WASHINGTON, DC--(Marketwire -02/24/12)- According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord's market commanding bigger rent increases. These trends also are confirmed in NAR's recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. "Sustained job creation is benefiting commercial real estate sectors by increasing demand for space," he said. "Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest."

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

"Household formation appears to be rising from pent-up demand," Yun said. "The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term."

The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.(1)

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market -- an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant's market -- 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers' market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR's latest Commercial Real Estate Outlook(2) offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,(3) a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Multifamily Markets
The apartment rental market -- multifamily housing -- is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord's market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.

After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

The Commercial Real Estate Outlook is published by the NAR Research Division for the commercial community. NAR's Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.

The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations -- CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.

Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

(1) The SIOR Commercial Real Estate Index, conducted by SIOR and analyzed by NAR Research, is a diffusion index based on market conditions as viewed by local SIOR experts. For more information contact Richard Hollander, SIOR, at 202/449-8200.

(2)Additional analyses will be posted under Economists' Outlook in the Research blog section of Realtor.org in coming days at: http://economistsoutlook.blogs.realtor.org/.

(3)Beginning in the third quarter of 2011, NAR forecasts have been generated based on historical data provided by REIS, Inc., and do not correspond with prior historical information from previous forecasts. This source permits coverage of additional metro areas than previously reported.

The next commercial real estate forecast and quarterly market report will be released on May 24.

Information about NAR is available at http://www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, charts and surveys also may be found by clicking on Research.

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Commercial Real Estate Vacancy Rates Improving, Rents Firming

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Santana Row in San Jose Friday Nov. 12, 2010. Several years after it first opened, many residents of the development say they love living there. (Photo by Patrick Tehan/Mercury News)

San Jose's Santana Row is preparing a fresh expansion of its residential, office and retail space, bolstered by brisk activity such as a recent deal for H&M to take over the old Borders bookstore site.

The South Bay's robust economy has prompted Federal Realty Investment Trust, the principal developer of the upscale commercial and residential complex, to lay the groundwork for new construction on the property.

"Silicon Valley clearly has led us out of recession," Don Wood, CEO of Federal Realty, said in a recent conference call with analysts. "The first bits of strength that we saw and continue to see come out of Silicon Valley."

First up is construction of 212 rental homes in what's described as a

resort-style community near Pasta Pomodoro restaurant. Once these homes are completed in the second half of 2013, Santana Row will have 834 homes, of which 615 would be rentals.

Next, the developers plan a large new office complex at the southeast corner of Winchester Boulevard and Olsen Drive.

Meanwhile, clothing retailer H&M has leased the entire 27,000-square-foot, two-story building that once was occupied by a flagship Borders store.

The deal represents a big expansion for H&M, which will triple its space at Santana Row, where it currently occupies 8,000 square feet.

"Santana Row is doing quite well," said James Chung, a partner with Terranomics, a commercial realty brokerage. "And the H&M deal is a

great sign for the retail market."

Construction on the new residences, designed to evoke a Mediterranean feel, began earlier this month.

"The demand to live on The Row is high and we believe the time is right to increase our residential offerings," said Jan Sweetnam, chief operating officer for Federal Realty's West Coast markets.

Federal Realty executives said a South Bay economy that during 2011 produced 26,000 jobs -- more than half of the 46,000 jobs created in the entire Bay Area -- is the big driver in the development efforts.

"It's why we have now moved forward very quickly on the second residential piece," Wood said. "It's why we got some great traction going on right now" in the retail and office elements.

Santana Row's 645,000 square feet of retail is 94 percent leased, its 100,000 square feet of office space is 100 percent leased and its existing 627 residences are 95 percent occupied.

"If this market continues the way it's going, in the next four or five years we should be built out," Wood said.

Santana Row could add another 200,000 square feet of retail and office space. And beyond the 212 residences now under construction, the project could add 348 more homes, for a potential grand total of nearly 1,200 residential units.

