2012 NATIONAL MARKET OVERVIEW
2012
TABLE OF CONTENTS
NATIONAL MARKET OVERVIEW SECTION I - INTRODUCTION 03 04 06
Introduction National Market Summary Statistical Summary
2
SECTION II - CITY STATISTICS 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Atlanta, GA Birmingham, AL Chicago, IL Colorado Springs, CO Dallas, TX Denver, CO Fort Myers, FL Fort Worth, TX Hampton Roads, VA Kansas City, MO Los Angeles, CA Miami, FL Milwaukee, WI New York, NY Northern New Jersey, NJ Oklahoma City, OK Portland, OR Richmond, VA San Antonio, TX St. Louis, MO Washington D.C.
SECTION III - ADDITIONAL INFORMATION 28 29
Industrial Services Board of Directors
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
EVP/Managing Director of Coporate 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 2012
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 extensive 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.
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NATIONAL MARKET SUMMARY 2012
OVERVIEW AND OUTLOOK The slow recovery seen in 2011 continued into 2012 as commercial real estate fundamentals showed slight improvement on a year-over-year basis. Of the 21 markets that CORE Network affiliates track, 16 experienced increased employment in office-using industries (Professional and Business Services, Financial, and Information supersectors). Oklahoma City led the CORE Network affiliates, seeing office-using employment increase by more than 11 percent. Nationally, total office-using employment grew by 530,000 jobs in 2012, down from 570,000 in 2011. Despite the slowdown, these sectors accounted for almost 30 percent of the job growth seen in 2012 while making up only 21 percent of all jobs.
United States Total Office-Using Employment 20,000 18,000 16,000
(thousands)
14,000 12,000 10,000 8,000 6,000 4,000 2,000 -
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Professional and Business Services
Jan-08
Jan-09
Financial
Jan-10
Jan-11
Jan-12
Information
Despite year-end unemployment improving 70 basis points from 2011, the United States unemployment rate is still 3.4 percent above the ten year low seen in 2006. This reduced unemployment rate is largely due to the decrease in labor market participation (down 0.4 percent), as 2012 saw the same amount of jobs added to payrolls as 2011 (roughly 1.8 million). While the national direct vacancy rate dropped 40 basis points to 11.9 percent, the improvement was slight compared to 2011. This can be attributed in part to an increase in new supply. Over 39.7 million square feet was delivered in 2012, an increase of almost 8 million square feet over 2011, but still well below the historical average of 150 million square feet. The sublease market continued to tighten as the amount of available space fell from 50.7 million square feet at the end of 2011, to 46.9 million square feet at year-end 2012. This 7.5 percent reduction in sublease space and 20 percent increase in deliveries is further evidence of improving corporate confidence and a recovering, albeit slowly, office market. Year-end asking rental rates posted the strongest improvement since mid-2008 with increases in average asking rental rates accelerating on a year-over-year basis. The average asking rate for Class A was $27.33, up from $26.85 at the end of 2011. Yet Class B and C average asking rates decreased slightly to $19.55 and $15.82, compared to $19.56 and $16.04, respectively, at the end of 2011. The disparity in rent growth across building classes is indicative of the “flight-to-quality� trend.
4
Total office transaction volume continued to improve, up 23 percent over 2011 to over $73 billion. Simultaneously, cap rates have continued to drop on a year-over-year basis, decreasing from 8.11 percent in 2011 to 7.91 percent in 2012. Cap rates continue to trend lower in major coastal markets with rates dropping over 40 basis points in San Francisco, down to 5.43 percent, and 10 basis points in New York City, down to 4.86 percent. As a result, investors are increasingly evaluating secondary markets in search of stable, but slightly higher yields. The economy will continue its slow recovery into 2013. Industries such as energy, healthcare, and technology are leading the labor recovery but are generally decreasing per-person square footage requirements which will mitigate occupancy improvements. The “downtown migration� trend seen in 2012 will continue into 2013, and will benefit central business districts at the expense of many suburban markets. We expect increased corporate confidence and economic certainty in 2013 to quicken the pace of recovery and lead to more substantial improvements in occupancy, employment and investment activity.
Markets with Largest Year-Over-Year Unemployment Rate Decrease Unemployment Rate
Market Dallas, TX Fort Worth, TX Miami, FL Fort Myers, FL San Antonio, TX
Decrease
5.9% 5.9% 8.1% 8.0% 5.7%
-2.1% -2.1% -1.9% -1.8% -1.8%
Markets with Largest Year-Over-Year Unemployment Rate Increase Unemployment Rate
Market
Increase
8.5% 8.8%
Northern/Central NJ Colorado Springs, CO
0.2% 0.2%
Total Vacancy by Market - Year End 2012 25% 20% 15% 10% 5%
San Antonio, TX
Chicago, IL
Dallas, TX
Milwaukee, WI
Miami, FL
Atlanta, GA
Birmingham, AL
Oklahoma City, OK
St. Louis, MO
Northern/Central NJ
Washington, D.C.
Fort Myers, FL
Fort Worth, TX
Colorado Springs, CO
Kansas City, MO
Denver, CO
Hampton Roads, VA
Los Angeles, CA
New York, NY
Richmond, VA
Portland, OR
0%
5
OFFICE MARKET STATISTICAL SUMMARY CORE Network 2012 Vacancy Summary Location
Direct Vacancy Size of Market (sf) YTD Absorption (sf) %
Sublease Vacancy %
Total Vacancy %
Metropolitan Unemployment Rate (Dec '12)
Atlanta, GA
208,924,820
2,018,732
17.9%
0.9%
18.8%
8.4%
Birmingham, AL
18,552,182
92,740
14.9%
3.4%
18.8%
5.8%
Chicago, IL
242,899,322
-226,023
19.2%
2.6%
21.8%
8.6%
Colorado Springs, CO
28,134,381
274,136
13.1%
1.0%
13.1%
8.8%
Dallas, TX
206,283,640
2,378,518
20.0%
0.6%
20.6%
5.9%
Denver, CO
185,366,071
2,896,715
12.0%
0.3%
12.3%
7.4%
Fort Myers, FL
31,133,290
339,757
13.2%
1.3%
14.5%
8.0%
Fort Worth, TX
43,845,560
620,687
12.8%
1.6%
14.4%
5.9%
Kansas City, MO
110,813,249
812,371
12.6%
0.3%
12.9%
6.4%
Hampton Roads, VA
47,952,455
606,326
12.1%
0.0%
12.1%
6.0%
Los Angeles, CA
375,088,493
546,494
11.6%
0.4%
12.0%
9.3%
Miami, FL
375,088,493
546,494
11.6%
0.4%
12.0%
8.1%
Milwaukee, WI
26,948,712
61,321
20.7%
0.8%
21.5%
7.0%
New York, NY
450,000,000
2,877,000
9.7%
2.3%
12.0%
8.5%
Northern/Central NJ
147,556,295
-493,119
16.9%
1.3%
16.7%
8.5%
Oklahoma City, OK
14,568,094
128,265
17.0%
0.2%
18.0%
4.6%
Portland, OR
27,406,198
75,711
10.6%
0.8%
11.5%
7.6%
Richmond, VA
60,764,564
88,539
11.3%
0.8%
12.0%
6.0%
San Antonio, TX
25,194,317
-355,613
22.0%
0.7%
22.6%
5.7%
St. Louis, MO
50,989,837
110,382
16.4%
0.7%
17.1%
7.0%
Washington, D.C.
