Tampa Office Market Analysis: Amgen Moves In

Picture of Amgen office and flag

The $25 million dollar office investment biotech giant Amgen has made in the Westshore business district of Tampa is touted to bring over 400 high-paying jobs to the Sunshine State. The California-based company’s plan to open a “capability center” — a kind of business support and operations facility — will occupy four floors of Corporate Center One, at 2202 N. Westshore Blvd., taking up over 125KSF.  The facility will open in October of 2017.

What made up the Tampa office market environment that Amgen’s property professionals liked? Competitors, talent and options. On the competition front, other biotech and pharma giants have digs in Tampa, including Squibb, Bristol-Meyers and Johnson & Johnson. Surely the location of so many highly-trained pharma and tech professionals living in and around Tampa metro sweetened the deal for Amgen.

Westshore: Market Snapshot

On the office property front, Tampa’s CBD is marked by options in Class A and B properties, plus a sliding vacancy rate, as specified by Xceligent’s 4Q2016 Tampa Office Market Report. The report shows the Westshore submarket where Amgen settled to be the largest source of deal activity.  The submarket sported five of the top eight lease transactions in the quarter, with inventory for the submarket adding up to over 14M SF, the largest number on offer in Tampa. Westshore’s vacancy rate is pegged at 8.4%, according to the report.

CommercialSearch: Properties listed in Tampa’s Westshore Submarket

Check out the office and industrial properties listed today at CommercialSearch.com located in the Westshore submarket of Tampa by clicking the link.  Total number today: 113 listings on offer, ranging from A, B and C class properties.

As always: to obtain a free copy of the latest Tampa Office Market Report from Xceligent, click here to drop us a line.

(Photo credit: BizJournals.com)

New Moapa Solar Plant Outside Of Las Vegas: Sold

View of Moapa Peak from near the Carp-Elgin ex...
Moapa Valley, NV

Demonstrating a state of the art in pollution- and water-free, photovoltaic (PV) energy generation is a new fully operational solar plant 30 miles north of Las Vegas. The Moapa Southern Paiute Solar Project will generate enough voltage to power well over 100K homes, but Las Vegas isn’t the target of all that juice — every watt will be sent 270 miles away to serve Los Angeles. What’s more, the project was sold after an impressively brief ten days of operation, in a deal to private asset manager Capital Dynamics. Terms of the Moapa Solar deal were not disclosed.

Free Report: Moapa Solar’s light industrial neighborhood shows low rents, high construction

The Moapa Solar Project takes advantage of the Las Vegas market’s northeast Clark County area. The site is located in the Moapa Valley, where the market quadrant offers the Las Vegas industrial market’s second lowest rents. The most recent Las Vegas industrial market report (4Q16) from Xceligent spots the northeast area ‘s weighted average asking rents at $0.46 per square foot (on a triple net basis).

The NE Clark County area also offers the market’s biggest volume in new construction by a significant margin. At over 2M square feet of new construction, the area nearly doubles the second place market (Henderson). Vacancy rates for the overall market are improving — year-over-year totals have dropped from 6.1% to 5.4%. Flex properties have had the most significant positive change in vacancy with rates improving from 10.1% to 7.4%. If you’re interested in obtaining a free copy of Xceligent’s latest Las Vegas Industrial Market Report, drop us a line here.

Live Query: Moapa Valley land and industrial properties listed on CommercialSearch.com

To check out a live query at CommercialSearch of land and industrial properties in the Moapa Valley northeast of Las Vegas, click here now.

(Photo credit: Wikipedia)

Trump Hotel Lease In DC Not Illegal

In a letter delivered to The Trump Organization yesterday, a US government agency acting as landlord to the President’s luxury hotel in Washington DC has determined the President’s hotel is in compliance with its lease.

The GSA lease, discussed earlier here at CRE Blog, has a 60-year term on the renovated former US Post Office Pavilion property that the President, while in real-estate developer mode, converted to the luxury Trump International Hotel D.C.

The GSA, whose purpose is to manage half a trillion dollars worth of federal property in a portfolio of over 8,300 owned and leased buildings, sent the letter in response to unique questions arising from the non-divestment of President Trump from his portfolio of properties.  GSA is the owner of the building in question and was called upon to review the structure of the lease for compliance.

