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Regional Real Estate Trends and Economic Impact
- 6. The mission of the Saratoga County Prosperity Partnership shall be to secure sustainable jobs and capital investment by attracting new business to the County and retaining existing businesses by assisting them to grow. Mission of the Saratoga Partnership
- 8. Source: Bureau of Economic Analysis - 2017 Real Estate + the U.S. Gross Domestic Product How does real estate affect our economy? • $19.3 T - U.S. GDP • $ 2.9 T - Housing investment + housing services Residential Investment + Housing Services 15% U.S. GDP • 3-5% GDP - Residential investment • 12-13% GDP - Consumption spend • Includes gross rent + utilities
- 9. Source: Bureau of Economic Analysis – 2017 & US Census Bureau 2018 • $19.3 T - U.S. GDP • $1.34 T - New Construction New Construction of Real Estate 7% U.S. GDP New Construction - Impact on GDP “New home construction activities directly affect as many as 122 Industries” –NuWire Investments • $551 B – Residential • $760 B – Non-Residential • $73 B – Office • $90 B – Commercial • $66 B – Manufacturing
- 10. Migration to Albany, NY Boston 17.8% Washington, DC 8.8% Bay Area 2.7% Los Angeles 2.7% Migration Patterns SOURCE – Redfin.com
- 11. Migration from Albany Boston 13.7% Washington, DC 7.2% Miami 5.6% Seattle 4.4% Los Angeles 2.8% Philadelphia 2.8% Portland 2.8% Charlotte 2.5% Migration Patterns SOURCE – Redfin.com
- 12. Residential Real Estate • Existing Home Sales • New Housing Permits • Housing Affordability • Days on Market • Housing Price • Inventory
- 13. 41% 13% 21% 25% SOURCE: National Association of Realtors (Oct. 18) 1.4% Oct. ‘18 After 6 straight months of decreases “Additional inventory will help contain rapid home price growth and open up the market to prospective homebuyers who are being priced out.” National Association of Realtors Chief Economist Lawrence Yun Existing Home Sales – National – By Region
- 14. 249 296 147 158 37 239 248 152 150 29 ALBANY SARATOGA RENNSELAER SCHENECTADY WASHINGTON Oct. '17 Oct. '18 -5.1% Capital Region - Number of Single-Family Sales -4% -16.2% 3.4% -21.6% SOURCE – GCAR 248
- 15. 754 911 987 1035 1069 997 1070 1062 1188 1247 1198 1236 1333 1461 1613 1682 1378 980 576 441 447 419 519 621 640 696 751 820 740 1991 1992 1993 1994 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 UP TO OCT 2018 Number of Housing Units (in thousands) National Number of Single-Family Housing Units Permitted (in thousands) SOURCE – Census.Gov
- 16. 385 288 711 128 208 300 236 555 64 144 265 182 521 108 109 260 185 490 130 108 186 105 456 118 97 246 147 621 104 98 341 116 655 79 85 369 134 612 70 90 296 106 693 72 80 395 131 750 76 83 276 109 708 93 88 ALBANY COUNTY RENSSELAER COUNTY SARATOGA COUNTY SCHENECTADY COUNTY WASHINGTON COUNTY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Regional Single Unit Building Permits SOURCE – Census.Gov 708
- 17. 0 50 100 150 200 250 141 213.6 National Housing Affordability Index SOURCE –
- 18. 0 50 100 150 200 250 167 Capital Regional Housing Affordability Index SOURCE – GCAR.COM
- 19. 73 50 42 57 52 93 68 46 45 55 41 96 NATIONAL SARATOGA ALBANY RENSELEAR SCHNECTADY WASHINGTON Oct. '17 Oct. '18 Days on Market - Capital Region Compared to National SOURCE – REALTOR.COM & CGAR 46
