Marcus & Millichap Acquires Mission Capital

Marcus & Millichap, Inc. (MMI) has entered into a definitive agreement to acquire Mission Capital in a transaction expected to close in the fourth quarter. 40 capital markets professionals—including Mission Capital’s founding partners, David Tobin, Joseph Runk, Jordan Ray and Trenton Staley—will join MMI offices in Texas, as well as in New York, Florida and California. “Broadening our capital markets capabilities is a key component of MMI’s long-term growth plan and we are excited to add Mission Capital’s complimentary services and track record to our financing division, Marcus & Millichap Capital Corporation (MMCC),” said Hessam Nadji, president and CEO of Marcus & Millichap. “Mission’s loan sales and consulting services will expand our lender relationships and client service offerings. Internally, their ability to collaborate with our existing financing and sales professionals will be synergistic to our overall business development. The debt and equity team’s track record of securing financing for larger and more complex transactions and equity advisory is highly complementary to MMCC’s core mortgage brokerage business.” Founded in 2002, Mission Capital is a capital markets advisor with teams specializing in the sale of loans and consultative/due diligence services as well as debt and equity placement across all property types. The firm’s loan sale and consulting clients include commercial and investment banks, hedge funds, special servicers, government agencies and private equity firms. The debt and equity team specializes in structured finance and equity advisory for institutions, developers and private real estate investors. “As we explored joining forces with Marcus & Millichap, we considered the firm’s stellar reputation and dedication to outstanding customer service, Tobin said. “We are attracted to the breadth of the company’s platform, commitment to growth and feel like minded with the firm’s collaborative culture. We look forward to adding value to the Marcus & Millichap team and helping the company scale and diversify its services.” “The debt and equity team is eager to join Marcus & Millichap because of the synergies of our respective organizations,” Ray said. “We see the value in Marcus & Millichap’s investment brokerage dominance and brand and respect MMCC’s leading market position on the financing side. We look forward to contributing to the company’s growth by bringing over a strong team with deep structured finance expertise.”

CenterPoint Acquires Last-mile Portfolio

CenterPoint Properties has acquired five last-mile sites. The portfolio includes one Houston property, in addition to five more in Long Beach, California. The off-market portfolio sale closed for an undisclosed sum. The Houston property is a 10.5-acre pipe yard, which incorporates a 10-year leaseback, in addition to a nine-year lease extension on an existing CenterPoint building across the street at 8900 Railwood Drive. The properties are just five miles from the I-610 East Loop and eight miles from the Port of Houston. CenterPoint now owns 38 assets in the Houston market. “We have strong momentum going into the fourth quarter. CenterPoint has closed on $1.3 billion in acquisitions over the past 15 months and $595 million just since March 2020,” said Ryan Dunlap, CenterPoint senior vice president of investments. The seller was a CenterPoint tenant, Ta Chen International.

Turning a Dead Mall into a Warehouse will Slash its Value as Much as 90%, Barclays Predicts

In the coming years, hundreds of America’s roughly 1,100 malls are expected to shut, as retail, restaurant and movie theater closures pile up, and more people favor shopping on the internet over heading to the store. Property owners are going to be tasked with giving dead malls a new life. But the future prospects — fulfillment centers, apartment complexes, schools or medical offices — could mean massive writeoffs in property values, according to a new Barclays report. Turning a shuttered mall into an e-commerce warehouse or a residential complex could reduce the value of the property anywhere from 60% to 90%, Ryan Preclaw, a research analyst at Barclays, told CNBC’s “Worldwide Exchange” Thursday morning. While the land that malls sit on may offer better recovery values if it is used for a mixed-use development, he said, historically that has only happened for about 15% of former malls. The turmoil hitting the retail industry, which has been accelerated by the coronavirus pandemic, creates a ripple effect for malls. When an anchor tenant like a department store closes, shopper traffic at the mall tends to drop by about 10%, Preclaw explained, setting off a “tipping point” for the property, as other retailers in the mall look to leave. Click to read more at www.cnbc.com.

Industrial Age: Texas Cities are Drawing Investors Looking to Capitalize on the Industrial Boom

Industrial is far and away the hottest sector in commercial real estate right now and the hottest industrial markets are scattered throughout Texas, each one creating a unique draw for investors and developers.

