Category: News & Market Reports

Have You Returned to the Office? Occupancy Rates are on the Rise, with Dallas Leading the Way

Posted on by Sarah

Office occupancy is creeping up across the U.S., with one Texas city leading an index of large metros where workers are returning to their buildings. Office buildings in Dallas had a 36.4 percent occupancy rate for the week ending Aug. 26 — the highest figure on the list and more than three times that of New York City, which was the least open city at just under 12 percent, according to a report from Kastle Systems. Houston’s occupancy rate was 23 percent during the same time period, down 6 percent from the previous week. The drop was likely the result of companies sending workers home in advance of Hurricane Laura. Dreary downtown: How COVID-19 turned downtown Houston into a ghost town Six months into the pandemic, the 10-city average was 23 percent. Falls Church, Va.-based Kastle Systems, which supplies security systems and services to the commercial real estate industry, has been collecting access data from the 3,600 buildings and 41,000 businesses it secures across 47 states to determine weekly office occupancy counts. The company’s figures are based on daily unique authorized user entries in each of its markets relative to their pre-COVID baselines. Click to read more at www.houstonchronicle.com.

Private Real Estate Investment Firm Purchases Northwest Houston Office Park

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JLL Capital Markets closed the sale and financing of Chasewood Technology Park, a four-building office campus totaling 463,969 square feet in northwest Houston. JLL represented the seller, The GenCap Group, and procured the buyer, Nitya Capital, and helped Nitya to secure a $46 million loan through Morgan Stanley. Chasewood Technology Park consists of One, Two, Three and Four Chasewood, which are located at 20333, 20405, 20445 and 20329 State Highway 249, respectively. The 10.44-acre site is positioned in one of Houston’s fastest-growing submarkets near the intersection of State Highway 249 and Louetta Road, equidistant between the Grand Parkway and Sam Houston Tollway. The GenCap Group’s first investment at Chasewood Technology Park was the acquisition of Two Chasewood in 1997, followed in the late nineties by the purchase of One Chasewood and the development of Three Chasewood. Four Chasewood was developed and delivered at the start of the 2008 financial crisis. Within a year, the building was more than 85 percent leased. “This type of strong demand has been typical during our holding period,” said Paul Vangrieken, executive vice president with the GenCap Group. “Despite the many challenges, these assets have continuously outperformed the market thanks to a strong ownership sponsor and the dedication of the Transwestern leasing and management team.” The GenCap Group’s only reason for selling the portfolio is because one of the partners, an undisclosed Dutch pension fund, is divesting all of its U.S. holdings. The JLL Capital Markets team representing the seller was led by director Rick Goings and analyst Ethan Goldberg. Financing efforts were led by JLL Capital Market’s senior director John Ream and associate Laura Sellingsloh. “This portfolio is among the first large office trades to occur in the Houston market since COVID-19 hit the U.S.” Goings said. “The pandemic created numerous challenges in bringing this deal across the finish line, but we had the right assets, the right tenancy and the right buyer to get it done. The prior owners did a great job in positioning these buildings to withstand macro-economic events and Nitya understood that value proposition.” The northwest Houston area has been driven by market-leading population growth given the proximity to the Energy Corridor and The Woodlands. Planned nearby future development includes Class A multi-housing, retail pads and jogging/biking trails along Cypress Creek, which is adjacent to the property. The multi-story buildings are 92.9 percent leased overall to a diverse array of tenants in the oil and gas, consulting, technology, engineering, architecture, healthcare, and food services industries.

Distressed Debt: When Will Opportunity Emerge?

Posted on by Sarah

Being in the business of distressed debt for the past 12 years has taught me a lot about investor appetite in this space, but most importantly, and as with most things, timing is everything. Traditionally, real estate investors and developers never want to have the music stop in the middle of development, days after a recent purchase, or at a time when they are struggling with an investment. However, recessions usually don’t come with warnings for the average owner. This cycle is very different than what we have experienced in the past, and in my opinion, is worse. If you think about it, when the Great Recession hit, as soon as the dust settled over Wall Street, there was nowhere to go but up. With the pandemic, the recovery doesn’t begin until the pandemic ends. So what does that mean for those who have funds waiting on the sidelines and want to be the first in line for distressed debt?

It’s not here yet. Yes, assets are hurting, but if the true recovery hasn’t begun, the impact to value is still unknown. This is one of the most important considerations to those making decisions on buying and selling distressed debt/properties. In my opinion, until the end is in sight for the pandemic, it will be difficult for any investor to underwrite effectively. Next year will provide the best opportunity for purchases of distressed assets. Click to read more at www.dmagazine.com.

