Vroom Expands with New 102,000-SF Lease in Houston’s Westchase Park

Vroom has leased 102,492 square feet at Westchase Park II at 3600 W. Sam Houston Parkway S. in Houston, bringing the building to 92 percent occupied. Transwestern Real Estate Services brokered the deal on behalf of the landlord with JLL representing Vroom. Westchase Park is a Class A, 569,825-square-foot office complex comprised of two buildings, with a freestanding amenity center complete with a Citrus Kitchen restaurant, a fitness center with full-service locker rooms and a tenant conference center offering flexible seating configurations. The transaction backfilled two floors of space and provided the opportunity to find a tenant that could utilize the existing space and high-quality build-out. Transwestern executive vice president Eric Anderson, vice president Parker Burkett, and senior associate Katy Gragg provide agency leasing services on behalf of the landlord. JLL’s Louie Crapitto provided tenant representation services to Vroom. “We are excited to find a high-caliber company to take the two available floors at Westchase Park Building II, which offers many appealing attributes,” said Anderson. “We look forward to having Vroom as a tenant to take advantage of the exceptional amenities and access offered at Westchase Park.” The park boasts a highly convenient, central location with frontage to Beltway 8 in Houston’s Westchase submarket. Building I at 3700 W. Sam Houston S. is currently 69% leased and occupied, offering another significant block of space that could be similarly utilized by a large user.

Cawley Partners and Staubach Capital Announce Acquisition of Sabre Corporate Offices In Southlake

DALLAS, TX – Cawley Partners and Staubach Capital have purchased the Sabre Global corporate offices located at 3120 and 3150 Sabre Drive in Southlake, Texas. The two-building campus totals 475,000 square feet of Class A office. Sabre Global, a leading software and technology company for the travel industry, has signed a 12-year lease for the entire 265,000-square-foot Building A, and entered into a short-term lease for the 210,000-square-foot Building B. The Work From Anywhere movement has proven not only possible, but preferable for many employees at Sabre Global. In light of Sabre’s shifting workforce, their need for nearly half a million square feet of office space has lessened. Cawley Partners and Staubach Capital jumped at the opportunity to purchase their campus in the ever-growing Southlake submarket. With Sabre retaining over 265,000 SF long term, there will be roughly 210,000 RSF (one entire building) available for lease in 2022. Beginning in Q1 2022, Cawley Partners plans to fully renovate Building B and add a full suite of upscale amenities, including: meeting rooms, fitness center, locker rooms, food service, and outdoor gathering spaces. “We are really excited about being in Southlake. With Charles Schwab, Microsoft and Robinhood growing in the area, we anticipate additional growth and demand for Class A space in the submarket,” commented Kristi Waddell, VP Leasing at Cawley Partners. 3150 Sabre Drive will be managed and leased by Cawley Partners. For leasing inquiries, contact Kristi Waddell at kwaddell@cawleypartners.com.

Deal Ticker: Another California-Based Real Estate Firm Relocates to Dallas

Lion Real Estate Group, an investment firm focused on multifamily and creative office properties, has relocated its Los Angeles-based headquarters to Dallas. The firm has taken space at 3811 Turtle Creek Blvd. “The decision to relocate our corporate headquarters to Dallas aligns with our strategy of acquiring desirable multifamily assets outside of the urban core, both here in Texas and in other high-growth cities across the Sunbelt and Southeast,” said Jeff Weller, co-founder and managing principal of LREG. Texas is already a key location for LREG, which has a national portfolio of 27 properties exceeding $900 million in estimated value as of Dec. 29, 2020. The firm owns five residential properties in the Lone Star State, including Embry Apartments (2210 Marsh Lane), a 151-unit multifamily property in Carrollton, 13 miles northwest of downtown Dallas. As of August 2020, Dallas-Fort Worth-Arlington is one of the nation’s 12 largest metropolitan statistical areas (U.S. Bureau of Labor Statistics). Late last year, CBRE also announced it was relocating from California to its new home base at 2100 McKinney Ave. in Dallas. Click to read more at www.dmagazine.com.

