Sunflower Beach Resort & Residences Breaking Ground on Latest Project in Port Aransas

Sunflower Beach Resort & Residences in Port Aransas, Texas, is holding the ground-breaking of its 21-unt Pool Residences condo building on Feb. 26. Sunflower Beach is the only master-planned community on the Texas coast with modern design built into its design code. The goal is to appeal to the more design-focused second homeowner. The resort’s latest project, The Pool Residences, is designed by Jay Corder, who is originally from Port Aransas. Corder graduated from the University of Texas at Austin in 1995 and immediately began working at Dick Clark Architecture in Austin, Texas.

“Dallas is a Powerhouse”: Multifamily Experts on Texas’ Hottest Markets

The thing about Texas is people want to live here. Proof is in the numbers. For the past several years, the state has been at or near the top of U-Haul’s annual migration report, a breakdown of the states on the receiving end of the most one-way moves. When they get here, those folks have to find a place to call home, a certainty that has helped the multifamily industry flourish. “Texas is a right-to-work state. It has a lower cost of living compared to states such as California or New York. There’s no state income tax. Someone can have a very high quality of life here at a bargain compared to some other markets,” said Jon Krebbs, managing partner of The Multifamily Group, a commercial real estate brokerage firm based in Dallas. “As long as there are jobs being created, you’re going to see a lot of activity from apartment developers and a lot of demand from apartment buyers.” That demand pushed sales volume for The Multifamily Group to record levels in 2019, the firm’s highest-grossing year ever. Things were looking up in early 2020 as well.

“The uncertainty that hit in March killed several of our deals that were either under contract or under letters of intent,” Krebbs said. “Everybody hit the brakes for a couple months.” Mark Allen, executive managing director, Greystone Investment Sales Group, attributes that pause to investor concern about rent collection. “After rent collections were proven stable, the challenge shifted to buyers finding deals as the demand far outpaced the supply on the market,” Allen said. While sales slowed, they never stopped completely. The new environment created a number of obstacles, but firms like Greystone, The Multifamily Group and Avid Realty Partners pressed forward. “On the operational side, we’ve seen fewer tenants leaving, fewer tenants moving in and less turnover,” said Craig Berger, Avid Realty Partners’ founder and CEO. “We also observed that, due to financial hardships, folks moved back in with family or brought roommates, so the number of people renting consolidated a bit.” The response by many properties, he said, was to offer concessions—such as reduced rent or a rent-free month—to drive occupancy and stay full. Meantime, multifamily pricing went up due to lower interest rates ramping up purchase power. “You’re discounting cash flows at a lower interest rate, so that makes asset prices go up,” Berger said. “We were doing virtual tours while trying to educate our owners about prospects. Buyers still had to go in every unit, and we had to make sure everyone was outfitted with personal protective equipment when they did. It was a logistical challenge to get the due diligence done,” said Krebbs, who added that his firm would consider 2020 a successful year based on its completed transactions in Texas, Oklahoma and Arkansas. “Like all multifamily brokerages, we had to get as creative as possible to help buyers and sellers close out transactions during the stay-in-place orders,” Allen said. “Multifamily owners had to adapt from an operational perspective. Whether they were communicating with residents differently, altering their marketing strategy to fill vacancies or shifting their maintenance work order operating procedures, 2020 wasn’t without its challenges.” Challenges or not, Greystone made the best of the situation. Allen said his team’s sales volume and number of transactions increased from 2019. “I’d likely attribute that to continuing to work hard through stay-in-place orders and continued maturity of our team,” he said. The lessons learned in 2021 are now being carried into 2021 as the market gets closer to normal. “Folks are sort of getting off the sidelines and buying and selling again, which is great,” said Berger. Though Texas as a whole is a promising market for multifamily investors, two cities stand out as offering exceptional opportunities. “In Dallas, we had an influx of new and existing residents from states with much more government control and restrictions, and less affordability,” Allen said. “Texas is a very business-friendly state relative to many others across the country; you can get twice the size of house in Texas for a fraction of the cost, and pay no state income taxes. Also, we have a very diverse economy and very low unemployment metrics relative to other Texas and U.S. cities.” “Dallas is a Fortune 500 and Fortune 5,000 powerhouse,” said Berger. “Because so many companies and people are moving to cities like Dallas or Austin, those are the places where I want to invest my money. I know there will be future growth.” Prices certainly reflect the increased interest in those in-demand markets, but Krebbs and the Multifamily Group have their eye on the San Antonio area. “In Houston, Austin or DFW, you’re looking at $90,000 to $100,000 a unit for a Class-C property,” he said. “But in San Antonio, the rents just aren’t as high, so you can still get a property for about $65,000 a unit.” Krebbs notes that, like other Texas cities, San Antonio is a steadily growing market, drafting off the winds of Austin and its location in the middle of the state. “At The Multifamily Group, we don’t see any headwinds to multifamily investing in Texas,” he said. “There’s just too much job growth.” That’s just one of the fundamentals that remains strong, setting up 2021 as an incredible time to buy multifamily in DFW. Allen also points to the spread between treasuries and cap rates being the widest since the “Great Recession.” “Investors sitting on the sidelines the last three to four years because prices are too high have missed out on an incredible opportunity of growth,” he said. “There was $4 trillion on the sidelines last year, so there’s plenty of pent-up demand still. With the discussions on further fiscal and monetary stimulus, a declining U.S. dollar, and inflation in the short term, I only see the market going one way in 2021 … up!” The issue of inflation is an important one that helps distinguish multifamily from other CRE investments. “In multifamily, you can keep pace with inflation. If the market is hot, it’s a free market. Your leases are typically a year, so you can go out and rent apartments at market rates that could be well in excess of 1.5 percent to 2 percent growth that you’re seeing in net lease properties,” Berger said. “So as inflation heats up, multifamily apartments tend to be a tremendous hedge against that inflation.” Everything is bigger in Texas, including the opportunity for multifamily investment as more and more people make the move to call the Lone Star State home.

