Commercial Investment Real Estate March/April 2017 | Page 10

MARKET
TRENDS
Top 5 Most Expensive Cities for Construction in the U.S.
Units = Cost Index*
248.8
No. 1
New York City 279.0
255.1
No. 2
San Francisco 266.6
266.6
No. 3
National average
San Jose/
Silicon Valley, Calif. 255.9
207.3
No. 4
Oakland, Calif. 255.1
279.0
255.9
No. 5
Chicago 248.8
*Costs include materials and labor for installation on a city-by-city analysis.
Source: JLL Construction Outlook Report
Briefly Noted
Industrial — Rents are
up 8.2 percent, while
12-month net absorption
is steady at 2.2 percent
with still competitive cap
rates holding at 5 percent
for industrial properties,
according to JLL. The
brisk pace for total
volumes in 2016 will mark
the second largest rally
since 2008.
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March | April 2017
Multifamily — With an
occupancy rate of 96.3
percent at the end of 2016,
multifamily properties
defied predictions of a
decline and were up from
95.9 percent occupancy
in 2015, according to
RealPage. While rent
growth slowed compared
to 2015, rents still climbed
3.8 percent in 2016,
reflecting higher than
historical norms.
Office — Rental growth
slowed with a vacancy
rate of 13 percent in the
second half of 2016,
according to CBRE.
Gradually, the market for
tenants grows stronger
as the fundamentals
for office soften in
downtown markets, with
the net absorption rates
plummeting 46 percent
compared to 2015.
Technology companies
comprise the largest
share of office leases at
18.9 percent, followed by
financial services at 12.9
percent, and business
services at 12.6 percent.
Retail — Food-centered
retail has grown explosively
— 37.1 percent YoY in the
first nine months of 2016,
according to Cushman &
Wakefield. Fueled by the
rise of the foodie movement
led by celebrity chefs and
championed by millennials,
restaurants are multiplying
in top tier shopping malls.
“No other retail category
has generated as much
aggressive expansion over
the past few years as food-
related retail,” says Garrick
Brown, vice president of
retail research for Americas
at C&W.
Hospitality — The
robust performance by
hospitality will be tested
as construction ramps up
during 2017, according to
Smith Travel Research.
JLL reports RevPAR
and average daily rate
have risen to 3.2 percent
year-to-date.
COMMERCIAL INVESTMENT REAL ESTATE