Eruption Ahead: Pent-Up Demand Will Drive the Economy

January has long been the time for market predictions, for economists to put their nickel down on which way the dollar will go. But how do you do that following the most fractious three quarters in living memory? Undaunted by the events of 2020, Dr. Mark Dotzour did exactly that, providing the keynote remarks for the 19th annual Commercial Real Estate Forecast Conference. While offering the caveat that economists are generally only right 50 percent of the time, he nonetheless expressed bullishness for the upcoming year. The biggest factor that will impact the U.S. economy during the next 12 months is pent-up demand. Currently, Americans aren’t spending money, they are saving it. This is an untenable situation since, as Dotzour put it, “Americans don’t tolerate deferred gratification.” COVID fatigue set in months ago for many people. Once the vaccines have been widely distributed, he foresees an explosion in spending. But instead of toilet paper and hand sanitizer, there might be a shortage of hotel rooms and airline seats. Dotzour said he is not underestimating the power of this pent-up demand for goods and services such as new clothes, vacations, conventions, gyms, live music, restaurants, weddings, theaters, business travel, going back to school and more. The supply chain proved to be more fragile than most people would have expected once the lockdown started in March of last year. As an example, half of all toilet paper typically goes to restaurants and half goes to homes, but most domiciles don’t have the hardware for three-foot-wide wheels of toilet paper, hence the shortage of that product. Will the supply chain fail us again once life returns to “normal”? Dotzour believes it’s hard to say. His biggest concern is that the supply chain remains robust enough to dispense the vaccines, pointing out that there are thousands of distribution job openings right now. Another worry is that there may be runaway inflation in our future, though Dotzour downplays those concerns. Factors such as higher gas prices, hotel rates, airline tickets and tuition could lead to inflation of the U.S. dollar. However, he feels that there are enough protections in place to prevent a runaway scenario. The Federal Reserve’s control of interest rates, for example, should mitigate escalating mortgage rates as housing is going to help lead us out of this recession. The real long-term concern is the likelihood that we will see another jobless recovery. That doesn’t mean we won’t have new jobs, but they will materialize too slowly. Historically, regardless of which political party is in office and notwithstanding tax cuts, the U.S. averages job growth at 2.5 percent. The main factor for this is globalization. Emerging economies around the world are creating more competition for the U.S. “We have purposely exported our jobs around the world. These are now tough competitors,” Dotzour said. “The world in which the U.S. is competing in 2021 is different than it was in 1980.” That said, Dotzour believes that money is going to flood in again. Private equity is sitting on $204 billion of dry powder. While we are all aware of distressed sellers, Dotzour labels these funds as “distressed buyers”—they’ve raised the capital and are hungry to deploy it. Global institutions continue to raise their allocations to real estate. The general rule of thumb used to be to spread funds 50/50 between bonds and real estate. Each year, higher CRE yields have led to more growth in institutional investment. “If you thought there was too much money chasing deals before, there’s a lot more coming down the road,” Dotzour said. The pandemic has impacted the U.S. just as it has other nations, though we may be taking a larger hit than most. Additionally, 2020 and even early in 2021 have proven that there is a lot of societal and political angst in our populace. Despite its problems, however, America is still going to be an attractive target for global investors. “Money is not flowing out of U.S.,” said Dotzour. “We have our problems, but we are still the prettiest pig at the trough.” Dotzour covered many more topics during his keynote, such as the urban to suburban migration, the future plans of the Biden administration, rising shipping costs and much more. It will be interesting to see how the next 12 months shake out; the ride hopefully won’t be as bumpy as the past 12 months.

Future of Flex: How Employee Choice Could Change Offices for Good

Of any sector in commercial real estate, the future of office is arguably the most tenuous. Even as some employees return to the office, many may not—now or potentially ever. Companies and their workers have found value in flexibility of the stay-at-home experiment, choosing to extend it for the foreseeable future in some cases. In other instances, a kind of middle ground is being explored: the use of flex space. “Companies are scrambling to figure out this new world, figure out how they support their employees’ diverse needs, figure out how to create workplaces not only at a headquarters but also near their teams’ homes, and figure out what to do with their leases that now pose even greater liabilities,” said Anna Levine, chief commercial officer of Industrious, which offers coworking and private office space all over the country. “Ironing out all of this can be overwhelming, especially at a time when companies are knee-deep in responding to all of the other changes the pandemic has brought on.” That’s why so many companies—and even individual employees—are turning to outfits such as Industrious. In some cases, the company just isn’t ready to have everyone back in headquarters, while many employees may also favor the convenience of working from home. It isn’t always a perfect environment, however, as any parent can share. A home office is still at home, which comes with an untold number of distractions. “Demand for coworking space is very much driven by people who need a location to work that isn’t their home,” said Ben Munn, JLL’s global flexible space lead. “We’ve seen demand increasing in near-to-home, suburban locations or dense residential areas and it tends to be for smaller requirements.” That’s precisely what Regus, which provides coworking and virtual office space, has witnessed in the past few months. “Currently, we are seeing much greater growth in smaller suburban areas as employees look to cut down on their commute and work closer to home,” a company spokesperson said, touting Regus’ representation in large metropolitan areas, as well as smaller towns and cities. “Our model is very well suited to the changes that are now taking place.” Click to read more at www.rednews.com.

CCIM Office Sector Luncheon—Demand, Density and Flex Space: Systemic Change or Return to Yesterday?

Keynote Speaker: Dr. James Gaines, Chief Economist, Texas A&M University, Real Estate Center

February 2020, was the peak of the 128-month-long prior recovery; then we fell sharply into recession
• Down 31% in Q2 and down 25-30% in Q3 (est.)
• Since March nationwide, 63 million have filed for unemployment—about 38% of the workforce; in Texas, 6 million; Texas lost 1.4 million jobs in March-April alone; lost jobs have now recovered by about one-half; Houston has retained 92% of pre-COVID jobs
• Texas has had a ‘double whammy’: oil and COVID…energy demand is down and will stay there for a while, although price at $40 bbl seems to have stabilized
• Our federal deficit will hit $4 trillion this year, and the Fed has had to borrow $3 trillion of it; in 2-5 years there will be a huge debt overhang
• 3.4 million mortgages—7% of total-are in forbearance arrangements, but those arrangements may expire in early 2021
• For recovery, we must: a) get virus under control b) increase consumer demand and spending c) re-employ people d) stabilize/improve global trade
• We have no inflation and stable (low) interest rates at or lower than 3%
• Texas is a little better off than rest of the U.S., and it should be early 2022 before we approach under 5% unemployment
• Home sales are up 3.5%, and prices up 5-6%; there is an inventory shortage of single-family homes; new home construction is up and could be one of major drivers pulling us out of current slump