367,080,870
-2,017,366
13.6%
2.7%
16.3%
5.2%
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. The vacancy rate is currently 18.9 percent, down 0.6 percent from 2011 when it was 19.5 percent. Atlanta recorded 2,045,214 square feet of positive absorption in 2012 with no significant new deliveries. The year ended with 1.5 million square feet of office space under construction. Quoted rental rates were averaging $19.51 at year end, up from $19.18 in the third quarter. The decrease in vacancy is largely due to companies relocating, consolidating or expanding their offices in the Atlanta market as well as the lack of new deliveries.
TRENDS & ECONOMIC CONDITIONS The Bureau of Labor Statistics reports that the unemployment rate for Metro Atlanta as of December 2012 is 8.3 percent, down 2.2 percent from its peak in October 2009. However, unemployment increased slightly from the previous quarter when it was 8.2 percent. According to the Georgia Department of Labor, the increase is a result of a slight increase in initial claims for unemployment insurance benefits and an increase in the labor force.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
600 Peachtree St 950 E Paces Ferry Rd 12525 Cingular Way 3200 Windy Hill Rd 55 Park Place
659,287 379,733 376,350 373,955 340,146
Downtown Buckhead North Fulton Northwest Downtown
7
Major New Developments Address
Size (sf)
Delivery Date
675 NE Ponce De Leon Ave
450,000
1st Quarter 2014
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
Direct Vacancy %
Sublease Vacancy %
City Suburban Total
66,336,218 142,588,602 208,924,820
748,165 1,270,567 2,018,732
17.4% 18.4% 17.9%
1.1% 0.7% 0.9%
Total Vacancy % 18.5% 19.1% 18.8%
Largest Tenant Transactions in 2012 Tenant State Farm Insurance Alston & Bird LLP Suntrust Robinson Humphrey Price Waterhouse Coopers Kids II
Submarket Central Perimeter Midtown Buckhead Midtown Buckhead
Address 64 & 66 Perimeter Center East 1201 W Peachtree St 3333 Peachtree Rd 1075 Peachtree St 3333 Piedmont Rd
Size (sf) 434,513 366,569 229,894 139,490 105,818
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 92,740 square feet of positive absorption despite six of the ten submarkets reporting negative absorption. The main drivers for the Birmingham market have been the Central Business District and 280/I-459 with a combined absorption of 236,750 square feet. Since the fourth quarter of 2011, vacancy has dropped from 15.7 percent to 14.9 percent and average rents have increased from $17.78 per-square-foot to $18.11 per-square-foot. Sublease space still presents problems for 2013, but has dropped from 2012. There are no new developments to report.
TRENDS & ECONOMIC CONDITIONS The Birmingham metropolitan unemployment rate is currently 5.8 percent compared to the national average of 7.8 percent. The Birmingham market is still being affected by the municipal bankruptcy of Jefferson County. Birmingham continues its growth in the healthcare sector and expects to continue that trend in 2013. From December 2011 to December 2012, Birmingham gained 1,361 jobs and the labor force decreased by 5,000 people. The area is home to a dozen hospitals and over 700 technology related companies.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
Southern Progress Birmingham News Building Meadownrook 300
355,000 120,000 100,000
Midtown CBD 280/I-459
8
Major New Developments Address
Size (sf)
Delivery Date
None
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
CBD Suburban Total
4,338,335 14,213,847 18,552,182
126,242 (33,502) 92,740
Direct Vacancy % 17.6% 14.1% 14.9%
Sublease Vacancy % 2.2% 3.8% 3.4%
Total Vacancy % 19.6% 18.6% 18.8%
*() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant Viva Heathcare Cadence Bank American Behavioral Sain Associates Lifeguard Transportation Service
Submarket CBD 280/I-459 280/I-459 280/I-459 Oxmoor
Address Regions Plaza 3500 Colonnade Alostar Bank Building Two Perimeter Park South Barber Business Park (216 Aquarius)
Size (sf) 85,626 59,564 12,403 11,316 7,667
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 continued to show modest improvement in Chicago’s CBD with direct vacancy falling slightly during 2012. The rent growth seen in Class A buildings in 2011 has slowly spread to Class B and C buildings in 2012. The Suburban market continued to struggle and experienced nearly 70,000 square feet of negative absorption.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS The Chicago metropolitan unemployment rate fell 100 basis points to 8.6 percent, but remains above the national average of 7.8 percent. Despite this decline in unemployment, vacancy continues to remain high as companies decrease their square-footage requirement per employee. The CBD continues to attract numerous tenants from the suburbs and around the country who are looking to take advantage of Chicago’s young workforce and geographic advantages.
Address
Size (sf)
Submarket
515 N State 500 W Monroe 200 E Randolph 233 S Wacker 101 E Erie
350,906 338,131 306,091 285,910 217,569
North Michigan Ave West Loop East Loop West Loop North Michigan Ave
9
Major New Developments Address
Size (sf)
Delivery Date
400 S Jefferson (redevelop.) 444 W Lake
304,000 900,000
January 2013 April 2013
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
131,044,641 112,311,826 243,356,467
472,780 (69,094) 403,686
Direct Vacancy % 15.1% 23.2% 18.8%
Sublease Vacancy % 2.5% 3.0% 2.7%
Total Vacancy % 17.6% 26.2% 21.6%
*() Denotes a negative number
Largest Tenant Transactions In 2012 Tenant Google (Motorola Mobility) AON Citadel (Renewal) United Airlines (Renewal) Draft FCB
Submarket River North East Loop Central Loop West Loop North Michigan Ave
Address 222 Merchandise Mart 200 E Randolph 131 S Dearborn 233 S Wacker 875 N Michigan
Size (sf) 572,000 396,406 225,000 205,000 185,000
MB REAL ESTATE WWW.MBRES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
COLORADO SPRINGS, CO
MARKET OVERVIEW The overall absorption for the office market in Colorado Springs was 274,136 square feet in 2012. The absorption rate has been decreased each quarter in 2012. The vacancy rates have been steady at 13.1 percent despite this downward trend in absorption.