"With so many high-end retailers, you would have thought Santana Row would have struggled. But it's actually been the opposite," said Jake Randolph, a realty broker with Cornish & Carey Commercial. "Like everyone else during the downturn, Santana Row had some turnover. But they have been able to fill their key spaces."

And much as the South Bay has been an island of economic strength amid weakness elsewhere in the state and nation, Santana Row and the adjacent Valley Fair mall appear to have dodged the worst of the sour times.

"Santana Row is a regional draw," Chung said. "The restaurants are always full. You see people shopping. If you looked at Santana Row and Valley Fair, you wouldn't have been able to tell that the rest of the world was falling apart."

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

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Expansion under way at San Jose's Santana Row

NIAGARA FALLS — An upscale hotel, residential and retail development in downtown Niagara Falls took a big step forward Wednesday.

The City Council greenlighted negotiations between a state development agency and the Hamister Group, following the announcement that the Buffalo-based group was selected from among seven proposals to develop 310 Rainbow Blvd., at Old Falls Street, 300 feet from the entrance to Niagara Falls State Park.

“I was born in 1966, and all I’ve ever seen them do is knock the buildings down, so to see something actually get built in my lifetime is big,” said Council Chairman Sam Fruscione.

He added that he hoped to see prevailing wages and 100 percent local hiring for the estimated 219 construction jobs that would be created to go with 130 permanent positions.

“It’s a great idea, and another sign that the city is moving in the right direction, and good things are beginning to happen,” said Councilman Charles Walker.

The $22.4 million, 109,000- square-foot project on about nine-tenths of an acre — where a balloon launch business closed in 2008—calls, preliminarily, for 104 upscale hotel rooms, 24 residential units and up to 8,000 square feet of ground-level retail space. It would stand five to seven stories tall.

Christopher Schoepflin, president of USA Niagara Development Corp., the state’s economic development agency in the Falls, said the project offered the most private investment and least amount of public dollars among the five leading proposals, all of which incorporated lodging and retail space.

“A truly mixed-use building is something we have been striving for, and now to leverage some public investment with some potential significant private dollars is exactly what we’re trying to accomplish,” Schoepflin said.

Construction could start in 2013, he said, with an opening in 2014.

Mayor Paul A. Dyster heralded the development as another positive sign for the city.

“It’s the first time in a generation that we have had a prime development block in such a key location so unencumbered that we could offer a request for proposals,” Dyster said.

“We felt we’d achieved enough positive momentum with the downtown redevelopment overall that it was an opportune time to test the market, and I think our confidence was rewarded.”

Dyster said his administration, along with Schoepflin, has contacted the other finalists to see if there could be interest in other downtown sites.

msommer@buffnews.comnull

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City Council approves hotel project

February 23, 2012 in Business

Gonzaga University plans to spend $14 million to build a parking garage on campus. Later it plans to replace its aging student union building called the COG.
(Full-size photo)(All photos)

Gonzaga University will break ground this spring on a $14?million, four-level building that will add about 650 parking spaces and ground-level dining options for students and area residents.

The new building, which will replace a surface parking lot, will be bordered by Hamilton and Cincinnati streets and DeSmet and Boone avenues. When finished in January, the 250,000-square-foot Gonzaga Retail and Parking Center will be the new home for GU’s campus bookstore and eventually several retail businesses.

The school has no plan yet to sign retail leases because it expects to need the space for a temporary dining hall in the future.

GU’s student dining hall is currently in the COG Building in the center of campus, which will eventually be demolished to make way for a larger University Center.

The proposed University Center will become the location for a larger student dining hall, along with meeting and event areas.

No dates have been set for starting the University Center project, said Chuck Murphy, vice president of finance. Design and construction for the building will take about three years. Murphy said preliminary plans for the center call for roughly 150,000 square feet. The existing COG is roughly 34,000 square feet.

GU trustees have said they won’t move forward with the University Center project until they’ve raised enough money for it, Murphy said.