- 20. 319,500 223,000 184,950 288,750 146,700 142,000 309,700 228,000 179,900 299,000 169,200 127,200 NATIONAL SARATOGA ALBANY RENSSELAER SCHENECTADY WASHINGTON 2017 2018 National Compared to Regional Median House Prices - 3% 2.2% - 2.7% 3.5% 15.3% - 10.4% SOURCE – CENSUS.GOV & $228,000
- 21. 1493 1049 632 705 276 1606 1035 582 568 216 SARATOGA ALBANY RENSSELAER SCHENECTADY WASHINGTON Oct. '17 Oct. '18 Capital Region Single-Family Home Inventory 7.6% -1.3% -7.9% -19.4% -21.7% SOURCE – NYSAR.COM 1,606
- 22. National Housing Trends • Slow Growth in new housing stock – driving home prices up quickly • Reduction in incentives for homeownership • Uncertainty of mortgage rates • High home prices • A dearth of inventory • New tax law • Millennials priced out of real estate market due to high education debt • The median housing price has risen at a faster rate than wages SOURCE – Wall Street Journal
- 24. National - Total value of Commercial Property Sold Every sector experienced an increase in value • Apartments 11.6% • Industrial 6.5% • Suburban office 6.0% Saw the largest bumps in Q2 year over year, with prices up Apartments Industrial Suburban office 11.6% 6.5% 6% Q2 ’18 SOURCE – Bisnow.com
- 25. Total amount of Industrial Space available SOURCE – Q3 2018 Industrial Market Outlook Colliers International
- 26. 24,296,735 2,678,808 9,639,376 9,844,720 24,240,153 2,678,808 9,759,376 9,844,720 24,240,153 2,678,808 9,699,376 9,751,995 24,240,153 2,678,808 9,722,046 9,751,995 24,327,153 2,678,808 9,722,046 9,916,259 24,309,712 2,678,808 9,722,046 9,836,550 24,309,712 2,678,808 9,899,046 9,836,550 24,278,914 2,678,808 9,924,046 9,836,550 24,278,914 2,845,512 9,901,678 9,836,550 ALBANY COUNTY RENSSELAER COUNTY SARATOGA COUNTY SCHENECTADY COUNTY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Total Industrial Inventory by County (Square Feet) SOURCE – CBRE | 9,901,678
- 27. 1,553,934 93,775 446,144 774,344 1,792,804 121,067 428,294 428,494 1,213,568 96,324 228,354 516,791 1,059,096 96,324 209,836 569,411 964,221 102,417 271,836 510,911 886,107 102,417 208,586 497,194 568,130 102,417 135,946 425,194 420,890 23,717 247,000 323,404 633,328 23,717 487,535 372,694 ALBANY RENSSELAER SARATOGA SCHENECTADY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Capital Region - Vacant Industrial Space by Square Feet SOURCE – CBRE | 487,535
- 28. National Inventory - Vacancy Rate (%) SOURCE – JLL 5.20% 3.60% 2.30% Warehouse & Distribution Manufacturing Special Purpose
- 29. 6.40% 3.50% 4.60% 7.80% 7.40% 4.50% 4.40% 7.00% 5.00% 2.70% 2.40% 5.30% 4.40% 3.60% 2.20% 5.80% 4.00% 3.60% 2.80% 5.10% 3.70% 3.80% 2.20% 5.10% 2.30% 3.80% 1.30% 4.30% 1.70% 0.90% 2.50% 3.30% 2.60% 0.80% 4.90% 3.80% ALBANY COUNTY RENSSELAER COUNTY SARATOGA COUNTY SCHENECTADY COUNTY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Industrial Vacancy Rate by County (%) SOURCE – CBRE | 4.90%
- 30. U.S. Annualized Rent Growth Annualized growth rate 6.2% Warehouse + Logistics Rents inched up $5.68 psf “As top logistics markets continue to operate at a sub–3.0 percent vacancy rate, we expect continued competition for quality space to add pressure on rents through 2018.” JLL Research SOURCE
- 31. National Inventory - Rent per square foot SOURCE – JLL $5.66 $5.67 $6.82 WAREHOUSE & DISTRIBUTION MANUFACTURING SPECIAL PURPOSE
