2018 Office Market Survey - Burns Commercial …...2 A look back at the 2008 office market survey reveals that there were two buildings in Tyler which had more than 10,000 square feet

OfficeMarketSurvey2018

1

TYLEROFFICEMARKETSURVEYFall-2018

TheannualBurnsCommercialPropertiesOfficeMarketSurveyindicatesthatthetrendsofthepastfewyearsarecontinuingintheofficesector.ThesurveyconsistsofdataobtainedfromLandlordsandLeasingAgentsforfiftyninebuildingsintheTylermarket.Thesepropertiescontainatotalof2,319,898squarefeet.Thedatashowsthatinexcessoftwentyninepercentofthespaceisvacant,withthetotalvacancystandingat467,067squarefeet.Thisisthelargestamountofvacantspaceeverrecordedinthetwentyyearsthesurveyhasbeenconducted.Theoccupancyratestandsat78.61%,downslightlyfrom79.8%in2017.Thedowntownsectorhasaoccupancyrateof74.5%,whilebuildingslocatedinsouthTylerareoccupiedatalevelof82.7%.Onaverage,Landlordsarequotingaleaserateof$15.86persquarefootperyear.Thisisupfromthe2017level,whichwas$14.42persquarefoot.Inspiteofthefactthatthevacancyrateforofficespaceremainshigh,thesupplycontinuestoincrease.TheincreaseappearstoprimarilybetheresultofsmallofficebuildingswhichhavebeenbuiltinthesouthernportionsofTylerbydevelopers.Thisisonetrendcontributingtotheoversupplyinthemarket.Othertrendsincludethefactthattechnologyandautomationhaveresultedinadecreaseintheamountofofficespacebeingutilizedperemployee.AccordingtoarecentstudybycommercialrealestatefirmAvisonYoung,thetypicalofficeuserhadanaverageof225squarefeetofworkspacein2010.Todaythatfigurehasdecreasedto151squarefeetperperson,anditispredictedthatby2020,theaverageofficespacewillbe120squarefeet.Thisisnotagoodtrendforofficelandlords.Additionally,anewstudybytheWorldEconomicForumresultedinapredictionthattheshareofworkplacetasksperformedbymachineswillincreasefromthepresentrateof29%to52%bytheyear2025.Thesetrendswillresultinadecreasingneedforofficespace.

2

Alookbackatthe2008officemarketsurveyrevealsthatthereweretwobuildingsinTylerwhichhadmorethan10,000squarefeetofcontiguousspaceavailable.Thisyear’sstudyshowsthateightbuildingshavethismuchcontiguousspaceforlease.In2008,theclassAbuildingsboastedanoccupancyrateof93.8%.Todaythisfigurestandsat78.1%.Theoccupancyratefordowntownbuildingsstoodat89.2%in2008,versus74.5%in2018.TheincreaseintheamountofvacantspaceavailableinTyleroverthistenyearperiodis258,376squarefeet.WhiletheTylereconomyisstillingoodcondition,andothersectorsofcommercialrealestatearedoingwell,theofficesectorisinalongtermdecline.Largeofficeusersareflockingtosomeofthebigmetroareasofthestate,butnottothesecondarymarkets.OfficerentsinmarketssuchasAustinandthenorthernportionsoftheDFWmetroplexareinexcessofthirtydollarspersquarefoot,makingthelocalrateslooklikebargains.Unfortunately,theratedifferentialhasthusfarnotbeentemptingenoughtopersuadelargecompaniestomovetoTyler.Locallandlordscanonlyhopethatthistrendwillreverseitselfinthefuture,andthatdevelopers(andtheirlenders)willdosomemarketresearchpriortomakingthedecisiontoconstructadditionalofficebuildings.Thankstothebuildingownersandleasingagentswhocontributedthedataforthisreport,andtoRebeccaHittoftheBurnsCommercialPropertiesstaffforcompilingtheinformation.

TaylorBurns

One American Center (cover photo)

909 ESE Loop 323

Total Office Market Statistics

Number of Buildings: 59

Total Square Feet: 2,319,898Total Vacant Square Feet: 467,067Overall Occupancy Rate: 78.61%Average Annual Rental Rate Per SF: $15.86

Tyler CBD (Downtown) Office Market Statistics


Total Square Feet: 801,984Total Vacant Square Feet: 204,115Occupancy Rate: 74.5%Average Annual Rental Rate Per SF: $14.72

Tyler Suburban (South Tyler) Office Market Statistics


Total Square Feet: 1,517,914Total Vacant Square Feet: 262,952Occupancy Rate: 82.7%Average Annual Rental Rate Per SF: $17.01

