments Adddress
Size (sf))
Delivery Date
Interstate Professional Center 5424 Discovery Park Blvd Towne Bank Operations Center Geenbrier Medical Office II Monarch Financial Center
66,000 40,000 39,399 27,476 17,301
2nd Quarter 2011 2nd Quarter 2011 4th Quarter 2011 1st Quarter 2011 1st Quarter 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Totals
9,502,682 37,345,103 46,847,785
(117,615) (82,544) (200,159)
Direct Vacancy % 14.5% 12.9% 13.2%
Sublease Vacancy % 0.2% 0.3% 0.3%
Total Vacancy % 14.7% 13.2% 13.5%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Delta Education/H&B Architects & Engineers SAIC SDV Properties LLC Amerigroup Wells Fargo
Submarket
Adddress
Size (sf))
VA Beach CBD/Pembroke Lynnhaven York Greenbrier Downtown Norfolk
Town Center VAB 2877 Guardian Lane 133 Waller Mill Road Liberty Two The Wells Fargo Center
38,000 32,000 28,764 25,500 24,893
DIVARIS REAL ESTATE, INC. WWW.DIVARIS.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
KANSAS CITY, MO
MARKET OVERVIEW The Kansas City Metropolitan commercial real estate market remains a tenant friendly environment. There is very little new construction taking place. The largest transactions in 2011 have been relocations in the market with some signs that prospect activity is on the upswing. One notable point is the recent drop in the amount of sublease space on the market. With little pressure from new construction, existing properties should benefit from incremental increases in leasing activity. The vacancy rates should decline into and through 2012.
TRENDS & ECONOMIC CONDITIONS The agricultural, distribution and government services sectors continue to spur whatever growth is alive and well in the Kansas City metro area. The large engineering and design firms in our market also are improving. However, the Sprint Corporation continues to make large blocks of space available on their 3.5 million square foot campus. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
1100 Main St. 11300 Corporate Ave. 9350 Metcalf Ave. 9300 Metcalf Ave. 4250 Main St.
240,947 170,000 150,899 78,376 75,974
CBD College Blvd Northeast Johnson County Northeast Johnson County Country Club Plaza
16
Major New Developments Adddress
Size (sf))
Delivery Date
Gibson Building Park Place Nos. 1 21201 W. 152nd
66,000 59,000 51,000
March 2011 March 2012 June 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
38,343,775 69,128,247 107,472,022
347,000 194,000 541,000
Direct Vacancy % 13.5% 12.6% 12.9%
Sublease Vacancy % 0.4% 0.3% 0.3%
Total Vacancy % 13.9% 12.9% 13.3%
Largest Tenant Transactions In 2011 Tenant EPA Burns & McDonell Eng. NAIC Applebees Encore Management
Submarket
Adddress
Size (sf))
South Johnson County South KC CBD South KC South Johnson County
Lenexa, Kansas 9201 Ward Parkway Town Pavilion 8140 Ward Parkway Linderwood Business Center
187,000 148,000 132,000 100,000 68,000
LASALA-SONNENBERG COMMERCIAL REALTY CO. WWW.LASALA-SONNENBERG.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
LOS ANGELES, CA
MARKET OVERVIEW The Los Angeles office market is beginning to see a decrease in available space and an increase in investment sales activity. Positive absorption continues to improve, and with few deliveries in the pipeline to apply upward pressure on vacancy, the market is starting to stabilize. Lease rates are expected to remain soft and concessions have begun to normalize. As job creation continues and consumer confidence stabilizes, the office rental market will continue its path to recovery.
TRENDS & ECONOMIC CONDITIONS The U.S. economy plunged into a deep recession combined with a severe financial crisis in 2008 and 2009. Throughout this period, employment declined and jobless rates soared across the nation. The economy reached bottom in June 2009, ending the recession. However, Los Angeles County’s economy experienced a gradual economic improvement in 2011 with the unemployment rate fluctuating and is currently at 11.0 percent (October 2011) based on the U.S. Bureau of Labor Statistics. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
2900 W. Alameda Ave. 9920 S. La Cienega Blvd. 633 W. 5th St. 555 W. 5th St. 12121 Bluff Creek Dr.
293,197 243,000 220,801 196,189 159,388
Burbank LAX Downtown LA Downtown LA Marina Del Rey/Venice
17
Major New Developments Adddress
Size (sf))
Delivery Date
275 Magnolia Ave. 750 San Vicente Blvd. West 750 San Vicente Blvd. East
545,000 211,426 203,568
August 2013 March 2012 March 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
66,856,184 305,755,396 372,611,580
(94,838) 375,292 280,454
Direct Vacancy % 10.9% 13.2% 12.8%
Sublease Vacancy % 0.5% 0.6% 0.6%
Total Vacancy % 11.4% 13.7% 13.3%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Direct TV Bank of America NBC Universal Houlihan Lokey, Inc. KCET-TV
Submarket
Adddress
Size (sf))
West LA Downtown LA Studio/Universal Cities Century City Burbank
2260 E. Imperial Highway 333 S. Hope St. 10 Universal City Plaza 10250 Constellation Blvd. 2900 W. Alameda Ave.
298,728 174,944 96,298 80,268 55,707
CHARLES DUNN COMPANY WWW.CHARLESDUNN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
MIAMI, FL
MARKET OVERVIEW The last of the new buildings delivered on Brickell Avenue, Brickell World Plaza, added 605,000 square feet to inventory and increased vacancy to 23 percent in this submarket. The pending completion of the widening of the Panama Canal in early 2014 and the related $2 billion of infrastructure improvements currently underway at the Port of Miami should produce positive benefits for the area, including demand for office space.
TRENDS & ECONOMIC CONDITIONS Many of the South Florida submarkets in 2011 reported continued positive absorption that started in 2010. The vacancy rate for the South Florida Market decreased to 14.5 percent, with net positive absorption of nearly 850,000 square feet. Increased leasing activity has led to stabilizing rates and reduced concessions going into 2012. Confirming a strengthening market was the recent sale of the 408,000 square foot Bank of America Tower at Las Olas City Centre in Downtown Fort Lauderdale to JP Morgan for $402 per square foot. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
600 Brickell Avenue 333 Avenue of the Americas 4700-4750 T Rex Avenue 1855 Griffin Road 2300 South Congress Avenue
484,023 391,900 300,000 200,000 208,609
Brickell Downtown Miami Boca Raton North Fort Lauderdale Delray Beach
18
Major New Developments Adddress
Size (sf))
Delivery Date
396 Alhambra, Coral Gables 21500 Biscayne, Aventura
170,185 116,645
1st Quarter 2012 3rd Quarter 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
41,693,739 181,329,990 223,023,729
690,943 1,218,571 1,909,514
Direct Vacancy % 17.3% 13.5% 14.2%
Sublease Vacancy % 0.5% 0.3% 0.3%
Total Vacancy % 17.8% 13.8% 14.5%
Largest Tenant Transactions In 2011 Tenant Crispin Porter & Bogusky, LLC Gibraltar Private Bank & Trust Co. University of Miami Bascom-Palmer State Farm Mutual Automobile Insurance Shoes for Crews, LLC
Submarket
Adddress
Size (sf))
Coconut Grove Coral Gables Plantation NW Broward/Coral Springs West Palm Beach
Mayfair in the Grove, East Bulding Columbus Center Crossroads 3 Convergys at Westpointe Centre One Clearlake Centre
69,685 61,248 52,205 50,000 37,449
STILES REALTY WWW.STILES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
MILWAUKEE, WI
MARKET OVERVIEW The Milwaukee office market improved slightly in the third quarter of 2011, posting positive absorption of 27,000 square feet. Vacancy rates fell in the downtown submarket but remained relatively unchanged in the suburbs. The overall trend in both the suburban and downtown markets has been positive for the year, reflecting a stabilization of the employment markets. As new development has been stagnant for the past few years, we’re anticipating a shortage of large blocks of space in some western suburbs in the next few years, which will drive rental rates closer to their pre-recession dollar amounts.
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
11100 W. Liberty 310 W. Wisconsin Ave. 111 W. Wisconsin Ave. 10001 W. Innovation Dr. 10850 W. Park Place
80,000 59,206 47,745 45,000 41,222
Park Place/Milwaukee NW Downtown West CBD Wauwatosa/Mayfair Park Place/Milwaukee NW
19
TRENDS & ECONOMIC CONDITIONS The unemployment rate in Milwaukee is down a half of a percent from a year ago, while the office sector employment numbers showed a modest gain of almost 1 percent from a year ago. We expect the slow economic recovery to translate into positive absorption over the next two to four quarters in the Milwaukee Metro. ■
Major New Developments Adddress
Size (sf))
Delivery Date
NONE
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
Milwaukee Waukesha Total
20,745,986 6,692,453 27,438,439
201,831 (1,865) 199,966
Direct Vacancy % 19.4% 20.5% 19.7%
Sublease Vacancy % 0.8% 0.8% 0.8%
Total Vacancy % 20.2% 21.3% 20.5%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Kohl's Gen-Probe Wells Fargo Annex Wealth Management Joy Global
Submarket
Adddress
Size (sf))
Park Place Waukesha/Pewaukee CBD Brookfield Mayfair/Wauwatosa
7800 N. 113th St. in Milwaukee Crossroads Corporate Center 100 East Wisconsin 12700 W. Bluemound,Brookfield Honey Creek II
80,000 60,000 44,670 41,000 32,000
RFP COMMERCIAL, INC. WWW.RFPCOMMERCIAL.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
NEW YORK, NY