TRENDS & ECONOMIC CONDITIONS The average office rental rates have been in the $10.00 triple net range for the past eight years. Although the rental rates are listed at $10.00 triple net, those rates are being negotiated below the actual asking price. The vacancy rate for the office market in Colorado Springs was 13.1 percent in the fourth quarter of 2012. The vacancy rate remained steady throughout 2012 ranging from 13.0 percent to 13.4 percent.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
565 Space Center Dr 1755 Telstar Dr 1650 Telstar Dr 2 N Cascade Ave 90 S Cascade Ave
69,231 53,104 47,106 43,330 41,969
Southeast Northeast Northeast CBD CBD
10
Major New Developments Address
Size (sf)
Delivery Date
Lifestyle Center - Northgate & I-25
202,000
Summer 2013
Vacancy Rates Location
274,136
Direct Vacancy % 13.1%
Sublease Vacancy % 1.0%
274,136
13.1%
1.0%
Size of Market (sf)
YTD Absorption (sf)
Colorado Springs
28,134,381
Total
28,134,381
Total Vacancy % 13.1% 13.1%
Largest Tenant Transactions in 2012 Tenant Merrick & Company Carecore National L-3 Communications Titan Group Metso Mineral Industries Penrose St. Francis Hospital
Submarket Northwest Northeast Northwest Northwest Greater CBD
Address 5755 Mark Dabling Blvd 1125 Kelly Johnson Blvd 5575 Tech Center Dr 4820 Centennial Blvd 2222 N. Nevade Ave
Size (sf) 36,970 21,679 20,807 20,226 17,500
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 29.7 million square feet and is currently showing a vacancy rate of 32.2 percent, while the suburban market contains over 176 million square feet and is showing a vacancy rate of 18.7 percent. There is currently just over 1,000,000 square feet of new office development to be completed within the next year. Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS Business and consumer confidence has improved as the economy begins to turn the corner. Steady job growth in stable sectors such as the energy, healthcare and insurance industries fueled the demand for new leases and expansions. Vacancy rates are likely to continue to improve in 2013.
Address
Size (sf)
Submarket
5601 Legacy Dr 1601 Elm St 350 N St Paul St 901 Mani St 14841 N Dallas Pkwy
354,482 299,005 291,570 269,556 263,564
Upper Tollway/West Plano CBD CBD CBD Quorum/Bent Tree
11
Major New Developments Address
Size (sf)
Delivery Date
5851 Legacy Cir 5543 Legacy Dr 7800 N Dallas Pkwy 5040 Headquarters Dr 8383 Preston Center Plz
318,600 246,229 157,800 92,371 85,000
Third Quarter 2012 First Quarter 2013 First Quarter 2013 Third Quarter 2013 First Quarter 2013
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
CBD Suburban Total
29,701,903 176,581,737 206,283,640
(139,692) 2,518,210 2,378,518
Direct Vacancy % 31.2% 18.1% 20.0%
Sublease Vacancy % 1.0% 0.6% 0.6%
Total Vacancy % 32.2% 18.7% 20.6%
*() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant State Farm Insurance Merit Energy Company State Farm Insurance VHA Christus Health
Submarket DFW Freeport/Coppell Quorum/Bent Tree Richardson Urban Center/Wingren Office Ctr/West LBJ Ext
Address 3950-4000 Regent Blvd 13727 Noel Rd 1011 Galatyn Pkwy 290 E John Carpenter Frwy 919 Hidden Ridge Dr
Size (sf) 415,141 368,035 291,469 286,922 227,075
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 had an overall absorption of 2,896,715 square feet in 2012. The absorption rate rose all year except for the negative absorption in the third quarter. The vacancy rate for the Denver market was at 12.0 percent for the fourth quarter in 2012. The average rental rates rose in the fourth quarter by 1.1 percent.
TRENDS & ECONOMIC CONDITIONS
Largest Blocks Of Class A Space
The Denver Office Market rental rates rose to $20.61 in 2012. The vacancy rates decreased in the fourth quarter of 2012 to 12.0 percent. The vacancy rates for the Denver office market have stayed steady in 2012, ranging from 12.0 to 12.7 percent.
Address
Size (sf)
Submarket
1801 California Street 999 18th Street 101 W. Colfax Ave 1001 17th Street 707 17th Steet
874,536 340,111 255,460 201,224 157,566
CBD CBD CBD CBD CBD
12
Major New Developments Address
Size (sf)
Delivery Date
1601 Wewatta St Denver Union Station 16th St & Wewatta Street
307,000 199,000 87,000
Mid 2014 Mid 2014 Mid 2014
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
City Suburban Total
32,902,747 152,463,324 185,366,071
480,043 2,416,672 2,896,715
Direct Vacancy % 12.5% 12.0% 12.0%
Sublease Vacancy % 0.2% 0.3% 0.3%
Total Vacancy % 12.5% 12.0% 12.3%
Largest Tenant Transactions in 2012 Tenant Jacons Engineering Group QEP Resources Wheeler Trigg O'Donnell LLC Bill Barrett Corporation Fidelity Exploration & Production Company
Submarket CBD CBD CBD CBD CBD
Address 707 17th Street 1050 17th Street 370 17th Street 1099 18th Street 1700 Lincoln Street
Size (sf) 143,915 87,411 74,242 73,443 60,639
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 Southwest florida office market ended the year with a vacancy rate of 15.5 percent. The vacancy rate was up over the third quarter, with net absorption totaling negative 60,000 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending at 62,152 square feet. Average rental rates ended the fourth quarter at $16.99, an increase over the third quarter.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS
Address
There are many positive signs of recovery in the Southwest Florida market. There was continued improvement in median sales prices, reflecting more traditional sales. Southwest Florida taxable sales increased by seven percent from September 2011 to September 2012. November 2012 seasonally-adjusted unemployment rates improved in all reporting counties compared to November 2011, as well as to October 2012. The region’s seasonally-adjusted employment rate declined to 8.0 percent in November 2012 from 10.2 percent a year earlier. Local recovery is expected to continue for the next few years.