Houston
The largest city in the Lone Star State also boasts the most absorption of industrial space so far in 2020: just more than 6.4 million square feet. According to CBRE research, nearly 3.9 million of that got leased up just in Q2. In that same period, though, about 8 million square feet came on the market, which boosted vacancy rates to 6.9 percent. About 18 million square feet of new industrial is under construction in the Houston market with the southwest (8.5M SF) and northwest (4.8M SF) sectors bringing in the most space. “Houston is very competitive,” said Alfredo Gutierrez, president of industrial-focused investment firm SparrowHawk Real Estate Strategists. “Because of the setback in oil prices, some investors are perceiving a pullback in real estate by some of the energy companies. That provides a window of opportunity to invest in industrial real estate in Houston.” He predicts this window will close in late 2021 as the energy sector rebounds, e-commerce increases and the benefits of trade with Mexico expand in Houston.

Dallas-Fort Worth
When it comes to new construction, it’s hard to beat the numbers coming out of the Dallas-Fort Worth area. CBRE reports that in Q2, more than 23 million square feet was underway. Thing is, that space is getting eaten up as soon as it hits the market. For example, DFW had about 3.4 million square feet in completions and 2 million square feet of net absorption this spring, marking 39 consecutive quarters of positive net absorption. “I think Dallas is the strongest market in the United States right now,” Gutierrez said. “Dallas is just screaming hot.” Two of the three largest leases signed in Q3 are distribution-focused companies. FedEx scooped up about 750,000 square feet of available space, opening a new distribution center in South Dallas, while packaging and fulfillment firm AmeriPac expanded to a new 400,000 square-foot facility near DFW Airport.

El Paso
Experts agree El Paso is the market to watch as near-shoring adds production to Mexico and manufacturers are looking for convenient locations to store their goods before they’re shipped across the U.S. That’s why vacancy rates are some of the lowest in the country. Right now, only 2.9 percent of industrial space (a record low) is available in El Paso, boosting the asking rate to a record high: $5.38 PSF. To answer demand, CBRE reports 3.4 million square feet of space is currently under construction, including a new three-story industrial build-to-suit project. Another project is a 370,000-square-foot warehouse/distribution complex from Hunt Southwest Real Estate Development Co. Hunt Southwest president, Preston Herold, told the El Paso Times the company picked the border town because of its low vacancy rates, calling them “market fundamentals you want to see as an investor and developer (in real estate).”

Central Texas
While they’re not making the headlines of the other Texas markets, Austin and San Antonio are holding their own in the industrial sector. CBRE reports that strong tenant demand for distribution space contributed to Austin’s 25th consecutive quarter of net absorption. Vacancy in the capital city is down to 9.7 percent as Q3 saw no new projects delivered. The opposite is the case in San Antonio, where more than 800,000 new square feet came to market in Q3. As a result, vacancy bumped up to 14.2 percent. And more projects are on the way. Per CBRE, a whopping 1.8 million square feet are under construction.

Texas Ranked Best State For Business For Eighth Consecutive Time

AUSTIN, TX – Governor Greg Abbott today issued a statement after a new survey of U.S. corporate executives ranked Texas the number one state for business for the eighth consecutive time since 1996. The survey was released at the International Economic Development Council (IEDC) Annual Conference, which is being held from Dallas virtually. “Thanks to our talented workforce, welcoming business climate, and state-of-the-art infrastructure, Texas has been named the best state in the nation for business for the eighth consecutive time since 1996,” said Governor Abbott. “I want to congratulate the Texas Economic Development Corporation on their well-earned recognition as one of the premier economic development marketing organizations in the nation. TxEDC, working together with my Economic Development & Tourism Office and other public and private sector partners throughout the state, play a pivotal role in bringing more investment and jobs to our state. As we safely and strategically mitigate the spread of COVID-19, Texas will continue to expand economic opportunity for all Texans and build a more prosperous future for the Lone Star State.” Conducted by Development Counsellors International (DCI) every three years, the “Winning Strategies in Economic Development Marketing” survey has tracked trends in economic development since its inception in 1996. The 2020 “Winning Strategies” survey is based on the aggregate responses of 316 corporate executives with site selection responsibilities. Texas has consistently held the number one ranking since 1996, making this its eighth consecutive win. Texas earned the number one spot this year by a wide margin, with 48% of survey respondents favoring the state’s business climate compared to second place Georgia’s 25% favorability. “We are honored to once again rank as the No. 1 State for Business among corporate executives,” said Robert Allen, president and CEO of TxEDC. “Texas has been recognized as the top state for business thanks to the leadership of Governor Greg Abbott and the incredible team of economic developers working every day in communities across the state to let businesses know that they can Go Big in Texas.” Texas was a favorite among survey respondents thanks to many key factors. In addition to recognizing Texas’ overall business climate, 36% of respondents named the state as having one of the most favorable tax climates, 20% cited Texas’ overall pro-business environment and 17% specified its access to talent. In addition to Texas, rounding out the top five states for business are Georgia at number 2 with 25%, followed by North Carolina at number 3 with 22%, Florida at number 4 with 18% and Tennessee at number 5 with 13%.

