- Las Vegas retail vacancy could climb shortly to 11.8% as 2.3M SF of new space appears.
- Charleston, SC malls holding up with some occupancy in the high 90s and overall retail occupancy at 91.5%.
- Office investment activity in Sacramento, CA down 60%
- Asking rents in Tampa, FL projected to fall 3.9% to $21.26 per SF
- Fewer listings and tight capital sources soften Minneapolis office market.
- Negative net absorption continues in Riverside-San Bernardino, CA office market.
- Local buyers keep St. Louis office investment market alive.
- Reduced space demand handcuffs Seattle office market.
- Buyers and sellers still far apart in Tucson, AZ office market.
- Loss of West Palm Beach office jobs expected to bring vacancy to 18.3% by year end.
- San Francisco office development activity comes to screeching halt.
- Deal flow slows in Washington, DC office investment market.
(LAS VEGAS, NV) -- A total 2.3 million square feet of new retail space is expected to be completed in metro Las Vegas by year end - and that's bad news for the market, says Marcus & Millichap regional manager John Vorsheck.
That 2.9 percent increase in the valley's stock, coupled with soft tenant demand and the 5.9 million square feet completed in 2008, will probably push the vacancy rate to 11.8 percent from 10 percent.
Vorsheck predicts rents will decline 7.6 percent this year to $19.20 per square foot.
"With rising unemployment and the troubled housing market curtailing retail demand," it doesn't look promising," Vorsheck says.
Brian Gordon
He adds, "That has put a lot of pressure on the vacancy rate, and we haven't seen a lot of demand from tenants looking to expand their operations in Southern Nevada. Many are taking the wait-and-see approach to see if the market conditions start to correct."
Northwoods Mall
The average vacancy in metro Charleston is 8.5 percent, up from 7.8 percent at this time last year. The national third-quarter average is 8.6 percent, up from 6.6 percent in third quarter 2008.
Northwoods Mall, a 130-store, 833,833-square-foot property in North Charleston owned by CBL & Associates Properties, claims occupancy in the high 90s. At year end 2008, occupancy was 97 percent.
Citadel Mall, a 100-store, 1.11-million-square-foot property also owned by CBL, has occupancy in the high 80s. At year end 2008, occupancy was 84 percent.
Mount Pleasant Town Centre, a 10-year-old, 452,000-square-foot location is 92 percent occupied. The 352,000-square-foot Tanger Outlet Center in North Charleston, is 97 percent occupied, according to Laura Thompson, the center's assistant general manager.
(SACRAMENTO, CA) -- Office fundamentals in Sacramento, CA are expected to deteriorate further through 2009 due to recent layoffs and consolidation efforts among local businesses.
Marcus & Millichap predicts a 20.9 percent vacancy rate for this market. Rents are expected to drop 6 percent to $19.05 per square foot.
"Although investment activity in the Sacramento office market has slowed considerably over the past year, buyers are targeting distressed opportunities and properties in core office-using districts where redevelopment efforts such as the Railyards (project) are concentrated, says Robert B. Hicks, regional manager of Marcus & Millichap's Sacramento office.
(TAMPA, FL) -- As vacancy in the metro Tampa office market climbs and rents recede, property owners and investors continue to look for the turning point that will signal the onset of an economic recovery.
Marcus & Millichap predicts a 20.5 percent vacancy rate by year end. Rents are forecast to slide 7.9 percent to $17.23 per square foot.
Bryn Merrey
"Buyers continue to assume that near-term NOIs (net operating income) will be pressured by rising vacancy and a greater use of concessions, even in properties with relatively stable tenants mixed and few lease expirations in the quarters ahead."
Solomon Poretsky
"Sales activity in the Twin Cities has been relatively muted during the last 12 months, mainly due to fewer listings and restricted access to capital," notes Poretsky.
By year end, he expects vacancy to reach 19.4 percent and asking rents to dip 0.8 percent to $21.71 per square foot.
(ONTARIO, CA) -- Supply and demand are greatly out of balance in the Riverside-San Bernardino office market. Metrowide effective rents have dropped for eight consecutive quarters, while negative net absorption has been recorded for seven straight quarters.
"Softening fundamentals have restricted investment activity in the Inland Empire, as many buyers have chosen to wait on the sidelines rather than make an acquisition before the market reaches bottom," says Douglas McCauley, regional manager of the Ontario office of Marcus & Millichap.