Size (sf)
Submarket
None
13
Major New Developments Address
Size (sf)
Delivery Date
12651 Gateway 9100 Forum Corp Pkwy 8350 Sierra Meadows 3208 Chiquita Blvd
119,141 40,000 20,151 20,000
First Quarter 2012 Second Quarter 2013 Fourth Quarter 2013 Second Quarter 2013
Vacancy Rates Location City Other Total
Size of Market (sf)
YTD Absorption (sf)
4,759,114 26,374,176 31,133,290
22,995 316,762 339,757
Direct Vacancy % 14.3% 12.7% 13.2%
Sublease Vacancy % 0.3% 1.7% 1.3%
Total Vacancy % 14.6% 14.4% 14.5%
Largest Tenant Transactions in 2012 Tenant Global HR Research John R Wood Lee Memorial Health Systems Health Group Wells Fargo
Submarket S Fort Myers Bonita Springs S Fort Myers Charlotte Co S Fort Myers
Address 9530 Marketplace Rd 26269 Tamiami Trl 16451 Healthpark Commons Dr 713 E Marion Ave 12140 Carissa Commerce Ct
Size (sf) 22,553 13,268 11,279 11,000 10,545
LANDQWEST COMMERCIAL WWW.LQWEST.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
FORT WORTH, TX
MARKET OVERVIEW The CBD market contains over 8.9 million square feet of office space and is currently showing a vacancy rate of 13.6 percent, while the suburban market contains over 34.8 million square feet and is showing a vacancy rate of 14.6 percent. The Fort Worth market brought on line almost 149,000 square feet of new office space in 2012. There is currently over 299,000 square feet of new office development planned within the next 18 months in the Fort Worth market.
TRENDS & ECONOMIC CONDITIONS The Fort Worth market continues to be at equilibrium. Leasing activity should pick up in 2013, as tenant’s 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 2013.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
1 E Kirkwood Blvd 3 Campus Cir 2 Campus Cir 7 Campus Cir 8 Campus Cir
381,376 120,243 120,108 71,584 44,303
Westlake/Grapevine Westlake/Grapevine Westlake/Grapevine Westlake/Grapevine Westlake/Grapevine
14
Major New Developments Address
Size (sf)
Delivery Date
12651 Gateway 9100 Forum Corp Pkwy 8350 Sierra Meadows 3208 Chiquita Blvd
119,141 40,000 20,151 20,000
First Quarter 2012 Second Quarter 2013 Fourth Quarter 2013 Second Quarter 2013
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
CBD Suburban Total
8,962,805 34,882,755 43,845,560
13,215 607,472 620,687
Direct Vacancy % 12.7% 12.8% 12.8%
Sublease Vacancy % 0.9% 1.8% 1.6%
Total Vacancy % 13.6% 14.6% 14.4%
Largest Tenant Transactions in 2012 Tenant Global HR Research John R Wood Lee Memorial Health Systems Health Group Wells Fargo
Submarket S Fort Myers Bonita Springs S Fort Myers Charlotte Co S Fort Myers
Address 9530 Marketplace Rd 26269 Tamiami Trl 16451 Healthpark Commons Dr 713 E Marion Ave 12140 Carissa Commerce Ct
Size (sf) 22,553 13,268 11,279 11,000 10,545
SWEARINGEN REALTY GROUP, LLC WWW.SWEARINGEN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
HAMPTON ROADS, VA
MARKET OVERVIEW After two quarters of negative numbers, the market pulled off a strong finish with positive 606,326 square feet of yearly net absorption in office space. One reason for the decrease in vacancy is the lease by Amerigroup of 315,000 square feet in the The Concourse, the former USAA headquarters building in the Lake Wright office park. Overall, the vacancy rate was 12.1 percent.
TRENDS & ECONOMIC CONDITIONS
Largest Blocks Of Class A Space
Deliveries of new Class A space in Hampton Roads were nonexistent throughout 2012. The year began with no deliveries in any submarket. Three buildings were added in both the second and third quarters with 39,500 square feet and 90,331 square feet, respectively. One building of 19,530 square feet was delivered in the fourth quarter. Also, the FBI Building, with 131,000 square feet of pre-leased space, and the Sidney Kellam Office Building, a fivestory 61,980 square foot facility at Virginia Beach’s oceanfront is under construction. Overall, the market is strengthening with significant interest in expanding into Hampton Roads.
Address
Size (sf)
Submarket
6160 Kempsville Circle 27511 Burbage Dr 7023 Harbour View Blvd 801 Water Street 4211 Monarch Way
87,168 82,500 59,052 49,938 40,404
Newtown/Witchduck Harbourview/North Suffolk Harbourview/North Suffolk Portsmouth CBD Norfolk-ODU/Ghent
15
Major New Developments Address
Size (sf)
Delivery Date
Clark Nexsen Main St FBI Building Operation Smile Global HQ Sidney Kellam 101 E. Queen Street
336,000 131,000 72,300 61,980 42,777
First Quarter 2015 Third Quarter 2013 Third Quarter 2012 First Quarter 2013 Fourth Quarter 2013
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
CBD Suburban Total
9,701,701 38,250,154 47,952,455
123,641 482,685 606,326
Direct Vacancy % 12.5% 11.9% 12.1%
Sublease Vacancy % 0.0% 0.0% 0.0%
Total Vacancy % 12.5% 11.9% 12.1%
Largest Tenant Transactions in 2012 Tenant Amerigroup Corp AMSEC Northrup Grumman Information Systems, Inc. New American Mortgage Atlantic Bay Mortgage
Submarket Central Norfolk Newtown/Witchduck Lynnhaven Lynnhaven Lynnhaven
Address The Concourse 5701 Cleveland Street, Virginia Beach Gateway Executive Center Bay 3 Chase Building
Size (sf) 315,000 65,000 31,680 30,000 21,591
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 market has enjoyed a renewal of leasing activity primarily in the suburban office markets. Large blocks of space have been leased on behalf of tenants that are 50,000 square feet and above. Small tenant leasing remains relatively stagnant. Due to the metropolitan area straddling the Kansas/Missouri state line, many large space users have chosen to relocate from state to state due to attractive economic incentives offered by the competing governments. While there is a good deal of new construction, it represents primarily build-to-suit activity. The outlook on office leasing activity remains positive with a slight decline in the overall vacancy rate by the end of 2013.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS Large employers in the agricultural, financial services, technology and distribution service sectors continue to grow offering positive prospects for 2013. Sprint Corporation has ceased third-party leasing of their 3.2 million square foot office campus and Cerner is in the process of building and occupying an additional 600,000 square feet. Unemployment in the Kansas City metro area remains below the national average. Steady if not spectacular growth is anticipated for 2013.
