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Hartman has recently announced two new leasing transactions:
Partners Real Estate (Partners), one of the largest independent commercial real estate firms in Texas—and the company formerly known as NAI Partners—today announced that Hanes Chatham Jr. has joined the firm as a partner in the firm’s Dallas Office. Mr. Chatham Jr. comes to Partners from Stream, as a Partner less than two months after Partners’ opened its Dallas office at 1717 McKinney Street.
Mr. Chatham is a decorated commercial real estate veteran with 15 years of experience. Prior to joining Partners, Mr. Chatham worked at Stream Realty Partners for 12 years, where he specialized in industrial services with a focus on tenant representation, building sales, and project leasing. CoStar has recognized Mr. Chatham as one of Dallas’ Power Brokers, and he serves on the Stemmons Corridor Business Association (SCBA).
As a native Texan from Fort Worth, Mr. Chatham has lived in Texas all of his life. Before moving to Fort Worth, he grew up on a quarter-horse ranch in Aubrey, Texas. He attended Southern Methodist University, where he played rugby and became a member of the Sigma Chi fraternity. In addition to earning a Bachelor of Science in economics with finance, Hanes is also a CCIM candidate.
The addition of Mr. Chatham to the Partners team comes on the heels of a busy few months for the company, which not only rebranded in September but also recently announced the opening of its Dallas office and expansion into North Texas commercial real estate markets, as well as tapping Jerod Hangartner to lead brokerage services in Dallas. The Dallas office now has 15 people in a short time.
Resia has closed on construction financing for a 573-unit apartment community located in the city of Houston, Texas. Santander Bank led the senior financing with Valley Bank participating, and Artemis Real Estate Partners provided preferred equity. The total financing amounted to $96.5 million for the project, which is one of several brand-new Resia developments as the company continues to develop throughout Texas, Georgia, and Florida. The project broke ground in the Q2 of 2022, is expected to begin leasing in Q4 of 2023, and be fully delivered by Q2 of 2024.
Located directly across from the Houston Methodist West Hospital, Resia Ten Oaks will deliver 573 units across three 12-story high-rise buildings. Resia Ten Oaks will offer one-bedroom, two-bedroom, and three-bedroom floor plans. Apartments will feature modern finishes, stainless steel appliances, and in-unit laundry. Built with young professionals and families in mind, Resia Ten Oak’s well-designed amenities include assigned parking, a business center, and a multipurpose clubhouse complete with a swimming pool and fitness center.
MMG Real Estate Advisors (MMG), a multifamily investment sales brokerage firm, announces the acquisition of Independence Commercial Advisors. Based in Texas, the boutique brokerage was founded in 2020 by industry veterans J. Michael Watson and J. Michael Moffitt with a focus on Texas private capital and institutional multifamily and self-storage brokerage.
With the mission of helping clients create and preserve wealth, Independence Commercial Advisors has garnered a reputation for integrity and client success in the multifamily space. “We’ve always seen ourselves as true advisors to our clients, and that is clearly a shared value with the team at MMG,” Mike Moffitt said. “We were highly impressed with the resources MMG has assembled and even more impressed with the collaborative team the firm has amassed, with each member bringing their collective knowledge to bear for the greater good.”
As part of the transaction, MMG has added eight investment sales advisors to the firm’s rapidly growing national roster with offices now in San Antonio, Austin, Houston, and Dallas. Managing Directors Mike Watson & Mike Moffitt join the firm, along with Senior Directors Mark Diebold, Nicholas Ling, Josh Murphy and Richard Mireles and Associate Advisors Tyler Salter and Alex Thompson. In addition, Senior Project Manager Evelyn Pinner has joined MMG’s growing operations team from Independence.
Mike Watson has been a market leader in the central and south Texas commercial real estate markets for over 20 years. He started his career in commercial real estate in the Austin office of Marcus & Millichap specializing in multifamily investment sales and later in executive management of many of the firms’ regions. He was the No. 1 producing agent for the Austin and San Antonio regions, routinely recognized as one of the state’s “Top 10 Producers,” and received numerous national sales awards. Over the course of his career, Mike has led the sales and marketing efforts for more than $3 billion in investment sales and financing transactions.
With over 30 years of experience, Mike Moffitt has personally represented buyers and sellers in the sale of multifamily, retail, office, industrial, hospitality and self-storage assets throughout Texas. In 2010, he joined Marcus & Millichap where he climbed the ranks before being named first vice president of Investments in 2017. During his tenure, Mike was a National Achievement, Sales Recognition, and Platinum Award winner. Over the years, Mike has been instrumental in helping family-owned private offices, regional syndicators, and individual private clients to form acquisition and disposition strategies.
Syndicated Equities (Syndicated) is pleased to announce an investment in the Oncor, an office building that will be converted to multifamily located in downtown Fort Worth, Texas.
