Category: News & Market Reports

Green Street Commercial Property Price Index

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Pricing Changes Vary by Property Type

Newport Beach, CA, February 4, 2021 — The Green Street Commercial Property Price Index increased 1.1% in January. The increase reflects higher valuations for lodging properties. Pricing in other property sectors was unchanged. The all-property index is now 7% below pre-Covid levels. “Pricing of properties where the top line is less affected by the pandemic are flat to higher versus a year ago. Property types heavily impacted by shutdowns—or where the ultimate impact from Covid is unknown—are seeing weaker pricing. The exact magnitude of price declines in these sectors, however, is unknown given little product is trading,” said Peter Rothemund, Managing Director at Green Street. “Most of the uncertainty surrounding real estate pricing should clear up over the next several months as the transaction market picks up, and when it does, we expect to see more upside surprises than the other way around.” Click to read more at www.greenstreet.com.

Data Center Outlook Year-End 2020

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The pandemic revealed the data center industry’s resiliency and importance to the global economy. As of November 30th, data center REITs yielded 17.2 percent in returns. With millions of people working from home, attending online schooling, shopping online, and gaming, there was immediate demand for data center capacity. Stay tuned for our full report with local market statistics and fundamentals in Q1 2021.
JLL identified five key themes in the year-end of 2020:

  1. Insatiable cloud demand across the globe In North America, cloud dominated demand in 2020 and will continue to expand in primary markets in 2021. Atlanta, Phoenix, and Chicago recorded large land purchases where new facilities will meet cloud demand.
  2. Despite initial slowing and leasing backlogs amid the pandemic, enterprise colocation demand picked up in the second half of 2020
    While cloud demand thrived in 2020, enterprise level demand slowed as overall IT spend declined globally. According to Gartner, overall IT spend declined by 5.4 percent due to the pandemic’s impact on organizations’ budgets. However, re-entry and vaccination rollouts could lead to a strong rebound in 2021 as cloud migration keeps momentum.
  3. M&A activity and operator investment remain robust
    Investment activity has grown on several fronts. It has increased on a speculative basis where cloud demand has been strongest, secondary markets where cloud demand has increased, and new international markets. Click to read more at www.www.us.jll.com.

Samsung Seeking Over $1B in Tax Credits for Potential Semiconductor Plant in Austin, Texas

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Samsung is seeking more than $1 billion in tax credits to potentially build a new 7 million-square-foot chip fabrication plant in Austin, Texas. The proposed facility, which is estimated to be valued at more than $17 billion, would produce advanced logic devices for Samsung’s Foundry business, according to a filing with the state comptroller. The filing shows that Samsung is seeking tax abatements from Travis County and the city of Austin and tax incentive deals with Manor Independent School District and the Texas Enterprise Fund. Samsung plans to request a 100% tax abatement over 20 years from Travis County worth over $718.2 million and a 50% tax abatement over five years from the city of Austin worth over $87.1 million. The company projects the net benefits for Travis County and Austin would be $4 million and $1.18 billion, respectively, over the next 20 years. Click to read more at www.foxbusiness.com.

Commentary: Are Californians Moving to Texas Because of Our Lax COVID-19 Rules?

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Huge California influencers like Lauryn Evarts Bosstick (@theskinnyconfidential), Sazan Hendrix (@sazan), Anna Victoria (@annavictoria) and celebrities like James Van Der Beek keep moving to Austin, and I kind of hate it? I put a question mark there because honestly I don’t really know how I feel but I can tell you something feels off about it. Over the last 10 months or so I’ve noticed a large influx of really big influencers and celebrities (of all sizes) packing up and leaving California for Austin. And when I started digging into the why, it seems they all of a sudden thought Austin was the place to be — in the middle of a global pandemic no less. I found similar reasons across the board. Most of them listed “cheap” housing/land prices, this idea that Austin is a thriving utopia not hit by COVID-19 or any other issues, the overall inexpensiveness of Austin, and lack of COVID-19 restrictions. I watched Instagram stories of one large influencer who said she loved how cheap everything in Texas was. I listened to an author share how great it would be for his kids to go to school in person, an option he didn’t have in California. I watched one influencer sit inside a well known hotel in Austin and express that the thing she was most looking forward to in her move was dining indoors. I read a Facebook post by one celebrity who said Texas offered the conservative values he was looking for and less COVID-19 restrictions than California. I listened to a podcast/influencer couple with over 1 million followers on Instagram talk about how many businesses in Austin were thriving because they didn’t have COVID-19 restrictions like the ones in California, and they also mentioned how excited they were to eat indoors. I watched and listened as influencers and other Californians of privilege went on and on about why they chose to move to Austin and I wondered what planet these people lived on. Click to read more at www.chron.com.

Austin Ranked No. 9 Overall on CBRE’s Inaugural U.S. Development Opportunity Index

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Austin – Jan. 27, 2021 – Austin offers one of the most favorable development markets for commercial construction in the U.S. according to CBRE’s U.S. Development Opportunity Index. The region secured the ninth overall spot on the inaugural list with sector rankings of fifth for retail development opportunities, sixth for office, seventh for multifamily and 18th for industrial. The report, which analyzed the top 50 U.S. markets by population, scored markets based on four performance categories: construction costs, fundamental strength of existing supply, prior cycle performance and property forecast. “As the population of the greater Austin area is on pace to grow 25% or more in the next 10 years, construction in the area will need to keep up with the additional demand for commercial real estate,” Brian Jarrett, Senior Director with CBRE Project Management. “We expect construction pricing will remain highly competitive due to number and quality of construction firms in the area. There are fantastic general contractors that not only specialize in nearly every construction type, but also specialize in nearly every project size.” Jarrett added that Austin’s projected growth can be attributed to several factors. “In addition to Texas’ business-friendly environment, the greater Austin area has plenty of affordable land and a great labor market. Combine that with great schools, affordable housing options and a consistently strong job market, it’s no wonder that top companies continue to relocate to the region.” Click to read more at www.cbre.com.

Office, Retail Space Under Construction Grows in The Woodlands Area Alongside Growing Vacancies

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As of early January, office and retail vacancies in The Woodlands area were higher than they were the previous year at the same time. However, industrial vacancies decreased. At the same time, the amount of retail and office space under development was higher through the first quarter of 2021 than it was a year earlier. Retail rental rates ended the year higher than they began in 2020. Click to see data and read more at www.communityimpact.com.