MARKET OVERVIEW The New York City office marketplace is comprised of three the Manhattan markets of Midtown, Midtown South and Downtown. Together they make up of over 450 million square feet, of which over 230 million square feet is considered Class A. New York City is host to a diverse group on industries and is home many “Fortune 500” companies.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS The New York City commercial real estate market was the tale of two halves in 2011. The first two quarters witnessed a robust marketplace while the second half of the year was relatively quiet. The end result for the year was overall strong with positive absorption of approximately 2.1 million square feet in Manhattan causing vacancy rates dip to 12.1 percent while average asking rates increased to $50.17 per square foot. The year was highlighted by a number of high profile leasing transactions such as Conde Nast’s one million square foot commitment at One World Trade Center. ■
Adddress
Size (sf))
Submarket
85 Broad St 1 New York Plz 1221 Avenue of the Americas 11 Times Square 11 Times Square
651,513 551,825 536,617 353,551 279,866
Financial District Financial District Times Square Times Square Times Square
20
Major New Developments Adddress
Size (sf))
One World Trade Center World Trade Center - Tower Four World Trade Center - Tower Three 250 West 55th Street International Gem Tower
Delivery Date
3,020,630 2,845,000 2,400,000 1,052,150 740,000
1st Quarter 2014 1st Quarter 2013 3rd Quarter 2015 1st Quarter 2014 4th Quarter 2012
Sublease Vacancy % 2.4% 1.7% 1.6% 2.0%
Total Vacancy % 11.8% 10.3% 16.3% 12.3%
Vacancy Rates Location Midtown Midtown South Downtown Total
Size of Market (sf)
Net Absorption (sf)
212,000,000 140,000,000 98,000,000 450,000,000
950,000 2,859,000 (1,675,000) 2,134,000
Direct Vacancy % 9.4% 8.6% 14.7% 10.3%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant National Broadcasting Company The Conde Nast Publications Nomura Secuirties International Li & Fung NYU Langone Medical Center and School of Medicine
Submarket
Adddress
Plaza District World Trade Center Times Square Penn Plaza/Garment Murrary Hill
30 Rockefeller Plaza One World Trade Center 825 Eight Ave 350 Fifth Ave 1 Park Ave
Size (sf)) 1,230,712 1,046,260 901,181 482,399 419,813
GEORGE COMFORT & SONS, INC. WWW.GCOMFORT.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
NORTHERN NEW JERSEY
MARKET OVERVIEW The Northern New Jersey Class A office market experienced modest improvement in 2011 with positive absorption of 1.1 million square feet. However, the Class A improvement was fueled by a flight to quality that came at the expense of the Class B & C inventories, as these two classes posted significant negative absorption numbers. The Class A vacancy rate is 14.9 percent, with the average gross asking rent rising slightly to $26.16 from $25.78 per square foot gross. Speculative construction remains muted.
TRENDS & ECONOMIC CONDITIONS Leasing velocity was primarily dominated by renewal transactions, but there were several very large lease deals consummated as a result of corporate consolidations. Lease deals remain heavy on free rent, increased tenant improvement allowances and often require base building improvements by landlords. Landlords are valuing their tenant bases more than ever, concentrating on delivering good management services and with lots of communication. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
3000 Continental 1 Continental Dr 56 Livingston Av 300 Kimball 184 Liberty Corner
543,000 490,000 434,000 400,000 365,000
West Morris Princeton North Suburban Essex Morris Cty Route 78 East
21
Major New Developments Adddress
Size (sf))
Delivery Date
180 Park Av Florham Pk 175 Park Av Madison
325,000 275,000
3rd Qtr 2012 1st Qtr 2013
Vacancy Rates Location
1,191,500
Direct Vacancy % 14.9%
Sublease Vacancy % 1.5%
1,191,500
14.9%
1.5%
Size of Market (sf)
Net Absorption (sf)
Northern NJ
147,556,295
Total
147,556,295
Total Vacancy % 16.4% 16.4%
Largest Tenant Transactions In 2011 Tenant Novo Nordisk Realogy Merrill Lynch Gemini Technology Atlantic Health Systems
Submarket
Adddress
Size (sf))
Princeton North Morristown Hudson Waterfront Parsippany Morristown
Ivy Crossing Princeton 175 Park Av, Madison 95 Greene Street, Jersey City 2 Gatehall Southgate II
777,000 275,000 259,000 204,515 190,000
WEICHERT COMMERCIAL BROKERAGE WWW.WEICHERTCOMMERCIAL.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
OKLAHOMA CITY, OK
MARKET OVERVIEW Absorption of office space in Oklahoma City improved dramatically in 2011, with substantial net gains offsetting the minimal negative absorption from the second half of 2010. Average asking rates remain stable, and few large blocks of space are available.
