2016 CCIM Forecasts - The Builders Association CCIM...2016 CCIM Forecasts •OFFICE •Kevin Annis,...

2016 CCIM Forecasts

• OFFICE

• Kevin Annis, ArchCrest

Commercial Partners

• RETAIL

• Gary Tremaine, Dickson

Commercial Group

• MULTI-FAMILY

• Todd Blonsley, Marcus &

Millichap

• INDUSTRIAL

• Chris Fairchild, Colliers

International

2015 Was a Great Year

Leasing Activity WAY UP – Vacancy Rate at 12% down from 19%

Unemployment Rate DOWN 5.6% down from 14%

Housing Prices continue to rise


“Tesla Effect”

Trends 2010 – 2015 Absorption

Absorption

Graph

Supporting text

Large animated arrow point

up

Trends 2010 – 2015 Vacancy

Vacancy

Graph

Supporting text

Large animated arrowing

pointing down

EDAWN

2010 – October 2014* Just Under 11 site visits a month

October 2014* - Now Just OVER 11 site vists a month


“Tesla Effect”

2015 Overview Absorption

2015 Absorption

Graph

Supporting Text

2015 Vacancy

Graph

Supporting Text

2015 Overview Vacancy

New Construction

0

2000

4000

6000

8000

10000

12000

14000

16000

2011 2012 2013 2014 2015

Squ

are

Feet

12,253

8,506

3,986

14,161

Reno vs Competitors

Market Class A Lease Rate Average Class A Lease Rate High

San Francisco $3.31 $12.07

San Jose $2.16 $7.37

Sacramento $1.82 $4.47

Phoenix $1.71 $8.03

Las Vegas $1.68 $8.28

Boise $1.34 $2.98

Salt Lake City $1.57 $3.11

Portland $1.69 $7.00

Chicago $2.11 $9.17

Seattle $2.29 $6.31

*information courtesy of CoStar

Reno vs Competitors



San Jose $2.16 $7.37

Chicago $2.11 $9.17

Seattle $2.29 $6.31


Phoenix $1.71 $8.03


Las Vegas $1.68 $8.28


Boise $1.34 $2.98


Reno $1.57 $2.72

Reno vs Competitors



San Jose $2.16 $7.37

Chicago $2.11 $9.17

Seattle $2.29 $6.31

Phoenix $1.71 $8.03

Las Vegas $1.68 $8.28




Boise $1.34 $2.98


Reno $1.57 $2.72

2015 Overview Notable Lease Transactions

Tenant Location Sq ft

Nevada Dept Wildlife 6980 Sierra Center Parkway 29,820

ArroHealth 1450 Vassar St 29,776

Coral Academy of Science 6275 Neil Rd 27,000

Dickinson Wright LLC* 100 W Liberty 11,800

Spine NV 780 Vista Blvd 15,300

Koch Industries* 5905 S. Virginia 5,494

Renown Health 50 W. Liberty 15,700

Grand Rounds * 10345 Professional Circle 12,000

Coupa* 10615 Professional Circle 12,000

Washoe County 5450 Riggins Court 10,009

2015 Overview Notable Sale Transactions

887 Trademark

Former WMS Gaming building.

Sold with 100% vacancy

$6,680,000 45,000 sq ft

11/05/2015 $125 per foot


10509 Professional Circle

Sold with 100% occupancy

$7,200,000 45,000 sq ft

10/19/2015 $160 per foot



Sold at 91.1% occupancy with University of Phoenix on short term lease

$9,500,000 59,602 sq ft

02/12/2015 $159.39 per foot


5470 Kietzke Lane

Sold at 65% occupancy with adjacent 5.5 Acres of future development

$11,500,000 56,000 sq ft

01/26/2015 $166 per foot



Sold to Renown as a owner user opportunity

$11,750,000 63,548 sq ft

05/28/2015 $184.90 per foot


885 Trademark Drive

Lease back from Mitel Corporation

*California Investor

$12,442,000 76,800 sq ft

10/02/15 $162.01 per foot


5441 Kietzke Lane

100% occupancy

*California Investor

$16,295,274 65,074 sq ft

12/18/2015 $250.41 per foot

2015 Overview Notable Leased Investment sales

Location Sales Price Sq ft Price Per foot Cap Rate (est)

980 Sandhill $6,600,000 31,169 $205 7.48

610 Sierra Rose 2,500,000 5,730 $427.57 6.00

500 Damonte Ranch 2,064,587 8,030 238.85 7

9484 Double R $2,118,000 7,488 $264.16 6.8

6350 Mae Anne $915,000 2,050 $390.24 7.5

3725 Lakeside $1,337,000 4,338 $308.21 7.22

What does this mean to me?

Investor

Tenant

Landlord

Current owner of leased

property

Lock in your rates TODAY. Try

and renew before rates spike

Get Ready for the negotiating

power to swing your direction

Great opportunity to sell! Low

inventory and high demand will

lead to high prices!

If you can find office property

below replacement costs, BUY!!

