Commercial Investment Real Estate September/October 2013

S O U T H Ä Multifamily Investors Zero In on Atlanta Lowe’s Enters Small-Format Market With the purchase of 60 Orchard Supply Hardware Stores in California and Oregon, Lowe’s is positioned to compete in the smaller-size neighborhood home improvement and garden center market. Purchased in bankruptcy for $205 million and debts, Orchard’s 36,000-sf stores with 8,000-sf outdoor garden centers give Lowe’s a presence in a number of high- density California markets. Lowe’s will maintain the separate Orchard Supply brand, plus its current management. Eight underperforming stores in California markets will close as part of the bankruptcy proceedings. N AT I O N A L Hotel Investors Sleep Easier Hotel prices rose by 12 percent last year, sur- passing all other property types, according to CoStar. While most of the gains were in six major markets, investors are now looking to secondary markets, fueled by positive occu- pancy forecast for 2013–17. Phoenix, Minne- apolis, Atlanta, Las Vegas, and Charlotte, N.C., are all expected to increase occupancy by more than 3 percentage points in the next three years. Is New Jersey on a Diet? While nearly every state in the Union added eating and drinking establishments in 2012, New Jersey lost 111, the largest numerical decline, according to the National Restaurant Association. Kan- sas (78), Massachusetts (66), Wisconsin (39), Maine (38), South Dakota (8), and Idaho (7) rounded out the biggest (and only) los- ers, while Florida (1,751), California (1,721), and Texas (1,296) opened the most locations. Tennessee saw the largest percentage growth in restaurants — 9 percent — followed by Florida, Loui- siana, Minnesota, and Indiana. Overall, the U.S. added 12,371 eating locations last year, the largest increase since 2007. CCIM.com E A S T E A S T Á A strong employment outlook has multifamily investors targeting Atlanta, squeezing downtown cap rates and pushing investors into out- lying submarkets in search of better deals, according to Marcus & Millic- hap’s 3Q13 report. Almost 58,000 jobs were created since 3Q12 — the largest increase since 2007 — and 61,000 jobs are being added this year, pushing local employment close to its prerecession peak. As a result, apartment sales in Atlanta are up 23 percent since 3Q12, with institutional deals up 32 percent. Institutional cap rates are hitting the 5 percent mark, while B and C class properties are in the 6 to 7 percent range. Inventory will expand by 1.4 percent this year; however, more than 50 percent of young professionals are priced out of the most desirable hous- ing markets, providing a ready supply of renters. W E S T Greater Boston Ofﬁ ce Stats, 2Q13 Vacancy 13.7% ↓ 60 bps from 1Q13 Class A asking rents $34.44 psf ↑ 1.7% YOY Direct net absorption 864,000 sf ↑ 2% annualized Source: Jones Lang LaSalle September | October | 2013 43

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