2012 Global Market report - NAI Global

n us Highlights – northeast region
n Connecticut
Delaware
Maine
Maryland
Massachusetts
New Hampshire
office
New Jersey
New York
Pennsylvania
Northern Virginia
Washington, DC
Overall net absorption in baltimore’s CBD was positive, boosted by several pre-leased deliveries
and relatively steady leasing activity. Although the Class A vacancy rate, at 16.9%, is down over
the past year, it remained elevated enough to put pressure on asking rents with Class A rents
declining to $25.50/SF.
At 14%, boston’s vacancy rate is virtually unchanged from last year. However, there are pockets
of activity where demand, especially from the biotech, high-tech and medical sectors, is meeting
a lack of new supply, which will put pressure on rents in select submarkets in 2012.
The economic recovery spurred historically high levels of leasing activity in manhattan in the
first half of 2011, with asking rents increasing and vacancy rates declining in most submarkets.
However, continuing economic uncertainty is impacting demand for office space, decelerating
growth in asking rents. Investors continue to seek out Manhattan office properties with, investment
sales transaction volume is up over 148% from 2010.
The northern Virginia office market experienced another year of modest improvement in almost
all leasing categories in 2011. However, corporate downsizing and federal government uncertainty
has caused government and government affiliated tenants to slow down leasing decisions,
resulting in an increase in vacancy rates and a decline in net absorption for 2011.
Washington dc’s continued its strong performance in 2011, recording 1.3 million SF of positive
net absorption year-to-date and Class A asking rents rising to $54.00/SF. The recovery is expected
to continue at a slower pace in 2012, as government leasing will probably slow.
Industrial
boston’s industrial market performed well, driven by demand for quality med/tech, flex,
warehouse and distribution space. Asking rents are in the $6/SF range, and overall vacancy
around 11.6% for warehouse, 12.5% for manufacturing and 13.4% for high-tech / R&D space.
The northern new Jersey industrial sector was active throughout 2011. Modern facilities are
in demand as a result of growth in international import/export businesses, while less modern
buildings are aggressively competing for deals or being converted into data centers. Overall
vacancies stand in the 9.0% to 9.5% range.
Philadelphia continues to attract global attention from heavy manufacturing, tech, drug, alternative
energy companies seeking labor, power, rail, port, and economic incentives offered specifically
within The Philadelphia Naval Yard and other industrial sites under the control of the Philadelphia
Industrial Development Corporation. Asking rents for warehouse space stands at $4/SF.
Demand for industrial space in Westchester remains flat, with the vacancy rate rising in the
12.5% to 15% range. Pricing has dropped to early 2000 rates.
retail
The northern new Jersey retail sector has been slow to recover. Retailers are cautious to open
new stores while others vacate. Vacancies have leveled to 6.5%. Malls continue to do well while
downtown locations suffer. There is minimal new construction.
Retail in Philadelphia experienced little change and remained resilient in 2011. Food related
business openings continue to lead the market and several national retailers and local entrepreneurs
have turned vacant locations into successful business locations in Center City. Asking rents and
vacancy levels remain virtually unchanged from 2010.
manhattan’s retail market was strong throughout 2012, especially in the city’s high-end retail
corridors, where luxury retailers are attracting tourists flocking to New York City to take advantage
of the US dollar’s depreciating value. At over $100/SF, Manhattan’s average retail rents are the
highest in the country.
long Island’s huge buying power has resulted in improvement in the retail sector. Equity One
broke ground on a 330,000 SF retail project in Westbury, the largest development in the region,
scheduled for completion in late 2012. Retailers are aggressively looking for locations with LA
Fitness, Shop-Rite and BJ’s Warehouse opening new locations in 2011.
The retail investment sales market in Washington improved significantly in 2011with cap rates
averaging 7.20% compared to the same period in 2010 when they averaged 8.25%.
