Category: Focus 2021

Suburban Commercial Real Estate Boom Continues Full Steam Ahead as Dallas office Market Struggles

Posted on by Sarah

In June, a group of public and private stakeholders approved a new framework plan to build a $130 million performing arts center at the Hall Park development in Frisco. The new venue would not only bring a large, world-class concert hall to the fast-growing Texas city, but it’s reflective of the investment and interest in Frisco and would become yet another major cultural amenity in a city increasingly known for its recreational and amusement offerings.

The plan for the performing arts center is just a drop in the bucket when compared to the investment in Frisco over the last decade. For instance, The Fields mega-development, which will deliver an expansive office park, thousands of new residences, hotels and more on a 2,500-acre site is anticipated to cost upwards of $10 billion. And the development already has a major tenant lined up as the future home of the PGA of America.

What’s happening in Frisco is something that other municipalities could only dream of — the city’s population has bloomed from 110,000 in 2010 to roughly 210,000 today. Frisco is frequently cited as the fastest growing city in the country and it’s also home to the 91-acre Dallas Cowboys’ headquarters dubbed The Star, the NCAA Division I football stadium Toyota Stadium, Comerica Center arena, Dr. Pepper Ballpark, the National Soccer Hall of Fame, the National Videogame Museum, and more.

All of this in a city of just over 200,000 residents. But there’s more on the way.

According to Jason Ford, CEcD and President of the Frisco Economic Development Corporation, his organization is currently working on upwards of 50 prospects at the moment. Ford says that there’s been a tremendous amount of interest in Frisco from corporate heads but the city is also doing the work to be as business-friendly as possible in order to win over as many of these prospects as possible.

Maximizing Returns: What You Need to Know About 1031 Exchanges and NNN Properties

Posted on by Sarah

One of the only constant things about commercial real estate is how much it changes. Trends cause shifts in demand, technology brings in new methodology and, as Texas CRE pros know all too well, a new presidential administration can alter how things are done. The Biden administration has already proposed restricting 1031 exchanges to $500,000 of gain, a move against which Asset Preservation, Inc. is pushing hard.

“The whole real estate industry has been working for two years to show Congress how much it would hurt jobs if they cut 1031s down,” says Greg Lehrmann, Attorney and Senior Vice President with Asset Preservation. “It would freeze capital.”

Asset Preservation, owned by Stewart Title, is one of the largest 1031 qualified intermediaries in the nation and a popular resource for would-be investors interested in a 1031 exchange. So named because it was created in IRC Section 1031, a 1031 exchange allows investors to swap one property for another, deferring capital gains taxes. In doing so, Lehrmann argues it keeps the commercial real estate market buzzing.

“When investors know they won’t have to pay capital gains, they’re more likely to make more transactions,” he says. “That means the title company employees make more. The real estate agents make more. The landscaper makes more. Home Depot makes more. Everybody makes more when people can trade up in real estate without paying taxes and the government actually receives higher ordinary income-tax rates on the additional income earned by all those people and companies.” That’s exactly what he says is happening right now as investors sell off high-maintenance real estate and exchange it for what he calls “mailbox money,” more passive real estate.

“They have three choices: buying into a triple-net property, investing in a Delaware Statutory Trust (DST) or banking on income-producing minerals,” says Lehrmann. Click to read more at www.rednews.com.

Mineral and Royalty Interests – The Perfect Complement to a Traditional Real Estate Portfolio

Posted on by Sarah

When many real estate investors hear the terms oil and gas mineral and royalty interests, they might cringe and possibly even run the other way. The unusual thing is the asset profile is very similar to that of a commercial real estate portfolio, yet delivered in a way that tends to be uncorrelated with traditional real estate yields and valuations. This is why an often misunderstood product set can be a perfect diversification tool to a traditional real estate portfolio.

Mineral Interests and corresponding royalties are considered subsurface real estate and are eligible as replacement real property for 1031 exchanges. The mineral royalty owner (MRO) owns a tract or fraction thereof from the surface of the earth downward. A portion of commodities extracted from the land by an operating lessor (OpCo) is paid to the owner in the form of a royalty. This is similar to a landlord/tenant relationship in a busy shopping center where the landlord negotiates for a portion of the gross sales earned by the tenant.

MROs receive royalties in units of actual commodities, such as barrels of oil as an example, which are then marketed for them by the OpCo as opposed to a portion of revenue from the OpCo. The royalty units are considered property of the MRO once the commodity reaches the earth’s surface at the wellhead. This mitigates the MRO’s counterparty credit risk exposure to the OpCo and generally makes the mineral royalty investment bankruptcy remote to the OpCo. Click to read more at www.rednews.com.

Tech Adoption Is Key To Organizational Resilience For Property Management Teams

Posted on by Sarah

For an industry that relied heavily on in-person interactions, the property management world had to adapt quickly to remote pandemic realities over the past year. The shift to remote work, virtual leasing and the types of communications needed to relay messages to residents all created an urgency in the property management world to find technology solutions that would best help them navigate business disruption caused by the pandemic.

However, the acceleration of tech adoption in property management is not something that starts and stops with a remote reality. Technology was gaining traction before the pandemic, and the acceleration of tech adoption is going to continue to rise, even when our environment starts to feel a little more “back to normal.”

Mineral royalty interests do not possess any liabilities which are present in traditional real estate. These are assumed by the OpCo including environmental, mechanical, and maintenance. Ultimately, if a well is drilled and there is a cost overrun, it is completely irrelevant to the mineral holder and 100% the operator’s responsibility. Click to read more at www.forbes.com.

Room for Recovery

Posted on by Sarah

The hospitality sector was devastated in 2020, but vaccinations, industrywide efforts, and returning demand are reasons for hope.

Perspective isn’t the easiest thing to maintain when facing unprecedented challenges — and the COVID-19 pandemic provided plenty of those for commercial real estate markets in the year-plus since the resulting shutdown affected nearly every facet of daily life in the U.S.

But with a year in the rearview mirror, hotel property owners, operators, investors, and guests alike have gained enough perspective to know there is light at the end of the tunnel. Plenty of variables will dictate just how far the sector has to go to reach it — but it’s a comforting thought for an industry that’s been to hell and is on its way back in 2021.

“Hope is going to be driven by the widespread dispersion of a vaccine,” says Geraldine Guichardo, global head of research for JLL’s Hotels & Hospitality Group and head of Americas Hotels Research. “Once people feel more comfortable traveling and do not fear the risk of becoming contagious, there is real pent-up demand to travel again.” Cllick to read more at www.ccim.com.

Together Again: Texans Venture out to Make up for Lost Time

Posted on by Sarah

With Texans finally stepping out in public again, we asked photographers across the state to give us a look at people enjoying themselves after the long shutdown.

As Texas settles in for another long, hot summer, more Texans are doing something they haven’t done for a year and more: going out into the world and being around other people. The pandemic took a terrible toll on the lives and health of so many, but it also changed how Texans behave. Famously friendly, culturally gregarious and inherently social, many Texans found themselves distanced, masked and unable to comfortably do so many things that before always seemed normal.

But now, with vaccinations readily available and infection and hospitalization rates in sharp decline, Texas is reopening — and Texans are taking full advantage, going swimming and dancing, eating at restaurants, drinking in bars, playing at parks, going shopping and just generally doing what comes naturally. Texas Tribune photographers fanned out across the state to get a feel for a state emerging from the long shutdown. Here’s a little of what they saw. Click to read more at www.texastribune.com.