Texas Healthcare Portfolio Trades for $7.1 Million

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Matthews Real Estate Investment Services facilitated the sale of a Radiology and Imaging of South Texas portfolio in Corpus Christi, Texas. Montecito Medical Real Estate acquired the properties for $7.1 million. Matthews associate vice president and director Michael Moreno, associate vice president and director Rahul Chhajed, and associate Kyle Mackulak brokered the transaction. The healthcare assets are located at 3226 South Alameda Street and 2825 Spohn South Drive in Corpus Christi. The tenant, Radiology and Imaging of South Texas is the largest area provider of imaging services and has contracts with most major local hospitals. The Spohn Drive location is directly across from the Christus Spohn Hospital Corpus Christi-South, off Saratoga Boulevard. The South Alameda drive location is one block from the Corpus Christi Medical Center and the W.B. Ray Highschool. The South Alameda property was built in 1970 and consists of 13,179 square feet and The Spohn Drive location has 15,338 square feet and was built in 2007. “This particular transaction shows the strong investor interest in physician-backed real estate and the ability for healthcare operators to monetize their real estate,” said Mackulak. “This was a very complicated deal with many moving parts; however, we were able to successfully manage the various challenges that arose during escrow.” Healthcare properties are extremely sought-after investments for their resistance to downturns in the economy and e-commerce trends that affect traditional retail properties. The seller, Radiology and Imaging of South Texas wanted to pull capital out and find a strong institutional partner. The buyer, Montecito Medical Real Estate was sourced by Matthews agents and is one of the most active buyers of medical real estate in the nation. “A few items came up during the escrow process that almost got in the way of closing. For instance, we needed to receive a parking variance, which meant getting approval from the city,” said Moreno. “Our tenacity, deal-making experience, and never say no attitude allowed us to keep pushing the rock up the hill and pivot as needed to ensure we reached our target goal.”

Experts Say Creating ‘Mini Cities’ in Austin Could Ease Traffic and Affordability Issues

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There’s lots to love about Austin — the nightlife, the food, the Butler Hike-and-Bike Trail, and so on. But there are two major things we love to hate about our city: increasingly jammed traffic and increasingly unaffordable housing. A new report indicates Austin could tackle both of those nagging issues by taking advantage of more than 1,300 acres for what essentially would become mini cities within the larger city. In a report, experts assembled by the Urban Land Institute identified 1,350 acres within Austin that could fit into the city’s current zoning framework for “transit-oriented development,” or TOD. Anchored by a transit station, a TOD features a mix of office, residential, retail, entertainment, and other spaces in a compact walkable and bikeable area. The report says the 1,350 acres consist of parcels located within one-fourth of a mile of existing MetroRail commuter tracks and existing high-frequency bus routes. Furthermore, another 400 acres along two proposed new MetroRail lines would also be ripe for TOD status, according to the report. An interactive map created in tandem with the report shows many of these TOD-ready parcels are located:
Along I-35 in South Austin, between West Dittmar Road and West Slaughter Lane. Along State Highway 71 East near U.S. Highway 183 East, just west of Austin-Bergstrom International Airport. Along North Lamar Boulevard near U.S. Highway 183 West. Advocates of TODs tout their ability to boost public transit ridership, reduce dependence on cars, encourage construction of affordable housing, and promote responsible use of land. Click to read more at www.austin.culturemap.com.

Agile Office: What is Next for Office?

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BY MANDI WEDIN, CEO, FEROCE REAL ESTATE ADVISORS

Agile office. Is that an oxymoron? Can a structure built of steel and concrete be agile? The answer is yes, emphatically yes, when there is agility in both the physical space and economic lease terms. In both cases, agility means being flexible and responsive in order to meet dynamic needs. Agility is also required for employers and people leaders to adapt, innovate, and evolve during this time of transition. Before the global pandemic of COVID-19, the agile office was already a differentiator for office building owners to win tenants, smart business solutions for office occupiers, and a competitive advantage for talent acquisition and retention. In today’s world, the need to be agile is crucial for the near- and long-term success of office building owners and occupiers. Agile physical space: For the physical space, consider agility from the perspective of delivering space that is useful today and can be useful for another purpose with moderate adjustments and limited capital investments in the near future. Agility means delivering spaces that are multi-purpose. Design an internal office so that it can also be used for video presentation space and small team pods. Agility means using furniture solutions and interior design principles to define spaces instead of building out walls and permanent structures. Think of how a hotel lobby contains seating areas that delineate separate spaces. Envision cafe spaces that also accommodate training sessions. Click to read more at www.rednews.com.