Many national retailers left Westchester a few years back, with 99-cent stores and seasonal
businesses taking spaces previously occupied by high-end retailers. With Borders, Blockbuster,
Pathmark and A & P recently vacating large spaces in 2011, this trend will likely continue into
2012.
leading Price class a markets
Downtown Office
Class A
Suburban Office
Class A
leading Price retail markets
Downtown Retail Office
Class Downtown A
Suburban Retail Office
Service Class Centers A
Retail Retail
Power Power Centers
Retail Retail
Regional Regional Malls Malls
Industrial Industrial
Bulk Bulk Warehouse
Industrial Industrial
Manufacturing
Industrial Industrial
High Tech/R&D Flex
Market Effective Avg. High Rent Vacancy
New York City-Midtown $ 64.48 $ 145.00 13.00%
Washington DC $ 54.00 $ 82.00 11.50%
New York City-Downtown $ 39.81 $ 72.00 8.20%
Boston, Massachusetts $ 38.00 $ 45.00 12.70%
Philadelphia, Pennsylvania $ 27.00 $ 32.00 12.00%
Market Effective Avg. High Rent Vacancy
Northern Virginia $ 55.00 $ 32.00 14.00%
Princeton/Mercer County, New Jersey $ 30.00 $ 32.00 18.00%
Suburban Maryland/DC Suburbs $ 29.73 $ 50.00 16.00%
Northern New Jersey $ 28.00 $ 35.00 12.50%
Bucks County, Pennsylvania $ 24.87 $ 33.00 32.00%
Market Effective Avg. High Rent Vacancy
New York City-Midtown $ 146.00 $2,500.00 4.60%
Washington, DC $ 52.00 $ 62.50 8.80%
Boston, Massachusetts $ 47.75 $ 91.29 2.60%
Westchester, New York $ 45.00 $ 70.00 15.00%
Philadelphia, Pennsylvania $ 35.00 $ 80.00 9.00%
Market Effective Avg. High Rent Vacancy
Westchester, New York $ 37.50 $ 50.00 15.00%
Washington, DC $ 35.00 $ 50.00 4.00%
Berks County, Pennsylvania $ 24.50 $ 30.00 16.00%
Baltimore, Maryland $ 24.00 $ 50.00 n/a
Suburban Maryland/DC Suburbs $ 21.17 $ 60.00 9.00%
Market Effective Avg. High Rent Vacancy
Westchester, New York $ 37.50 $ 50.00 15.00%
Southern New Jersey $ 28.00 $ 40.00 7.00%
Philadelphia, Pennsylvania $ 27.00 $ 38.00 10.00%
Suburban Maryland/DC Suburbs $ 20.48 $ 45.00 6.00%
Greater Springfield, Massachusetts $ 14.00 $ 16.00 10.00%
Market Effective Avg. High Rent Vacancy
Washington, DC $ 40.00 $ 65.00 4.40%
Westchester, New York $ 37.50 $ 50.00 15.00%
Long Island, New York $ 30.00 $ 40.00 5.00%
Boston, Massachusets $ 26.94 $ 51.86 3.60%
Middlesex/Somerset Counties, New Jersey $ 19.00 $ 24.00 13.00%
leading Price Industrial markets
Market Effective Avg. High Rent Vacancy
Westchester, New York $ 10.00 $ 12.00 12.50%
Washington DC $ 8.50 $ 16.50 13.40%
Northern Virginia $ 6.75 $ 18.00 10.50%
Suburban Maryland/DC Suburbs $ 6.72 $ 22.28 15.00%
Northern New Jersey $ 4.75 $ 6.00 9.00%
Market Effective Avg. High Rent Vacancy
Westchester, New York $ 10.00 $ 12.00 12.50%
Suburban Maryland/DC Suburbs $ 7.94 $ 9.75 9.00%
Boston, Massachusetts $ 5.90 $ 8.40 12.50%
Albany, New York $ 5.00 $ 6.00 8.00%
Northern New Jersey $ 4.25 $ 5.50 8.00%
Market Effective Avg. High Rent Vacancy
Washington, DC $ 16.00 $ 27.00 10.10%
Westchester, New York $ 13.50 $ 15.00 15.00%
Northern Virginia $ 11.50 $ 23.00 15.00%
Boston, Massachusetts $ 9.11 $ 15.87 13.40%
Princeton/Mercer County, New Jersey $ 4.75 $ 5.50 12.00%
2012 Global Market Report n www.naiglobal.com
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