Address
Size (sf)
Submarket
Two Pershing Square One Kansas City Place South Lake 11500 Ambassador 8300 Metcalf
238,000 212,000 170,000 150,000 150,899
CBD CBD College Blvd NKC Overland Park, KS
16
Major New Developments Address
Size (sf)
Delivery Date
Grandview Plaza Vista Leawood, Kansas 5200 W 116th
352,099 275,000 127,000 102,183
Dec-12 Jan-13 Feb-13 Feb-13
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
CBD Suburban Total
28,401,283 82,411,966 110,813,249
45,634 766,737 812,371
Direct Vacancy % 15.4% 11.8% 12.6%
Sublease Vacancy % 0.3% 0.3% 0.3%
Total Vacancy % 15.7% 12.1% 12.9%
Largest Tenant Transactions in 2012 Tenant NEA/Bendix Cerner TEVA AMC Polsinelli, White, et al.
Submarket South KC Kansas City, KS Overland Park, KS Leawood, KS Kansas City, MO
Address Grandview, MO Legends West Nall & College 119th & Nall Country Club Plaza
Size (sf) 352,099 330,000 147,463 127,600 125,000
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 continued to stabilize with signs of growth for the year end of 2012, displaying 574,000 square feet of total net absorption, the third consecutive quarter of positive absorption. Average rental rates ended the year at $28.68/sf/year gross and vacancy rates at 12.0 percent. Industry sectors such as science/technology and media/entertainment have expanded in the Los Angeles market during the recession and are currently demanding creative space. The businesses in these sectors require unique office environments like a campus setting; however, supply for creative office space is still a scarce commodity in Los Angeles.
Largest Blocks Of Class A Space
TRENDS & ECONOMIC CONDITIONS The Los Angeles county unemployment rate is currently 10.2 percent (December 2012), well above the national average of 7.8 percent (December 2012). Based on LAEDC, Los Angeles should continue along its 2011 and 2012 growth trajectory with GDP growth in the 2.0 percent range for 2013. The labor market is expected to have modest gains in non-farm jobs, slight improvement in the unemployment rate and inflation is expected to stay in check.
Address
Size (sf)
Submarket
201 N. Douglas 3900 W. Alameda Ave. 555 W. 5th St. 9920 S. La Cienega Blvd. 2900 W. Alameda Ave.
329,342 329,342 251,208 243,000 210,999
South Bay Tri-Cities Downtown LA LAX Tri-Cities
17
Major New Developments Address
Size (sf)
Delivery Date
1200 Grand Centra l Ave. 700 W. Main St. 11333 Sepulveda Blvd. 18888 Labin Ct.
330,679 130,000 125,000 120,000
Second Quarter 2012 Fourth Quarter 2012 Fourth Quarter 2012 Third Quarter 2012
Vacancy Rates Location Central Business District Suburban Total
Size of Market (sf)
YTD Net Absorption (sf)
67,029,660 308,058,833 375,088,493
(304,324) 850,818 546,494
Direct Vacancy % 12.3% 11.5% 11.6%
Sublease Vacancy % 0.2% 0.4% 0.4%
Total Vacancy % 12.5% 11.9% 12.0%
*() Denotes a negative number
Largest Tenant Transactions In 2012 Tenant Wells Fargo Lewis Brisbois Bisgard & Smith LLP Deluxe Digital Studios Playboy Plus U.S. Secret Service
Submarket Downtown LA Downtown LA Tri-Cities Tri-Cities Downtown LA
Address 333 S. Grand Ave. 221 N. Figueroa St. 2400 Empire Ave. 2300 W. Empire Ave. 725 S. Figueroa St.
Size (sf) 328,829 160,415 130,302 102,000 94,100
CHARLES DUNN COMPANY WWW.CHARLESDUNN.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
MIAMI, FL
MARKET OVERVIEW The greater Miami area continued to see improvements in the office market through 2012, ending the year with 1.7 million square feet of positive absorption across the tri-county area. Newto-market leasing has helped the market rebound to some extent, but expansion from existing tenants was the primary factor in the volume of absorption in the area. While the area has seen improvement, asking lease rates have yet to rebound and tenants continue to seek quality space in prime submarkets at rates below those seen at peak market conditions.
TRENDS & ECONOMIC CONDITIONS Confidence in the area continues to rise as unemployment declines. A major boost to the economy is the return of construction to the market. Development of multi-family, industrial and retail properties is picking up, particularly in Miami-Dade County. Additionally, the Port of Miami and Port Everglades have several infrastructure projects underway in anticipation of increased cargo traffic expected to occur after the completion of the Panama Canal expansion in 2014.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
600 Brickell Avenue 333 Avenue of the Americas 4700-4750 T Rex Avenue 1501 Biscayne Blvd 2300 South Congress Avenue
409,013 364,459 300,000 246,925 208,609
Brickell Downtown Miami Boca Raton North Biscayne Blvd Cooridor Delray Beach
18
Major New Developments Address
Size (sf)
Delivery Date
21500 Biscayne, Aventura 3895 NW 107th Ave, Doral
116,645 80,000
First Quarter 2013 First Quarter 2013
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
City Suburban Total
21,560,564 94,780,047 116,340,611
429,254 1,290,964 1,720,218
Direct Vacancy % 19.0% 19.5% 19.4%
Sublease Vacancy % 0.6% 0.5% 0.5%
Total Vacancy % 19.6% 19.9% 19.9%
Address Airport Corporate Center, Miami 3000 W Cypress Creek Rd., Fort Lauderdale 4100 Okeechobee Blvd, West Palm Beach 601 Brickell Key Dr., Miami 3440 Hollywood Blvd, Hollywood
Size (sf) 198,731 75,000 50,155 43,055 41,752
Largest Tenant Transactions In 2012 Tenant NCL Corporation One Blood Child and Family Connection Young & Rubicam Conroy, Simberg, Ganon, Krevans, Abel
Submarket Miami Airport West Cypress Creek West Palm Beach Brickell Hollywood
STILES REALTY WWW.STILES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
MILWAUKEE, WI
MARKET OVERVIEW The Milwaukee office market weakened slightly in the fourth quarter of 2012, posting negative absorption of 25,000 square feet. Vacancy rates rose in all submarkets, except for Park Place. The overall changes are minimal and not indicative of a trend, but rather an issue of timing. Employment growth in the metro area continues tracking slightly positive. Several new downtown Class A buildings have been proposed, but remain on the drawing boards, and the suburbs continue to be very quiet on the development front.