- 32. $4.27 $2.99 $5.51 $3.50 $4.58 $3.11 $6.43 $3.48 $4.59 $3.59 $6.69 $3.44 $4.46 $6.69 $6.69 $3.59 $4.52 $5.59 $5.59 $3.69 $4.69 $6.05 $6.05 $3.80 $5.06 $5.34 $5.34 $3.85 $4.46 $5.37 $5.37 $3.79 $4.82 $5.52 $5.52 $4.11 ALBANY RENSSELAER SARATOGA SCHENECTADY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Industrial Lease Rates by County Cost per square foot SOURCE – CBRE | $5.52
- 33. Regional Office Space (Square Feet) Urban Markets 1,179,174 221,800 75,564 196,855 70,914 1,295,511 232,000 53,955 203,044 90,550 1,077,740 216,591 19,528 161,368 93,182 941,244 174,256 24,284 153,664 81,849 1,054,504 139,719 15,003 155,095 86,506 1,020,900 139,719 10,251 57,510 88,615 951,571 77,756 17,365 67,380 76,247 802,077 83,560 15,290 234,883 62,247 828,822 136,567 11,853 264,006 ALBANY CBD TOTAL GLENS FALLS SARATOGA SCHENECTADY TROY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 SOURCE – CBRE | 11,853
- 34. Regional Office Space (Square Feet) Suburban Markets 1,944,687 257,988 11,245 347,565 1,952,010 234,932 14,745 150,744 1,852,954 247,532 27,467 112,895 1,740,124 268,523 19,191 153,051 1,754,761 316,139 17,571 157,146 1,887,281 355,017 14,471 144,346 ALBANY SUBURBAN SARATOGA SUBURBAN SCHENECTADY SUBURBAN RENSSELAER SUBURBAN H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 SOURCE – CBRE | 355,017
- 35. 21.50 19.40 12.20 10.30 5.40 24.80 20.30 8.70 10.50 6.70 22.40 19.00 3.20 8.30 6.70 19.80 15.30 3.90 7.90 6.10 22.20 12.40 2.40 8.00 6.60 21.50 12.40 1.70 3.00 6.70 20.30 6.90 2.80 3.50 5.80 17.50 7.40 2.50 11.50 4.70 18.10 12.10 1.90 12.80 6.10 ALBANY CBD TOTAL GLENS FALLS SARATOGA SCHENECTADY TROY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 1.90% Regional Office Market Vacancy Rate (%) Urban Markets SOURCE – CBRE |
- 36. 13.90 9.50 2.50 13.60 14.00 8.90 3.50 5.90 13.30 9.30 6.50 4.40 12.40 9.80 4.20 6.00 12.50 11.70 3.80 6.20 13.40 12.70 3.20 5.60 ALBANY SUBURBAN SARATOGA SUBURBAN SCHENECTADY SUBURBAN RENSSELAER SUBURBAN H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Regional Office Market Vacancy Rate (%) Suburban Markets SOURCE – CBRE | 12.70%
- 37. 17.37 16.99 19.97 15.16 15.42 15.37 14 20.66 14.67 14.71 16.77 $13.61 $21.71 $15.97 $15.34 17.08 13.79 20.68 15.62 15.69 18.19 $13.79 20.69 $16.80 $15.67 $17.31 $14.40 $22.36 15.4 $15.71 17.44 $14.91 22.37 15.09 15.71 18.48 $15.01 25.73 19.03 16.7 $18.26 $15.01 $24.41 $19.10 $17.79 ALBANY CBD TOTAL GLENS FALLS SARATOGA SCHENECTADY TROY H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Regional Office Market Lease Rate Urban Markets SOURCE – CBRE | $24.41
- 38. 16.86 16.31 12 14.63 $16.81 $16.19 14.85 $15.67 16.88 $16.07 13.99 14.24 $17.07 $16.07 16.25 14.34 17.08 17.96 13.14 14.45 $17.50 $17.78 $10.74 $14.77 ALBANY SUBURBAN SARATOGA SUBURBAN SCHENECTADY SUBURBAN RENSSELAER SUBURBAN H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Regional Office Market Lease Rate Suburban Markets SOURCE – CBRE | $17.78
- 39. SUMMARY RESIDENTIAL: • Saratoga County Residential real estate market has seen some slowing in permits, inventory, sales, and affordability, but ever so slightly. • We are still the preferred place to live in the Capital region. COMMERCIAL/INDUSTRIAL: • Inventory seems large, but it is dated. • With more inventory comes more opportunities.
