HOUSTON — It’s much too soon to know the extent of the damage Hurricane Irma has inflicted on Florida and the Southeast, but a clearer view is starting to emerge with regard to the total impact that Hurricane Harvey has had on the Houston commercial real estate market. Hurricane Harvey, a Category 4 storm that made landfall on Aug. 25 near Rockport, Texas, was the strongest storm to hit the Texas Gulf region since 1961, according to CBRE Research. The hurricane dumped more than 50 inches of rain across the region in a matter of days and caused extensive property damage due to flooding. Moody’s Analytics estimates that the hurricane caused anywhere from $81 billion to $108 billion in property damage and economic loss, including the closing of Port Houston and many oil and gas refineries. If these estimates are correct, this would make it the second costliest natural disaster in the history of the United States, only trailing Hurricane Katrina in 2005. Just a few weeks later, Hurricane Irma became the first Category 4 storm to make landfall in Florida since 2004. In its wake, the hurricane has caused severe damage in Miami, the Florida Keys and Naples, as …
As the flooding in Houston from Hurricane Harvey begins to recede and more properties become accessible, commercial real estate firms are beginning the long, tedious process of figuring out the full magnitude of the destruction. It will likely be months before the full extent of the property damage throughout Houston is known. But the fortunes of certain classes of commercial real estate are already coming into focus. Metro Houston’s industrial market, which according to CoStar Group has experienced positive net absorption for 10 consecutive quarters, appears to be an immediate beneficiary of the storm. With recovery and restoration projects now fully underway across the metro area, demand for construction materials — wood, sheet rock, concrete — is set to rise. These products will need to be stored in warehouses and distributed throughout the metro area. This influx will likely put a dent in industrial vacancy, which rose from 5.3 percent to 5.6 percent between the first and second quarters. Rents for warehouse assets, which declined by 1 percent during the second quarter, should also rebound from the recovery effort. “On the industrial side, our people have seen a spiked level of demand that will result in more absorption,” says Tim …
ATLANTA — By offering paid internships, educational programs, community events and flexible hours, seniors housing leaders hope to combat the well-documented labor shortage and entice younger workers. There simply aren’t enough employees to keep up with the pace of development, and the industry is plagued by high turnover rates as well. That’s according to speakers during an operations update at InterFace Seniors Housing Southeast on Aug. 23 in Atlanta. The conference, held at the Westin Buckhead in Atlanta, attracted over 400 industry professionals. Lisa Welshhons, senior vice president of human resources company Aureon, noted the distinct gap between the number of workers needed and actual employees working. As moderator, she asked the panel of operators how the labor shortage is changing the way they are staffing their communities, as well as recruiting and retention strategies. “We’re often asked by our peers and partners what number of communities is our goal, but it’s not about a number of communities. It’s really about continuing to develop as long as we’re able to attract the best-in-class employees,” said Sarabeth Hanson, COO at Harbor Retirement Associates, a regional senior living development and management company in Vero Beach, Fla. Already a concern, the demand for new …
The U.S. economy added 156,000 jobs in August, falling short of expectations but not enough to sound alarm bells. In advance of the report released Sept. 1 by the Bureau of Labor Statistics (BLS), the forecast from economists surveyed by The Wall Street Journal called for an increase of 179,000 jobs. A closer look at the data shows total nonfarm payroll employment in the private sector grew by 165,000 in August, while the government sector overall contracted by 9,000, mostly at the state and local levels. It’s noteworthy that the BLS also made downward revisions to the June and July employment figures, resulting in 41,000 fewer jobs than previously reported for those two months. Meanwhile, the national unemployment rate increased 10 basis points in August to reach 4.4 percent, still quite low by historical standards. On the heels of the latest jobs report, REBusinessOnline posed seven key questions to three real estate economists: Steve Hovland, director of research at Irvine, California-based HomeUnion Inc.; Ken McCarthy, principal economist and applied research lead for the U.S. based in Cushman & Wakefield’s New York City office; and Ryan Severino, chief economist at JLL who works out of the firm’s New York City office. What follows …
With construction costs rising and the supply of talented staff diminishing, doing business has never been more expensive for seniors housing developers. As such, both developers and operators are seeking new ways to save money. Increasingly, these groups are considering the role design plays in their projects, with a particular emphasis on identifying design concepts and elements that save on the bottom line without compromising the property’s sense of livability. A panel of seniors housing developers and operators gathered at the Westin Buckhead Atlanta on Wednesday, Aug. 23 as part of InterFace Seniors Housing Southeast to discuss development trends in today’s market. More than 400 industry professionals attended the conference. Moderator Will Childs, executive vice president of seniors housing for Oracle Healthcare Advisors and based in the firm’s Atlanta office, led the analysis of how construction and labor issues alike are driving developers to think outside the lines. At the most fundamental level, many new designs for seniors housing properties share the goal of repurposing common and outdoor spaces, according to panelist Alan Moise, chief investment officer for Atlanta-based Thrive Development Partners. “Overall pricing for development projects in the Southeast and mid-Atlantic is probably up about 6 percent this year,” …