TRENDS & ECONOMIC CONDITIONS The unemployment rate in Milwaukee is down 0.5 percent from a year ago, while the office sector employment numbers showed a modest gain, or almost one percent increase 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.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
310 W. Wisconsin Avenue 411 E. Wisconsin Avenue 23754 W. Bluemound Avenue 17950 W. Corporate Circle 111 E. Wisconsin Avenue
250,112 145,182 120,000 89,128 72,675
CBD Downtown East Brookfield/Waukesha Brookfield/Waukesha Downtown East
19
Major New Developments Address
Size (sf)
Delivery Date
None
Vacancy Rates Location Milwaukee Waukesha Ozaukee Total
Size of Market (sf)
YTD Absorption (sf)
20,439,972 6,508,740 709,349 26,948,712
(10,165) 71,486 (3,122) 61,321
Direct Vacancy % 20.2% 20.7% 21.0% 20.7%
Sublease Vacancy Total Vacancy % % 0.5% 20.7% 0.8% 21.5% 0.0% 21.0% 0.8% 21.5% *() Denotes a negative number
Largest Tenant Transactions In 2012 Tenant AECOM Street Links Center for Veterans Vacon, Inc.
Submarket Schlitz Park Schlitz Park Milwaukee West The Blue (CBD)
Address 1555 River Center 1610 S. 2nd Street 315 W. Court Street 310 W. Wisconsin Avenue
Size (sf) 21,350 17,419 13,800 12,481
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 different markets in Manhattan: Midtown, Midtown South and Downtown. Together they are made up of more than 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 Despite the economic uncertainty in 2012, namely the Presidential election and the Fiscal Cliff, and the effects of superstorm Sandy, the New York City commercial real estate market showed resilience. All three submarkets showed positive absorption for a total of 2.8 million square feet being removed from the market causing vacancy rates to dip to 12 percent. Rental rates increased to $54.39 per square foot. The year was highlighted by a number of renewal transactions as many tenants decided to stay in place. Viacom, Morgan Stanley, UBS, Davis Polk Wardwell and Citibank all renewed at their current locations in deals ranging from approximately 500,000 to 1,600,000 square feet.
Address
Size (sf)
Submarket
The Remington Rand Building Continental Center
994,614 729,467
Chelsea Downtown West
20
Major New Developments Address
Size (sf)
Delivery Date
One World Trade Center World Trade Center - Tower Four World Trade Center - Tower Three 250 West 55th Street International Gem Tower
3,020,630 2,845,000 2,400,000 1,052,150 425,000
First Quarter 2014 First Quarter 2013 Third Quarter 2015 Third Quarter 2013 First Quarter 2013
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
13,000 1,662,000 1,202,000 2,877,000
Direct Vacancy % 9.3% 7.8% 13.6% 9.7%
Sublease Vacancy % 2.8% 1.6% 2.1% 2.3%
Total Vacancy % 12.1% 9.4% 15.7% 12.0%
Largest Tenant Transactions In 2012 Tenant Viacom Inc. Morgan Stanley Smith Barney LLC UBS Davis, Polk & Wardwell Citibank, N.A.
Submarket Times Square Financial District Columbus Circle Grand Central Plaza District
Address 1515 Broadway 1 New York Plz 1285 Avenue of the Americas 450 Lexington Avenue 601 Lexington Ave
Size (sf) 1,606,000 1,152,763 890,861 649,769 490,527
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 a small increase in its vacancy rate in 2012 as a result of 419,193 square feet of negative absorption. The Class A vacancy rate is now 16.9 percent and the average gross asking rent rose slightly to $26.35 from $26.16 per-square-foot gross in 2011. Investment sale cap rates were lower in 2012, averaging 7.4 percent as compared to 8.1 percent in 2011. There is still very little overall activity in the way of speculative new office building construction.
Largest Blocks Of Class A Space Address
TRENDS & ECONOMIC CONDITIONS Leasing velocity was primarily dominated by renewal transactions as tenants continue the trend of avoiding the costs of relocation, but there were also several lease deals in excess of 100,000 square feet consummated this year as a result of corporate consolidations. Lease deals remain heavy on free rent, increased tenant improvement allowances and often require base building improvements/renovations by landlords. Landlords are valuing their tenant bases more than ever, concentrating on delivering good quality of life in their buildings along with very responsive management services.
Size (sf)
Submarket
101 Crawfords Corner Rd., Holmdel 1,675,000 67 Whippany Rd., Whippany, NJ 1,400,000 1 Lake St., Upper Saddle River 474,801 4201 Quakerbridge Rd., Princeton Jct. 450,000 865 Ridge Rd., Monmouth Jct. 378,195
Eastern Monmouth Parsippany Bergen North Princeton Princeton
21
Major New Developments Address
Size (sf)
Delivery Date
Two Riverfront Plaza 175 Park Avenue 300 Carnegie Ctr Dr.
410,000 270,000 88,274
Third Quarter 2013 Second Quarter 2013 Second Quarter 2013
Vacancy Rates Location
(493,119)
Direct Vacancy % 16.9%
Sublease Vacancy % 1.3%
(493,119)
16.9%
1.3%
Size of Market (sf)
YTD Absorption (sf)
Northern NJ
147,556,295
Total
147,556,295
Total Vacancy % 16.7% 16.7%
*() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant Public Service Enterprise Grp The Medicines Group Fresenius Medical Care Alergan Corp EisnerAmper
Submarket Newark/Urban Essex Parsippany Palisades Route 22 West Edison/Woodbridge
Address 80 Park Plaza, Newark 8 Sylvan Way, Parsippany Spectra East, Rockleigh Somerset Corp Ctr Metrotop Plaza II
Size (sf) 854,226 176,745 123,000 96,000 81,700
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 continued its positive trajectory in 2012, with substantial net gains offsetting the negative absorption experienced in various pockets throughout the suburbs. 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 completion of 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.