“We do not have a cost estimate yet” for the University Center, he added.

The money to build the retail and parking facility comes from private donations, with fees and lease payments expected to maintain it, according to GU.

In addition to a new bookstore, the ground level of the parking building will be initially used for academic conferences and meetings, special events and general uses, Murphy said.

Adding more campus parking has been an ongoing focus of campus officials, in part to alleviate concerns among Logan neighborhood residents who have had to deal with GU parking sprawl.

The retail and parking building is the first major construction project on campus since completion of Coughlin Residence Hall in August 2009.

Spokane-based ALSC Architects designed the new facility. Vandervert Construction will be the general contractor.

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Gonzaga adding building for parking, retail - Thu, 23 Feb 2012 PST

Developer Derwent London has been granted planning permission to redevelop the former Queens Cinema site in west London by Westminster City Council. Derwent plans a residential led scheme on the Westbourne Grove site.23 Feb 2012

The proposals cover 21,400 square feet and will include 16 new residential units and 2,700 square feet of ground floor retail space. Derwent applied for full planning permission for the scheme, located at 96-98 Bishops Bridge Road, last November.

Construction is expected to begin in early 2013 with completion due in late 2014.

The proposed plans for the former Queens Cinema were draw up by architects Stiff and Trevillion. Plans are to retain the art deco facade and build 18,700 square feet of apartments, together with retail space. The developer is targeting art galleries and boutique retailers as potential tenants of the retail units.

The development will build on the success of nearby Notting Hill and Westbourne Grove, the developer said.

The planned apartments will be a mix of one, two or three bedroom units. New public space on the opposite side of Queensway will also be created.

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Derwent to redevelop former Queens Cinema

Rendering of a building at the proposed Bay Meadows Station development in San Mateo.

Rendering of a building at the proposed Bay Meadows Station development in San Mateo.

The owner of Bay Meadows has started courting suitors to lease more than 1 million square feet of Class A office space to be constructed in five buildings on the site of the former horse race track in San Mateo.

Property owner Wilson Meany Sullivan expects construction to be completed by early 2014 for the office space which is the second phase of the Bay Meadows mixed-use development. When completed, Bay Meadows will be the largest transit-oriented development in the state.

Combined, the five buildings on Delaware Street called Bay Meadows Station will have up to 1.5 million rentable square feet of office and retail space. Each building will be certified LEED Gold.

Office space for rent will range from 95,000 square feet to 185,000 square feet, according to Wilson Meany Sullivan. The development sits between the Hillsdale and Hayward Park Caltrain stations.

Phase 1 of the Bay Meadows project was officially completed with the construction of the new Kaiser Medical Center and includes housing, office and retail space.

Phase 2 will also feature townhomes, condos and about 15 acres of park space. The final development will include 1,171 residential units, up to 1.5 million rentable square feet of office space and approximately 90,000 square feet of retail space, according to Wilson Meany Sullivan.

“Companies who find a home here will embrace the vision of Bay Meadows Station and will be an integral part of bringing this community to life,” Christopher Meany, partner at WMS, wrote in a prepared statement. “Built to rigorous environmental standards, this urban office campus is at the forefront of contemporary and creative office space. Bay Meadows is perfect for people who want to work and live in the most sustainable, innovative and comfortable atmosphere possible.”

More here:
Bay Meadows leasing office space

Staff Report
Published Feb. 20, 2012

The commercial real estate market in the Columbia metro area showed steady improvement during 2011 as vacancy rates for office, retail and industrial space dropped, according to NAI Avant’s commercial real estate report.

Citing the latest labor reports, NAI Avant noted there has been six consecutive months of positive growth. In December, 348,500 people were employed in the Columbia area — 21,600 short of its peak in 2007.

“This positive trend was a contributing factor to the performance of Columbia’s commercial real estate market, which ended the fourth quarter with positive net absorption in all market segments,” the report said.

