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MarketSnapshot
At Northmarq, we are committed to offering our clients the latest trends and expert analysis to power their decision making. Our MarketSnapshot suite of reports contains critical market data covering a variety of commercial real estate property sectors. In each report, you will find: Investment sales volume data Average cap rate information Buyer distribution analysis... and more! Single-Tenant Overall Market Single-Tenant Office Single-Tenant Industrial Single- Tenant Retail Multi-Tenant Retail
Latest Publications
Kansas City 3Q23 Multifamily Market Insights Report: Vacancy dips, even as new units continue to come online
Highlights:The Kansas City multifamily market posted a solid third quarter, as the vacancy rate continued to trend lower while asking rents inched higher. Developers have been active, bringing roughly 3,100 units online year to date.The vacancy rate declined by 20 basis points for the second consecutive quarter. Area vacancy currently sits at 5.1%, unchanged from one year ago.Asking rents ticked higher by 0.5% during the third quarter, reaching $1,171 per month. Local rents advanced 2.8% from one year ago.Multifamily sales activity was light in recent months, lagging levels from the first half of the year. Transaction volume to this point in 2023 is down 45% from levels recorded last year. The median price to this point in 2023 is $113,500 per unit.Read the report, or engage with our Kansas City office to learn more.
December 14, 2023
Inland Empire 3Q23 Multifamily Market Insights Report: Vacancy remains tight, but rents slow to gain traction
Highlights:Property performance metrics in the Inland Empire softened a bit during the third quarter as asking rents ticked lower and vacancy rose. The pace of supply growth is expected to gain momentum in the coming periods with projects totaling 6,773 units currently under construction.Local vacancy ticked up 20 basis points in the last three months to 3.3%. Year over year, the rate rose by 40 basis points.Asking rents dipped 0.4% during the third quarter to $1,822 per month. Apartment rents have been inconsistent from quarter to quarter; rents are down 1.7% from one year ago.The multifamily investment market in the Inland Empire has been fairly quiet to this point in the year with only a handful of transactions closing in recent periods. The median sales price year to date is $234,400 per unit and cap rates are averaging close to 5%.Read the report
December 7, 2023
Dallas 3Q23 Multifamily Market Insights Report: Sales velocity picks up spurred by economic growth
Highlights:Vacancies were flat and rents ticked higher in Dallas-Fort Worth in the third quarter. Renter demand is being fueled by rapid growth in the local labor market, and developers are meeting heightened demand by delivering new rental properties.Vacancy held steady at 6.6% in the third quarter, although the rate has risen 160 basis points during the past 12 months. The bulk of the increase occurred in the final few months of 2022, and vacancy levels have been mostly flat throughout much of this year.Rents inched up to $1,552 per month, slightly higher than at midyear and 0.8% higher than one year ago. Rents are expected to advance by about 1% per quarter for the next few periods.Transaction counts are down from 2022 levels, but sales velocity has gained some momentum in each of the past two quarters. In transactions where pricing is available, the median price reached $156,300 per unitRead the report, or contact our Dallas office to learn more.