Steve Lieberman: Why Retail is the Great Unifier

Friends on the industrial side of the shopping aisle often tell me that industrial is the new retail, but anyone who knows retail knows that retail is constantly changing, and it will always be the new retail. Whether retail is red hot or in a blue state, retailers bring us together, meet the challenges of change, and unite parties for the optimal shopping experiences. Retail stores certainly had a rough year in 2020 and continue to have challenges. The pandemic has been the most disruptive force retail stores have faced in decades, and it accelerated trends that were already in motion—most notably, online shopping. This trend was hugely propelled by a behavioral shift of working from home and doing almost everything there. E-commerce represented about 1 percent of retail sales in 2000; it grew over the next two decades to account for more than 10 percent by the end of 2019. One year and one pandemic later, online now represents nearly 20 percent of all retail sales today. This clearly accelerated the failure of weak businesses and served as a growth catalyst for new ones. The number of chains went bankrupt more than doubled from 23 to over 50, leading to 25,000-plus stores closing nationwide. More than 10,000 restaurants closed in Texas alone, and 4 million square feet of local retail space became available in North Texas. Still, 80 percent of all retail sales are in stores, and shopping centers are not going away—by a long shot. The consumer wants and has the capacity to shop, how, when, and where they want, and many of their purchases—particularly replenishment items—will continue to occur through the internet. However, the store’s role will remain central to the shopping experience, the building of brands, consultation, and social interaction. Provided, of course, that the retailer or shopping center continues to deliver a great experience. Click to read more at www.dmagazine.com.

Redfin Announces Agreement to Acquire RentPath for $608 Million

Acquisition brings together a leading site for homebuying with a leading site for rental listings

SEATTLE and ATLANTA, Feb. 19, 2021 /PRNewswire/ — (NASDAQ: RDFN) — Redfin (www.redfin.com) has entered into an agreement to acquire RentPath (www.rentpath.com), the Atlanta-based owner of ApartmentGuide.com, Rent.com, and Rentals.com, for $608 million in cash. The acquisition will bring together a leading site for buying a home with a leading site for renting a home, giving anyone trying to move a complete view of her options. “RentPath has more than 20,000 apartment buildings on its rental websites, and grew its traffic more than 25% last year,” said Redfin CEO Glenn Kelman. “We can almost double that audience, as one in five of Redfin.com’s 40+ million monthly visitors also wants to see homes for rent. Together with RentPath, we can create an online destination for every North American to find a home.” “We are energized by the transformational potential of this combination to help more consumers find the right home and help property managers find residents,” said Dhiren Fonseca, RentPath’s CEO. “RentPath’s customers experienced all-time highs in traffic and leads from us last year and our value proposition to multifamily property managers has never been better. By acquiring RentPath, Redfin will be as committed as we are to the rental market. As part of the Redfin family, our platform will be well positioned to lead the market in the quality and value of our products, while giving our current and future customers access to many more high-intent renters through Redfin’s extensive network.” Redfin, the technology-powered real estate brokerage, operates the #1 nationwide brokerage search site. The company uses a combination of local real estate agents and technology to make it easier, faster and less costly to buy or sell a home. Click to read more at www.investors.redfin.com.

Winter Storm Uri to Generate Billions in Insured Losses: Moody’s

The massive winter storm that barreled through the mid-section of the United States and across the South in mid-February, hitting Texas particularly hard, will generate billions in insured losses, according to commentary by Moody’s Investors Services. The storm, which has been dubbed Winter Storm Uri, brought “snow, ice and some of the coldest temperatures in decades, particularly in Texas and across the Southern U.S.” over the Valentine’s Day weekend, extending into President’s Day on Feb. 15 and throughout the following week. Millions were left without power, and in many cases water, from the storm which has also been attributed to dozens of deaths. “We expect insured losses for US P&C insurers to total in the billions of dollars, with claims from homeowners, commercial property, and auto lines of business,” Moody’s said in its report. The Insurance Council of Texas (ICT) has said the storm “may be the costliest winter weather event in the state’s history.” Hundreds of thousands of claims are expected as a result of the storm, according to ICT spokesperson Camille Garcia. The Independent Insurance Agents of Texas said in a statement on its website that it “is expected to be the largest insurance claim event in Texas history.” Click to read more at www.insurancejournal.com.

Professional and Personal: IREM Houston Offers Unique Networking and Educational Opportunities

Six years into her career in commercial real estate, Kaci Hancock walked into her first luncheon for the Houston chapter of Institute of Real Estate Management (IREM). “I remember thinking, ‘Oh, my gosh. This is so overwhelming. I don’t belong here. I don’t fit here,” said Hancock. “Then Jo D. walked up to me.” Jo D. Miller, the chapter’s executive director, introduced Hancock to some of the others in the room, warmly welcoming the then-assistant property manager into the IREM family. “That was a key moment in my IREM life. If it hadn’t been for Jo D. taking the initiative or noticing that there was a new person in the room who was looking a little lost, I probably wouldn’t have come back,” Hancock said. “Because of that moment, I am now the 2020 president!” Click to read more at www.rednews.com.