While vacancy rates are going down, the report also noted that neither office nor industrial space were under construction at the end of the quarter. But retail appears to be growing as three new buildings totaling 66,775 square feet were delivered during the quarter and another space totaling 22,711 square feet.

The industrial market ended the fourth quarter with a net absorption of 792,756 square feet. The vacancy rate for the fourth quarter was 10.6%. The average asking rental rate dropped 2 cents to $4.06 per square foot from $4.08 at the end of the third quarter. Flex space went for $8.34 a square foot while warehouse rates averaged $3.79 per square foot.

The office market ended the fourth quarter with an 8.9% vacancy rate, down from 9.3% for the previous quarter. Overall about 134,496 square feet of office space was absorbed during the three-month period.

The vacancy rate for downtown Columbia office space averaged 10% for the quarter. In the suburbs, Forest Acres averaged 18%, followed by St. Andrews, 11.2%; Dutch Fork/Irmo, 8.8%; Lexington, 8.5%; Northeast Columbia, 7.6%; and Cayce/West Columbia, 7.5%.

The average asking rate for all classes of office space was $14.63 per square foot, slightly down from $14.67 for the third quarter. Rent for Class “A” space average $17.13 per square foot, Class “B” was $14.51, and Class “C” was $11.51.

The retail market saw little change from the previous quarter. The vacancy rate rose to 6.5% in the fourth quarter compared to 6.4% for the third quarter. Overall, about 42,000 square feet was absorbed in the fourth quarter. The average asking rate for the Columbia market was $12.10 a square foot. Downtown Columbia had the highest average retail rent at $14.49 per square foot, followed by Forest Acres, $14.08; and Lexington, $13.87.

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NAI Avant reports improvements in commercial real estate market

The Greece Town Planning Board approved the site plans for the Stoney Creek Development project for 846 Long Pond Road at their meeting Wednesday night. The development will bring a 33,000 square foot Bryant & Stratton college campus to the area.

The plans for the 17.7-acre site also include a 17,000 square foot retail/service building and an 11,000 square foot retail/office/service building. Site developers 846 LPR, LLC said a child care center may fill the latter space.

The developers made a series of changes since the board postponed its decision on the proposal at its Feb. 8 meeting. These changes include enhanced landscaping along Long Pond Road, modified parking lots to provide room for buses, decreased parking space with green space left for possible future expansion, modified decoration including the addition of two flagpoles, and more.

One major reason the board did not approve the site plans on Feb. 8 was because of concerns over the need for a traffic light at the site's Long Pond exit. Though traffic experts judged the light unnecessary, the developers will install all the underground circutry and equipment it would need should it be built in the future.

"It's gotten better, but I think it has a way to go," said Deborah Janowicz, who lives across the street from the development. Janowicz said she will be able to see the campus from her bedroom window and that its construction -and noise from the site when it opens- will affect her entire neighborhood.

Janowicz said when she moved in, the Stoney Creek site was zoned residential. She hoped more neighborhoods would be built, not a small college campus and strip mall.

"Greece doesn't need more empty retail space," she said.

Stoney Creek property owner Laurence Glazer addressed Janowicz and her neighbors' concerns after the meeting.

"I think their issues have been dealt with very carefully," Glazer said. "They'll be happy with the end result."

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Site plans approved for Bryant & Stratton campus on Long Pond Road

New construction of a $165-million project near the TD Garden will provide the area with space for a hotel, apartments, restaurants and retail businesses, according to the Boston Redevelopment Authority.

The BRA approved the construction of The Merano, a project in the Bulfinch Triangle that will create 240 construction jobs and 275 permanent jobs, according to a BRA press release.

The project will consist of a 210-room Marriott Courtyard hotel as well as 230 residential apartments, restaurants and retail stores on the ground level, said John Meunier, COO and vice president of project management and development at the Boston Development Group, which is heading the project.