TRENDS & ECONOMIC CONDITIONS
Largest Blocks Of Class A Space
Oklahoma’s economy is stronger than most of the rest of the country and Oklahoma City continues to enjoy broad support for its investments in urban infrastructure, venues, and schools. This is evidenced by the voters’ commitment to another penny sales tax for MAPs III projects downtown, Devon’s progress with its corporate headquarters, and Project 180’s reconstruction of all the streets within the CBD. During the next decade more than $3 billion of public and private investments are committed to the downtown area, an indication that the city’s remarkable renaissance is likely to continue. ■
Adddress
Size (sf))
Submarket
211 N Robinson 7919 Mid America Blvd 3030 NW Expressway 4727 Gaillardia
106,397 34,814 26,794 25,071
Downtown Southeast Northwest Downtown
22
Major New Developments Adddress
Size (sf))
Devon Tower - 325 W Sheridan Ave 6005 S Air Depot Blvd Paycom - 7801 W Memorial Rd Oklahoma Diagnostic Laboratory Mustang Fuel
Delivery Date
1,800,000 June 2012 320,000 1st Quarter 2012 90,000 2012 70,000 2011 38,275 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
5,657,716 9,018,174 14,675,890
8,296 314,107 322,403
Direct Vacancy % 26.4% 13.1% 18.2%
Sublease Vacancy % 0.1% 0.0% 0.0%
Total Vacancy % 26.5% 13.1% 18.3%
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
Enogex Chesapeake Energy Vericrest Financial, Inc OHCA Midfirst
CBD Northwest Memorial Midtown Midtown
211 Robinson Ave 3817 NW Expressway 13801 Wireless Way 2402 NW 23rd 2401 NW 23rd
130,000 110,998 55,152 52,000 42,000
WIGGIN PROPERTIES, LLC WWW.WIGGINPROP.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
ORANGE COUNTY, CA
MARKET OVERVIEW The Orange County office market continues to show signs of stabilization, with continued improvement in vacancy and positive absorption during the end 2011. For the upcoming year, job growth may stimulate new office space demand; the decline in projected vacancy will result primarily from minimal construction. Many projects will remain in the planning process due to limited construction financing. Reduced rents and generous leasing incentives may encourage tenants to consider larger and higher-quality spaces.
TRENDS & ECONOMIC CONDITIONS The recovery has been slow and steady over the past 12 months. With a net increase of 11,700 jobs from August 2010 to August 2011, 5,600 jobs were created in leisure and hospitality and 5,400 in education and health services. Despite government, defense, and aerospace cutbacks, other industry sectors have been dampening the blow. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
18171 Von Karman Ave. 3800 Chapman Ave. 1100 Town & Country Rd. 7711 Center Ave. 2600 Michelson Dr.
140,000 82,752 80,969 80,000 60,075
Airport Central Central West Airport
23
Major New Developments Adddress
Size (sf))
Delivery Date
1003-1011 E. Ball Rd. 3400 E. La Palma Ave. 1041 E. Yorba Linda Blvd.
194,000 100,000 43,000
2nd Quarter 2011 3rd Quarter 2011 1st Quarter 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
CBD Suburban Total
42,489,624 68,446,842 110,936,466
391,416 535,243 926,659
Direct Vacancy % 17.0% 15.6% 16.1%
Sublease Vacancy % 0.9% 0.8% 0.8%
Total Vacancy % 17.9% 16.4% 17.0%
Largest Tenant Transactions In 2011 Tenant CoreLogic Microsemi Corporation Western Digital Experian VPI Pet Insurance
Submarket
Adddress
Size (sf))
South South Airport Airport North
40 Pacifica 1 Enterprise 3337-3353 Michelson Dr. 535 Anton Blvd. 1800 E. Imperial Highway
169,287 109,948 104,000 87,000 77,828
CHARLES DUNN COMPANY WWW.CHARLESDUNN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
PHOENIX, AZ
MARKET OVERVIEW 2011 was by no means a banner year for the Phoenix office market. Rental rates continued to fall and the improvement in vacancy is mainly due to a few larger tenants taking occupancy of previously signed leases. One thing is for certain: it was a better year than 2010. The Phoenix market continues to lower the average quoted rates and offer landlord concessions, allowing new tenants to take advantage of market conditions. Phoenix will remain a tenant’s market until the local economy make significant strides for improvement.
TRENDS & ECONOMIC CONDITIONS The Phoenix area experienced a job growth totaling 27,100 jobs in 2011, representing 1.6 percent of the total employment base. Nearly every employment sector recorded job growth, including the construction segment. From mid-2006 through mid-2010, the sector lost 100,000 positions. In 2011, however, employers created 2,200 construction jobs. Although the Phoenix economy remains positive, forecasts predict another slow year of growth in 2012. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