However low inventory may

push pricing up quickly

2016 Forecast

Absorption

Vacancy

Lease Rates & Sale Prices

New Construction

2016 Forecast

2016 Vacancy Rate Projection:

11.5%

Northern Nevada Retail Forecast

Presented by:

Gary Tremaine Senior Retail Associate

2016 RETAIL MARKET FORECAST

Vacancy

Construction

Net Absorption

Significant Leases Firecreek Crossing

Ulta

14,000 sq. ft.

Legends

Petco

12,500 sq. ft.

Legends

Payless Shoes

7,000 sq. ft.

Sparks Crossing

Home Express Discount Furniture

20,182 sq. ft.

Silver State Plaza

Pet Supermarket

8,500 sq. ft.

Silver State Plaza

Hancock Fabrics

7,700 sq. ft.

Significant Sales

Smithridge Plaza

137,691 sq. ft.

$22,300,000

Crossroads Shopping Center

57,355 sq. ft.

$8,500,000

Southcreek

66,834 sq. ft.

$25,500,000

Southwest Pavilion

75,000 sq. ft.

$8,500,000

New Construction

Sparks Legends

Lemmon Valley

2016 Retail Market Predictions

LEASE RATES $1.50 - $2.00

2016 OVERALL VACANCY 10.7%

“Continued Stability & Growth”

2015 U.S. GDP Estimated End 2015 at 2.52% (was 5% GDP in 2014)

2015 GDP Growth Short of 3.0% to 3.3% Projected GDP Growth

U.S. GDP Growth Averaged over 3% from 1947 to 2014

U.S. Unemployment at 5% End 2015, Down 11% from end of 2014

2.65 Million Jobs Added to U.S. Economy in 2015

Washoe County Unemployment Down 14% to 5.6% ending 2015

Strong Local Job Growth Expectations for 2016

Potential Weakness & Factors Influencing U.S. Economy:

True Health of the Chinese Economy & Fed Actions on Rates

Continued Flat Line Corporate Earnings/Profit (U.S. firms)

Sources: U.S. Bureau of Labor Statistics, St. Louis Fed. The World Bank The Economist

Source: U.S. Dept. of Labor-Bureau of Labor Statistics

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(November 1st of each year)

Historical Unemployment Rates Washoe County (1994 to 2015)

2.7%

4.2%

4.4%

8.6%

13.2%

8.2%

5.6%

6.4%

4.7%

6.50%

9.63%

8.54%

7.16%

6.56%

5.60%

5.10%

4.35%

2.67%

$885

$875

$848

$824

$822

$834

$850

$865

$942

$760

$780

$800

$820

$840

$860

$880

$900

$920

$940

$960

2%

3%

4%

5%

6%

7%

8%

9%

10%

2007 2008 2009 2010 2011 2012 2013 2014 2015

2007-2012 = End of 4TH Q 2013-2015 = End of 3RD Q

Reno-Sparks Apartments Historic Data Year Ending Vacancy Rate & Average Rent

2007-2012 Source: Johnson-Perkins & Associates, Inc

Apartment Sales 2015

Project Name City Sale Price Units Price/Unit Cap Rate Closing

Date

The Element Reno $15,000,000 206 $72,816 6.2% 2/20/2015

Spring Villas Sparks 18,700,000 160 116,875 5.31% 2/27/2015

Sunset Ridge Reno $6,050,000 100 $60,500 6.64% 5/8/2015

Caviata at Kiley Ranch Sparks $33,840,000 184 $183,913 5.2% 5/19/2015

Sundance West Reno $23,450,000 350 $67,000 5.76% 6/16/2015

Trails at Pioneer Meadows Sparks $44,000,000 300 $146,667 4.93% 8/20/2015

Village at Iron Blossom Sparks $35,575,875 404 $88,059 5.8% 1/7/2015

Sierra Bonita Apartments Reno $2,830,000 42 $67,381 6.7% 7/29/2015

Vizcaya at Hilltop Reno $ 36,208,335 318 $113,863 5.5% 9/3/2015

Bighorn Apartments Sparks $3,675,000 53 $69,340 - 12/16/2015

Continued Local Population, Job & Wage Growth

Improved Local Consumer Confidence

Modest Increases in Apartment Supply

Median SFR Prices to Rise 8%-10%

• Potential for Weakness in U.S. Economy

•Health of Chinese Economy

•Fed Actions on Interest Rates

•Flat Lining Corporate Earnings/Profits

San Francisco #1, San Jose #2 & Oakland #4

San Jose pushed New York City from #2 to #3

Bay Area strength = Northern Nevada strength

National apartment vacancy rates end 2015 at

4.2%, likely to remain the same for end 2016

Homeownership at 63.7 (lowest in 20 years)

250,000 apartment units completed in 2015

285,000 apartment units estimated for 2016

Apartment Values Were Up in 2015 and with

Rising Rents Expect Values to Rise in 2016

Nationally Apartment Vacancy Rates Should

end 2016 in the 4.2% to 4.4% range

Apartments Continue as Most Favored Asset

Multi Family 2016 Forecast

Reno-Sparks Vacancy Rates ends 3Q

2016 at 2.95%

Average Rental Rate Up (1.0%-1.5%)

ends 3Q 2016 at $954

2015 Completions & 2016 Planned Development

2016 CCIM Forecasts - The Builders Association CCIM...2016 CCIM Forecasts •OFFICE •Kevin Annis,...

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