THE RENEWAL BOMB
In the go-go days of 2000, many high-flying dot-com firms signed three-year leases. Now, it's rollover time. Of the 37 office markets CoStar Group tracked rent comparisons for over that three-year period, Austin, Texas, has suffered the highest drop in quoted rental rates, raising its lease rollover risk significantly. By comparison, Seattle's exposure is more moderate.
| Quoted Rental Rate | Vacancy Rate | |||||
|---|---|---|---|---|---|---|
| Market | 1Q 2000 | 4Q 2002 | Percent Decrease | 1Q 2000 | 4Q 2002 | Percent Increase |
| Austin* | $26.30 | $20.14 | 23.42% | 7.2% | 18.9% | 162.5% |
| San Francisco | $36.44 | $29.27 | 19.68% | 7.0 | 16.1 | 130% |
| Denver | $20.89 | $18.71 | 10.44% | 10.8 | 18.4 | 70.37% |
| Boston | $27.99 | $25.18 | 10.04% | 8.7 | 14.0 | 60.92% |
| Dallas/Fort Worth | $20.67 | $18.61 | 9.97% | 17.2 | 21.1 | 22.67% |
| Indianapolis** | $18.24 | $16.47 | 9.70% | 9.5 | 15.2 | 60% |
| Charlotte | $18.99 | $17.82 | 6.16% | 9.8 | 14.0 | 42.86% |
| New York City | $41.30 | $39.55 | 4.24% | 9.7 | 10.2 | 5.15% |
| St. Louis | $19.59 | $18.85 | 3.78% | 7.2 | 12.9 | 79.17% |
| Seattle | $23.77 | $22.91 | 3.62% | 6.5 | 14.4 | 121.54% |
| *2000 as of fourth quarter. **2000 as of third quarter. | ||||||
| Source: CoStar Group Inc. | ||||||
CONSTRUCTION SLOWDOWN
Office developers have dramatically curtailed building activity over the past few years in light of the soft economy. Most industry observers agree that's a good sign for the long-term health of the sector. But building activity in the apartment sector has slowed only slightly, which could delay a recovery.
NO RESERVATIONS REQUIRED
Only five of the top 25 hotel markets experienced occupancy gains in 2002. Norfolk, Va., home to one of the East Coast's largest naval bases, led the way with a 5% increase in occupancies in 2002 over 2001.
WHERE THE JOBS ARE
Of the 65 metro areas tracked by Lend Lease Real Estate Investments, 25 are showing a slight rise in the employment growth rate. Las Vegas is the clear frontrunner, while San Jose, Calif., has posted the biggest losses.
| Top Five Job Growth Markets | ||
|---|---|---|
| 1. | Las Vegas | 3.3% |
| 2. | Riverside, Calif. | 2.2% |
| 3. | Miami | 1.8% |
| 3. | Greenville, S.C. | 1.8% |
| 4. | San Diego | 1.7% |
| 5. | Charlotte, N.C. | 1.6% |
| Bottom Five Job Growth Markets | ||
| 61. | Memphis, Tenn. | -1.8% |
| 62. | Hartford, Conn. | -2.0% |
| 63. | San Francisco | -2.1% |
| 64. | Seattle | -2.4% |
| 65. | San Jose, Calif. | -3.2% |
| Source: Lend Lease Real Estate Investments | ||
THE UPPER CRUST
Commanding the biggest bucks in America, a small group of households has annual household incomes topping $200,000. Where are they? They cluster in power centers like New York and Washington, D.C., and scenic metros like West Palm Beach, Fla., and Santa Barbara, Calif.
| Rank/Metro | Number of Households | Percent | |
|---|---|---|---|
| 1. | San Francisco-Oakland-San Jose, Calif. CMSA | 152,989 | 6.0% |
| 2. | Naples, Fla. MSA | 5,994 | 5.8% |
| 3. | New York CMSA | 366,594 | 4.7% |
| 4. | West Palm Beach MSA | 21,898 | 4.6% |
| 5. | Washington, D.C. CMSA | 112,181 | 3.9% |
| 6. | Boston CMSA | 83,311 | 3.8% |
| 7. | Santa Barbara, Calif. MSA | 5,054 | 3.7% |
| 8. | Chicago CMSA | 115, 258 | 3.5% |
| 9. | Los Angeles CMSA | 180,381 | 3.4% |
| 10. | Atlanta MSA | 50,550 | 3.4% |
| Note: Statistical ties are due to rounding. | |||
| Source: American Demographics analysis of Census 2000 data | |||