1500 N. Priest Drive 13610 N. Black Canyon Highway 1601 W. Fountainhead Parkway 16765 N. Perimeter Dr. 210 E. Earll Dr.
208,478 180,048 165,290 159,141 158,249
Tempe North Phoenix Tempe North Scottsdale Phoenix
24
Major New Developments Adddress
Size (sf))
Delivery Date
2700 West Frye Road 1601 West Fountainhead Parkway
183,000 165,290
1st Quarter 2011 2nd Quarter 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
CBD Suburban Total
20,878,669 59,678,492 80,557,161
238,876 835,974 1,074,850
Direct Vacancy % 21.8% 26.2% 25.1%
Sublease Vacancy % 1.1% 1.1% 1.1%
Total Vacancy % 22.9% 27.3% 26.2%
Largest Tenant Transactions In 2011 Tenant US Foods Fennemore Craig Fender Musical Instruments Corp. Greenberg Trauig, LLP GE Capital Corp
Submarket
Adddress
Size (sf))
Chandler East Phoenix Scottsdale East Phoenix Tempe South
8075 S. River Parkway 2394 E. Camelback Rd. 17600 N. Perimeter Dr. 2375 E. Camelback Rd. 2150 S. 48th St.
132,224 121,000 119,681 78,286 68,224
CHARLES DUNN COMPANY WWW.CHARLESDUNN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
PORTLAND, OR
MARKET OVERVIEW The Portland metropolitan office market ended the fourth quarter with net absorption totaling more than 283,000 square feet, marking the seventh quarter in a row of positive absorption. The overall occupancy level, currently 89.6 percent, has steadily increased from low of 88.5 percent during the first quarter of 2010. Average quoted rental rates have increased slightly over the last seven quarters, currently at $19.83 per square foot (full service).
TRENDS & ECONOMIC CONDITIONS Tenants in the market today for CBD, class A office space larger than 30,000 square feet have four alternatives. Large blocks of contiguous office space will continue to be limited until new office developments are completed. Two proposed office developments remain poised to move forward - One Waterfront Place and Park Avenue West. Both projects have significant pre-development work completed and arebest prepared to deliver occupancy within 24 months. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
2035 NE Cornelius Rd - Bld B Kruse Oaks III Pacific Center US Bancorp Tower KOIN Center
116,500 108,454 67,272 38,702 29,181
SUB SUB CBD CBD CBD
25
Major New Developments Adddress
Size (sf))
Delivery Date
Park Avenue West 100 Multnomah One Waterfront Place
480,000 337,000 250,000
2015 TBD 2014
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
CBD Suburban Total
11,751,987 15,871,793 27,623,780
191,044 216,717 407,761
Direct Vacancy % 6.7% 13.5% 10.6%
Sublease Vacancy % 0.7% 0.7% 0.7%
Total Vacancy % 7.4% 14.2% 11.3%
Largest Tenant Transactions In 2011 Tenant Miller Nash Law Firm HDR Engineers KPFF Engineers RadiSys Corporation Rockwell Collins
Submarket
Adddress
Size (sf))
CBD CBD CBD Sunset Corridor Wilsonville
US Bancorp Tower Congress Center US Bancorp Tower 5435 NE Dawson Creek Dr. 27500 SW Parkway Ave
56,379 48,111 47,788 45,655 34,180
MELVIN MARK BROKERAGE COMPANY WWW.MELVINMARKCOMPANIES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
RICHMOND, VA
MARKET OVERVIEW As in 2010, the majority of activity in office leasing occurred in the Innsbrook submarket in Northwest Richmond. Reynolds Crossing III remains the only building under construction and is expected to deliver 63,000 square feet in the second quarter of 2012. Downtown Richmond and the Northwest quadrant saw 128,697 and 129,028 square feet of space absorbed in 2011, respectively. New construction has not weighed heavily on vacancy as of the top five new deliveries are all 100 percent occupied.
TRENDS & ECONOMIC CONDITIONS Leasing and sales activity rebounded in 2011. After a flat year, rental rates are expected to rise based on the limited availability of Class A large blocks. Vacancy rates have decreased as net absorption stayed positive throughout the year. In the first nine months of 2011, 13 sales transactions occurred with an average price per square foot of $174.42--as compared to $54.74 for the 7 transactions that were recorded over the same amount of time in 2010. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
9954 Maryland Drive 11013 W. Broad St. Rt 288 & Patterson 901 E. Byrd St. 919 E. Main St.
63,967 45,000 25,000 22,970 18,199
Innsbrook Innsbrook West Creek CBD CBD
26
Major New Developments Adddress
Size (sf))
Delivery Date
OrthoVirginia Building VCHA & CCNV Headquarters Mayland Medical Center - Bldg 1 Millworks V Dominion Place - Building H
70,000 25,268 15,360 14,540 13,387
2nd Quarter 2011 1st Quarter 2011 2nd Quarter 2011 2nd Quarter 2011 3rd Quarter 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Totals
18,129,268 42,065,726 60,194,994
135,529 353,346 488,875
Direct Vacancy % 9.5% 11.3% 10.7%
Sublease Vacancy % 0.7% 0.7% 0.7%
Total Vacancy % 10.2% 12.0% 11.4%
Largest Tenant Transactions In 2011 Tenant Mondial Assistance Capital One Bank SunTrust Bank SnagAJob Rummel Klepper & Kahl, LLP
Submarket
Adddress
Size (sf))
Innsbrook Innsbrook Innsbrook Innsbrook Shockoe Bottom
Deep Run 1/Mondial Assistance HQ Liberty Plaza II Franklin Commons Rhodia Bldg Edgeworth Bldg @ Tobacco Row
235,326 135,375 85,000 67,672 15,152
DIVARIS REAL ESTATE, INC. WWW.DIVARIS.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
SAN ANTONIO, TX
MARKET OVERVIEW In spite of activity sparked by the Eagle Ford Shale play south of San Antonio, the year shows negative absorption for 2011. The AT&T sublease space returned to the market in fourth quarter. Many of the large deals completed in 2011 were moves within the market so they did not result in significant absorption. NuStar and KCI are building new facilities that will bring additional large blocks of space back to the market in 2012.