The letter is fascinating in that it provides a rare view into an operating structure of a Trump property, plus a snapshot of some of the Trump / Trump family’s real estate empire’s various legal structures.  It also references that the hotel operations group undertook changes to Section II of its internal operating agreement in order, one assumes, to achieve compliance.

Getting Paid? No, says GSA.

CBS Marketwatch reports that the changes and structure as expressed in the letter makes it so that distributions sourced from the hotel will not make it to the pocket of the President; such funds instead will remain within the operating LLC rather than going to his ownership vehicle.

Download the entire GSA letter here — and take a long look at what full compliance means in these unprecedented times.

Self Storage Investing On Rebound In 2017

Photo of self-storage facility hallway

After reading IRR’s latest report on the national self-storage property marketplace, I was inspired to take a closer look at this dynamic sub-sector. A wealth of commentary and metrics, the 2017 National Viewpoint National Self-Storage Report lifts the veil on this specialty sub-sector’s comeback from the 2008 recession and suggests where the market is headed based on past performance.

The fundamentals of the market are solid, says report author Steven J. Johnson, MAI, Senior Managing Director at IRR-Metro L.A.  Coming off of a hot year in 2016, the national marketplace in self-storage saw two huge portfolio deals completing, totaling over $3 billion alone. This in a wider market that sports some interesting drivers and leading indicators:

Only 15% of self-storage held by REITs

Quoting the report as calling the national market “fragmented” and dominated by small groups or mom-and-pop operations, it surprised me to see that institutional investors have thus far left 85% of the self-storage pie on the table. From where I’m sitting, that suggests that, all things being equal, acquisition volume in is likely to rise in 2017. Adding to the heat: cap rates on average are landing between 6 and 6.25% across all class types.

Customer life events drive the self-storage business

Classic drivers of the self-storage industry include marriages and divorces.  There were approximately 2.2 million marriages and 800K+ divorces in the US in 2016.  This shows basically flat to declining national trends, both trailing downward slightly, which might appear to go against the case for market growth, but remember that buried in these numbers are cohabitation events displacing some marriages.  Other important life events include births,

See for yourself: browse Self Storage national property listings right now at CommercialSearch.com

Check out the live national picture in self-storage property right now —  click over to this query of  self-storage properties for sale at CommercialSearch.com. The current listings count reads nearly 250 properties, located all across the US in primary, secondary and tertiary markets. The range of locations and classes tell the tale: this is an investment property class that has hung out its shingle and is doing business.

(Photo credit: Wikipedia)

CommercialSearch Integrates Realtors Property Resource

Logos of CommercialSearch and RPR

Transformational providers of commercial real estate data don’t often find ways to interoperate, but when they do, the user benefits pile up fast.  Starting tomorrow, a notable new integration arrives: REALTOR® users of CommercialSearch’s national marketplace in commercial real estate data will have one-click access to powerful new features driven by RPR Commercial, including tax information, transaction history, and more.  From RPR:

As of March 16, 2017, REALTORS® with CommercialSearch who hold RPR accounts can easily jump from a listing within CommercialSearch into RPR’s extensive commercial property and trade area data, investment analysis tools, business intel, and comprehensive reports.

“RPR’s mission is to serve the needs of our 1.2 million REALTORS®,” said Emily Line, RPR vice president of commercial services. “Through partnerships like the RPR / CommercialSearch integration, we are able to expand our service offerings and to ultimately save our members time and money previously spent on multiple applications and subscriptions.”

The integration offers REALTORS® on CommercialSearch one-click access to RPR data found on both the website and RPR Mobile™. Subscribers will find property and owner facts, mortgage and tax info, transaction history, maps and photos. Visual heat maps can be drawn down to the census block group level with 25+ variables including traffic counts and more than 20 million business points of interest. And RPR Commercial reports––which can be sent by way of email or text–– reveal data on consumer segmentation, population, age, marital status, economic conditions, and education comparisons, among other datasets.

David O’Rell, managing director of CommercialSearch, believes the partnership furthers Xceligent’s commitment to providing an open technology platform that combines researched content with leading workflow tools.