“The approval of The Merano is a sign of the great economic development momentum in the Bulfinch Triangle,” said Boston Mayor Thomas Menino in an email to the BRA. “With the addition of 230 units of housing at The Merano, on top of the more than 800 units already under construction or under review in this area, the Bulfinch Triangle is well on its way to becoming a 24-hour residential neighborhood.”

The Merano complex project is part of a larger ongoing development project to revitalize the economy in the Bulfinch Triangle and North Station area, said Melina Schuler, assistant director of media and public relations at BRA.

“Projects like The Merano are key to improving the city and moving these revitalization efforts forward,” Schuler said.

Meunier said he believes The Merano project will have a positive impact on the Downtown Boston area.

By adding a nationally branded hotel alongside residential apartments, more people will be residing in the area, resulting in more “pedestrian activity” at the street level, he said.

Schuler said the $165 million cost is mainly funded by private investors and developers who view Boston as a valuable city to invest in and expect their projects to do well.

The BDG agreed to contribute $50,000 to a traffic study by the Boston Transportation Department of the Bulfinch Triangle neighborhood, according the press release.

The BDG will also contribute $75,000 to support neighborhood improvements, $300,000 to the Boston Crossroads Initiative, $12,000 to the Bulfinch Triangle Streetscape Improvements Initiative and $500,000 for a future neighborhood park, totaling about $1 million in public improvements, according to the release.

The BRA first approved the plans for The Merano in 2008, which included two hotels, office space, stacked parking and space for retailers and restaurants, according to the release.

But due to the closure in office occupancy after the economic recession, the plans were revised to replace the offices with residential apartments, Meunier said.

Richard Parr, the director of policy at A Better City, a nonprofit organization that aims to improve transportation, land development and more in Boston, said it is a great thing to construct more residential buildings near the Rose Kennedy Greenway.

Vibrancy and economic activity will spill over into the parks, Parr said.

Parr also said building more houses near transportation creates more density in the core of the city, which is good for the environment and causes a much smaller carbon footprint.

The Merano project will begin construction in the spring and is expected to finish in two years, Meunier said.

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The Merano hotel to spark economic momentum downtown

This artist’s rendering shows what the Infusion Technology Center will look like when it is completed in Innovation Square. (Submitted by Trimark Properties)

Published: Tuesday, February 21, 2012 at 5:59 p.m. Last Modified: Tuesday, February 21, 2012 at 5:59 p.m.

The Infusion Technology Center is one step closer to starting construction at Innovation Square at the former Shands AGH site.

Front Street Commercial Real Estate Group of Gainesville was recently appointed as the property’s exclusive broker. Managing Director Nick Banks said they are looking to fill the space with biomedical and high-tech companies. The center also will need businesses such as law firms to provide in-house services, and retail outlets and restaurants to lease the ground floor.

Banks said he hopes to start signing contracts in the next 30 to 45 days, and construction is planned to start late this year.

“It’s very exciting,” he said. “There’s so much momentum behind this project.”

The 150,000-square-foot building is the first private development in Innovation Square. It will be next to the Florida Innovation Hub at UF, an incubator for technology-based start-ups. It is hoped that workers at the two buildings will collaborate.

“We envision that it is likely when they (the start-ups) do graduate that many will go right next door to the Infusion Technology Center,” said Jane Muir, director of the Innovation Hub.

Trimark Properties, developer of the Infusion Technology Center, also plans to build the UF INSPIREation Hall in the square. John Fleming, managing member of Trimark, said it will be a dormitory for entrepreneur-minded students attending UF. It will be open to students of all majors and ages and, in addition to housing, will have a 150-person space to be used for classes, dinners and events.

Construction is planned to start in early 2013.

Fleming said it was a well-planned strategy that Trimark Properties would one day develop with UF. In Innovation Square, it hopes to help create an environment where people can work, play and live.

“Our hopes are to support the University of Florida’s efforts in creating a really urban, unique research park,” he said.

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First private company closer to joining Innovation Square