Category: Focus 2020

CCIM Commercial Real Estate Forecast Competition – February 2020

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Keynote Speaker: Mark Dotzour, PhD We should have a solid economy ongoing in Houston and Texas, with a few ‘clouds’, such as election year uncertainty, China trade issues, and the Covid19 virus scare. Energy exploration and production will be curtailed due to lack of capital from investor/lenders, which should eventually lead to an upward trend in oil prices. Our current economic expansion is into its 129th month, and going strong. 2020 will be a little slower but consumer confidence and most other economic indicators remain strongly positive. Commerce is so interconnected on the planet that trade disputes will inevitably need to be worked out. Even if 2020 is a little slower, it should create pent-up demand for 2021. Wages are up about 3.5% a year, and lots of job openings remain, despite steady increase of hiring, which has been in the range of 200-300,000 new jobs per year in recent years. Housing starts are up and household debt is down; corporate profits are leveling off-companies did not reinvest savings from last tax cut but instead bought own stock. Unemployment claims are way down, and interest rates are low and going lower. It is a ‘given’ that we will have a recession in next five years but it is not on the immediate horizon. Click to read more at www.rednews.com.

Texas is Open for Business. Now What?

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Over the final two weeks in May, Texas Governor Greg Abbott instituted a graduated opening of the state’s economy. But what does this look like on the ground? What are the prospects moving forward for the larger economic engine in the face of the COVID-19 pandemic? “Mixed in with the controversy that surrounds the reopening plans and whether it’s the right thing to do or not is that nobody really knows what’s next,” said Ryan Walsh, executive director, NRG Park. “All we can do is plan against the worst-case scenario.” Walsh was part of a panel discussion that REDnews recently hosted to explore what the next steps are for Texas businesses and properties now that stay-at-home orders are lifting. NRG Park—the four-stadium, 350-acre property that hosts Texans games, the Houston Livestock Show and Rodeo and other live events—has joined a task force with other
Houston arenas regarding the best practices for opening up their venues.
Following guidelines from the CDC and the White House about strict social distancing requirements would mean that NRG Stadium, for example, would only be able to fill 17 to 18 percent of the 72,000 seats for a Texans home game. NRG Park has been in constant contact with their vendors and the NFL as to how they can safely reopen the stadium, but at the moment there are no set-in-stone plans. Walsh said that one frustration is the mercurial communication coming from various government agencies as to how to proceed. Click to read more at www.rednews.com.

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.

NewQuest Closes Three Houston-Area Deals

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NewQuest Properties recently facilitated one retail lease and three property sales in the larger Houston metro. Crumbl Cookies has leased 1,572 square feet of retail space in the Grand at Aliana, located at the intersection of West Grand Parkway S and West Airport Boulevard, Richmond, Texas. David K. Meyers and Josh Friedlander of NewQuest Properties represented the landlord. Greg Stanislawski and Mark Stanislawski of the Retail Strategy represented the tenant. APG Industrial LaPorte LLC has sold a 12,810-square-foot warehouse on 5.6 acres at to ESCO International Trading LLC. Dave Ramsey and Brad Elmore of NewQuest Properties represented the seller in the direct deal. Turbo Restaurant Management LLC has sold a 2,219-square-foot vacant structure on a 0.7-acre pad site at 9540 Hwy. 6, Missouri City, Texas and a 2,150-square-foot vacant building, also on a 0.7-acre pad site, at 9046 FM 1960 Bypass W., Humble, Texas to Briggs of Missouri City Properties LLC. Andrew Alvis of NewQuest Properties represented the seller. Tyson Walker of BWB Advisors represented the buyer.

Bradford Inks Three Leases in North Dallas Portfolio

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Bradford Commercial Real Estate Services has pushed a four-building industrial portfolio in Farmers Branch, Texas to 100 percent occupancy, signing 24,261 square feet in two new leases and one renewal. Midpoint Auto Group has leased 13,119 square feet at 3300 Garden Brook Drive while JKMG & International Co. Inc., dba Noroo, has taken 4,472 square feet at 3314 Garden Brook Drive, filling the balance of the portfolio’s vacancy. In a long-term renewal, United Fine Arts Services LLC has held fast to 6,670 square feet in 3109 Garden Brook Drive. Brian Pafford, executive vice president and managing partner of Bradford, and Susan Singer, executive vice president, closed the triple play for the landlord, Gardenbrook Industrial LLC, shortly before the portfolio changed hands. “These three deals certainly helped in the sale process,” Pafford said, “as did our ability to add to the portfolio’s value by raising the bar on future rates for renewals and new leases.” The Bradford team was facing a six-month deadline to fill the 13,119-square-foot vacancy with another automotive group or face the loss of the permitted use. “We got the deal done in the nick of time,” Pafford said. Pafford and Singer negotiated direct deals with Midpoint Auto Group and United Fine Arts Services. Daniel Lee of Stellar Real Estate LLC represented Noroo, which is opening its first location in Texas. The portfolio also includes a single-tenant building at 3113 Garden Brook Drive and a multi-tenant structure at 4101 Lindbergh Drive. The shallow-bay warehouses are geared toward smaller tenants with spaces from 5,000 to 20,000 square feet. “There continues to be strong demand for spaces in that size range,” Pafford said.