“We are excited to partner with Realtors Property Resource®,” said David. “We will now be able to provide RPR account holders an exclusive opportunity to analyze local dynamics surrounding properties actively listed for lease or sale in the CommercialSearch national marketplace.“

About RPR® Commercial

Realtors Property Resource® (RPR®) is a wholly owned subsidiary of the NATIONAL ASSOCIATION OF REALTORS®. RPR Commercial provides REALTORS® with persuasive, decision-making data and reports for all types of clients. From identifying site selection using data sets such as public records, traffic counts, business points of interest, demographic and psychographic insights, and consumer spending data, to presenting reports that accurately depict current market activity as well as future projections, this valuable members-only benefit truly helps to validate a practitioner’s expertise.

About Xceligent™

Xceligent™ is a leading provider of verified commercial real estate information across the United States. Xceligent’s professional research team pro-actively collects: a comprehensive inventory of commercial properties, buildings available for lease and sale, tenant information, sales comparables, historical trends on lease rates and building occupancy, market analytics, and demographics. This information assists real estate professionals, appraisers, owners, investors, and developers that make strategic decisions to lease, sell, and develop commercial properties. Xceligent™, backed by dmg information, has launched an aggressive national expansion that will provide researched information in the 100 largest United States markets. Visit Xceligent.

Milwaukee Industrial Real Estate Market

Map of the Milwaukee area including the Milwaukee industrial market

 

The Milwaukee industrial market is a healthy one, offering midwestern location, pre-recession market characteristics and a high level of cooperation among commercial real estate practitioners.  In Brew-town, brokers share data easily and in doing so, drive transaction counts across the whole market. Shared data means more options for making client needs fit inventories.  A quick sampling of recent listings and deals includes:

What’s behind Milwaukee’s industrial market? We ask veteran broker Brian Parrish

Specialist in the sale and lease of industrial property in Milwaukee, Brian Parrish has been building expertise in the market for fifteen years. Currently President and CEO of PARADIGM Real Estate, Brian took a few minutes to share his expert perspective on what makes this market tick.

Xceligent data shows combined vacancy rates for the industrial market in Milwaukee have held at 4.2% from 1Q 2016 to 4Q2016. Does what you're seeing 'on the street' match with this finding?
Brian: Yes, we are back to pre-recession levels. The only reason it isn’t lower is that some new construction has come onto the market and is in the process of being absorbed.  It is common to hear brokers and buyers lamenting about lack of inventory, so to the street it may feel like even less is available. Quite a bit of the vacancy at this point constitutes larger and older buildings that require some repurposing. Nonetheless, this is still an attractive proposition compared to the increasing costs of new construction.

Another marketplace factor is that bank financing is readily available for industrial users (buyers). Much of the vacant space tends to be in properties for lease, where a sale is not possible.  As interest rates rise and users become more frustrated with inventory, the pendulum should swing towards leasing again.

Talk a little about your most recent transaction. How long was it in the pipeline?
Brian: PARADIGM recently represented General Capital in the purchase of a 135,000sf former Sam’s Club on 76th Street near Good Hope Road in Milwaukee. The deal took about 8 months from beginning to close, and involved rezoning the property from retail to industrial. The building has been leased on a long term basis to Sellars Absorbent Materials. It is a great example of how a vacant building can be repurposed from one economic driver to another, continuing to provide employment to the local community.
What do you think the big story in 2017 will be in Milwaukee industrial property?
Brian: Milwaukee — particularly Downtown — is truly experiencing a renaissance. Every day a new construction project gets announced, so it is hard to contemplate a story that would draw more buzz than the noteworthy projects we already have in town.  With that said, I think we will see some more speculative development in the north and the west submarkets of southeastern Wisconsin where such has lacked over the last several years.

Get the latest Milwaukee industrial market numbers from Xceligent

Click here to request a free copy of Xceligent’s latest Market Report for the Milwaukee industrial market.

 

U.S. Construction Spending Down in January 2017

US Construction Spending Down, Nonresidential Construction Slightly Higher

US Census data indicates a drop in U.S. construction spending for the month of January 2017.  A 1% fall from the figure for the preceding December nonetheless represents an increase of 3% as compared to the preceding January of 2016.