Office Market SurveyPresented by Burns Commercial Properties

Tyler, TX - Fall 2018

Class A



Class B



Class C


Total Square Feet: 240,240Total Vacant Square Feet: 50,772Occupancy Rate: 77.6%Average Annual Rental Rate Per SF: $13.09



7

8

9

10

11

12

13

14

15

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$14.33

$11.61

$11.36

88%

$11.81

$12.10$12.26

$12.87

$13.36$13.44

$14.21

$14.51$14.44

$14.76

$15.24 $15.12

85.4%

2017

$14.42

86%86%86%87%89%87%90%90%88%86%90%89% 79.84%84.9%

2018

$15.86

78.61%

Wadel–ConnallyBuilding112E.LineSt.

Central Business District(Downtown)



Property ContactNumber of

FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop

Building Class

122 South College Bldg122 S. CollegeWhitehurst & Smith

Bill Whitehurst(903) 595-0470 7,000 SF 2 0% 7,000 SF 7,000 SF $10.00

(Negotiable) /SF N/A N/A C

200 Broadway Center (KLTV)105 W. FergusonTV-3, Inc

Taylor BurnsBurns Commercial Properties

(903) 534-120054,904 SF 4 51% 26,818 SF 16,313 SF $13.00 /SF N/A Base

Year B

210 South Broadway Building210 S. Broadway AveBroadway Rusty Nail, Ltd

Andy BergfeldBergfeld Realty(903) 592-1032

13,357 SF 2 100% 0 SF 0 SF $13.50 /SF 15.0% Base Year B

320 South Broadway Building320 S. Broadway AveMetro Asset Management, LLC


19,202 SF 2 100% 0 SF 0 SF $13.50 /SF 5.0% Base Year B

777 Building777 S. BroadwayBroadway Hope LLC

Hagan BakerDrake Real Estate(903) 581-3737

8,522 SF 2 66% 2,906 SF 1,572 SF $11.00 /SF N/A N/A C

Austin Bank Building305 S. BroadwayBriarwood Group, Ltd

Martin HeinesReal Estate Services

(903) 593-236735,841 SF 12 85% 5,500 SF 1,250 SF $12.00 /SF N/A None C

Blackstone Building315 N. BroadwayTyler Chamber of Commerce

Allen BellAllen Bell Property Services

(903) 595-280526,620 SF 6 99% 260 SF 260 SF $13.00 /SF 20.9% $6.68 B

Energy Center, The719 W. FrontBriarwood Group, Ltd


(903) 593-236741,560 SF 3 93% 3,000 SF 500 SF $12.00 /SF N/A None C

Fair Investment Building121 S. BroadwayInvest in Tyler, LLC


44,392 SF 8 52% 21,289 SF 6,397 SF $12.00 /SF N/A Base Year C

First Place100 E. FergusonCrest Properties, Ltd


(903) 595-2805187,387 SF 12 86% 26,818 SF 16,313 SF $16.00 -

$18.00 /SF 10.8% $9.72 A

Fountain Square401 E. FrontBriarwood Group, Ltd


(903) 593-236729,484 SF 2 81% 5,500 SF 1,200 SF $11.00 /SF N/A None C

Total Size Annual Base RentCurrent Vacant

Largest Contiguous Available

People’sPetroleumBuilding&PlazaTower102&110N.CollegeAvenue

Central Business District(Downtown)




