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From the Editor: Unique Trends in CRE: Trophy Industrial to Spaceports
This issue features a story on REI’s newest distribution center and its focus on designing for employee wellness, a trend the NAIOP Research Foundation studied last year in a report by KSS. Similarly, longtime NAIOP member Clark Machemer says developers should drop the cookie cutter and go for “trophy” status when designing certain industrial buildings.
In another feature story, freelance writer and former broker Will McDonald looks at the boom in spaceport development in Houston and coastal Florida.
Also, congratulations to Crescent Communities for being named the 2024 Developer of the Year! They have consistently demonstrated the ability to produce remarkable communities with a strong brand.
I hope to see you at CRE.Converge in Las Vegas!
Stay informed,
Jennifer LeFurgy, Ph.D.
Editor-in-Chief
In Brief
Notable facts and figures on the state of the commercial real estate industry, culled from media reports and other sources.
INDUSTRY OUTLOOK
80%
The portion of U.S. respondents to Altus Group’s Q2 2024 CRE Industry Conditions & Sentiments Survey who expressed their intention to transact (buy, sell or both) over the next six months; 65% of Canadian respondents likewise indicated plans to enter transactions. Altus Group said the quarter’s transaction appetite was “driven more by larger firms with CRE exposure greater than US $5 billion.”
INDUSTRIAL
$142
The average national sale price per square foot of U.S. industrial properties, according to the CommercialEdge May 2024 market report. This represents a year-over-year increase of 15.4% and is 71.2% higher than in 2019. “With office assets trading at $165 per square foot in 2024, industrial prices are closer to office on a per-square-foot basis than ever before.”
OFFICE
830
The total number of office buildings CBRE designated as “prime” in an analysis identifying the highest-quality buildings across 57 U.S. cities. The properties comprise only 8% of the U.S. office market by square footage and 2% by building count (compared with 60% for Class A properties). “Average vacancy in the prime buildings in this year’s first quarter (14.8%) was 4.5 percentage points lower than the rest of the market ... and attracted an average rent premium of 84% more than the rest of the market.”
265,897
Square feet of new office building construction started in the first quarter of 2024. The quarter marked an all-time low for office building groundbreakings, according to JLL and reported by Fast Company. For comparison, the first quarter of 2020 saw 10,562,590 square feet of new office building construction.
MULTIFAMILY
30%
The percentage decline in permits to build apartments in the United States since the COVID-19 pandemic, according to a Redfin analysis of U.S. Census Bureau data. “Builders obtained permits to construct 13 multifamily housing units for every 10,000 people in the U.S. so far this year, down from an average of 18 during the same periods in 2021-2023.”
DATA CENTERS
$100 Billion
The amount that Amazon, the world’s largest data center user, plans to spend on new data centers over the next decade. As reported by The Wall Street Journal, the Seattle-based tech giant intends to add at least 216 data center buildings in the next several years as it dedicates more investment money to its cloud computing and artificial intelligence infrastructure.
RETAIL
8.5 Months
The average time it takes to secure a tenant once available shopping center space hits the market. According to CoStar, that is the fastest pace recorded in more than two decades, due in part to minimal shopping center development over the past 10-plus years, which has available space hovering at historic lows.
PROPTECH
14.3%
The amount that venture capital investments in proptech and proptech-adjacent companies declined in the first half of 2024, per the Center for Real Estate Technology & Innovation. Total funding reached $4.37 billion, compared with $5.10 billion in the first half of 2023 and $13.13 billion in the first half of 2022.
ENVIRONMENT
876
The number of Energy Star-certified commercial buildings in Los Angeles, outpacing all other U.S. cities. Washington, D.C. (631), New York City (390), Atlanta (373) and San Francisco (368) rounded out the Environmental Protection Agency’s annual “top cities” list. Energy Star-certified buildings use an average of 35% less energy and are responsible for 35% less carbon dioxide emissions than typical buildings.
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