- 40. REAL ESTATE PULSE SURVEY RESULTS
- 41. 62% 38% RESIDENTIAL REAL ESTATE COMMERCIAL REAL ESTATE 62% Residential 38% Commercial Representation of respondents 26 Responses
- 42. 4% 35% 35% 26% 0% SIGNIFICANTLY IMPROVED MODERATELY IMPROVED ABOUT THE SAME MODERATELY WORSE SIGNIFICANTLY WORSE What are you expectations for the U.S. economy for 2019? 74 % US Economy SAME or BETTER23 Responses
- 43. 0% 7% 60% 27% 7% VERY WEAK WEAK STABLE STRONG VERY STRONG What is your current assessment of the residential real estate market? 94% Stable or Better 15 Responses
- 44. 0% 0% 60% 40% 0% VERY UNFAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING Expectation of the residential real estate market 6 months from now? 60% Static 15 Responses
- 45. 0% 0% 87% 13% 0% VERY WEAK WEAK STABLE STRONG VERY STRONG Assessment of financing market for residential real estate sales? 87% Stable 13% Strong 15 Responses
- 46. 0% 7% 73% 20% 0% VERY UNFAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING 15 Responses Expectation of the financing market for residential real estate sales 6 months from now? 73% Static 20% Promising
- 47. 0% 7% 60% 27% VERY WEAK WEAK STABLE STRONG Assessment of the current residential rental market? 87% Stable to Strong 15 Responses
- 48. 0% 0% 60% 40% 0% VERY UNFAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING Expectation of the residential real estate rental market 6 months from now? 60% Static 40% Promising 15 Responses
- 49. OPINION – What would impact future market performance. “There is a lot of talk from buyers about the interest rate hikes and the impact it will have on their ability to purchase the home they want." “Younger people are hindered by student loan debt.” “We are pricing our young people out of our market. They can't afford to live here. Also people in retail and food services can't afford to live here. We need more affordable homes and apartments.” “New businesses have a huge positive impact on our markets. They need help, both from taxes and regulations and with mentoring to remain viable and continue to flourish while they gain a footing in the community." “I think the rising mortgage rates are hurting the market.”
- 50. 0% 0% 22% 56% 22% VERY WEAK WEAK STABLE STRONG VERY STRONG Current assessment of the commercial real estate market? 78% Strong to Very Strong 22% Stable 9 Reponses
- 51. 0% 0% 33% 56% 11% VERY UNFAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING Expectation of the commercial real estate market 6 months from now? 67% Promising to Very Promising 33% Stable 9 Reponses
- 52. 0% 0% 44% 56% 0% VERY WEAK WEAK STABLE STRONG VERY STRONG Assessment of the current financing market for commercial real estate? 56% Strong 44% Stable 9 Reponses
- 53. 0% 22% 33% 44% 0% VERY FAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING Expectation of the financing market for commercial real estate 6 months from now? 44% Promising 33% Stable 22% Unstable 9 Reponses
- 54. 0% 11% 44% 22% 22% VERY WEAK WEAK STABLE STRONG VERY STRONG Assessment of the current commercial real estate leasing market? 88% Stable to Very Strong 9 Reponses
- 55. 0% 0% 44% 33% 22% VERY UNFAVORABLE UNFAVORABLE STATIC PROMISING VERY PROMISING Expectation of the commercial real estate leasing market 6 months from now? 55% Promising 44% Static 9 Reponses
- 56. 0% 38% 25% 13% 50% 38% What are some obstacles to selling properties? 50% Type of Property 8 Reponses
- 57. OPINION – What would impact future market performance. “Biggest issues I see is the permitting process and the lengthy delays to get things approved. Construction costs are increasing which is helping the sales on existing structures.” “I believe we will see rising interest rates leading to a slow down in development" “Labor market concerns. Government actions are also a concern, including property taxes.”“I think we've reached peak or near peak with an overabundance of properties available.”
Editor's Notes
- To start our presentation today we will begin with a look at RESIDENTIAL REAL Estate. The growth of the residential housing market has always been the part of our economy that drives us out of a recession. We all know the growth of our economy was slow coming out of the financial meltdown of 2008-2009. Let’s see how we have fared Nationally and then here in Saratoga County.
- Let’s look at residential real estate and it s role in the National economy: In 2017 the US GDP was 19.3 trillion Dollars 15% of GDP was attributable to. Residential housing. And investment services this amounted to 2,895,000,000,000 ( Residential Fixed Investment + Housing Services)---Housing's Contribution to Gross Domestic Product (GDP) Housing’s combined contribution to GDP generally averages 15-18%, and occurs in two basic ways: Residential investment (averaging roughly 3-5% of GDP), which includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees. Consumption spending on housing services (averaging roughly 12-13% of GDP), which includes gross rents and utilities paid by renters, as well as owners' imputed rents and utility payments. SOURCE: NAHB housing Contribution https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US GDP Stats from the Bureau of Economic Analysis https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey IN DROPBOX SEE “Housing-Contribution-gdp” for numbers… Residential Fixed Investment + Housing Services
- In 2017, real estate construction of every type contributed $1.34 trillion to the nation's economic output. That's 7 percent of U.S. gross domestic product. And It's more than the 2006 peak of $1.19 trillion. However at that time, real estate construction was 8.9 percent component of GDP.” “New Home Construction activities directly affect as many as 122 Industries” These include concrete, lumber, steel, plumbing and all the other components related to construction SOURCE: The Balance ( a .dash company) James Schlett - CEG
- Who is buying? We have all heard how millennials are not part of the consumer class With housing prices high, why are people still buying homes? TOP THREE REASONS 3 LOWEST REASONs SOURCE: REALTOR.COM
- Where are they coming from? People are leaving from Silicon Valley to come to this area because of our Chip manufacturing and other technology jobs
- Where are people going? People are leaving from Silicon Valley to come to this area because of our Chip manufacturing and other technology jobs Vice Versa…people are going to dc for government, snow birds are moving to Florida, people are moving Oregon to Intel
- What are some impediments to people purchasing homes? TOP THREE REASONS 3 LOWEST REASONs SOURCE REALTOR.COM
- There are many indicators that help paint a picture of the health of the housing market.