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop

Building ClassTotal Size Annual Base RentCurrent Vacant

Largest Contiguous Available

People's Petroleum Building102 N. CollegePeople's Petroleum Building, LLC


76,305 SF 15 97% 1,981 SF 1,981 SF $19.00 /SF N/A Base Year A

Plaza Tower110 N. College AveThe Genecov Group


209,264 SF 19 54% 96,820 SF 12,085 SF $17.00 /SF 8.0% Base Year A

Tyler Office Center120 S. BroadwayIndividual

Art MullanSignature Management, Inc

(903) 526-088017,000 SF 2 71% 4,900 SF 3,000 SF $10.50 /SF N/A None B

Wadel-Connally112 E. Line St.BSGJ1, LLC


(903) 595-280531,146 SF 3 96% 1,323 SF 1,252 SF $13.00 -

$16.00 /SF 17.3% $5.33 B

TOTAL/AVERAGES: 801,984 75% SF204,115 $14.72 /SFSF

IndependenceCenter100Independence

Suburban District




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop

Building Class

Alpha Centre3200 Troup HwyAberfeldy, Ltd

Russell PattersonPatterson Commercial Property

(903) 597-180045,632 SF 3 89% 5,230 SF 4,207 SF $14.00 /SF 20.0% Base Year B

Asher Park1042, 1043, 1058 Asher WayAsher Park, LLC


18,000 SF 1 8% 16,500 SF 8,000 SF $18.00 - $22.00 /SF N/A N/A A

Atelier Office Buildings3800 Old Bullard RdHarbor Properties

Carrie JohnsonHarbor Properties

(888) 792-030813,960 SF 1 100% 0 SF 0 SF $14.72 /SF N/A $6.68 B

Atriums1820 Shiloh RdAberfeldy, Ltd



Bullard Rd Square5604 Old Bullard RdHarbor Properties


(888) 792-030814,114 SF 1 100% 0 SF 0 SF $15.00 /SF N/A $5.33 C

Broadway Commons8288 S. BroadwayAndres Alarcon

Robert MeansInvestment & Real Estate

Services(903) 594-8880

16,000 SF 1 100% 0 SF 0 SF $16.00 /SF N/A N/A B

Broadway Hills Plaza7925 S. BroadwayCHB Interests, LLC


30,446 SF 2 76% 7,302 SF 3,463 SF $16.00 /SF N/A N/A A

Colonial, The5935 Old Bullard RdHarbor Properties


(888) 792-030810,300 SF 1 100% 0 SF 0 SF $14.00 /SF N/A N/A B

Commerce Square3334 SSW Loop 323Wynne Interests

James Wynne, IIICommerce Square Corp.

(903) 509-979573,165 SF 1 100% 0 SF 0 SF $12.10 /SF N/A None B

Copeland Point6115 New Copeland Rd Copeland Point, LLC


27,360 SF 1 58% 11,400 SF 4,560 SF $18.50 /SF N/A N/A A

Corporate Green Office Park5751-5767 Eagles Nest BlvdPhil Burks

Matthew MarshallDrake Real Estate(903) 581-3737

19,945 SF 1 95% 1,080 SF 1,080 SF $16.50 /SF N/A N/A A

Total Size Current Vacant

Largest Contiguous Available Annual Base Rent

GrandeCentre6101S.BroadwayAve.

Suburban District




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop

Building ClassTotal Size Current Vacant


Grande Centre6101 S. BroadwayDavid A. Lake


(903) 534-120090,704 SF 5 62% 34,544 SF 18,383 SF $16.00 /SF 12.2% $6.68 A

Grande Plaza212 Grande BlvdPyle Properties

Brad DonleyPyle Properties(903) 509-8161

57,500 SF 1 85% 8,889 SF 7,679 SF Negotiable /SF N/A N/A B

Heartland Financial Center501 Shelley DrHibbs Financial

Brig NorthHeartland SIG

(903) 266-564758,578 SF 2 54% 26,818 SF 16,313 SF $15.00 /SF 15.0% Base Year A

Highlands Office2624 KensingtonBob Matush

Bob Matush(903) 561-7287 7,730 SF 1 93% 527 SF 527 SF $14.00 /SF N/A None C

Hollytree Professional Park6760-6770 Old Jacksonville Hwy

Cole IhrigPatterson Commercial Property

(903) 597-180020,314 SF 1 100% 0 SF 0 SF $15.50 /SF 0.0% $5.35 A

Independence Center100 IndependenceThe Genecov Group

Don SimmonsSimmons Real Estate


Jordan Plaza104-115 Jordan Plaza BlvdVerian Investments, LP

Brian BurksLandbridge Commercial

(903) 561-952740,000 SF 1 100% 0 SF 0 SF $11.00 /SF $3.75 $6.68 B

Kinsey Plaza1420 WSW Loop 323ETX Tyler Properties

Marc IvyBridgewater Realty

(903) 881-317126,592 SF 1 88% 3,156 SF 3,156 SF $12.00 /SF NNN N/A B

Oakglen Office Building5620 Old Bullard RdHarbor Properties



Oak Leaf Building5528 Old Bullard RdHarbor Properties


(888) 792-030812,360 SF 1 100% 0 SF 0 SF $14.00 /SF N/A $2.75 C

Oak Plaza Building*3300,3304, & 3310 S. BroadwayRoosth Properties* 3 buildings with 2 floors each

Dan SpiveyRoosth Properties

(903) 593-833359,610 SF 6 55% 26,818 SF 16,313 SF $16.00 /SF 13.5% $6.04 B

PaluxySquare3800PaluxyDrive

Suburban District




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop



Off Broadway II2301 S. Broadway AveNolan Manziel

Nolan Manziel(903) 592-4315 22,990 SF 1 0% 22,990 SF 22,990 SF Negotiable /SF N/A N/A B

