2012 Global Market report - NAI Global

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Grand Rapids, Michigan Lansing, Michigan Contact NAI West Michigan +1 616 776 0100 Metropolitan Area Economic Overview 2011 Population 2016 Estimated Population Employment Population Household Average Income Median Household Income 1,322,233 1,322,067 690,695 $61,589 $50,372 The West Michigan region has stabilized over the past 12 months. Unemployment has decreased, real estate prices have not continued their erosion and occupancy rates have slightly increased. The health science industries continue to grow as evidenced by the completion of the Michigan State University Medical School ($90 million) and The Helen DeVos Children’s Hospital (464,000 SF). Wind turbine and electric vehicle battery manufacturers have helped improve the manufacturing outlook in the region. The industrial market experienced positive net absorption over the last 12 months. There is demand for Class A large industrial properties, as owners see the tremendous value in existing buildings versus new construction. The resurgence of a profitable automotive industry has benefited the tier one and two suppliers in West Michigan. There has been very little new construction, and little is anticipated in the near future. Vacant fully-improved industrial land is available in abundance at bargain prices. The number of industrial commercial real estate transactions increased slightly over the last 12 months. The retail sector experienced little change in the past year. Neighborhood shopping centers continue to be challenged by the difficulties that local retailers face in a tough economy. Lease renewals provide tenants the opportunity to reduce rent and terms on their lease. Regional shopping centers have for the most part maintained occupancy rates. On the positive side there are new and expanding retailers in the market that include O'Reilly Auto Parts, Smash Burger, Panera, Goodwill Industries and Newks. We don't expect that occupancy and rental rates will increase in the near term. The office market is evaluated in two distinct markets. The first market is suburban, which for the most part has seen vacancy increase and rates decrease, especially for Class B and Class C properties. Landlords with cash for tenant improvements are winning tenants, those without are in trouble. The second market is downtown office. Rates have stabilized and demand is up a bit. The growth and development of an active entertainment district and of reasonably priced housing have helped solidify downtown rates and occupancy. Contact NAI Mid-Michigan Vlahakis Commercial +1 517 487 9222 Metropolitan Area Economic Overview 2011 Population 2016 Estimated Population Employment Population Household Average Income Median Household Income 467,049 481,234 244,417 $64,184 $51,171 The Greater Lansing area is comprised of Ingham, Eaton and Clinton counties and has a population of approximately 450,000 people. While market conditions show signs of recovery with increased leasing activity, we continue to see the investment and development markets dry up, mostly due to unwilling lenders and too much inventory impacting all markets. Unemployment went from a low of 5.4% in 2007 to currently almost 15% The Lansing market consists of more than 15 million SF of Class A, B and C office space. The majority of the space is located between the central Lansing and east Lansing submarkets. The office market has been impacted the worst as rates continue to fall by as much as 60% and vacancy hovers near 25%. Eaton County represents the majority of the industrial building in the marketplace with nearly 50%. Lansing’s industrial market has seen negative net absorption specifically in the central and east Lansing submarkets. General Motors currently owns or leases over 30% of the total industrial space within the tri-county region. There has not been much change in the industrial sector as the influx of new users is minimal. The Lansing retail markets consist mostly of regional malls, power centers and strip centers totaling over 10 million SF of space spread evenly across the market. The retail market seems to have rebounded with positive absorption, but with a downside of reduced rates and increase landlord incentives. Retail has been able to stay strong, despite consumer confidence and the highest unemployment rate in over a decade. The cost of prime land continues to drop as few new developments have entered the market. There has been a dramatic decline in interest from all markets except for Medical which has been driving the few new vacant land developments in