- NATIONAL--- “Low inventory and high prices have slowed down the entire housing market, which is mostly made up of previously owned homes.” Existing-home sales increased in October by 1.4% after six straight months of decreases, according to the National Association of Realtors”- According to National Association of Realtors Chief Economist Lawrence Yun, “Additional inventory will help contain rapid home price growth and open up the market to prospective homebuyers who are consequently — and increasingly — being priced out,". That creates a drag on the job market as well, since it makes it more difficult to pick up and move to a new city for better employment opportunities. Americans are already relocating far less than they used to.” SOURCE: CNN Business: https://money.cnn.com/2018/08/28/news/economy/housing-market/index.html https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
- Let’s look at the Capital region and see how we fared. The number of home sales decreased in all counties except Rensselaer. Saratoga County saw a -16.2% decrease in closed sales year over year as of October 2018 Across the entire Capital region this represents a 7.7% decrease. However the year is not over yet! The decrease in home sales shows a slow-down in the housing market. Source for Counties: GCAR
- Nattionally The number of housing permits is decreasing from its peak in 2005, right before the meltdown. With less houses being built, the inventory is decreasing. This keeps the price of homes high, but people can not afford those prices, so they are staying in the rental market. This is due to tariffs on lumber and steel and immigration laws cause the price of construction to be higher. Stocks of Construction companies are down. Lowes is not doing well, but Home Depot is. More people are choosing to renovate their houses than sell them, due to high mortgage rates and high home prices….people are staying put in their homes. Source: https://www.census.gov/construction/bps/uspermits.html
- The good news is that the number of single family construction permits since the financial crises has remained higher in Saratoga County than the rest of the Capital region and by substantial margins Source: United States Census Bureau
- Now let’s take a peek. At the issue of affordability: The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data. The typical family is defined as one earning the median family income as reported by the U.S. Bureau of the Census. To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment. For example, a composite HAI of 141 means a family earning the median family income has 141% of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home. An increase in the HAI, then, shows that this family is more able to afford the median priced home. Source: National Association of Realtors
- The Capital Region Affordability Index (167) is better than the National (141). The lower the number, the lower the affordability. The ability for people in the Capital Region to afford a home is decreasing. The increased price of homes is outpacing the increase in wages and income Flat incomes, higher prices, higher mortgage rates. Source: GCAR
- Days on market dropped everywhere except Albany and Washington County. Saratoga is lower than National average SOURCE: National - Realtor.com for October 2018 and October 2017 Regional and Saratoga come from GCAR – October 2018 report https://gcar.com/wp-content/uploads/2018/10/GCAR_NY_HSO_2018-Q3.pdf
- National median house price has decreased It has increased in Saratoga, Rensselaer. And Schenectady county Source- National Numbers: US Census.gov https://www.census.gov/construction/nrs/pdf/uspricemon.pdf Source- County: GCAR
- In 2018, total inventory rose monthly from January until it peaked in July but has declined each month from August through October. The number of homes for sale is still near historically low levels and is down, year-over-year, compared to 2017. down in year-over-year comparisons. The 70,704 homes for sale in October 2018 represent a decrease of 1.3 percent from October of 2017. Rising interest rates are affecting affordability for some potential buyers. Helping mitigate the impact of higher interest rates is the strength of the overall economy including the national unemployment rate which continues to sit below 4.0 percent. Source for Counties: GCAR Source- NEW YORK STATE INFO: From https://www.nysar.com/industry-resources/market-data