TRENDS & ECONOMIC CONDITIONS San Antonio is Texas’ second largest city and continues to be a friendly business environment with logistic advantages favorable to businesses looking to reduce operating costs or execute efficient expansion. Positioned as a national economic leader, San Antonio has gained several enviable spots on recent Forbes’ lists and most recently a spot on Bloomberg’s “One of America’s top 50 best cities to live in” list. The Alamo city is expected to continue to draw interest of new businesses in 2012 and create additional job opportunities. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
8023 Vantage Drive 1101 Sentry Gateway 7990 W IH-10 17802 IH-10 17806 IH-10
137,080 95,000 86,047 81,241 76,585
Northwest Northwest Northwest Far Northwest Far Northwest
27
Major New Developments Adddress
Size (sf))
Delivery Date
3503 Paesanos Parkway 1101 Sentry Gateway 17115 San Pedro Avenue
26,532 95,000 42,377
Feb-11 May-11 Dec-11
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
3,851,570 21,612,365 25,463,935
105,697 (247,430) (141,733)
Direct Vacancy % 27.7% 19.6% 20.8%
Sublease Vacancy % 0.3% 0.5% 0.5%
Total Vacancy % 28.0% 20.1% 21.3%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
Size (sf))
Visionary Properties, Inc. The Hartford Financial Services Group Texas A&M University System Argo Group US United Healthcare Services
CBD Northwest South CBD Northwest
175 E Houston Street 3600 Wiseman Boulevard Brooks City Base IBC Centre Tech Ridge I
108,655 99,984 77,648 77,414 55,000
PELOTON COMMERCIAL REAL ESTATE WWW.PELOTONCRE.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
SAN DIEGO, CA
MARKET OVERVIEW The San Diego office market is progressively improving as net absorption continues to maintain positive gains while vacancy steadily decreases. Positive net absorption of 700,373 square feet dropped the direct vacancy rate for San Diego office space to 16.6 percent at the end of 2011 from 17.1 percent in the third quarter. The San Diego office market will continue to show modest improvement for 2012. Leasing activity will gain momentum once occupational and economic conditions maintain moderate improvement.
TRENDS & ECONOMIC CONDITIONS According to the State of California Employment Development Department, San Diego County gained 13,500 payroll jobs from August 2010 to August 2011. The unemployment rate in San Diego County was at 9.2 percent in November 2011, down from 9.7 percent in October 2011 and below the November 2010 rate of 10.6 percent. The decrease of the unemployment rate may be an indication that the San Diego job market will stabilize. â–
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
1 Torrey Santa Fe Road 9885 Towne Centre Drive 12220 Scripps Summit Drive 401 West A Street 3570 Carmel Mountain Rd.
350,000 190,000 135,000 93,025 89,367
56 Corridor Sorrento Mesa East County Downtown Sorrento Valley
28
Major New Developments Adddress
Size (sf))
Delivery Date
16465 Via Esprillo 5454 El Cajon Blvd.
83,000 54,776
3rd Quarter 2011 2nd Quarter 2011
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
CBD Suburban Total
11,549,240 68,254,660 79,803,900
(10,103) 710,476 700,373
Direct Vacancy % 17.9% 15.5% 15.8%
Sublease Vacancy % 0.5% 0.8% 0.8%
Total Vacancy % 18.4% 16.3% 16.6%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Cooley Godward Kronish, LLP Wells Fargo Halozyme Therapeutics Union Bank AutoAnything
Submarket
Adddress
Size (sf))
UTC Sorrento Mesa Sorrento Valley Mission Valley Kearny Mesa
4401 Eastgate Mall 10421 Wateridge Circle Sorrento Plaza Rio San Diego Plaza 6602 Convoy Court
89,309 64,148 57,946 50,651 40,431
CHARLES DUNN COMPANY WWW.CHARLESDUNN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
SAN FRANCISCO BAY AREA, CA
MARKET OVERVIEW As predicted, the Bay Area office market made a spectacular recovery in 2011. Gross leasing in Greater Silicon Valley set a new record at 15 million square feet. The explosive job growth of Facebook , Twitter, and Salesforce led the way while mainstay Apple grabbed as much space as possible in the West Silicon Valley. Palo Alto Class A rents have hit common highs of $96 while San Francisco’s South of Market jumped to many mid to high $40 rents. Watch for a burst of campus and speculative pre-entitled building announcements in 2012.
