Florida Ports – Investment and the Potential Upside


Florida surpassed New York as the third largest state by population, and is the main anchor for the fast-growing Southeast region. Florida’s geographic location positions it to be a major player in the global distribution network, both as a consumer market and major exporter with strong linkages throughout the region.

The state of Florida is projected to spend approximately $3.5 billion over the next five years on capital improvements and upgrades to its 15 seaports across the state. Most of this money will go to the state’s five busiest seaports, including Jacksonville, Everglades, Canaveral, Tampa and Miami. Improvements, like harbor and channel deepening, are being made to position Florida as a major gateway for international trade. The Port of Miami’s $205 million dredging project is expected to be completed this summer. Miami’s new 50-foot depths will mean the port will be able to accommodate new ultra-large container ships when they begin transiting the expanded Panama Canal in 2016. Once completed, the Port of Miami will be the only major logistics hub south of Virginia capable of handling fully laden post-Panamax vessels which will be a major draw to importers.

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South America: Politics And Foreign Trade Hinder Growth


Peru, Colombia and Chile have been garnering a lot of international attention as they continue to show overall economic improvements driven by favorable public policies. Unfortunately, decelerating trade and lower commodity pricing are affecting both the trade balance and currency levels, particularly for Colombia and Peru where negative trade balances have resulted in a much higher level of imports than exports, and have caused notable currency depreciation. In the case of Chile, the currency deprecation has much more do to with global stress and weak GDP growth than it does with foreign trade figures, but it is also being affected. Still, these countries are performing well overall. In fact, interest rates for these countries remain moderate, running between 3% and 4.5%, their inflation figures are also in check, ranging between 3% and 4.5% as well, and GDP growth, while not as robust as it was a few years ago, ranges between 2.5% and 3.5%.

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The Drayage Industry Continues to Feel the Impact of Worsening Truck Driver Shortage and Chassis Problems at the Ports


Transportation budgets represent one of the highest costs for most shippers to get their products to the end customer. Driver salary is the second largest operating cost (behind diesel fuel) and the shortage of qualified drivers is perhaps the biggest factor pushing up the rates shippers pay for capacity.

The drayage industry is already facing a labor crisis with current driver shortages only getting worse over the last few years. The shortage is a result of the demand for trucking services increasing faster than the number of drivers entering the field. A recent survey by Wolfe Research reported that shippers are expected to shift freight from rail to truck, after four years of shifting cargo in the opposite direction. A new report released by the American Trucking Association (ATA) projects freight volumes will increase by nearly 29% over the next 11 years. Trucking will still be the dominant mode of freight transportation and the number of Class 8 trucks in use will grow from 3.56 million in 2015 to 3.98 million by 2026.

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Nurturing Innovation: How Institutions Create Startup Ecosystems


“Don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.”
– Mark Cuban, entrepreneur and investor

According to the U.S. Census Bureau, approximately 97% of all business establishments in North Texas employ fewer than 100 people. Many of these small businesses are young tech startups that need additional support to launch their businesses. They often require working space, capital funding, and networking opportunities in order to fully capitalize on their ideas. Connecting startups with private equity growth funds, venture capital, and angel groups has been a challenge until recently.

Over the last several years, a startup ecosystem has been developing in Dallas-Fort Worth that is helping provide access to these amenities for many of the area’s tech entrepreneurs. Local institutions have created a network of facilities, mentors, and capital investors that support local entrepreneurs as they work to build their businesses.

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Law Firms: Moving On Up


Law firms are on the move in search of greener pastures. Shades of green range from trendier neighborhoods, closer proximity to amenities, new development, and greenest of all: reduced real estate expenses. While the increased desire to relocate has not translated into a surge in leasing activity, the number of relocations has outpaced renewals in four of the last five quarters. (For the purpose of this report, we are focusing on significant lease transactions, qualified by a minimum threshold of 10,000 square feet).