The property will be redeveloped by 3L Real Estate, a Chicago and Dallas-based developer that specializes in the adaptive reuse of converting urban office buildings to residences. The property consists of a 314,514-square-foot, 16-story office building and a four-story addition. Once complete, it will feature 330 units with Class A amenities including a gym, pool, rooftop deck, and business center.
Syndicated acquired the property alongside 3L Real Estate.
It’s a pivotal moment for the U.S. economy. Will surging inflation and geopolitical shifts spell trouble for the sector? Not necessarily.
Chicago Industrial Properties recently consulted SparrowHawk Founder Alfredo Gutierrez to discuss the current outlook, including how to parse truth from tale when it comes to investing in today’s market.
The Concern
Much of the concern has less to do with volatile economic factors, but the lack of clarity surrounding them, Gutierrez said. The economy is murky, and everyone seems to have a different opinion regarding what might or might not happen. It’s true that some of the traditional items the real estate industry looks to are in flux—like the 10-Year T—but no one knows for sure how things will play out. Still, whatever does happen will have an impact, and lenders, in particular, are widening their spreads to give themselves room if there’s an upward shift.
“Because of this, no one knows exactly how to underwrite a deal. From the matrix of traditional cap rate underwriting, if you only took a property’s first-year NOI, the majority of deals don’t pen out in terms of what they’re truly worth. Meaning cap rates as a function may have moved up, due to what’s happening in the economy, but so have rental rates resulting in value to be captured in the future.”
Real estate values haven’t deteriorated, and much of the investment community has shifted their focus to three-year windows as opposed to 12 months because of rent inflation, which Gutierrez said is predicted to continue to significantly inflate as a result of low vacancy and limited supply of space. New buildings are quickly absorbed, as the sector continues to see positive absorption.
“Everyone’s predicting there’s going to continue to be upward pressure on rents, making way for a landlord’s market,” Gutierrez said. “But is that enough to justify the potential cap rate increase? There’s just not enough clarity. No one has a crystal ball, so there’s a little skittishness in the market but property values based on price per square foot continues to be maintained .”
What Sets Industrial Apart
Each sector is different, and thus, it’s fair to wonder if the above economic concerns will have different effects on each. That said, Gutierrez said no. It’s important to focus on the basics and fundamentals.
“Industrial continues to have legs to it,” he said. “It’s a favored sector. Commercial real estate traditionally has been highly levered. Whether its 50–60%, the leverage is a part of the investment and in the low interest rate environment real estate values benefited. We had almost zero cost of capital for many years and even with relatively flat rental rate escalation cap rates continued to decrease, and lenders spread decreased. Now we are seeing the opposite situation and a lot of cash buyers who see the value due to extremely high rental rate growth and potential to add leverage later. Historically life companies and banks based their interest rates upon the 10-Year Treasuries. The 10- Year Treasuries being a longer-term number and while the Fed fund rates have significantly increased the 10 year doesn’t move basis point by basis point, it does move in tandem to some degree. We did see the 10 Year Treasuries push 3.75%–4% with a 200 basis point spread on it for the lender, lenders are quoting 6% interest rates. A traditional highly leveraged buyer can’t buy deals at 4% yield because the equation doesn’t work with negative leverage. We have seen the 10-year rate pull back significantly even in the face of rising Fed Funds which have resulted in an inverted yield curve and the 10-year T currently at about 3.4%. When the lenders narrow the spreads, you will see debt at sub 5%. With double digit rent inflation leverage deals will trade and strong returns will continue even if the CAP rate move up slightly.”
Now there is a cost, and Gutierrez said the short term objective is to get the industry on the same page. Unfortunately, it is like turning a big ship, it takes time, and slowly, it will turn.
Another thing worth noting is the Fed’s recent adjustment of interest rates but less aggressive, as they’ve scripted a 5% interest rate to offset the risk of flaring inflation.
“I think you’re going to see inflation quickly come into line,” Gutierrez said. “Current inflation isn’t an interest rate issue, but rather a supply issue brought about by the pandemic. It’s solving itself and as supply grows, you’ll start to see downward pressure on price of commodity goods.”
Information Overload
There is so much information out there—every article slightly different—contributing further to the previously-mentioned lack of clarity. When asked for insight by investors with regard to trying to navigate the space in the current market, Gutierrez emphasized patience. 2H2022 came with a lot of speculation and worry, but the fundamentals speak for themselves.
“The fundamentals in the sector are stronger than I’ve ever seen them in my 35-year career,” he said. “Low vacancy, good product, the growth of e-commerce and reshoring are all positive for owners of industrial real estate. We just have to step back. Those of us that have been in the business for long enough realize we need to do our job to increase NOI and, as a result, increase value. It’s important to be patient, pay attention to the fundamentals and remind ourselves that it’s still a strong market.”