Nearly a week has passed since Hurricane Harvey made landfall in Texas, drenching Houston and the Gulf Coast area with trillions of gallons of rainwater and sending residents scrambling for shelter. While Houston is now, in the words of Mayor Sylvester Turner, “mostly dry,” CoStar estimates that roughly 72,000 residential units are situated within Houston’s 100-year floodplain and are expected to suffer water damage, if they haven’t already. The volume of devastation has prompted property owners across all sectors of commercial real estate in Texas to issue press releases on the status of their properties. Texas Real Estate Business reached out to Norman Radow, CEO of The RADCO Cos., a private equity firm in the multifamily space whose holdings were mostly spared by Harvey. The Atlanta-based company owns seven multifamily properties in Texas, including four in Houston totaling about 1,800 units. Of those, only about 1 percent, or 18 units, were damaged by Harvey. The following interview captures his firm’s efforts to help displaced tenants, and offers insight on how Hurricane Harvey might positively impact future absorption and occupancy in Houston’s multifamily market. Texas Real Estate Business: Prior to the storm, the consensus coming out of Houston seems to have been …
HOUSTON AND COLLEGE STATION, TEXAS — Hurricane Harvey has brought massive amounts of rain, flooding and destruction to southern Texas, but reports show that on- and off-campus student housing properties have largely escaped the worst of the damage. The Texas Tribune reports that colleges in Houston have cancelled class and evacuated some student housing as the rain continues to fall and floodwaters continue to rise. About three buildings on the University of Houston campus have taken on water, and 140 students were evacuated from Bayou Oaks, a university-owned, off-campus apartment complex for older and international students. Most universities in Houston — such as Rice University and Victoria College — reported minor damage including leaks and power outages. Texas A&M University-Corpus Christi also reported minor structural damage, according to The Texas Tribune. The first day of classes has been pushed to September 5. Texas A&M University’s Kingsville and College Station campuses also reported no major building damage or flooding, and plan to begin classes early next week. Servitas reports that Park West — a 3,406-bed student housing community developed through a public-private partnership with Texas A&M University in College Station — did not receive any damage or leakage during the storm. The …
SEATTLE AND AUSTIN, TEXAS — Amazon (NASDAQ: AMZN) has officially closed its $13.7 billion acquisition of Whole Foods Market. The first order of business for the e-commerce giant is making the Austin-based grocer’s high-quality and organic food more affordable for its shoppers. Beginning yesterday, Whole Foods Market now offers lower prices on selected grocery staples across its stores, with more to come. These include fair-trade bananas, organic avocados, organic large brown eggs, organic salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85 percent lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken and organic butter. “We’re determined to make healthy and organic food affordable for everyone,” said Jeff Wilke, CEO of AmazonWorldwide Consumer, in a statement. “We will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.” Due to Amazon’s reputation and ability to deliver on its promises, other grocers are watching closely as Whole Foods transitions to the new model, according to Rick Scardino, principal of Lee & Associates’ Chicago office. “Most grocers will be concerned for obvious reasons as to Amazon’s plan to lower pricing because that will shrink already tight margins in the grocery …
ATLANTA — Legislative decisions made over the next 18 months will have a substantial effect on American businesses, according to Sen. Johnny Isakson (R-Ga.). The remarks were made at the fourth annual InterFace Seniors Housing Southeast conference on Wednesday, Aug. 23. The event drew over 400 industry professionals. “If you’re in business in America, what happens in Washington has a lot to do with your business,” he says. “You’re going to begin to see pressure on elected officials to move out of partisan voting, and I think that’s good for the economy.” Before entering politics, Isakson worked in real estate for more than 40 years and has a long family history in the industry. His father helped establish the prominent Atlanta-area real estate firm Northside Realty, which Isakson led as president for 22 years. Johnny’s brother, Andy Isakson, founded Isakson Living, a seniors housing development company, based on the Isakson family’s own difficulty finding suitable retirement options for their parents. Currently serving his third term, the U.S. Senator delivered this year’s keynote address at the Westin Buckhead in Atlanta. According to Isakson, healthcare and tax reform top the list of issues that need be addressed by Congress over the next …
ATLANTA — When businesses loosen their purse strings and increase their capital expenditures (CapEx), good things tend to follow. U.S. businesses this year have already doubled the volume of CapEx recorded for all of 2016, which has contributed positively to the nation’s real gross domestic product (GDP), according to Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University’s (GSU) J. Mack Robinson College of Business. Speaking at his quarterly economic forecast, which was held on Wednesday, Aug. 23 at GSU’s Centennial Hall Auditorium, Dhawan says that the 5.2 percent growth of nonresidential fixed investment in the second quarter over the prior quarter has boosted his outlook for the U.S. economy. “Compared to February, my forecast is way more optimistic,” says Dhawan. “I don’t usually change my opinion that quickly until all the evidence comes in. I’ve always said ‘investment today, jobs tomorrow.’” CapEx spending was down in 2016 leading up to the U.S. presidential election, which Dhawan says was due to both oil prices coming down and the uncertainty surrounding the election’s outcome. “Everyone was waiting to see which way the election was going to go,” says Dhawan. “Since the election, CapEx spending has rebounded sharply.” Dhawan …