this market. Overall the majority of the market activity and growth has come from the retail and the industrial sectors. Michigan continues to exhaust all efforts to attract and retain new and existing business to the area. Total Population Median Age 36 Total Population Median Age 33 Grand Rapids At A Glance (Rent/SF/YR) low High effective avg. Vacancy doWntoWn offIce New Construction (AAA) $ 15.00 $ 25.00 $ 20.00 20.00% Class A (Prime) Class B (Secondary) suburban offIce New Construction (AAA) Class A (Prime) Class B (Secondary) IndustrIal Bulk Warehouse Manufacturing High Tech/R&D retaIl Downtown Neighborhood Service Centers Community Power Center Regional Malls $ $ $ $ $ $ $ $ $ $ $ $ 12.00 5.00 12.00 10.00 5.00 2.00 2.25 3.75 7.50 7.00 8.00 14.00 $ $ $ $ $ $ $ $ $ $ $ $ 20.00 10.00 18.50 15.00 10.00 3.50 3.50 4.75 20.00 10.00 18.00 35.00 $ $ $ $ $ $ $ $ $ $ $ $ 16.00 7.50 15.25 12.50 7.50 2.75 2.90 4.25 13.75 8.50 13.00 24.50 20.00% 20.00% 25.00% 25.00% 25.00% 10.00% 10.00% 10.00% 10.00% 15.00% 10.00% 5.00% deVeloPment land Low/Acre High/Acre Office in CBD $ 1,000,000.00 $ 5,000,000.00 Land in Office Parks Land in Industrial Parks Office/Industrial Land - Non-park Retail/Commercial Land Residential $ $ $ $ $ 75,000.00 40,000.00 30,000.00 75,000.00 5,000.00 $ $ $ $ $ 200,000.00 100,000.00 75,000.00 400,000.00 15,000.00 Lansing At A Glance (Rent/SF/YR) low High effective avg. Vacancy doWntoWn offIce New Construction (AAA) Class A (Prime) Class B (Secondary) suburban offIce New Construction (AAA) Class A (Prime) Class B (Secondary) IndustrIal $ $ $ $ $ $ 16.00 14.00 8.00 16.00 10.00 6.00 $ $ $ $ $ $ 19.00 18.00 12.00 18.00 14.00 12.00 $ 17.00 $ 16.00 $ 10.00 $ 17.00 $ 12.00 $ 10.00 15.00% 14.00% 25.00% 15.00% 20.00% 26.00% Bulk Warehouse Manufacturing High Tech/R&D retaIl $ $ $ 1.25 2.00 4.00 $ $ $ 4.00 5.50 6.50 $ $ $ 3.00 4.50 5.25 15.00% 15.00% 12.00% Downtown Neighborhood Service Centers Community Power Center Regional Malls $ $ $ $ 6.50 4.00 8.00 15.00 $ $ $ $ 18.00 16.00 14.00 30.00 $ 12.25 $ 10.00 $ 10.00 $ 18.00 8.00% 12.00% 8.00% 12.00% deVeloPment land Low/Acre High/Acre Office in CBD) Land in Office Parks Land in Industrial Parks) Office/Industrial Land - Non-park Retail/Commercial Land Residential N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2012 Global Market Report n www.naiglobal.com 107
Minneapolis/St. Paul, Minnesota Jackson, Mississippi Contact NAI Global +1 609 945 4000 Everest Real Estate Advisors +1 612 424 7542 Metropolitan Area Economic Overview 2011 Population 2016 Estimated Population Employment Population Household Average Income Median Household Income 3,313,924 3,454,156 1,901,441 $86,226 $66,937 The Twin Cities Metro Area (TCMA) enjoys a diverse employment base of medical technology, finance, agriculture, food processing, printing and publishing, manufacturing, health care, education, arts and entertainment. Although manufacturing plays a major role in the economy Minneapolis hosts a large white-collar employment sector, a large high-technology sector, a well-educated work force, high household incomes and rates of population growth more than twice the overall rate for the Midwest. A gradual recovery is taking place in the TCMA office market. Vacancy has decreased slightly with asking rates up slightly year-over-year. However, owners are offering 3 to 12 months free rent impacting the effective rate. Notable transactions include a 153,750 SF lease by Ecolab University, 76,728 SF lease by Agri and a 75,121 SF lease by Wells Fargo. In the industrial market, only 290,000 SF of new space came online in 2011; this subdued activity prevented vacancy from getting out of hand. Vacancy, while still elevated, has decreased slightly and rent growth has improved slightly. Notable leases included the 129,508 SF lease by Great Northern and the 129,120 SF lease by Magno. The apartment market is flourishing, ranking as one of the top markets in the country. With absorption surging to 6,400 units in 2010 and the vacancy rate below 3% across the market, the fundamentals are strong. The net market rate absorption through September was 2,950 units. There were just 560 units of new supply. Vacancy in the TCMA ended Q3 at just 2.3%, down 190 bps. 10,000 units have been announced for delivery over the next 12 to 36 months which will impact demand over the next two to four years. The 64 million SF retail centers are experiencing high vacancy rates and lower rental rates. Owners are putting more money into TI’s in order to get deals done. Positive signs in the market include Target’s acquisition of up to 220 leases of Zellers, Dish Network’s purchase