APARTMENT MARKETS BUCKING THE TREND
In select markets, rapidly rising prices of single-family homes and development constraints are helping keep renters in their apartments and vacancies below 5%. Philadelphia leads the pack with a nearly rock-bottom 2.6% apartment vacancy rate forecast for 2003, compared with a national vacancy rate of 7%.
INDUSTRIAL STRENGTH
Although the national industrial vacancy rate jumped from 9.5% at year-end 2002 to 10.1% in the first quarter of 2003, several markets bucked the trend. At 3.5%, Los Angeles boasts by far the lowest industrial vacancy rate in the U.S. due to owner-user purchases of small buildings in the 10,000 sq. ft. to 30,000 sq. ft. range, reports Grubb & Ellis.
| Market | 1Q 2003 |
|---|---|
| Los Angeles | 3.4% |
| Kansas City | 7.5% |
| Fresno, Calif. | 7.8% |
| Philadelphia | 7.9% |
| Riverside-San Bernardino | 8.0% |
| United States | 10.1% |
| Source: Grubb & Ellis | |
RETAIL INVESTORS READY FOR RISK
Food and drug centers — considered one of the “safer” investments in the retail sector — remain extremely popular, but an improving economy in the second half of 2003 will encourage investors to purchase riskier assets, predicts Marcus & Millichap.
| Share of Total Dollar Volume for Year Ending 1Q 2003 | |
|---|---|
| Power Center | 4% |
| Regional Center | 16% |
| Strip Center | 20% |
| Single-Tenant | 25% |
| Neighborhood/Community Center | 35% |
| Source: Marcus & Millichap | |
SOAKING UP OFFICE SPACE
For office absorption, the West Coast tops the charts. Orange County, Calif., and Phoenix, Ariz., were ranked No. 1 and No. 2, respectively, in CoStar's ranking of U.S. office market absorption. Baltimore was a distant third at just over 500,000 sq. ft. of absorption.
IN SEARCH OF A BARGAIN
Bargain-hunters are flocking to value-oriented retail destinations. Since 1999, the percentage of households that made at least one annual purchase at a supercenter or dollar store has risen significantly. Meanwhile, traditional mass merchandisers and convenience stores have been losing customers.
| Venues | 1999 | 2002 |
|---|---|---|
| Grocery Store | 100% | 100% |
| Mass Merchandiser | 95% | 92% |
| Drugstore | 87% | 86% |
| Supercenter | 52% | 63% |
| Dollar Store | 52% | 62% |
| Warehouse Store | 50% | 52% |
| Convenience Store/Gas Station | 50% | 46% |
| Source: ACNielsen | ||