Asking rents are forecast to drop 3.2 percent to $21.86 per square foot with effective rents probably dipping 7.8 percent to $17.20 per square foot. Vacancy is expected to rise 490 basis points to 25.6 percent when 2009 ends.
(ST. LOUIS, MO) -- Ongoing losses in key employment segments will continue to weaken the St. Louis office market as it heads into 2010. Heavy cuts in the professional and business services sectors are project to push office using head counts back to 2005 levels.
"While out-of-state investors remain active in the St. Louis office market, local buyers are driving sales velocity," says Stephen Maulden, regional manager of the St. Louis office of Marcus & Millichap.
He expects vacancy to rise 2130 basis points to 17.8 percent compared to 2008 when vacancy rose 80 basis points. Asking rents are projected to fall 1.5 percent to $20.07 per square foot; effective rents may decline 5.4 percent to $15.62 per square foot.
(SEATTLE, WA) -- As the Puget Sound office market slips deeper into the 27-month-old Recession, demand from key local employers and several support firms has dampened the region's outlook through the next several quarters, according to a new analysis by Marcus & Millichap.
"Rapidly deteriorating conditions have resulted in a lull in metrowide sales activity, especially in recent months," says Gregory Wendelken, regional manager of the Seattle office of Marcus & Millichap.
Wendelken forecasts a year-end vacancy of 14.7 percent, up 370 basis points from a 190 basis point jump in 2008. Asking rents are forecast to contract 6.1 percent to $28.38 per square foot. Effective rents will slip 10.4 percent to $23.64 per square foot.
(TUCSON, AZ) -- Limited new office space development has kept the metro Tucson market from experiencing the extreme softness seen in other major national markets, according to Marcus & Millichap.
David Guido
Still, he notes, "investment activity in the local office market has retreated in recent quarters, as the expectations gap between buyers and sellers remains wide."
Vacancy is expected to reach 14.5 percent. Asking rents will fall 1.1 percent to $21.56 per square foot. Effective rents will decrease 3.4 percent to $17.62 per square foot.
(WEST PALM BEACH, FL) -- Office-using employment has contracted 2.2 percent so far this year in Palm Beach County, FL. With additional job losses projected over the remaining months of 2009, vacancy will continue to rise and rents will fall, forecasts a new office-market survey by Marcus & Millichap.
"As for property investment trends in the county, velocity is down from a year ago, while prices are falling," notes Gregory Matus, regional manager of Marcus & Millichap's Fort Lauderdale office which also monitors the Palm Beach sectors.
Matus expects vacancy to rise 310 basis points to 18.3 percent on negative net absorption of 675,000 square feet. Last year, vacancy increased 380 basis points.
Asking rents are projected to fall 2.3 percent to $28.93 per square foot. Effective rents are forecast to decrease 5.1 percent to $23.41 per square foot.
(SAN FRANCISCO, CA) -- A glut of sublease space and declines in rental rates, along with the effects of the economic downturn, will continue to deteriorate San Francisco office fundamentals through the end of 2009 and well into 2010, according to a new market report by Marcus & Millichap.
"Year-to-date transaction velocity has been limited, as buyers and sellers are attempting to assess how valuations have shifted as widening concessions have eroded NOIs (net operating income)," says Jeffrey Mishkin, regional manager of Marcus & Millichap's San Francisco office.
"Development activity will slow dramatically this year, as roughly 250,000 square feet is scheduled to come online, down from 2008 when close to 2 million square feet was completed," adds Mishkin.
He sees 2009 ending with vacancy of 15.4 percent, up 430 basis points from last year when the rate rose 170 basis points. Asking rents are forecast to retreat 13.6 percent to $35.69 per square foot. Effective rents will end the year at $28.39 per square foot.
(WASHINGTON, DC) -- Persistent job losses in metro Washington, DC will keep office demand weak by year end and into 2010, according to a new report by Marcus & Millichap.
Vacancy is expected to rise 200 basis points to 13.5 percent. Last year, vacancy surged 240 basis points. Asking rents will see a drop of 0.8 percent to $36.14 per square foot. Effective rents will fall 3.6 percent to $30.35 per square foot.
"Although operating fundamentals have been the most stable in Northern Virginia, deal flow has declined in the area," says David Feldman, regional manager of Marcus & Millichap's Washington, DC office.
Leave a comment