of Blockbuster Video’s assets after its bankruptcy and Whole Foods’ addition of two locations in the TCMA. It is expected that progress in this market sector will be slow in 2012. Contact NAI Mark S. Bounds Realty Partners +1 601 856 7377 Metropolitan Area Economic Overview 2011 Population 2016 Estimated Population Employment Population Household Average Income Median Household Income 541,749 551,830 265,335 $63,736 $45,770 Jackson, Mississippi, anchor of the metro area, ranked third out of America’s 100 largest metro areas for the best “Bang for Your Buck” city according to Forbes magazine. The study considered affordability, housing rates, etc. Jackson’s economy finds its stability and strength in three main sectors: government, healthcare and education. The state has continued success in drawing companies that service the auto manufacturing, telecommunications and government industries with a new sector seeing light: clean energy. Five companies, four of them new to Mississippi, are committed to manufacturing clean energy or clean energy related products in different areas of the state. Lockheed Martin has assumed 33,000 SF on the 4th floor of the former WorldCom building (South Pointe Business Park) as a new mission support center. Laclede Chain Manufacturing Company has bought a former automotive plant in Ceres Industrial Park (Vicksburg) with full production to begin within a year. Capital City Beverages signed a 10,000 SF lease located in the Madison/Ridgeland market. Fred’s Discount Store began its lease of a 17,000 SF space in Ridgeland, as well. Across the board, vacancy rates have increased while rental rates have decreased for the industrial, office and retail sectors. The average asking rental rate for all types of office space in the Jackson Metropolitan Statistical Area is $16.81/SF per year with a vacancy rate of 11.2%, an increase from the 10.9% rate seen in Q4 of 2010. The average asking rental rate for industrial space is $3.50/SF per year. The overall vacancy rate for industrial space stands at 14.2%, up from 12.7% in Q4 of 2010. Flex space has a vacancy rate of 15.4% (14% Q4 2010) and warehouse space has a vacancy rate of 14.1% (12.6% Q4 2010). The average asking rental rate for retail space is $9.27/SF per year; this reflects a 7.87% decrease from $10/SF in Q4 2010 and is a 2.1% decrease from $9.47/SF in Q2 2011. Total Population Median Age 35 Total Population Median Age 33 Minneapolis/St. Paul At A Glance (Rent/SF/YR) low High effective avg. Vacancy doWntoWn offIce New Construction (AAA) Class A (Prime) N/A $ 10.00 $ N/A 35.00 N/A $ 15.08 N/A 12.80% Class B (Secondary) suburban offIce New Construction (AAA) $ 5.00 N/A $ 30.00 N/A $ 13.69 N/A 19.80% N/A Class A (Prime) $ 10.00 $ 34.00 $ 19.12 15.90% Class B (Secondary) IndustrIal $ 5.00 $ 30.00 $ 16.10 15.50% Bulk Warehouse Manufacturing High Tech/R&D retaIl $ $ $ 3.50 4.00 2.00 $ $ $ 5.35 9.50 25.00 $ $ $ 4.55 7.50 5.40 10.70% 10.10% 20.20% Downtown Neighborhood Service Centers Community Power Center $ $ $ 5.00 5.00 6.10 $ $ $ 55.00 30.00 30.00 $ 19.17 $ 15.99 $ 17.29 17.90% 10.30% 7.70% Regional Malls $ 11.23 $ 25.74 $ 18.04 4.30% deVeloPment land Low/Acre High/Acre Office in CBD Land in Office Parks Land in Industrial Parks Office/Industrial Land - Non-park Retail/Commercial Land Residential N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Jackson At A Glance (Rent/SF/YR) low High effective avg. Vacancy doWntoWn offIce New Construction (AAA) Class A (Prime) Class B (Secondary) suburban offIce New Construction (AAA) Class A (Prime) Class B (Secondary) IndustrIal Bulk Warehouse Manufacturing Flex retaIl Downtown Neighborhood Service Centers Community Power Center Regional Malls $ $ $ $ $ $ $ $ $ $ $ $ 25.00 25.00 14.00 25.00 16.67 13.33 2.82 2.00 4.02 N/A 6.13 14.00 15.43 $ $ $ $ $ $ $ $ $ $ $ $ 30.00 30.00 17.00 30.00 25.46 16.58 5.85 3.00 9.04 N/A 14.48 18.45 32.00 $ $ $ $ $ $ $ $ $ $ $ $ 25.00 27.00 17.00 27.00 19.46 15.89 3.22 2.50 7.75 N/A 8.75 17.22 21.05 N/A N/A N/A N/A 17.70% 10.50% 14.10% N/A 15.40% N/A 11.10% 1.50% 1.50% deVeloPment land Low/Acre High/Acre Office in CBD Land in Office Parks Land in Industrial Parks Office/Industrial Land - Non-park Retail/Commercial Land Residential $ $ $ $ $ 217,800.00 108,900.00 20,000.00 87,120.00 217,800.00 N/A $ $ $ $ $ 348,480.00 152,460.00 60,000.00 174,240.00 348,480.00 N/A 2012 Global Market Report n www.naiglobal.com 108
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2012 Global Market report Values, t
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n n n table of contents General Inf