TRENDS & ECONOMIC CONDITIONS The Bay Area's dominance as the top global region for venture capital and innovation rang true in 2011. Many submarket vacancy rates are below 5 percent including Palo Alto, Mountain View and San Francisco's infamous South of Market, at 3.3 percent. There are no indications that this will slow in 2012. Expect total Bay Area office vacancy rate below 10 percent by year end. As rental rates continue to climb the pressure to deliver more space will mount. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
500 Terry Francois 55 22nd St 101 California 600 Montgomery 555 Mission
305,260 103,975 98,243 69,586 67,084
SF Mission Bay SF South Financial SF Financial SF North Financial SF South Financial
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Major New Developments Adddress
Size (sf))
Delivery Date
SFPUC Headquarters 188 Spear St
257,097 73,631
2nd Quarter 2012 First Quarter 2012
Vacancy Rates Location San Francisco East Bay/Oakland South Bay/San Francisco Total
Size of Market (sf)
Net Absorption (sf)
160,338,040 112,893,475 107,934,385 381,165,900
3,908,970 950,645 1,612,546 6,472,161
Direct Vacancy % 10.5% 12.0% 12.2% 11.1%
Sublease Vacancy % 1.0% 0.4% 1.0% 0.9%
Total Vacancy % 11.5% 12.4% 13.2% 12.0%
Largest Tenant Transactions In 2011 Tenant Facebook Sony Salesforce Environmental Protection Agency Twitter
Submarket
Adddress
Northern Silicon Valley Mid Peninsula SF South Financial District SF South Financial District SF SouthFinancial District
Network Circle, Menlo Park Bridgepoint Park, San Mateo 50 Fremont St., SF Hawthorne Plaza, SF Market Square, SF
Size (sf)) 1,000,122 450,501 412,000 259,152 214,950
RITCHIE COMMERCIAL, INC WWW.RITCHIECOMMERCIAL.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
ST. LOUIS, MO
MARKET OVERVIEW Overall vacancy rates in the St. Louis market rose by 10 basis points from 16.9 percent to 17.0 percent. Space reductions from companies like Verizon, Sara Lee, Monsanto and Wells Fargo have contributed to a total 179,000 square feet of negative absorption in 2011. Given the continued decline in demand, rental rates have fallen by 8 percent, averaging $19.25. Average lease terms remain low, as companies delay hiring due to economic uncertainty, and hesitate to sign long-term leases.
TRENDS & ECONOMIC CONDITIONS Continuing on with the trends of 2011 – 2012 is highly favorable to the tenant in search of great lease terms and rates. Average lease terms/rates and construction will remain low until we see an increase in job growth in the area (which is projected to grow by 2 percent this year). ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
6 Cityplace Center Dr. 3470 Rider Trail S. 211 N. Broadway 800 Market St. 13640 Riverport
112,920 99,308 71,782 64,315 40,560
West County Earth City Downtown Downtown Earth City
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Major New Developments Adddress
Size (sf))
Delivery Date
Streets of St. Charles Sunnen Development
250,000 180,000
Phase 1 - 2nd Quarter 2012 Fall 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
12,253,179 38,736,658 50,989,837
(195,609) 16,859 (178,750)
Direct Vacancy % 28.8% 12.1% 16.1%
Sublease Vacancy % 0.5% 1.1% 1.0%
Total Vacancy % 29.3% 13.1% 17.0%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant Stifel Financial Corp BEB Management LLC Peabody Energy Clayton Bemiston Investors St. Louis Metro Police Department
Submarket CBD CBD CBD Clayton CBD
Adddress 501 N. Broadway 500 N. Broadway 701 Market 130 S. Bemiston Ave. 1901-1915 Olive Street
Size (sf)) 434,000 285,211 215,362 156,932 143,024
COZAD COMMERCIAL REAL ESTATE, LTD WWW.COZADGROUP.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
WASHINGTON, D.C.
MARKET OVERVIEW The Washington, D.C. market continues to be one of the top performing commercial real estate markets in the United States as key market indicators, including unemployment and office vacancy rates, outperform all Metropolitan areas across the nation. Washington DC remains the top recipient of federal procurement dollars among all Metropolitan areas. This has led to a consistently strong job market and economic stability in the region.