Omega Building, The1901 Rickety Ln

Russell Patterson & Cole IhrigPatterson Commercial Property

(903) 597-180011,400 SF 1 75% 2,850 SF 659 SF $13.00 /SF 15.0% N/A C

One American Center909 ESE Loop 323Mesa Loans of Athens, LP


(903) 534-1200113,708 SF 7 84% 18,545 SF 7,744 SF $17.50 -

$18.00 /SF N/A Base Year A

Paluxy Square3800 Paluxy DrThe Genecov Group

Aaron UncapherBurns Commercial Properties

(903) 534-120078,642 SF 1 81% 15,045 SF 3,403 SF $14.50 /SF N/A Base Year B

Pruitt Place Offices1007 & 1011 Pruitt Place


(903) 597-18007,556 SF 1 100% 0 SF 0 SF $15.50 /SF 0.0% $5.46 A

Pruitt Place Offices1014 Pruitt Place


(903) 597-18003,671 SF 1 100% 0 SF 0 SF $16.00 /SF 0.0% $4.38 A

Pruitt Place Offices 1015 Pruitt Place


(903) 597-18009,837 SF 1 54% 4,483 SF 2,256 SF $15.50 /SF 0.0% $4.38 A

Regions Bank Building1000 WSW Loop 323WSW Loop Partners, LLC


(903) 534-120012,367 SF 1 100% 0 SF 0 SF $15.50 /SF N/A Base Year B

Scottish HighlandsTroup Hwy & KensingtonThe Genecov Group

Glenn EiknerBurns Commercial Properties

(903) 534-120032,847 SF 1 76% 7,935 SF 2,765 SF $12.50 /SF $1.14 Base Year B

Shiloh Office Park921 Shiloh RdAberfeldy, Ltd



Southeast Center3301 Troup HwyRoosth Properties

Dan SpiveyRoosth Properties

(903) 593-833338,757 SF 4 99% 260 SF 260 SF $16.00 -

$18.00 /SF 13.5% $6.68 A

SouthgateOfficePark722-728WSWLoop323

Suburban District




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop



Southgate Office Park722 WSW Loop 323The Genecov Group

Mark WhatleyBurns Commercial Properties

(903) 534-120011,893 SF 1 100% 0 SF 0 SF $15.00 /SF N/A Base Year B

Southpark Centre1828 ESE Loop 323Negem Investments, LLC


(903) 534-120048,309 SF 3.5 100% 0 SF 0 SF $15.50 -

$17.00 /SF N/A $6.68 B

Southside Office Building1324 S. BeckhamPollard-Heines Buildings, LLC


(903) 593-236715,837 SF 1 86% 2,200 SF 700 SF $12.00 /SF N/A None C

Threlkeld Building515 WSW Loop 323

Don Robert JohnsonTrust Property Management

(903)581-656015,929 SF 2 100% 0 SF 0 SF $15.00 /SF N/A N/A B

Trails Office Park, The5433 Donnybrook AveSAVB, LLC


3,747 SF 1 100% 0 0 SF $17.00 /SF N/A N/A A

Two American Center821 ESE Loop 323Aberfeldy, Ltd


(903) 597-180094,017 SF 5 100% 0 SF 0 SF $17.00 -

$19.00 /SF 16.0% Base Year A

Woodgate Centre1001 ESE Loop 323Woodgate Centre, LLC


(903) 534-120095,507 SF 4 100% 0 SF 0 SF $16.50 /SF $6.33 $5.33 B

Woodgate I1121 ESE Loop 323

Brian BurksLandbridge Commercial

(903) 561-952732,776 SF 1 90% 3,438 SF 1,569 SF $14.50 /SF N/A $6.00 B

Woodgate II1021 ESE Loop 323Flowers Davis,PLLC



Woodgate IV1101 ESE Loop 323Copeland Gate, LLC

Don Robert JohnsonTrust Property Management

(903)581-656050,757 SF 1 52% 24,337 SF 24,337 SF $13.50 /SF N/A $6.68 B

Winchester Office Complex211-215 Winchester DrHarbor Properties


(888) 792-030812,000 SF 1 100% 0 SF 0 SF $13.00 /SF N/A N/A C

WoodgateCentre1001ESELoop323

Suburban District




FloorsCurrent

Occupancy

CAM Add-On Factor

Expense Stop



TOTAL/AVERAGES: 1,517,914 83% SF262,952 $17.01 /SFSF

Documents

2018 Office Market Survey - Burns Commercial …...2 A look back at the 2008 office market survey reveals that there were two buildings in Tyler which had more than 10,000 square feet