Nationally, law firm leasing activity during the first quarter of the year was nearly equal to the total during the same period last year. There were 68 transactions totaling 2.5 million square feet (msf) leased during the first three months of this year – only two less transactions (70) totaling slightly less square footage (2.3 msf) signed during the first quarter of last year. While seven of the largest 10 leases signed this quarter were renewals, there were actually two more relocations than renewal transactions signed nationally. While it may seem balanced, traditionally law firm renewals have dwarfed relocations on a square footage basis. In the current quarter, the number of relocation leases signed larger than 20,000 sf in the 10 US cities* outweighs renewals by 63.4%.

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Downtown Toronto’s Explosive Evolution


With weak commodity prices choking off growth in Western Canada, and both Montreal and Ottawa deep in demand doldrums, downtown Toronto stands out as the lone wolf – the hottest market in the country. It’s hard to say whether it’s good timing or fortuitous circumstance, given the downtown market is in the midst of a development cycle that rivals activity unseen since the early nineties.

The first two developments in the current wave of new product arrived in Q4 2014 and 3.8 million square feet (msf) are under construction. In addition, Ivanhoé Cambridge is moving forward with a 1.5-msf tower in a two-tower development in the financial epicenter of downtown Toronto, set to open in 2018. And while vacancy is expected to reach 9.6% by 2017, this is still reasonable considering the extraordinary amount of new inventory.

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Washington, D.C. – No Longer Just a Government Town


Washington, D.C. is finally beginning to shake off the effects of sequestration, government dysfunction, and the overall economic slowdown seen during the period from 2012 through 2014. During this time the Washington, D.C. office market was categorized by rising vacancy rates, subdued leasing activity, and negative absorption – something not often seen in the downtown market outside of a recession. No impact of this period of market softness was felt quite as hard as a complete shutoff in government leasing activity as the General Services Administration (GSA) focused on consolidations, short-term extensions, and moving from leased to owned space. Read the rest of this entry »

Here’s Why 20% Office Vacancy Doesn’t Matter


Earlier this year, we reported on the resurgence of Downtown Los Angeles in recent years and the accompanying strength of the office market. Our Los Angeles Research team found this strength continued into first quarter 2015.

In the Central Business District, direct vacancy remained relatively flat at 20.8% with a small amount of occupancy losses totaling 6,540 square feet, but healthy leasing activity and diminished rightsizing will translate into occupancy gains in second quarter. Last year’s fire damage in a city-owned Downtown high-rise forced the tenants to move, but even without these large deals, leasing still outpaced activity from one year ago by 51.7%.

Landlords, encouraged by the growth in Downtown, also pushed rents, increasing the direct Class A asking rent to $39.24 per square foot/year, a 6.3% increase over last year.

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Millennials Reshaping South Florida’s Urban Areas


Throughout South Florida, millennials, young adults born in the early 1980s through early 2000s, are flocking to the area’s amenity-dense urban cores. Since technology has inherently globalized their experiences and created a more diverse interconnected generation, millennials seek to feed their need to explore and interact. The world is at their fingertips due to advances in technology. Large cities appeal to this group because of diverse cultural options, large population and increased social opportunities. Young talent is migrating from northeastern states to warmer climates. New York and New Jersey are big feeder states for Miami and West Palm Beach where the financial market is less competitive but still well-respected.

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Gone To Texas: Headquarter Relocations And Expansions Are Transforming The Dallas-Fort Worth Economy


The North Texas region is a hot spot for economic activity. Nearly every week an announcement is made in the media that another company has selected the Dallas-Fort Worth (DFW) area as their new home. The sheer number of headquarter relocations and other corporate expansion projects underway are transforming the local commercial real estate landscape. Once quiet suburban locales are now bustling with activity, and former agricultural tracts are now being master-planned to accommodate large corporate campuses.

The limited supply of inventory and the growing need for space has developers scrambling to meet demand. Office construction activity is at its highest level since the late 1990s with over 8.8 million square feet (msf) of new space currently being built. Nearly 5.2 msf are build-to-suit projects such as Toyota, State Farm, 7-Eleven, Raytheon, Liberty Mutual, and FedEx. Speculative projects make up the remaining 3.6 msf of which 25% is already pre-leased.

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