Texas & Oklahoma Feature Archive

Recovery of Houston Office Market Still Distant, Say InterFace Panelists

by Taylor Williams February 5, 2018

HOUSTON — If patience is a virtue, then developers and brokers in Houston’s office market are poised to become a bit more saintly. For the past three years, the story of the market has been a painful coinciding of sluggish oil prices hurting Houston’s largest tenants, while deliveries of new office spaces are at a peak. According to CoStar Group, more than 5 million square feet of office space has been delivered in Houston during each of the past three years. The nosedive that oil prices took beginning in early 2015 set rising vacancy in motion, leading to an 11-quarter streak of negative absorption. And while the price of oil has risen substantially to start the new year — increasing by roughly $10 to its current price of $65 per barrel over the last two months — that won’t force an overnight recovery in this struggling niche. This one-two punch has players in the space wondering when the market might finally begin to display sound fundamentals. According to panelists at the InterFace Houston Office Forecast, that’s not likely to happen before 2020. The event was held Thursday, Feb. 1 at the Royal Sonesta hotel in Houston. Approximately 150 industry professionals attended the …

February 5, 2018

Features Retail Texas Texas & Oklahoma Feature Archive Top Stories

Retail Landlords Struggle With the Logistics of Backfilling Vacated Space with Entertainment Concepts

by John Nelson January 2, 2018

As 2018 gets underway, retail real estate finds itself at an odd juncture. According to CNN, more than 6,700 stores either closed or announced plans to close in 2017, leading many to consider last year to be the beginning of the end for brick-and-mortar shopping. Yet a new report from Tennessee-based retail advisory firm IHL Consulting Group notes that for every company that closed stores in 2017, there were nearly three companies opening new stores to offset it. Whether you believe retail is dying or evolving, there’s no arguing that the inability of certain tenants — mainly apparel-based department stores — to compete with e-commerce has caused millions of square feet of retail real estate to be returned to the market. Owners of these properties face the challenge of backfilling these spaces with tenants that aren’t likely to share the same fate — restaurants, gyms and entertainment concepts. But when it comes to backfilling a big box or anchor space with an entertainment concept, merging the existing space with the design requirements of the tenant can be a major headache for landlords. With 58 million square feet of project designs under his belt, Randy Stone, associate principal at Dallas-based architecture …

January 2, 2018

Features Industrial Texas Texas & Oklahoma Feature Archive Top Stories

InterFace Panel: Demand for Automated Labor Growing in Industrial Sector

by Taylor Williams November 15, 2017

HOUSTON — The number of American manufacturing jobs has been decreasing for more than a decade, radically enough that the pledge to return them became a cornerstone of President Donald Trump’s campaign. Between 2004 and 2014, the country lost about 2.1 million manufacturing jobs, according to the U.S. Bureau of Labor Statistics (BLS), which also projects that another 814,000 manufacturing jobs will be cut by 2024. The decline in manufacturing jobs has coincided with job growth in other industrial subfields, particularly transportation and warehousing. The total number of jobs in this sector increased by about 391,000 between 2004 and 2014, with an additional 137,000 new positions expected to be created by 2024, per the BLS. Analyzed in the context of e-commerce, these trends suggest that industrial activity is still robust throughout the country, but that distribution is outstripping manufacturing as the primary form of industrial-using employment. Yet the growth of e-commerce alone does not account for the radical dip in the number of manufacturing jobs available. The substitution of human labor for automated robot workers has also been a driving force behind sluggish job growth in the manufacturing sector, according to a panel of industrial real estate professionals who gathered …

November 15, 2017

Features Industrial Texas Texas & Oklahoma Feature Archive

Logistics Consultant: Role of Air, Rail Transit Expands in Industrial Market

by Taylor Williams November 6, 2017

HOUSTON — As the growth of e-commerce continues, its impacts on logistics and operations within the industrial real estate sector become more significant. Recent data from supply chain consulting firm Tompkins projects that by 2020, the value of America’s cross-border e-commerce sales will be approximately $486 billion. In addition, the value of cross-border purchases via e-commerce will total about $140 billion. To meet the e-commerce demand, industrial developers will have to supply about 160 new logistics facilities spanning 800,000 square feet in top urban markets, according to Tompkins. Another 100 or so facilities in the 75,000- to 100,000-square-foot range will need to be repurposed to support delivery to secondary and tertiary markets. Distributors in the e-commerce era have long since learned to compress their supply chains and look for logistical opportunities to save on “last-mile” expenses. To that end, industrial operators are increasingly looking to air and rail transit as distribution channels. Steve Schellenberg, vice president of business development for IMS Worldwide Inc., a logistics consulting firm for the industrial real estate sector, discussed the rise of intermodal transit during the InterFace Houston Industrial conference on Oct. 31. Approximately 115 industrial real estate professionals attended the event, which was held …