Address 210 Park Avenue 14000 Quail Springs PKWY One Benham Place, 9400 N Broadway Ext Caliber Center, 3817 NW Expressway 14201 Caliber Drive
Size (sf) 35,060 22,190 17,000 15,424 14,311
Submarket CBD Memorial Corridor North Northwest North
22
Major New Developments Address Devon Tower - 325 W Sheridan Ave Chesapeake, 6200 N Classen Blvd Boeing, 6005 S Air Depot Road Sandridge
Size (sf) 1,800,000 484,000 320,000 200,000
Delivery Date 2012 2013 2012 2014
Vacancy Rates Location City Suburban Total
Size of Market (sf) 5,553,044 9,015,050 14,568,094
YTD Absorption (sf) 268,574 (140,309) 128,265
Direct Vacancy % 23.8% 13.0% 17.0%
Sublease Vacancy % 0.0% 0.3% 0.2%
Total Vacancy % 23.8% 14.0% 18.0% *() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant Midfirst Bank OK Heart Hospital
Mercy Hospital
Submarket Midtown Northwest Memorial Corridor
Address 2401 NW 23rd St 7800 NW 85th Terrace 3705 W Memorial Rd
Size (sf) 88,259 33,000 15,164
WIGGIN PROPERTIES, LLC WWW.WIGGINPROP.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
PORTLAND, OR
MARKET OVERVIEW The Portland metropolitan office market ended 2012 with net absorption totaling more than 741,228 square feet. The overall occupancy level, currently at 89.7 percent, has steadily increased since 2010. Average quoted rental rates have remained stable, currently at $19.82 per square foot (full service).
TRENDS & ECONOMIC CONDITIONS Tenants in the market today for class A office space larger than 30,000 square feet have limited alternatives. Although additional “shadow space” is expected to come back to the market, 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 predevelopment work completed and are, therefore, best prepared to deliver occupancy within 24 months.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
Robert Duncan Plaza Crown Plaza River Forum 2100 River Parkway Pacwest Center
159,000 56,100 33,100 32,600 30,300
CBD CBD John's Landing CBD CBD
24
Major New Developments Address
Size (sf)
Delivery Date
Park Avenue West One Waterfront Place
480,000 250,000
2016 2015
Vacancy Rates Location CBD SUB Total
Size of Market (sf)
YTD Absorption (sf)
11,864,350 15,541,848 27,406,198
(179,013) 254,724 75,711
Direct Vacancy % 7.8% 13.5% 10.6%
Sublease Vacancy % 1.1% 0.6% 0.8%
Total Vacancy % 8.8% 14.1% 11.45% *() Denotes a negative number
Largest Tenant Transactions In 2012 Tenant M Financial DW Fritz Automation URS Corporation Jive Software University Medical Group
Submarket
Address
Size (sf)
NW
Brewery Block 4
70,000
Wilsonville CBD CBD NW
Wilsonville I-5 Corporate Center Columbia Square Federal Reserve Con-Way Crossings
70,000 52,800 51,000 42,000
MELVIN MARK BROKERAGE COMPANY WWW.MELVINMARKCOMPANIES.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
RICHMOND, VA
MARKET OVERVIEW The majority of activity in office leasing occurred in the Innsbrook submarket in Northwest Richmond as it has for the last two years. Vacancy rate for the Richmond metro area increased to 11.3 percent in 2012. Absorption was negative 131,574 square feet in the fourth quarter, but this was offset by a strong third quarter positive absorption of 209,418 square feet which kept the numbers in the black for a year-end net absorption of 88,539 square feet. Class A space fared better than other classes with 392,741 square feet of absorption.
TRENDS & ECONOMIC CONDITIONS Deliveries of new buildings continue to be historically low in 2012, as they have been since 2009. Forest Medical Building was delivered in the second quarter, adding 65,772 to the inventory in the Northwest submarket. And Biotech 8 – Phase 2 broke ground in the third quarter to bring another 112,000 square feet of Class A office space to downtown Richmond. However that is the one and only project under construction in the Class A category. Between CBD and suburban space, there is a widening gap of new occupancies. Year-to-date net absorption for downtown was negative 142,592 square feet compared to a positive 231,131 square feet for office space in the suburban submarkets.
Largest Blocks of Class A Space Address
Size (sf)
Submarket
Deep Run 3 - 9954 Maryland Drive, Richmond 11013 West Broad Street, Glen Allen First Health Building - 4300 Cox Road, Glen Allen Deep Run 1 - 9950 Maryland Drive, Richmond 4895 Lake Brook Drive, Glen Allen
366,023 78,357 69,000 56,674 30,625
NWQ - Innsbrook NWQ - Innsbrook NWQ - Innsbrook NWQ - Innsbrook NWQ - Innsbrook
25
Major New Developments Address
Size (sf)
Delivery Date
Biotech Eight - Phase 2 Forest Medical Building 13400 Tredegar Lake Pkwy 269 Medical Park Blvd
112,000 65,772 4,375 4,580
First Quarter 2014 Second Quarter 2012 First Quarter 2012 First Quarter 2013
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
Direct Vacancy %
Sublease Vacancy %
CBD Suburban Total
18,004,898 42,759,666 60,764,564
(142,592) 231,131 88,539
10.7% 11.6% 11.3%
0.8% 0.8% 0.8%
Total Vacancy % 11.5% 12.4% 12.0% *() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant SunTrust Bank Magellan Health Services Virginia Commonwealth University Health Systems General Electric Company Federal Emergency Management Agency
Submarket Northwest Northwest Northwest Innsbrook Innsbrook
Address WestMark Two WestMark Two The Shops at Willow Lawn 4880 Cox Road Deep Run 3
Size (sf) 82,700 45,000 43,491 30,535 17,500
DIVARIS REAL ESTATE, INC WWW.DIVARIS.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
SAN ANTONIO, TX
MARKET OVERVIEW Most of the negative absorption in 2012 is the result of large tenants moving from multi-tenant space to single-tenant or build-tosuit facilities. However, half of the Nationwide space has already been backfilled. This is in line with the Class A buildings trending toward increased occupancy and rental rates. The Eagle Ford Shale play continues to have positive impact on the overall market. A report released by the San Antonio Economic Development Foundation expects Bexar County to have 11,627 shale-related jobs with a payroll of $507 billion in 2021. Following a spell with zero activity, speculative office construction has resumed with significant pre-leasing.