Source: Office of Governor Greg Abbott

Building Out: What it Means to be LGBTQ in the Design Industry

The engine of the commercial real estate industry is people, which can often make it feel like a close-knit family. Likewise, the LGBTQ community is also very nurturing of its members. So, what are the experiences of those who fall within both groups? Insightful Chicago—which has as its mission to creates inspiring stories and conversations for women, minorities, and the LGBTQ community in the CRE industry—hosted a discussion that focused on being LGBTQ in the design industry. The panel series was hosted by the organization’s cofounders, Derek Jayson Rusch, Catie Kill and Tyler Offutt. The panelists met digitally via Zoom, sponsored by Herman Miller. The panelists were cognizant of the fact that working in the architecture and design industry—and doing so now at this point in history—affords them some level of ease, at least in comparison to other industries or even other disciplines within commercial real estate. “When I became part of the design community, it was like, ‘where has this world been all my life?’ There is a vibrance about this community,” said Todd Heiser, co-managing director of Gensler in Chicago. “Designers are a collection of misfits. I once was an outsider, but this community really brought everything together for me.” Mel Chotiner, senior interior designer at Wright Heerema Architects in Chicago, described a similar experience. One of her first jobs was with Perkins & Will and she relished the opportunity to pick the brains of the senior designers on architectural issues, personal issues and everything in between. “As an industry, we’re fortunate to be in a place where we are less of an outsider,” Chotiner said. “I’ve experienced more discrimination outside of the workplace than in it.” While the architecture and design community may be more inclusive than other professions, clients and potential clients come from all walks of life. Roger Sekol interior design practice leader in the Houston office of Perkins + Will, said that he has had to carefully manage how he comes across with some of these individuals so as not to strain a professional relationship. “Whether you are in Chicago, Houston or central Ohio, whoever the client is, I try to adjust myself based on who I’m working with,” Sekol said. “It’s a lot like clothing. You might dress differently for a tech client, for instance.” “I’ve never had to deal with conversations about people’s sexuality in this industry, whether people know I’m gay or not,” said Malisa Bryant, senior vice president and general manager at Herman Miller. “By nature of being a black woman and six feet tall I always feel like I stand out anyway.” As a woman, a person of color and a member of the LGBTQ community, Bryant said she has found herself overcompensating and at times restraining what she says so as not to cause offense among clients or industry colleagues—who are quite often white cis males. Her view now, however, is that the world had better catch up with her, not the other way around. “As I get older,” Bryant said, “I think, ‘the hell with it. I’m going to speak how I want to speak.” Neil Schneider, design director and principal at IA Chicago, said that inclusion needs to be better incorporated not just in the industry, but also in the buildings and spaces that they are designing. That includes subtle pushback on clients’ wants and needs, to help redefine what is “normal” in the built space. “The way that we design environments, they have to have an inclusive nature to them,” Schneider said. “There needs to be more dialog about restrooms, wellness centers and making space for every generation, every sexual orientation, every background.” Alex Gray, an architect in New York with Mace Group North America, had one suggestion to help push these boundaries. “A great way to convince people to do stuff is explaining how it will make them money,” he said. As an example, Gray described how New York now requires that all single-occupancy bathrooms within public and commercial properties be designated as gender-neutral, rather than male or female. He has used this as leverage with clients in other parts of the country, saying that if they incorporate the change now, they won’t have to pay to make changes later if their jurisdiction were to pass a similar ordinance. Other topics that came up included pronouns; straight colleagues who consider themselves allies of the LGBTQ community can do something as simple as include their pronouns in their email signature as a way to shift the burden away from transgender individuals. In addition to discussing their personal mentors, the panelists also acknowledged the members of the LGBTQ community who came before and help to tear down barriers that might otherwise have stood in their way. All agreed that we’ve come a long way, but there are still challenges ahead.