November 6, 2017

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Forecast Survey: What’s Your Take on Real Estate in 2018?

by John Nelson October 24, 2017

France Media, Inc. is conducting a brief online survey to gauge market conditions, and we welcome your participation. This survey should only take a few minutes to complete. Questions range from property sectors that your firm is most bullish on heading into 2018 to trends in deal volume to the outlook for interest rates. The results will be collated and published in the January 2018 issue of our regional magazines. Conducting these surveys is part of our mission at France Media to provide readers with indispensable information. To participate in our broker/agent survey, click here. For developers/owners/managers, click here. For lenders and financial intermediaries, click here. (Note: Please remember to click on “done” to properly submit the survey.) Sincerely, Matt Valley Editorial Director, Real Estate Regionals France Media, Inc.

October 24, 2017

Features Multifamily Texas Texas & Oklahoma Feature Archive Top Stories

InterFace Panel: Property Taxes, Public Transit Among Chief Concerns for DFW Multifamily Market

by Taylor Williams September 22, 2017

DALLAS — With roughly 10,000 new residents moving into the metro area every month and more than 100,000 jobs already created in 2017, the Dallas-Fort Worth (DFW) metroplex appears poised to handle any challenges thrown at its multifamily sector. These obstacles include absorbing the 35,000 or so multifamily units expected to come on line in 2018, maintaining positive rent growth of 3 to 4 percent and navigating a constricting labor market to ensure new projects stay on schedule. For the real estate professionals who spoke on these issues at the InterFace Multifamily Texas conference on Sept. 13 at the Westin Galleria hotel in Dallas, there wasn’t much dissension as to whether the market can handle these tasks. The bigger question among the panelists was what, if anything, could crash the party. Moderator Rob Key, senior vice president at HFF, invited the four panelists — all of whom work for DFW-based firms that offer investment platforms — to share their insights on what they believe is the single-biggest threat to the continued growth and prosperity of DFW’s multifamily market. Kim Radaker, managing principal of The Exponential Property Group of Cos., identified rising property taxes stemming from higher sales prices as her biggest …

September 22, 2017

Conference Coverage Features Multifamily Texas Texas & Oklahoma Feature Archive Top Stories

Combination of Multifamily, Office Space is Hot Concept in Texas, Say InterFace Panelists

by Taylor Williams September 15, 2017

DALLAS — Say the words “mixed-use” in commercial real estate circles today and generally the first thought that comes to mind is a property featuring a combination of multifamily and retail space. But there’s no written rule that says what property classes can or can’t be included in mixed-use. As such, a number of multifamily developers in Texas are redefining the term’s scope and application by bringing together apartment living and an office component in newer projects. As part of the InterFace Multifamily Texas conference, a panel of real estate experts convened Sept. 13 at the Westin Galleria in Dallas to address this topic and other emerging trends in the apartment sector, most of which center on ways of improving amenity packages for tenants. Approximately 200 real estate professionals attended the event. The move toward developing apartment communities with office space — not business centers — stems from landlords’ need to differentiate their amenity packages from the competition. These new office elements within multifamily properties are taking a variety of forms in their infancy, ranging from large co-working spaces and conference rooms to individualized desks and cubicles. “Having amenities like a knockout pool and an awesome fitness center doesn’t really …

September 15, 2017

Features Industrial Multifamily Office Retail Texas Texas & Oklahoma Feature Archive Top Stories

CBRE Research: Houston’s Commercial Real Estate Shows Resilience in Wake of Hurricane Harvey

by John Nelson September 12, 2017

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 …

September 12, 2017

Features Industrial Office Texas Texas & Oklahoma Feature Archive Top Stories

Fortunes of Houston’s Industrial, Office Sectors Diverge in Wake of Hurricane Harvey

by Taylor Williams September 8, 2017

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 …

September 8, 2017

Features Multifamily Texas Texas & Oklahoma Feature Archive Top Stories

Hurricane Harvey May Accelerate Multifamily Absorption in Houston, Says RADCO CEO Norman Radow

by Taylor Williams September 1, 2017

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 …

September 1, 2017

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