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Global Outlook US Year in Review As
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On the Road to Recovery % of Loss S
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55% (1.1 million) owning and 45% (8
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short-term leases, the multifamily
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Alberta is home to Canada’s oil a
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Office The sovereign debt crisis an
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Area Type Q1 2010 Q2 2010 Q3 2010 Q
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obust telecom infrastructure and av
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For 2012, absorption in the commerc
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n us Highlights - northeast region
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n us Highlights - midwest region n
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n us Highlights - West region n Ari
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Adelaide, Australia Brisbane, Austr
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Sydney, Australia Beijing, China Co
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Shanghai, China Shenzhen, China Con
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Chennai, India Mumbai, India Contac
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Jakarta, Indonesia Tokyo, Japan Con
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Christchurch, New Zealand Wellingto
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Taipei, Taiwan Ho Chi Minh City, Vi
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Calgary, Alberta, Canada Edmonton,
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Halifax, Nova Scotia, Canada Ottawa
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Regina, Saskatchewan, Canada Contac
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The Baltics (Latvia/Estonia/Lithuan
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Helsinki, Finland Paris - lle de Fr
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Tel Aviv, Israel Almaty, Kazakhstan
Page 57 and 58: Amsterdam, The Netherlands Oslo, No
Page 59 and 60: Moscow, Russia St. Petersburg, Russ
Page 61 and 62: Madrid, Spain Stockholm, Sweden Con
Page 63 and 64: Istanbul, Turkey Kiev, Ukraine Cont
Page 65 and 66: Leeds, England, United Kingdom Lond
Page 67 and 68: Latin America sectIon contents Buen
Page 69 and 70: Rio de Janeiro, Brazil Sao Paulo, B
Page 71 and 72: San Jose, Costa Rica Contact NAI Co
Page 73 and 74: Guadalajara, Jalisco, Mexico Guanaj
Page 75 and 76: Mexico City, Mexico Contact NAI Mex
Page 77 and 78: Saltillo, Coahuila, Mexico San Luis
Page 79 and 80: Lima, Peru Caracas, Venezuela Conta
Page 81 and 82: Birmingham, Alabama Huntsville/Deca
Page 83 and 84: Little Rock, Arkansas Bakersfield,
Page 85 and 86: Oakland, California Orange County,
Page 87 and 88: San Francisco, California Ventura C
Page 89 and 90: Hartford, Connecticut Wilmington, D
Page 91 and 92: Fort Lauderdale, Florida Ft. Myers/
Page 93 and 94: Miami, Florida Ocala/Gainesville, F
Page 95 and 96: Tampa Bay, Florida Atlanta, Georgia
Page 97 and 98: Boise, Idaho Southeast (Idaho Falls
Page 99 and 100: Fort Wayne, Indiana Indianapolis, I
Page 101 and 102: Des Moines, Iowa Sioux City, Iowa C
Page 103 and 104: Baton Rouge, Louisiana Lake Charles
Page 105 and 106: Greater Portland, Maine Baltimore,
Page 107: Greater Springfield, Massachusetts
Page 111 and 112: Billings, Montana Bozeman, Montana
Page 113 and 114: Omaha, Nebraska Las Vegas, Nevada C
Page 115 and 116: Portsmouth, New Hampshire Atlantic
Page 117 and 118: Ocean/Monmouth Counties (“Shore M
Page 119 and 120: Las Cruces, New Mexico Albany, New
Page 121 and 122: Westchester, New York Asheville, No
Page 123 and 124: Raleigh/Durham, North Carolina Farg
Page 125 and 126: Cincinnati, Ohio Cleveland, Ohio Co
Page 127 and 128: Oklahoma City, Oklahoma Tulsa, Okla
Page 129 and 130: Berks County, Pennsylvania Bucks Co
Page 131 and 132: Philadelphia, Pennsylvania Philadel
Page 133 and 134: Wilkes-Barre/Scranton/Hazleton, Pen
Page 135 and 136: Sioux Falls, South Dakota Chattanoo
Page 137 and 138: Memphis, Tennessee Nashville, Tenne
Page 139 and 140: Corpus Christi, Texas Dallas, Texas
Page 141 and 142: Houston, Texas Contact NAI Houston
Page 143 and 144: Salt Lake City, Utah Washington Cou
Page 145 and 146: Northern Virginia Seattle/Puget Sou
Page 147 and 148: Madison, Wisconsin Milwaukee, Wisco
Page 149 and 150: n Glossary n Acre Area of land equa
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