TRENDS & ECONOMIC CONDITIONS San Antonio is Texas’ second largest city and continues to be a friendly business environment with logistical advantages favorable to businesses with a healthy labor market attracting a growing college-educated population. Even with this influx, the city’s unemployment rate has dropped from 6.7 percent in December 2011 to 5.7 percent in December 2012, nearly half the national average. Added job opportunities give a strong outlook for the San Antonio office market.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
8023 Vantage Dr 2371 Stanley Rd 601 NW Loop 410 17802 W IH-10 175 E Houston St
137,080 109,435 95,347 81,062 66,438
Northwest Northeast North Central Far Northwest CBD
26
Major New Developments Address
Size (sf)
Delivery Date
303 Pearl Parkway 2301 Brodway 1100 McCullough Ave 414 W Sunset Rd 2251 Broadway St
56,483 38,087 26,443 24,598 21,044
Sep-12 Mar-12 Apr-12 Jun-12 Apr-12
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
City Suburban TOTAL
4,144,544 21,049,773 25,194,317
48,838 (404,451) (355,613)
Direct Vacancy % 25.0% 21.3% 22.0%
Sublease Vacancy % 0.5% 0.7% 0.7%
Total Vacancy % 25.5% 22.1% 22.6% *() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant Beckton Dickinson Southwest Airlines Univision Vanguard
Submarket Northwest Northeast Northwest CBD
Address 5859 Farinon Dr 11711 IH-35 N 12238 Silicon Dr 1222 N Main Ave
Size (sf) 67,993 52,205 41,000 23,719
PELOTON COMMERCIAL REAL ESTATE WWW.PELOTONCRE.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
ST. LOUIS, MO
MARKET OVERVIEW St. Louis closed out 2012 with mixed results, but positive office absorption and occupancy trends continue to be seen. On one hand, several companies have announced hiring and acquisitions that will bring demand for more office space, yet on the other hand, some have experienced loss due to acquisition.
TRENDS & ECONOMICS CONDITIONS
Largest Blocks Of Class A Space
With employment on the rise in the St. Louis market, it is hopeful that the demand for vacant office space will continue to increase in 2013. Average lease rates and terms remain low to attract prospective tenants.
Address
Size (sf)
Submarket
600 Kellwood 8500 Maryland 575 Maryville 800 Market St. 13690 Riverport
73,794 55,000 52,000 44,385 42,149
West County Clayton West County CBD North County
27
Major New Developments Address
Size (sf)
Delivery Date
Streets of St. Charles Sunnen Development West Highland Ball Park Village
250,000 180,000 132,000 100,000
Fall 2013 Fall 2013 Summer 2015 Fall 2013
Vacancy Rates Location
Size of Market (sf)
Net Absorption (sf)
City Suburban Total
12,253,179 38,736,658 50,989,837
65,896 44,486 110,382
Direct Vacancy % 28.4% 12.6% 16.4%
Sublease Vacancy % 0.5% 0.8% 0.7%
Total Vacancy % 29.3% 13.2% 17.1%
Largest Tenant Transactions In 2012 Tenant Talx Corporation Bunzel St. Anthony's LDI CRB Builders
Submarket North County West County South County West County West County
Address 11940 Riverport Dr. 9 City Place 9713 Landmark Pkwy 701 Emerson 701 Emerson
Size (sf) 100,000 45,000 40,000 30,000 28,000
COZAD COMMERCIAL REAL ESTATE, LTD WWW.COZADGROUP.COM COMPILED BY MB REAL ESTATE WWW.MBRES.COM (312) 726-1700
WASHINGTON, D.C.
MARKET OVERVIEW Leasing activity and absorption experienced a slight uptick within the borders of D.C.; however, vacancy increased by one full percentage point to 9.1 percent due to new inventory. Rents for all classes of space decreased by 0.3 percent despite Class A and B rents increasing by just over 1.0 percent due to a flight-to-quality. The Northern Virginia market showed the largest increase in vacancy with a negative absorption of over 2.7 million square feet. Suburban Maryland fared better with a very small positive absorption. Rents for existing buildings have remained flat while new Class A buildings are pushing for and in some cases getting record asking prices.
TRENDS & ECONOMIC CONDITIONS In the Washington, D.C. statistical area, unemployment is well below the national average at 5.0 percent. The region (particularly the Northern VA submarket) is bracing for a disproportionately hard hit once the expected defense contractor cutbacks begin to take effect in 2013. The migration of large government agencies to the suburbs continues in 2013, with Suburban Maryland and Northern Virginia presently competing for the FBI relocation from Downtown D.C. Overall, absorption is expected to stay flat or be slightly negative in 2013 and rental rates will decline accordingly.
Largest Blocks Of Class A Space Address
Size (sf)
Submarket
5001 Eisenhower Avenue 1812 North Moore Street 1775 Tysons Boulevard 1015 Half Street SE 165 N Street NE Constitution Square 3
606,921 538,092 476,913 390,749 360,000
I-395 Corridor Rosslyn Tysons Corner Capitol Riverfront NoMa
28
Major New Developments Address
Size (sf)
Delivery Date
200 F Street, NW - Capitol Crossing I Medical Center Drive 1812 North Moore Street 7900 Tysons One Place 5601 Fishers Lane
685,430 575,000 538,092 524,432 490,998
First Quarter 2015 First Quarter 2013 Third Quarter 2013 Second Quarter 2014 Second Quarter 2014
Vacancy Rates Location
Size of Market (sf)
YTD Absorption (sf)
City Suburban Total
130,174,567 236,906,303 367,080,870
644,092 (2,661,458) (2,017,366)
Direct Vacancy % 9.1% 16.1% 13.6%
Sublease Vacancy % 2.3% 3.7% 2.7%
Total Vacancy % 11.4% 19.8% 16.3%
*() Denotes a negative number
Largest Tenant Transactions in 2012 Tenant NOAA U.S. Department of Health & Human Services Comptroller of the Currency NASA N.I.A.I.D.
Submarket Silver Spring, MD Rockville, MD Southwest, DC Southwest, DC Rockville, MD
Address 1305-1325 East West Highway 5600 Fishers Lane 400 7th St SW 300 E Street SW 5601 Fishers Lane
Size (sf) 1,060,000 935,000 640,000 600,000 491,000
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.
Please visit www.corenetworkcre.org for contact information
29
BOARD OF DIRECTORS Walter Conn, Jr.
Board of Directors - CORE Network President, Brokerage Charles Dunn Company, Inc. 800 West Sixth Street, 5th Floor Los Angeles, CA 90017 p: 213 481 1800 wfconn@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
Bruce H. Hecht
Rachel G. Krupnick
M. James Mark
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
Executive Director CORE Network One Columbus Center, Suite 600 Virginia Beach, VA 23462 p: 757 490 7871 rkrupnick@corenetworkcre.org
Paul M. Marko IV
Board of Directors - CORE Network President Stiles Realty 301 East Las Olas Boulevard Fort Lauderdale, FL 33301 p: 954 627 9147 paul.marko@stiles.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
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
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
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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