Category: US/Texas CRE News

REDnews Post COVID Summit: Economic Forecast; Capital Markets Update; Commercial Real Estate Forecast

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Economic Forecast
Moderator: Carlton Schwab, Texas Economic Development Council. Panelists: Regina Lindsey, Economic Alliance Houston Port Region; Jess Thompson, Federal Reserve Bank of Dallas; Bethany Miller, Greater Houston Partnership; Lance Lacour, Katy Area Development Council; Tim Jeffcoat, Small Business Administration

• There is a high degree of uncertainty now in forecasting the future
• The United States GDP dropped 32 percent in last quarter, the sharpest drop in the history of the country; the next quarter should be better with a slow rebound starting
• Forecasts are for six quarters to recover to where we were before COVID
• Houston has an international economy which is tied to the whole world
• The Purchasing Managers Index, a good tool, shows that the lines have stopped declining and are starting a slow upward trend
• Restaurants, bars and hospitality have showed a sharp upward bounce with re-openings although now, at end of July, we seem to be seeing a leveling off in many CRE sectors
• We have recovered one-third of jobs which were initially lost
• In Houston, the local payroll should only be down about 4.8 percent for the year 2020 compared to 2019

Click to read more at www.rednews.com.

Data Center Performance Varies Across Texas

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As they are no longer merely the domain of enterprise users, demand for data centers has skyrocketed in recent years with more information moving to the cloud. The pandemic has created issues, nevertheless, the events of 2020 have largely accelerated this trend. By just about every metric, the asset class saw incredible gains during the first half of the year,
according to a report by JLL. Datacenter REITs outperformed other sectors, absorption rose in most markets and operators have thus far weathered the
pandemic with steady—if not booming—business activity. As strong as the overall industrial sector has been this year, data centers have been even stronger. For example, the stay-at-home orders brought on by COVID-19 led to an increase in online shopping, and thus renewed demand for warehouse and logistics space. This, in turn, has resulted in a year-over-year increase in returns of 2.3 percent among industrial REITs, according to information gleaned from Nareit. Contrast that with data center REITs, which saw an incredible 19.2 percent climb over that same period. Residential, office, healthcare, retail and hospitality REITs all regressed during the 12-month period ending on June 30, 2020. What’s behind this surge? First is the increase in online shopping; in addition to furthering demand of the storage of goods, extra server space is required to accommodate all the ones and zeroes supporting this activity. Click to read more at www.rednews.com.

Industrial Age: Texas Cities Are Drawing Investors Looking to Capitalize on the Industrial Boom

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Industrial is far and away the hottest sector in commercial real estate right now and the hottest industrial markets are scattered throughout Texas,
each one creating a unique draw for investors and developers. Houston
The largest city in the Lone Star State also boasts the most absorption of industrial space so far in 2020: just more than 6.4 million square feet. According to CBRE research, nearly 3.9 million of that got leased up just in Q2. In that same period, though, about 8 million square feet came on the market, which boosted vacancy rates to 6.9 percent. About 18 million square feet of new industrial is under construction in the Houston market with the southwest (8.5M SF) and northwest (4.8M SF) sectors bringing in the most space. “Houston is very competitive,” said Alfredo Gutierrez, president of industrial-focused investment firm SparrowHawk Real Estate
Strategists. “Because of the setback in oil prices, some investors are perceiving a pullback in real estate by some of the energy companies. That
provides a window of opportunity to invest in industrial real estate in Houston.” He predicts this window will close in late 2021 as the energy sector rebounds, e-commerce increases and the benefits of trade with Mexico expand in Houston. Dallas-Fort Worth When it comes to new construction, it’s hard to beat the numbers coming out of the Dallas-Fort Worth area. CBRE reports that in Q2, more than 23 million square feet was underway. Thing is, that space is getting eaten up as soon as it hits the market. For example, DFW had about 3.4 million square feet incompletions and 2 million square feet of net absorption this spring, marking 39 consecutive quarters of positive net absorption. “I think Dallas is the strongest market in the United States right now,” Gutierrez said. “Dallas is just screaming hot.”