December 7, 2023
Redeveloping the Future: Converting Commercial Assets to Multifamily to Unlock Hidden Value
Over the last several decades, consumer shopping patterns and preferences have been changing. In the 1980s, enclosed malls were a dominant part of the retail landscape, influencing everything from consumer behavior to pop culture. By the early 2000s, preferences had begun shifting to open air shopping centers, and consumers began relying more on neighborhood and community centers with big box anchors. Now, in the aftermath of the COVID-19 pandemic and with strong reliance on online shopping, brick-and-mortar retail continues to evolve. As we see an uptick in existing retail facilities becoming functionally obsolete in the face of these shifting consumer patterns, many investors are questioning the highest and best use of their properties and evaluating their real estate portfolios to identify opportunities that will maximize value now and into the future.One option investors may consider is converting or redeveloping outdated or underutilized commercial space to a multifamily use. With this repositioning, investors can help address the shortage of housing options available to the nation’s growing population, as well as potentially increase the value of their assets by replacing obsolescence or activating existing retail by adding a built-in consumer base. But residential conversions may not be possible for every property or in every situation. Here, we discuss the benefits and challenges investors may face when considering this option.When Might a Commercial-to-Residential Redevelopment Be Right?If commercial sites meet specific criteria, it may make sense for investors to explore a commercial-to-residential redevelopment or conversion. Some retail properties – including regional and enclosed shopping malls, as well as power centers – that were built years ago may be located in areas that have been impacted by unfavorable demographic shifts. If the surrounding consumer population no longer supports these sites as viable retail centers, the owner may wish to explore the possibility of redeveloping or adding a multifamily use.Similarly, many commercial properties that have become functionally obsolete may be ripe for redevelopment. Industrial properties in urban areas, for example, are served by streets too narrow for large semis and trailers to access, and they offer clear heights that no longer cater to the needs of modern warehouse users. Properties such as these, when converted to residential, can help address in-town housing shortages and allow investors to create substantial value for themselves.Benefits of Redeveloping Underutilized Commercial AssetsThe successful redevelopment of a commercial property or underutilized site can pay significant dividends for a real estate owner. Exploring what is the highest and best use of a particular property can mean the difference between an investment that cash flows and one that sits vacant. If an owner has an under-leased or underutilized retail property, for example, converting a portion of it to multifamily or mixed-use introduces an immediate and direct customer base for the remaining stores. In other scenarios, investors may have small-footprint properties on large parcels of land. By demolishing the existing improvements and building vertically, the increased density translates to increased value.Beyond the benefits afforded to the investor, many communities across urban, suburban, and rural areas are experiencing housing shortages or simply lack the desired walkability that mixed-use projects provide. Populations are growing and home ownership is becoming more difficult to attain for much of the lower and middle classes. Access to multifamily housing, as well as affordable housing options, is critical to the success of these growing communities. By redeveloping a dark shopping mall or reactivating an existing retail center, an investor can create affordable and accessible housing, walkable neighborhoods, and more stable communities.Factors That May Limit Redevelopment OptionsNot every underutilized commercial asset, however, is a good candidate for redevelopment. Several characteristics may limit – or even prevent – the possibility of repositioning a property. First is the size of the parcel. Some parcels may be too small to accommodate multifamily construction. Consider a one-acre outparcel to an anchored shopping center. It may be sitting vacant, undeveloped, and therefore underutilized, but a parcel this size in most locations would not be able to accommodate apartments in addition to all the required or expected amenities, such as covered parking or a swimming pool. Generally speaking, investors should refrain from considering a multifamily development if their parcel is less than one and half acres at a minimum, with exceptions for highly dense urban areas. On the flip side, some larger urban tracts can be ripe for large scale mixed-use redevelopment, which generally have a large multifamily component.Location is also a consideration. Proposed developments located further away from commercial corridors may meet resistance from established neighborhoods, be limited by zoning and use restrictions, or encounter other challenges that would prevent the project from going forward. It’s also possible that residential tenant demand could be lower if a property isn’t well located or easy to access.Economics present yet another challenge for investors. Rent comparables in the immediate area must be able to support a new development. Constructing a