Although urban office markets continue to be popular with Millennials, movement to creative corporate office campuses in the suburbs is a growing trend. A recent report from commercial real estate services firm CBRE looked at vacancy rates and rental rate increases in a number of revitalized suburbs. A lack of new supply has driven rents up in the majority of these markets, while others are benefiting from outsized demand due to a concentration of specific industries, such as technology and bioscience. Below are the ten suburban office markets with the highest rent increases, according to the report:
By Stephen Cox
Consultant, Atlanta, GA
It's revaluation year in several Tennessee counties and property owners should be on the lookout for their new valuation notices if they haven't already received one. Hamilton County, Davidson County, and Shelby County are on a 4 year reappraisal cycle, with properties last being appraised in 2013. Given the significant improvement in both the overall economy and these counties specifically, commercial property owners should expect major valuation increases. Below you will find some notable information pertaining to each county:
The Urban Land Institute and PwC recently released Emerging Trends in Real Estate 2017, an in-depth outlook report that reflects the views of more than 2,000 professionals in real estate development and investment who completed surveys, conducted interviews, or participated in focus groups as part of the research process. The reports includes a "Markets to Watch" section, that takes an expanded look at all 78 markets included in this year’s survey.
Survey respondents shuffled the markets a little for 2017. Austin, which has been a fixture in the top ten for the past few years, is getting its turn at the top. Austin's market has benefited from a diverse economy that was affected in a minimal way by the global financial crisis, a growing population base made up of an educated labor force, and the undeniable “hip” factor that makes Austin attractive to the millennial dominated workforce.
Due to low cap rates and sky high prices in gateway cities, many commercial real estate investors in search of good yield are turning to non-gateway markets as a more appealing and affordable option. A recent “State of the Market” survey by global law firm DLA Piper found that 78 percent of real estate professionals it surveyed agreed that non-gateway markets will come to the forefront of investment preferences in the next 12 months (33 percent said they agreed, and 45 percent said they somewhat agreed). The preference was more pronounced among domestic rather than foreign investors, DLA Piper reports.
All across the country, both companies and cities alike are competing to attract STEM-educated employees. STEM - which stands for science, technology, engineering and math - related fields are transforming the economy, and office building owners and investors wanting the best returns need to look no further. Industries such as health care and energy, job markets where STEM dominates, are already driving growth. And as baby boomers begin to retire, the competition for STEM employees will only get fiercer. For example, almost 55 percent of the energy industry’s current workforce may retire over the next decade, affecting both the office and manufacturing sectors, according to a recent report from commercial real estate services firm JLL.
Despite continued discussion about the board’s role in providing tax abatements, known as payments in lieu of taxes, outside of Downtown Memphis, The Center City Revenue Finance Corp. approved a a partial 15-year tax abatement for a $43 million apartment and retail project on a prominent but blighted Midtown. According to The Commercial Appeal, redevelopment of the southwest corner of Union and McLean would produce a net increase of $1.7 million in city and county property taxes during the term while saving developers about $10.5 million. But Downtown Memphis Commission officials were quick to point out that the tax savings was a “fictional/moot number” because the "transformative, high-impact" project wouldn’t happen without the incentive, and it was a big enough project to justify granting an incentive outside the core area of Downtown.
It's well-known that millennials are flocking to urban cores across the country, causing developers to rush downtown in order to meet the growing demand. Midwest cities are gaining just as much attention, and brokers say it's not just young people that are moving downtown. Consumers of all ages want to live where they can walk to public transportation, grocery stores, shops and restaurants, and the Midwest has plenty of thriving cities to meet those needs. Downtown Chicago, of course, is thriving. But Cleveland, Omaha, Nashville, Minneapolis/St. Paul and Kansas City are all booming, and there’s even a resurgence happening in downtown Detroit. However, one Midwest downtown seems to be leading them all: Louisville.
The U.S. hotel industry ended 2014 with a bang, reporting positive results in the three key performance metrics during December 2014, according to data from STR, Inc. Overall, in year-over-year results, the U.S. hotel industry’s occupancy was up 4.8 percent to 52.6 percent; its average daily rate rose 4.3 percent to $113.42; and its revenue per available room increased 9.3 percent to $59.62. Demand for the month was 5.8 percent higher than last year, and Interstate and Suburban hotels even reported demand increases of more than 6 percent.
For the second year in a row, Georgia took the top spot in Site Selection magazine's Top US Business Climates: 2014. The magazine releases its annual rankings each November. The Peach State had been a strong performer in this contest for several years, rising in the ranking steadily thanks to its Quick Start workforce training program, logistics infrastructure and economic development leadership, among other factors, according to Site Selection. The magazine's ranking methodology is as follows: 50 percent of the overall Business Climate Ranking is based on a survey of corporate site selectors who are asked to rank the states based on their recent experience of locating businesses in them. The other 50 percent is based on an index of seven criteria: performance in Site Selection's annual Competitiveness ranking; total New Plant Database-compliant facilities in 2013; total new facilities in 2013 per capita; total 2014 new projects year to date; total 2014 projects year to date per capita; state tax burdens on mature firms and new firms according to the Tax Foundation and KPMG Location Matters analysis.
Smith Travel Research, Inc. (STR) released the U.S. hotel performance data for the month of April 2014, and the industry continues to post positive results in key performance metrics. Overall, the U.S. hotel industry’s occupancy was up 3.2 percent to 65.7 percent, its average daily rate (ADR) rose 4.0 percent to $114.67, and its revenue per available (RevPAR) room increased 7.4 percent to $75.30. April was a good month for hotels, as the industry saw the highest RevPAR growth (+7.4 percent) so far this year and the strongest in the last 12 months, according to STR. In April 2013, RevPAR growth was also 7.4 percent, so this year’s growth was impressive against this tough comparable. ADR grew 4.0 percent, and has been above 3.0 percent each month since January 2011. STR expects rate growth to continue unabated for the foreseeable future. Supply growth for the month increased 0.8 percent, same as during the last two months. However, because of the strong growth in the under construction pipeline, STR expects supply will grow at a faster pace in coming months. Despite the Easter and Passover calendar shift, demand still grew 4.0 percent, which means the industry sold 3.7 million more rooms this April compared to April 2013.