Also hidden in the downtick was a year-over-year rise in nonresidential construction. That figure rose 1.5% year-over-year even as January compared to December showed a 1.9% drop.

Are Massive Gains In New Office Construction Over?

Annual census data showed an eye-popping annual increase in new office projects of 28.8% annually, which was the largest increase for any type of property tracked.  Looking solely at office construction from December-January shows a fall of 1.7%, suggesting either a reversal of a trend or an end-of-year slowdown in the sector generally.

How Can I Get US Census Data On Construction?

The US Census releases data on construction regularly and can be found at Census.gov. U.S. Construction spending numbers are sourced from the Census’s VIP Survey, aka the Value Of Construction Put In Place survey, which provides monthly estimates of the total value of construction work in the US. Included in the survey are estimates of architectural and engineering work, labor, materials, taxes, interests and overhead costs.

 

Stadium Finance: Wins On The Field Can Mean Wins For Investors

Panorama of Dodger Stadium in Los Angeles (tak...
Panorama of Dodger Stadium in Los Angeles  (Photo credit: Wikipedia)

As Spring Training for the 2017 Major League Baseball season gets underway, our attention turns to stadium finance, a strange intersection of finance, athletics and real estate that leverages competition on-field and off.

Stadium development in the US is often subsidized by the public, meaning development risks are often shared by taxpayers in various ways, from tangible environmental impacts (parking availability, foot traffic) to the borrowing of already-strapped municipalities aiming to improve the business fitness of the areas surrounding the stadium.

That borrowing – typically performed by issuing municipal bonds – is rated by bond ratings agencies, allowing comparisons to be made in a bond market matching lenders and borrowers.  But which sport throws off the most data to use for investment comparisons?  It’s baseball.

Baseball Is The Handiest Test Case

Of the major sports, only Major League Baseball puts the “business fitness” argument behind stadium development to its greatest utilization test. Unlike football, basketball or hockey, (major league) baseball hosts a whopping 81 home games a season. From April to September, baseball stadium utilization when the team is in town is a nearly-every-day-of-the-week affair, whereas other sports make their home appearances only a handful of days of a season-week – or only one day, as in football.

It’s in part because of this high utilization that the finances of stadium development can be deeply affected by the performance of the team on the field.  In an amazing post at Commercial Observer by Terrence Cullen, exactly how on-field performance can affect financial performance underwriting a development is shown by a long look at the New York Mets and Citi Field. From “How Batting Averages Can Affect A Stadium’s Bond Rating”:

“There are two ways to argue for a new stadium,” he said. “One is, ‘Our team sucks, we need a new stadium so we can be good again.’ Which usually doesn’t work very well, because if your team sucks, nobody cares. Or, ‘Our team is great. If you don’t give us a new stadium, you’ll never see this again.’”

The latter option, he added, is often the better route. “This is very, very common,” he said. “If you’re trying to get a new stadium you compete that one year.”

[…]

Gerstner pointed to the instance in which the San Diego Padres leveraged its All-Star roster to secure financing in the late-1990s to build what is today Petco Park. The Padres boosted their roster for the 1998 season, making it all the way to the World Series that October (the Yankees swept the team). The following month, voters went to the polls to determine whether the team could build the stadium. The city invested $300 million into the project, while the Padres invested $115 million, according to news organization Voice of San Diego.  

Following the approval, however, the Padres traded away key players and lost others to free agency, Gerstner noted. The team finished fourth in its division with a 74-88 record.

Read the entire post at Commercial Observer here. And don’t forget to Play Ball!

 

Downtown Cleveland’s Key Center Sells For $268M: What’s The Market Like?

Key Tower in downtown Cleveland, Ohio
Key Tower in downtown Cleveland, Ohio (Photo credit: Wikipedia)

The cornerstone of Cleveland’s skyline has sold this week for $268M to a local owner.  What does it mean for the local office market?

The Key Center, a 1.3M SF office tower sporting 57 stories and Class A status has been sold by national office REIT Columbia Property Trust to a Cleveland-based multifamily property and development firm. Built in 1991, the Key Center anchors a deal that includes a nearly 1,000-space parking garage as well as a ten-story bank building.