REDNews’ Texas Capital Markets Virtual Summit

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Emerging Trends in Logistics and

• We can’t be angry about the COVID pandemic and its interruptions of our business lives, and we have to accept where we are and move forward; some sectors are down, some are flat, and some are way up.
• The multifamily and industrial sectors for example are way up, and are very attractive to lenders, although underwriting is more careful and conservative than before; some trophy office buildings are able to secure financing as well; lower LTVs, some non-recourse loans still, but also loans with initial recourse that burns off as the project reaches stabilization; some lenders prefer Texas loans.
• There are lenders in the market still willing to look at all property types, and now that many have worked through their forbearance requests from earlier in the year, they are looking to put out money through new builds and acquisitions and refinancing…although much more conservatively than pre-COVID; new development loans tend to favor multifamily; some of the big national banks have dropped out of the construction loan market. Click to read more at www.rednews.com.

RESOLUT RE Inks 10 Deals in Multiple Texas Markets

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RESOLUT RE recently completed 10 retail leases in Texas. The deals included transactions in the Austin, Dallas, El Paso and Houston markets. Anchor Bar has leased 7,950 square feet at La Frontera Village (2702 Parker Drive, Round Rock, Texas). David Simmonds of RESOLUT RE represented the tenant. Dan Gostylo of Providence Commercial Real Estate represented the landlord. Sprinkler Medics has leased 1,254 square feet at Longhorn Biz Park (4701 Priem Lane, Pflugerville, Texas). Andrew Perkel and Michael of RESOLUT RE represented the landlord. Dapper Five Fine Men’s Grooming has leased 2,045 square feet at Shops at Three Eighty (2281 E. University Drive, Prosper, Texas). Chris Flesner and Brian Sladek of RESOLUT RE represented the landlord. Fossil Creek Liquor has leased 3,000 square feet at Shops at Three Eighty (2281 E. University Drive, Prosper). Chris Flesner and Brian Sladek of RESOLUT RE represented the landlord. Pike Chapman of Lot 7 Realty represented the tenant. Buddy’s Home Furnishings has leased 6,720 square feet at West 7th Shopping Center (1809 W 7th Avenue, Corsicana, Texas). Colin Cannon and Chris Flesner of RESOLUT RE represented the landlord. David’s Wholesale has leased 5,600 square feet at West 7th Shopping Center (1809 W 7th Avenue, Corsicana). Colin Cannon and Chris Flesner of RESOLUT RE represented the landlord. Evan Webb of Mercer Company represented the tenant. An undisclosed buyer has purchased the 16,380-square-foot industrial building at 6250 Modesta Street in El Paso. Chris Duncan of RESOLUT RE represented the seller. Taylor Roberts of CBRE represented the buyer. Dog Haus has leased 2,167 square feet at 8422 Highway 6 North in Houston. Benny Nguyen and Dave Burggraaf of RESOLUT RE represented the tenant. Karen Hutton of Hutton represented the landlord. An undisclosed buyer has purchased three acres at the SWQ of FM 529 and Fry Road in Houston. Mohamed Gamal of RESOLUT RE represented the seller Kareem Gamal, president of Gamal Enterprises Inc. An undisclosed buyer has purchased two acres at Anderson Road and Vandalia Way in Houston. Benny Nguyen Dave Burggraaf of RESOLUT RE represented the seller. Imtiaz Ali of Keller Williams Signature Realty represented the buyer.

This Is the Altered Normal

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The COVID-19 pandemic continues to necessitate unimagined change. The impact it has brought to our world would have seemed, for many, unthinkable at the turn of the year. Some refer to this change as the “new normal.” Really, however, it’s the ”altered normal.” We are experiencing significant alterations to supply chain, manufacturing, and education models. How families live together and apart, how and where we shop, the shape of our workplaces, the meaning of an essential worker, and every facet of recreation and leisure have seen major changes as well. While the sharpness of these shifts may make life and work feel like a new reality, this altered normal has been in motion for decades — and most of us have missed it. Businesses most able to adapt in this pandemic are helmed by leaders who previously built into their thinking and strategic plans the ideas of disruption and digital transformation. These are strategic leaders who previously understood the forces and trends that were shaping the future, and grasp that the industry is ever-evolving beyond COVID-19.

Consumer Response

After hitting a peak in February 2020, the United States officially entered an economic recession, ending its longest expansion in history, lasting just over 10 years. Other global economies are also suffering. This recession is different to those of before. How fast the economy has slowed, who its slowing is affecting, and its leading factors all distinguish it from previous downturns. Jason Furman, an economist and professor at Harvard Kennedy School, described the current U.S. economy as being in a “medically induced coma.” Others highlight the fact that for many consumers and politicians, the remedy for the pandemic is an economic pause. Click to read more at www.ccim.com.