new multifamily community can be extremely expensive, and if a proper market analysis isn’t conducted in advance, an investor may not get the deal to pencil.Investing in the FutureAs investors seek to maximize value across their real estate portfolios, many will look for creative ways to reposition today’s underutilized assets. By converting an existing commercial property to multifamily or mixed-use, investors have the potential to increase their cash flow and position themselves for long-term gains. It’s important to acknowledge, however, that redeveloping every underperforming commercial site to multifamily simply isn’t possible. Size limitations and zoning restrictions, among other considerations, may pose a multitude of challenges. Nevertheless, with careful planning and thorough evaluation, investors can tap into the potential benefits offered by this repositioning strategy. Not only can investors increase the value of their own portfolios, but they can also contribute positively to the creation of vibrant and sustainable communities.Given the current market headwinds, Northmarq cautions owners to align redevelopment underwriting to institutional standards to ensure project viability. hbspt.cta.load(7279330, '69aba55c-2172-414b-8cb8-e094fe4328b2', {"useNewLoader":"true","region":"na1"});
December 7, 2023
Orange County 3Q23 Multifamily Market Insights Report: Renter demand strong enough to hold area vacancies steady
Highlights: Operating conditions in Orange County recorded a modest improvement during the third quarter with asking rents ticking higher and vacancy holding steady. Developers remain active in the region with 2,070 units completed year to date.The local vacancy rate remained unchanged at 3.5% during the third quarter. Year over year, the rate increased by 30 basis points.Rents have remained in a tight range and rose just 0.3% during the third quarter to $2,503 per month. Year over year, area rents rose 0.2%.Multifamily sales activity in Orange County accelerated in recent months although deal volume so far in 2023 remains well below last year’s levels. The median sales price year to date is $387,200 per unit, while cap rates averaged 5% during the third quarter.Read the report
December 7, 2023
Albuquerque 3Q23 Multifamily Market Insights Report: A few more properties trade in the third quarter
Highlights:The Albuquerque multifamily recorded mixed conditions during the third quarter. Rents pushed higher, even with vacancy levels lingering around 6%. Year to date, deliveries have been minimal, but construction activity is expected to ramp up in the coming quarters.Vacancy remained in a tight range in the middle part of the year, after spiking in the first few months of 2023. The rate ended the third quarter at 6.3%.Asking rents advanced 1.3% in the last three months to $1,291 per month. Rents are up 3.5% from one year ago.Multiple properties changed hands in the local multifamily investment market during the third quarter, after minimal sales volume in the first half of the year. In transactions where pricing was available, the median price to this point in 2023 is $182,900 per unit, up 37% from last year’s figure.Read the report, or engage with our Albuquerque office to learn more.
December 5, 2023
Las Vegas 3Q23 Multifamily Market Insights Report: Vacancy leveling off after rise to start the year
Highlights:The Las Vegas multifamily market posted a mixed performance during the third quarter with rents inching lower despite a modest vacancy dip. The pace of multifamily completions accelerated with approximately 1,300 units coming online in the last three months, bringing the year-to-date total to nearly 3,700 units.Area vacancy trends have been volatile, but conditions are moving closer to the market’s historical norms. After tightening by 30 basis points in the second quarter, the vacancy rate dipped an additional 10 basis points in the last three months to 6.4%.Asking rents ticked lower in recent months, offsetting gains recorded in the previous quarter. Apartment rents declined by 0.3% in the last three months to $1,490 per month. Area rents fell by 1.5% during the past 12 months.Transaction volume in the local multifamily investment market has been light to this point in 2023, although a few properties have traded in recent months. The median price thus far in 2023 is $259,600 per unit, up 5% from last year’s figure.Read the report, or engage with our Las Vegas office to learn more.
November 28, 2023
Richmond 3Q23 Multifamily Market Insights Report: Vacancy remains tight, inching lower in the third quarter
Highlights: The Richmond, Va., multifamily market posted a mixed performance during the third quarter, as rents ticked lower even as vacancy started to tighten. The vacancy rate dipped 10 basis points during the third quarter to 6%. Year over year, area vacancy is up 40 basis points. Despite an active pace of new development, Class A vacancy rates have remained more than 100 basis points below the market average. Local apartment rents dipped in recent months after posting solid gains in the first half of 2023. Asking rents fell 1.1% during the third quarter to $1,498 per month. Area rents have risen 1.3% in the past year and are forecast to post healthy gains in 2023. After a fairly steady pace of investment activity in 2022, transaction volume has been minimal in 2023. This trend continued in recent months. The median price thus far in 2023 is $191,500 per unit, nearly identical to last year’s figure. Read the report, or contact our Richmond office to learn more.
November 9, 2023