Category: Focus

Landing the Amazon Facility: Third Time’s a Charm for Pflugerville

Posted on by Sarah

When Amy Madison first joined the Pflugerville Community Development Corp. as executive director in 2014, she immediately began looking for opportunities to bring an Amazon facility to Pflugerville. In June 2018, Madison began working alongside an Amazon site selection team to find a plot of land best fit for the job. Three site proposals later, the future facility found its match along Pecan Street, and Project Charm was formally launched. “As in, third time’s the charm,” Madison said. The PCDC hosted a behind-the-scenes panel Jan. 21 into the development process for the upcoming 3.8 million-square-foot facility, set to launch by early fall. The fulfillment center is expected to employ a minimum 1,000 employees once it is online, with plans to seek out local and regional employment in late spring. Key players behind the development who were present at the Jan. 21 panel include Jessica Breaux, economic development manager at Amazon; Jonathan Stites, senior vice president for the Texas region of Seefried Industrial Properties; and Tim Timmerman, a real estate developer and investor behind Timmerman Properties and original property owner of the project site. Click to read more at www.communityimpact.com.

Houston’s Healthcare System Takes a Pause, but for How Long?

Posted on by Sarah

The Houston healthcare sector, like the overall market itself, witnessed incredible growth over the past decade. That activity came to a skid, however, leaving owners and occupiers attempting to navigate the choppy waters brought about by the pandemic. All market metrics—from absorption to vacancy to investment activity—either remained relatively stable or trended in discouraging directions, according to Q3 research compiled by Transwestern. For example, absorption during the quarter was less than that of a typical dialysis center, totaling just 456 square feet.
Granted, just barely positive absorption is better than negative, but that figure is tempered even further by the 70 bps quarter-over-quarter vacancy rate increase to 13.1 percent. One contributing factor to this rise in vacancy is the approximately 252,000 square feet of new healthcare space that came online, less than half of which was pre-leased. The largest delivery during the third quarter was Bissonnet Medical Plaza, a 53,000-square-foot MOB in the Bellaire submarket. All across Houston, multiple projects are in the pipeline that will add additional healthcare supply. In or near the TMC alone there are three hospital facilities now under construction, totaling more than 733,000 square feet. The largest of these is the 427,000-square-foot O’Quinn Medical Tower going up on the Baylor St. Luke’s McNair campus, scheduled for completion in early 2024. The two-building UTHealth Public Education Mental Health Hospital will comprise 220,000 square feet when it wraps construction this December. Slated to deliver in the fourth quarter of 2023, the MD Anderson Cancer Center Proton Therapy Center will occupy 86,500 square feet. Click to read more at www.rednews.com.

Surprise! This Chart Shows Holiday Shoppers Did Rush to Malls in Final Weeks of 2020

Posted on by Sarah

A data analysis released this week by Placer.ai shows how shopper visits to malls have ebbed and flowed amid the Covid pandemic. The research firm, which uses cellphone data to track consumer behavior, studied foot traffic at more than two dozen “top-tier” malls across the country over the span of the year. Visits to the malls tracked, which Placer.ai declined to name, peaked before the pandemic, in February, climbing 10.7% from 2019 levels. In March — when retail stores and malls began to shut down to try to slow the spread of Covid — visits tumbled 59.5%. That was followed by a 95.9% year-over-year decline, marking a bottom, in April. During the summer months, as Americans felt a bit more comfortable getting out of the house, visits to these malls steadily rebounded, month by month into the fall. But a resurgence in Covid cases hit traffic in November and led some to believe that U.S. malls would be especially bleak in the final weeks of the year. A surprise came in December, however, as visits rebounded again. Some procrastinators had no choice but to head to the mall in the final days leading up to Christmas to snag last-minute gifts. The uptick shows, for some consumers, malls still serve a role as a convenient shopping option. Click to read more at www.cnbc.com.

How Will Biden’s Proposed Infrastructure Spending Commercial Real Estate?

Posted on by Sarah

While policy wasn’t necessarily the cornerstone of November’s election, Joe Biden did promise a sweeping program of infrastructure spending. His promised plan would revitalize American infrastructure, from roads to internet access, as well as providing “every American city with 100,000 or more residents with high-quality, zero-emissions public transportation options.” Now with victories in Georgia giving Democrats control of the senate, it seems quite likely that this plan will go forward. But what will overhauling American infrastructure and introducing rapid transit into small cities mean for commercial real estate? We’ve already seen smaller markets become more attractive for residents and employers, able to move thanks to work from home infrastructure. Will better road, rail, and transit systems cement their resurgence? While it may be too early to know for certain, one commercial property developer is already planning accordingly. Click to read more at www.mpamag.com.

Eruption Ahead: Pent-Up Demand Will Drive the Economy

Posted on by Sarah

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

Posted on by Sarah

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.