- The slow growth of new housing stock has driven up home prices quickly, especially in hot markets like San Francisco and Miami. (Other markets, like Detroit, still haven't regained the value lost during the Great Recession, according to data collected by the Federal Housing Finance Agency.) Although the closely-watched Case-Shiller Index showed on Tuesday that home price growth slowed slightly in June, the 20-city composite measure topped its pre-recession high at the beginning of 2018 Millennials are especially priced out due to their enormous debt What's eating the housing market, in the midst of what otherwise looks like upbeat growth? In part, it's a victim of the economy's success: The Federal Reserve is seeking to keep inflation in check by raising interest rates, making mortgages more expensive. The median housing price has risen at a faster rate than wages. People are being priced out of the market. ”fewer people are attending open houses. This shows that demand could be faltering and some potential buyers might be giving up, for now.”- Housing market is faltering and strong economy offers no cure”
- “Though every sector experienced an increase in value, apartments, industrial and suburban office assets saw the largest bumps in Q2 year over year, with prices up 11.6%, 6.5% and 6%, respectively” Source: https://www.bisnow.com/national/news/capital-markets/were-close-to-the-top-of-the-market-6-commercial-real-estate-capital-flows-trends-to-watch-for-93832
- National “The U.S. industrial market remains on a roll with robust activity, record development, and all-time high occupancy and rental rates. Industrial real estate demand continues to be driven by a strong domestic economy and the need to modernize and expand supply chains to keep up with growing e-commerce retail sales. Occupiers are leasing both regional big-box facilities as well as last mile distribution centers in core and emerging markets throughout the country.”- “Robust demand dropped the overall vacancy rate to 4.9%, the first time the U.S. industrial market has posted a vacancy rate under 5%. Low vacancies are driving up asking rents which finished the third quarter at an all-time record $5.91 per square feet per year for warehouse/distribution space.” SOURCE Q3 2018 Industrial Market Outlook Colliers International https://www2.colliers.com/en/Research/2018-Q3-US-Industrial-Market-Outlook-Report https://www.nreionline.com/industrial/industrial-absorption-creeps ^^to learn about “absorption”
- Vacancy rates are up with hotels leading the way. Office and retail are also in double digits when it comes to vacancy nationally But tis is after vacancy rates have been trending down since 2010
- WHY IS IT STAGNANT? Albany Inventory has remained the same, but vacancy space is declining Saratoga and Schenectady County have about the same amount (s.f) of industrial inventory Source: CBRE & James Schlett
- The amount of vacant industrial space in Albany county has decreased significantly, while all the other counties have maintained the same amount of vacant space. Why has Saratoga County seen an uptick in Vacancy Rate in Saratoga County?? >> Ask Sleasman Source: CBRE & James Schlett
- As noted previously, the vacancy rates heave been trending down over the past several years, with a slight uptake more recently. Nationally, with the increase in ologistics needs, increased construction of W/D product has let to slightly higher vacancy rate in this area, however absorption of this product is fast-paced as well.
- “However an increase in overall vacancy rates, and rising construction coasts point to new construction continuing to be limited moving forward” CBRE H1 2018 SOURCE:CBRE
- Nationally U.S. annualized Rent growth continues to trend upward Rents continue to extend the upward trend. Spurred by an increase in absorption of warehouse space, rents inched up further reaching $5.68 per square foot, with an annualized growth rate of 6.2 percent. As top logistics markets continue to operate at a sub–3.0 percent vacancy rate, we expect continued competition for quality space to add pressure on rents through 2018. SOURCE: (https://www.us.jll.com/content/dam/jll-com/documents/pdf/research/americas/us/US-Industrial-Outlook-Q2-2018-JLL.PDF)
- Th
- Triple net – other costs above that, generally taxes, insurance and common area maintenance...
- Saratoga County and Rensselaer County rental rates are the highest and essentially equal. They are also in line with the national figures we saw on the previous slide Overall rental rates have not increased by large percentage Source: CBRE & James Schlett
- SOURCE:CBRE James Schlett
- SOURCE:CBRE
- SOURCE:CBRE
- “However an increase in overall vacancy rates, and rising construction costs point to new construction continuing to be limited moving forward” CBRE H1 2018 SOURCE:CBRE
- SOURCE:CBRE
- SOURCE:CBRE
- That’s what we think, what does the industry think? 26 Responses 13 Commercial
- NEED TO FIX Y AXIS to include %