Author: Sarah

Houston-area Retail Strip Center Acquisition Financed

Posted on by Sarah

JLL Capital Markets announced today that it has arranged acquisition financing for Harper’s Trace Center, a fully leased, 12,928-square-foot retail strip center in the Houston-area community of Conroe.

JLL worked on behalf of the borrower, Austin-based Door Capital Partners, to place the five-year, fixed-rate non-recourse acquisition loan with Woodforest National Bank.

Completed in 2017, Harper’s Trace Village is triple net leased to a diverse, synergistic mix of tenants, including Subway, SuperCuts, Papa John’s, Greenpath Pharmacy, 242 Animal Hospital and Friendly Dentists, along with a popular wireless provider. An adjacent, non-owned Starbucks and O’Reilly Auto Parts help drive traffic to the property, and a Chick-fil-A will be opening next door.

Harper’s Trace Village is positioned on 1.27 acres at 10161 Highway 242 in Conroe, a northern suburb of the Houston MSA. The property is within a popular retail corridor and surrounded by residential neighborhoods that house nearly 85,000 residents earning an average annual household income of $108,968. Additionally, the property is across the street from a new 102,000-square-foot H-E-B grocery store.

According to JLL Research’s United States Retail Outlook Q1 2022 report, smaller-sized retailers are currently driving demand for neighborhood and strip centers. Vacancy compressed 110 basis points year-over-year ending the first quarter of 2022 to 6.0%. Rents rose 1.4% during the quarter and 4.6% over the previous year.

The JLL Capital Markets Debt and Advisory team representing the borrower was led by Senior Director CW Sheehan, Managing Director Michael Johnson and Analysts Hunt Wood and Matt Ctvrtlik.

Houston Ranks Among Leading Life Sciences Markets: CBRE Report

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Aided by a high percentage of PhDs and a low cost of living, Houston ranks No. 13 in a new analysis of the nation’s top 25 life sciences markets from real estate firm CBRE.

The report sheds light on the growth of life sciences hubs beyond the traditional coastal markets such as Boston and San Diego. Houston is getting a boost from the growing Texas Medical Center and an influx of venture capital earmarked for life sciences research.

Job growth in life sciences professions – from bioengineers and biochemists to microbiologists and data scientists – expanded by 79% over the last two decades to roughly 500,000. In comparison, the overall U.S. job growth rate in that span was 8%, according to CBRE. That surge in life sciences jobs boosted mainstay markets such as Boston and San Francisco as well as emerging hubs including Nashville, Salt Lake City and Houston.

The report suggests that Houston’s life sciences labor market offers an attractive combination of affordability and a particularly strong PhD talent pool. Major research universities and medical institutions such as the UT School of Public Health and Baylor College of Medicine boosted the city’s ranking ahead of other Texas markets in CBRE’s analysis. Click to read more at www.houston.org.

Central Texas Hospital Systems Invest Billions in Expansions to Keep Pace with Population Boom

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Central Texas is on pace to gain more than 600 hospital beds in the next three years, including two new hospitals in growing suburban areas, two new children’s hospitals in Northwest Austin, a new behavioral health hospital and expansions at seven existing facilities.

Combined, three major health care systems are investing almost $2.5 billion in physical infrastructure to increase access to services and meet the needs of the growing region.

Hospital officials said the additional space is necessary to care for the population of a rapidly expanding region, with Williamson and Hays counties ranking as some of the fastest-growing in the nation. Andy Davis, the CEO for Ascension Texas, a major health care system that includes Ascension Seton and Dell Children’s, said based on projections, within 10 years the metro area will have a 1,200-bed deficit.

“The great thing about Central Texas is the community is growing in every direction, and so it presents a unique opportunity for us to make sure that we’re doing all we can to be present in a way that keeps families close to home and together,” Davis said. Click to read more at www.communityimpact.com.

Pain, Pain, Pain: From Soaring Gas Prices to Rising Labor and Materials Costs, Inflation is Making Life Difficult for CRE Occupiers

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Pain. That’s what inflation is bringing to both businesses and consumers today. Gas prices are soaring. Families are spending more at the grocery store. And the average interest rate on 30-year, fixed-rate mortgages has been inching ever closer to 6%.

Inflation is also upending the business models of commercial real estate occupiers, something that Cushman & Wakefield addresses in its latest research.

As the report says, the largest expenses for most businesses are labor costs, which range from about 30% of total operating expenses for transportation firms to 60% for office-using businesses such as accounting, legal, medical and professional services. And today, labor costs for real estate occupiers are rising more quickly than at any time in recent memory, according to Cushman & Wakefield.

According to the Employment Cost Index for the private sector, median wage growth in the first quarter of 2022 rose 6% when compared to the same quarter a year earlier. That’s tied for the fastest rate on record dating back to 1990.

Another challenge for occupiers? Retaining employees. Cushman & Wakefield reported that workers who changed jobs in April of this year received a year-over-year wage increase of 7.2% compared to the average wage increase of 5.3% that workers staying in their current roles saw. Workers understand that they’ll typically earn more by jumping to another company. This makes it especially difficult for companies to keep their best employees if they don’t want to match those bigger wage increases.

It’s little surprise then, that Cushman & Wakefield reports that the number of people quitting jobs remains near an all-time high.

These challenges aren’t likely to disappear soon, either. As Cushman & Wakefield says, escalating labor costs don’t ease as quickly as other forms of inflation. Wages tend to be sticky.

Rising labor costs aren’t the only inflation challenges that businesses face. Cushman & Wakefield says that commercial real estate occupiers are also facing higher electricity, heating and cooling costs. In the United States, the consumer price index for electricity rose 11% during the previous 12 months ending in April, while the consumer price index for natural gas rose 22.7%.

Then there are soaring transportation costs, increases that are especially difficult on companies that ship their product across the country. As Cushman & Wakefield reports there is no sign that these costs are heading down anytime soon.

Another rising expense? The cost of materials. According to Cushman & Wakefield, the Producer Price Index for industrial commodities — excluding fuel– rose 13.8% during the 12 months ending in April, with certain products such as plywood, steel and chemicals rising by even larger margins.