The anchor tenant in the tower is a regional banking power. KeyCorp, a holding company that owns the 18th largest bank in the US, lends a significant chunk to the tower’s 95% occupancy at sale time. The new owner, Ohio’s Millennia Companies – a group of real estate operations and development firms – intends to move operations into the tower, further bolstering the Cleveland CBD strong net absorption numbers, reported in Xceligent’s 4Q2016  Cleveland Market Report as the city’s leading absorption submarket with over 75KSF absorbed.

A Peek Around The Neighborhood

The deal takes place against Cleveland’s backdrop of declining office vacancy and modest levels of new construction. From Xceligent’s most recent Market Report:

  • During the 4Q 2016 the Cleveland office market has absorbed 104,105 square feet (sf) of space.
  • At 12.0% the regional vacancy rate has continued to decline, showing improvements from the 4Q 2015 at 13.1%.
  • The Cleveland CBD submarket observed the greatest positive net absorption totaling 75,222 sf during the 4Q 2016.
  • The Cleveland Office development pipeline had 67,000 sf under construction during the fourth quarter

Cleveland, In Fact, Rocks

If nothing else, the Key Center deal is a strong show of local commercial confidence in the face of a city’s commercial history that has suffered from capital flight, at times resulting in “rust belt” perception. It’s the duty of CRE professionals to look past such cliches, however. Industry players who might shadow the principals in this deal — such as financial support services or real estate service companies who have or seek profiles in the Midwest — can indulge their interest in low-barrier office markets such as Cleveland’s with a quick and easy look at Cleveland CBD’s comparable and nearby office properties.  To view a live query at CommercialSearch of office properties listed for lease or sale in the shadow of the Key Center,  click here.

Get Xceligent’s 4Q Cleveland Office Market Report

To get your own copy of Xceligent’s latest (4Q2016) Market Report on the Cleveland Office Market, click here to drop us a note today.

New Amazon Air Hub and the Cincinnati Warehouse Market

Amazon’s latest step in its apparent plan to take over its own supply chain is an announced $1.5B cargo hub outside of Cincinnati. The hub, slated to be placed in Cincinnati/Northern Kentucky Airport (CVG) is expected to enable the company to fly its Amazon Prime cargo jet fleet into and out of a healthy property market blessed with what Amazon’s SVP of Worldwide Operations Dave Clark called “a large, skilled workforce, centralized location with great connectivity to our nearby fulfillment locations and an excellent quality of living for employees.”

Construction of the facility is sure to have some follow-on effects as vendors and customers consider the Airport submarket’s nearly 31 million sf of inventory.  A recent arrival of new space allows plenty of options, boosting total vacant space to 1.4 million. Here’s a quick look at Queen City’s market as published this week in Xceligent’s 4Q2016 Cincinnati Industrial Market Report:

  • During 4Q 2016 the industrial market has absorbed just over 538,504 square feet (sf), with a year to date absorption of just over 5.2M sf.
  • As a result of just over 4.6 million sf of newly delivered space, industrial vacancy has risen from 3.7% in 2Q 2016 to 4.3%.
  • The Tri-County submarket has posted the highest positive net absorption for two consecutive quarters, closing 4Q 2016 with just over 676,000 sf. This positive movement was offset by the Airport submarket which posted a negative net total of 750,000 sf.
  • The weighted average asking rent has increased year over year from $3.56 per square foot (psf) to $3.96 psf. This increase can be attributed to an increased demand with limited warehouse availability.

Industrial Property Search: CVG Airport Cincinnati

Click here to take a look at live property data centered on CVG Airport/Covington at CommercialSearch.com.

Taking To The Skies

The location choice of CVG Airport by Amazon has the company striking while the iron is hot; the airport itself has been the beneficiary of ready warehouse inventory nearby. Its growth in freight handling has been in the double digits year-over-year for the last five years. If the extra freight loads Amazon represents seems a good fit for an airport with a record of expanding capacity in a sustained push, that may be part of the company’s interest in taking to the air: their designs for floating warehouses and plans for drone delivery are far more likely to arrive than it might at first seem. If there’s one thing Amazon does, it’s deliver.