TRENDS & ECONOMIC CONDITIONS Renewal activity dominates the market as the Federal Government grapples with deficit reduction measures and the private sector takes a “wait and see” approach to their real estate. Submarkets offering mixed use amenities and access to public transportation continue to demonstrate solid fundamentals while outlying suburbs suffered from a lack of tenant demand. ■
Largest Blocks Of Class A Space Adddress
Size (sf))
Submarket
1299 Pennsylvania Avenue 5001 Eisenhower Avenue 5275 Leesburg Pike 1015 Half Street SE 250 E Street SW
602,000 605,000 427,000 391,000 331,000
East End I-395 Corridor I-395 Corridor Capitol Riverfront Southwest
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Major New Developments Adddress
Size (sf))
Delivery Date
800 & 810 10th Street, NW 165 N. Street NE 1000 Connecticut Ave, NW 800 N. Glebe Road, Ballston 500 N. Capitol Street, NW
462,228 400,000 394,145 300,575 211,818
3rd Quarter 2013 1st Quarter 2013 3rd Quarter 2012 3rd Quarter 2011 1st Quarter 2012
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
113,488,741 212,043,531 325,459,013
2,156,845 (1,396,661) 760,184
Direct Vacancy % 10.2% 14.5% 13.0%
Sublease Vacancy % 0.8% 1.4% 1.2%
Total Vacancy % 11.0% 15.9% 14.2%
Please note: Numbers in parentheses are negative.
Largest Tenant Transactions In 2011 Tenant
Submarket
Adddress
NOAA Office of the Comptroller of the Currency NASA National Science Foundation Federal Housing Finance Agency
Silver Spring Southwest Southwest Ballston Southwest
Silver Spring Metro Plaza 400 7th Street, S.W. 300 E Street, S.W. 4201 Wilson Boulevard 400 7th Street, S.W.
Size (sf)) 1,000,000 702,000 597,000 541,000 351,000
AMR COMMERCIAL, LLC WWW.AMRCOMMERCIAL.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726 -1700
INDUSTRIAL SERVICES The following CORE member firms service industrial clients in their respective markets: Ackerman & Company
Atlanta, GA
Aronov Commercial
Montgomery, AL
Arthur J. Rogers
Chicago, IL
Cameron Butcher
Denver & Colorado Springs, CO
Charles Dunn Company
Los Angeles, CA
Cozad Commercial
St. Louis, MO
Divaris Real Estate
Hampton Roads, VA
LaSala-Sonnenberg
Kansas City, KS
LandQwest Commercial
Fort Myers, FL
Peloton Commercial Real Estate
San Antonio, TX
RFP Commercial
Milwaukee, WI
Stiles Realty
Fort Lauderdale, FL
Swearingen Realty Group
Dallas, TX
Weichart Commercial
New Jersey
Wiggin Properties
Oklahoma City, OK
Please visit www.corenetworkcre.org for contact information.
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BOARD OF DIRECTORS Christopher Cooper Board of Directors - CORE Network Chief Executive Officer Charles Dunn Company 800 West Sixth Street, 5th Floor Los Angeles, California 90017 p: 213 534 3201 ccooper@charlesdunn.com
Andrew J. Davidson Chairman - CORE Network Executive Vice President/Managing Director MB Real Estate 181 West Madison Street, Suite 4700 Chicago, Illinois 60602 p: 312 558 3888 adavidson@mbres.com
Michael B. Divaris Vice Chairman - CORE Network President Divaris Real Estate, Inc. One Columbus Center, Suite 700 Virginia Beach, Virginia 23462 p: 757 497 2113 mdivaris@divaris.com
Bruce M. Hecht Board of Directors - CORE Network Executive Vice President, Managing Principal Swearingen Realty Group, LLC 5950 Berkshire Lane, Suite 700 Dallas, Texas 75225 p: 214 365 2700 bhecht@swearingen.com
Tom Kates Board of Directors - CORE Network President Stiles Realty 301 East Las Olas Boulevard Fort Lauderdale, FL 33301 p: 954 627 9326 Tom.Kates@stiles.com
Rachel Krupnick Executive Director CORE Network One Columbus Center, Suite 600 Virginia Beach, VA 23462 p: 757 490 7844 rkrupnick@corenetworkcre.org
M. James Mark Board of Directors - CORE Network Chief Executive Officer Melvin Mark Companies 111 Southwest Columbia, Suite 1380 Portland, Oregon 97201 p: 503 223 4777 jmark@melvinmark.com William K. Montrose Treasurer - CORE Network Principal AMR Commercial, LLC 7900 Wisconsin Avenue, Suite 202 Bethesda, Maryland 20814 p: 301 961 9696 wmontrose@amrcommercial.com Jeanne Rogers, CCIM. SIOR Board of Directors - CORE Network Executive Vice President/Principal Arthur J. Rogers & Co. 1559 Elmhurst Road Elk Grove Village, IL 60007 p: 847 297 2200 jrogers@arthurjrogers.com
F. Keene Miller Board of Directors - CORE Network President, Brokerage Ackerman & Co. 10 Glenlake Parkway, South Tower, Suite 1000 Atlanta, Georgia 30328 p: 770 913 3990 fkmiller@ackermanco.net Gardner Peavy Board of Directors - CORE Network Partner Peloton Commercial Real Estate 4040 Broadway, Suite 520 San Antonio, TX 78209 p: 210 299 1172 gpeavy@peloton-sa.com
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