U.S. office vacancies across the major metro areas reached 11.5 percent in December, the lowest rate reported in a decade, due to cautious development and healthy absorption, according to Transwestern's newly released 2017 year-end report on the national office market. Significant net absorption in markets such as Dallas/Fort Worth; San Jose/Silicon Valley; Seattle; Northern Virginia; and Austin, Texas, contributed to this decline in vacancy, as did a deceleration in new construction starts during the fourth quarter.
Based on data recently released by Research firm Reis Inc that shows office markets with the biggest year-over-year changes in effective revenue per sq. ft. during the second quarter of 2016, the National Real Estate Investor provided a market snap shot of the top five best and worst performers. The tech sector continues to have a big influence on boosting performance in many office markets. And while it may not be entirely fair to single out some of the laggards on the list, there are some clear trends there as well. According to Reis, smaller tertiary markets continue to struggle to rekindle economic and job growth that will fuel demand for more office space.
U.S. Apartment growth is not showing signs of moderating, according to the July 2015 edition of Matrix Monthly, a report on U.S. multifamily market trends in the 101 U.S. markets surveyed by real estate software developer Yardi. Apartment rents in the United States rose 6.5 percent year-over-year in July to a record $1,155, up 20 basis points from June and the highest rate of growth in the current market cycle. Technology-fueled markets in the Western U.S. continued to spearhead year-over-year growth, led by Portland (14.6 percent), Denver (13 percent) and San Francisco (9.8 percent). Although markets in the Midwest, Northeast and Mid-Atlantic continue to lag the rapidly-growing metros in the South and West, growth is strong across the board. Rents increased by less than 4% year-over-year in only five metros, and only three were below the national long-term average of 2.8%.
Property taxes paid to counties and municipalities by the proposed Atlantic Coast Pipeline would exceed $25 million a year, according to the energy companies that want to build it. The pipeline would extend about 550 miles in West Virginia, Virginia and North Carolina to bring natural gas for power generation, homes and businesses. Dominion plans to build and operate the natural gas pipeline pending regulatory approval for a four-member joint venture that includes Atlanta-based AGL Resources, Duke Energy, and Piedmont Natural Gas. If approved by federal regulators, construction would start in 2016 with service projected to begin by late 2018.
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.
Arlington County, Virginia's office market has been suffering since the Pentagon's 2005 Base Realignment and Closure (BRAC) plan. While many counties in the D.C. area are reeling from loss from BRAC-related vacancies, Arlington was one of the hardest hit. In fact, Arlington's office vacancy rate is around 20 percent, the highest it's been in nearly a decade. According to ARLnow.com, the high office vacancy rate is exacerbated by new office buildings coming on the market and certain large employers (including military offices impacted by BRAC) leaving. To combat that, Arlington is considering options providing certain tax incentives to attract new businesses and encourage growth for existing employers. Alex Iams, a commercial development specialist with Arlington Economic Development, ensures that the county is aggressively planning for the future. By the end of the season, a policy should be structured to offset office vacancy.
The office market in Washington D.C. has been less than ideal, thanks to the short-term shocks to the region including sequestration, the government shutdown and mandates that federal agencies must decrease their real estate profiles. While this hasn't deterred investors from commercial real estate in the area, it has shifted their interest to retail space and other non-office properties, which pose less of a near-term risk. According to the Washington Business Journal, the sale of a pair of Northern Virginia retail sites could be the leading edge of that trend, in which the Sterling Plaza and Sterling Plaza II was sold for $26.5 million, as well as the Lake Montclair Center in Prince William County for $19.2 million.
Major utility companies in Washington D.C. including Washington Gas, Dominion Virginia Power and Pepco are threatened by a temporary hit in earnings if the federal shutdown continues for an extended amount of time, according to the Washington Business Journal.
In the Virginia race for governor, Terry McAulliffe (D) and Attorney General Ken Cuccinelli II (R) are battling over the state's tax policy. McAulliffe argues that Cuccinelli's plans to cut state taxes would inevitably raise property taxes. Cuccinelli accuses McAuliffe of using "faulty logic" and a series of major assumptions to determine the effects of his proposal.
On March 12, 2013, the Virginia General Assembly passed House Bill 1598, making things easier on taxpayers and providing fairer treatment for property owners facing appeals. This taxpayer-friendly bill made a number of changes, most notably: