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Jason Gibbons and Tyler Holt with Finial Group closed a sale at 12543 Perry Road in Houston.
The industrial property in Northwest Houston totals 21,250 square feet with 5,420 square feet of covered outdoor storage area.
The property features 11 grade-level roll-up doors and has frontage on Perry Road. Holt and Gibbons represented the seller. Jim Rock with Avison Young represented the buyer.
Gov. Greg Abbott called on state lawmakers Friday to try to limit Wall Street’s presence in the Texas housing market.
As the nation’s housing affordability crisis continues unabated, lawmakers and housing advocates have increasingly concentrated scrutiny on so-called institutional homebuyers, meaning investors big and small as well as corporations who buy single-family homes to rent them out. They accuse corporations and hedge funds of playing an outsized role in the homebuying market and outbidding would-be first-time homebuyers, even though estimates show investors own only a small percentage of the nation’s overall housing stock.
A spike in investor activity in the housing market in the COVID-19 pandemic era has since prompted lawmakers to try to curtail or even ban it as a means to bring down home prices and give first-time homebuyers a leg up in the market.
Abbott joined the fray Friday.
“I strongly support free markets,” Abbott wrote on the social media site X on Friday afternoon. “But this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families.”
Abbott didn’t detail the scope or what kind of action he would like lawmakers to take. His office did not return requests for comment Friday.
Investors ramped up their home purchasing noticeably during the pandemic, when interest rates were at historic lows. Texas, in particular, was a major hotbed for investor activity in the homebuying market as demand for housing skyrocketed amid the state’s robust growth.
Texas led the nation in home purchases by investors in 2021, according to the National Association of Realtors — 28% of all homes sold that year went to an institutional investor. That share was even greater in exceptionally high growth markets like Tarrant County, where investors accounted for some 52% of home sales.
Those figures prompted state lawmakers last year to try to rein in investor activity in the Texas housing market, or to at least calculate the scale of that activity. Those efforts went nowhere.
Texas lawmakers approved a bill to commission an annual report from the Texas Real Estate Research Center at Texas A&M University to track institutional buyers’ moves in the state’s housing market. But Abbott vetoed the bill — part of a rash of vetoes he used to pressure then-warring Republican legislators to agree on a massive property tax cut package.
Economists and housing experts questioned Friday whether limiting investors from buying and owning homes would improve the housing market and benefit first-time homebuyers. Institutional investors’ share of single-family homes in some parts of the country can be high, researchers say, but it’s unclear how much they distort the overall housing market. An estimate from the Brookings Institution pegs institutional investors’ share of the nation’s single-family rental stock at about 3%.
Limiting or barring institutional investors from purchasing homes, who then rent out those homes, would mean fewer rental units overall, said Daryl Fairweather, chief economist at Redfin. That could potentially bar renters, who tend to have lower incomes, from living in wealthier neighborhoods with access to better school districts and job opportunities, she said.
“If you say none of these single-family homes can be rented out, or you make it harder for them to be rented out, you make it harder for families to live in the neighborhoods that have the best schools or have the best parks, amenities, transit, whatever it is that single-family neighborhood has going for it,” Fairweather said.
Institutional investors aren’t buying as many homes as they did during the pandemic, owing to high interest rates. Investors with at least 1,000 homes in their portfolio made up 0.4% of U.S. home purchases at the end of the fourth quarter last year, according to figures provided by John Burns Research and Consulting, a firm that tracks the housing industry. That’s down from a peak of 2.4% in 2022.
That trend was apparent in some parts of Texas. In the Dallas area, the number of investor purchases peaked in early 2022 at around 40,000, figures from John Burns show. By the end of 2023, those purchases had fallen to a little more than 20,000, in line with pre-COVID levels.
Amid higher interest rates, Texas has more homes on the market now than it did during the hot pandemic-era housing market.
“Investors have not sucked all of the inventory out of the market,” said David Jarvis, principal at John Burns.
But inventory is still tight. Instead of going after institutional investors, Fairweather said, Abbott should throw his weight behind statewide zoning reforms aimed at loosening local land-use regulations to allow more homes to be built.
Texas lawmakers flirted with those kinds of measures last year, but they died quietly in the Texas House. Meanwhile, Austin officials have enacted policies to allow up to three homes to be built on single-family lots — and are expected to vote to allow homes to be built on smaller parcels.
Rise48 Equity acquired Copperfield Apartments in Fort Worth, Texas.
This 323-unit complex marks the company’s 49th acquisition since 2019 and its ninth in the Dallas market, further strengthening its Texas portfolio.
Rise48 Equity has plans to invest over $9 million in revitalizing Copperfield Apartments, which will soon be rebranded as Rise Spring Pointe. The property renovations include:
In an agreement facilitated by the Sugar Land Economic Development and Tourism (SLOEDT), Frazer, the nation’s leading provider of emergency vehicles, will invest $4 million to relocate its headquarters from Houston to Sugar Land, Texas.
The company will occupy a 150,000-square-foot space at 1410 Gillingham Lane and create 286 new jobs with an average annual salary of $71,000.
Frazer has provided vehicles suitable for licensing and use as mobile clinics, mobile stroke units and ambulances to fire and emergency medical services organizations nationwide for over 30 years. The company is leasing its new headquarters from CVH Capital Partners LLC, which was formerly occupied by Thermo Fisher Scientific. The two-story facility sits on a 10.65-acre fenced and landscaped site, minutes to several major roadways, including U.S. 59, and less than 30 minutes from Houston.
SLOEDT facilitated the company’s expansion, working with Frazer’s leadership and the City of Sugar Land on various incentive and financing options.
This news follows Accredo Packaging’s fourth expansion in Sugar Land, representing a $10 million investment, and SouthWest Water Company’s expansion, which created 100 new jobs. SLOEDT incentives and financing accelerated both deals.
Sugar Land is located about miles from Houston.
KDC and Wells Fargo celebrated the topping out of the financial institution’s first net-positive energy office campus at 401 W. Las Colinas Blvd. at the northeast corner of West Las Colinas Boulevard and Promenade Parkway in Las Colinas, Texas. The facility will stand one block south of West Northwest Highway.
The 850,000-square-foot facility will allow Wells Fargo to consolidate multiple offices across the Metroplex to the 22-acre Las Colinas site by the end of 2025 when the campus is expected to officially open.
As Wells Fargo’s first net-positive energy campus, it is expected to generate more energy than it consumes with rooftop solar panels, electric vehicle charging stations and native plantings to minimize watering requirements. The campus is targeted for LEED Platinum environmental certification.
Enhanced employee wellness and access to outdoor activities were also top priorities throughout the planning process. The new campus will include well-being rooms and gyms with remotely led classes, as well as nearby walking and bicycle trails, stand-up paddle board rentals, a cycling studio and four golf courses.
The interior design boasts full-scale amenities including barista-style coffee, a world-class food hall with open-view cooking stations and a dining hall overlooking Lake Carolyn. There will also be a library with a high-tech workshop space and a tech express lounge on-site.
Partners on the project include Corgan (CS/TI Architect and Design); Kimley Horn (Landscape, Civil); and Austin Commercial (GC for CS/Site/TI).
Brokers, developers and lenders who worked through the challenges presented by high interest rates won’t be surprised to learn that investment sales volume fell for the second consecutive year in 2023.
But what about this year? Will investment sales activity pick up? A new report from Colliers predicts that it will. But how much this activity rises in 2024 is still unknown.
In its most recent Market Snapshot, Colliers points to an unsurprising reason for optimism in 2024: The Federal Reserve Board has signaled that it will no longer be increasing it benchmark interest rate. But while this is good news, there is some disappointment here: As Colliers says, the market initially predicted not just flat interest rates, but significant rate cuts this year. So far, that hasn’t happened.
At the same time, even with the Fed’s decision, borrowing costs will still be well above where they stood when many CRE deals originated, something that will cause challenges for the many refinancings expected this year. An estimated $2.8 trillion of loan maturities are expected through 2028. As Colliers asks in its report, how will these deals be capitalized?
What about individual asset classes? What does the future hold for them?
Multifamily: Colliers says that multifamily remained the most heavily transacted asset class as 2023 drew to a close. At the same time, it also posted the largest annual volume decline in sales activity of all the major asset classes last year.
Colliers reports that a record influx of new supply continues to impact the multifamily sector. This supply boost has resulted in falling asking rents in many parts of the country. Concessions are also on the rise.
However, Colliers says that multifamily is expected to remain the top choice of capital in 2024, leading all asset classes in sales volume. Fewer groundbreakings of new multifamily properties will take place this year, leading to an anticipated window of lower supply in the future, setting the multifamily market up for a new round of rent growth and stronger fundamentals.
Office: Colliers reports that office volume as a share of total sales hit a new low point in 2023, accounting for just 15.1% of all sales activity last year. CBD activity has been hit the hardest, with only $13.4 billion traded in 2023, the lowest volume since 2009.
The good news? Colliers says that the office market has likely hit bottom, and predicts that momentum and deal velocity will accelerate in 2024. Investors and lenders will be forced this year to move underperforming assets.
Industrial: The industrial market has long been a darling of investors. But even this sector saw sales activity fall in 2023, according to Colliers.
Sales volume last year aligned with activity in 2015 through 2019, according to Colliers. But the number of individual deals was lower, with today’s higher pricing propping up aggregate volume.
Sales volume peaked in the second quarter of 2023 and then declined in both the third and fourth quarters. Colliers, though, said that it expects increased sales activity in the industrial sector in the months ahead.
As Colliers says, industrial remains a highly liquid asset class, and should rank as the second-most heavily traded property type in 2024.
Retail: Retail bucked the trend in 2023, showing improved fundamentals last year. That led to an uptick in sales volume. According to Colliers, retail drove 16.7% of all sales volume in 2023, its highest aggregate mark since 2015.
Because of its strong 2023 performance, Colliers predicts that retail will become a potential landing spot for capital in 2024 and beyond.
The positives in the retail sector are many today. Colliers pointed to low unemployment, healthy job gains and wage growth as three of the bigger ones. There are some potential worries: Consumer delinquencies on credit card and auto loan debt have risen. But overall, consumers seem ready to continue spending, Colliers says.