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In The Pipeline: CoStar Development & Construction News for March 18 - 24

News, Notes and Comments on New Projects, Trends and Construction In the Commercial Real Estate Development and Planning Pipeline Around the U.S.
March 18, 2014

Wells Fargo: CRE Construction Starting to Improve

A pair of reports from Wells Fargo confirm that both demand for new supply and builder sentiment have ramped up to the point that commercial construction is finally beginning to improve across virtually all property types and U.S. regions.

Demand for office, industrial and retail space are steadily improving amid falling vacancy rates and very little new construction, according to the latest economic commentary from Wells Fargo. While the greatest occupancy improvement continues to be in metro areas with exposure to the energy and technology sectors, the proportion of markets seeing improving conditions and new construction has broadened, Wells Fargo said in its Economic and Financial Commentary released March 14.

In a related 2014 construction forecast from Wells Fargo Equipment Finance, the financial institution said contractors and equipment distributors are optimistic that local non-residential construction activity will improve in 2014 compared to the prior year. The Optimism Quotient (OQ) -- this survey’s primary benchmark for measuring construction industry executive sentiment -- is at a historic high of 124, up 18 points from 2013 and up from the survey low of 42 in 2009.

In The Pipeline is a column on significant acquisitions of commercial land for sale, and other transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new commercial real estate project -- and sign up to be added to our distribution list to receive future In the Pipeline columns by e-mail.

"The construction industry has come a long way over the last five years," said John Crum, national sales manager for Wells Fargo Equipment Finance. "We see this optimism in responses from across the country and among contractors, dealers, and other stakeholders alike."

In contrast to previous forecasts, contractors are seeing more consistency between residential and non-residential construction, with equally positive sentiment in both sectors, Crum said.

The apartment market has seen the strongest recovery of any major property type, benefiting from both the employment rebound and the decline in homeownership, according to the bank's latest commentary. Most of the growth in households since the recession ended has gone toward rental housing.

Apartments demand has been strongest in areas where job growth has risen the fastest, which tends to be concentrated in major technology and energy sectors. Demand has improved much more broadly, however, and a large proportion of new construction has occurred in and around downtown areas.

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The Wharf Mixed-Use Project to Finally Break Ground

After nearly a decade of stops and starts, the massive $2 billion project on D.C.'s Southwest Waterfront known as The Wharf has reached the groundbreaking stage.

Hoffman-Madison Waterfront LLC was scheduled to break ground Wednesday on the 27-acre mixed-use waterfront development on the Washington Channel on a mile of land and more than 50 acres of water stretching from the Fish Market to Fort McNair. The development seeks to create a marketplace type environment that recalls Seattle's Pike Place Market and other waterfront destinations.

At build out, the project, part of the District's Anacostia Waterfront Initiative, will total 3.2 million square feet of residential, office, hotel, retail, cultural, and public uses. Public amenities will include waterfront parks, promenades, piers and docks.

Read the Full Story... to Build 4th Fulfillment Warehouse In WA

Seattle-based, Inc. announced plans to open a nearly 1 million-square-foot fulfillment center in Kent, WA -- the giant e-tailer's fourth fulfillment center in the state.

Amazon’s other Washington fulfillment centers are located in Sumner and Bellevue, and a site in DuPont, northeast of Tacoma, is near completion.

Mike Roth, Amazon's vice president of North America operations, said the center will bring hundreds of new jobs to the Kent area.

Amazon employees will pick, pack and ship small items such as books, electronics and consumer goods to customers.

IDS Real Estate Group and Clarion Partners are building the site as part of a joint venture.

Panattoni Acquires 108 Acres Near Nashville

By Justin Sumner

Panattoni Development Co. and Clarion Partners have purchased a 108-acre land tract through a joint venture in CentrePointe Distribution Park in La Vergne, TN, where Panattoni plans to build three buildings totaling 1.33 million square feet.

Two of the buildings in the town southeast of Nashville in Rutherford County will be 600,000-square-foot cross-dock bulk buildings, in addition to a 130,000-square-foot single-load building.

Grading of the entire site and construction of a pad for the first 600,000-square-foot building, expandable to 1.3 million square feet, will begin immediately.

The 260-acre CentrePointe Distribution Park mixed-use business center is on 1-24 at the Waldron Road interchange.

Hayne Hamilton, Nashville-based senior development manager for Panattoni, said the land represents "the best undeveloped bulk distribution site for multiple buildings left in the Nashville southeast submarket," adding that the company aims to deliver the first building this year.

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Bixby Land Completes San Jose Office Park Repositioning

Bixby Land Co. has completed a full redesign of the Trimble Technology Park in San Jose, CA, converting the property into a 250,000 square-foot, four-building office project called The Campus.

Irvine, CA-base Bixby acquired the property in San Jose's Golden Triangle submarket from Rockpoint Group LLC in a venture with Cornerstone Real Estate Advisors on behalf of one of its institutional clients in 2011.

Bill Halford, president and CEO of Bixby Land Co., said the project "has exceeded everyone’s expectations with a vision that turns a deaf ear to conventional office development."

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