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Texas & Oklahoma Feature Archive

FeaturesIndustrialOfficeTexasTexas & Oklahoma Feature ArchiveTop Stories

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

by Taylor Williams

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 …

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FeaturesMultifamilyTexasTexas & Oklahoma Feature ArchiveTop Stories

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

by Taylor Williams

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 …

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FeaturesMultifamilyStudent HousingTexasTexas & Oklahoma Feature ArchiveTop Stories

Universities, Student Housing Properties Face Hurricane Harvey

by John Nelson

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 …

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FeaturesTexasTexas & Oklahoma Feature Archive

Are You Leaving Property Tax Savings on the Table?

by Taylor Williams

Suing to appeal an unsatisfactory appraisal review board decision is straightforward in Texas. The state property tax system provides taxpayers with a pragmatic approach to air their valuation disputes before the courts, without the delay and headache frequently experienced in other types of litigation. Yet many taxpayers choose not to appeal, relinquishing the opportunity to achieve significant tax savings. Do not be so shortsighted. Texans enjoy one of the most fair property tax protest systems in the country, beginning with the right to contest their appraised values through an administrative process. If they do not like the result, they can file a lawsuit that provides a fresh start, turning the valuation issue over to a judge or jury, whichever the parties prefer. And if the taxpayer is unsatisfied with the court’s decision, he or she can seek review from a state appellate court and even the State Supreme Court. Not all states provide such a favorable review process. Texas is special. Built into the Texas Tax Code are processes and requirements that make litigating property tax appeals more efficient and less procedurally burdensome for taxpayers, even if an appeal advances to the state’s highest court. Here are a few of …

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FeaturesRetailTexasTexas & Oklahoma Feature ArchiveTop Stories

InterFace Panel: Parking Spaces Present New Opportunities for Developers

by Taylor Williams

HOUSTON — As e-commerce continues its siege of brick-and-mortar retail, shopping center developers in Houston are re-evaluating and repurposing the space currently allotted for parking. Virtually all centers are seeing reduced need for parking space, which creates opportunities to reclaim that space for more efficient uses, like adding another in-line store. At the InterFace Houston Retail conference on April 18, moderated by David Luther of Marcus & Millichap, industry experts spoke at length about how retail developers are cutting their parking allotments in strip centers and power centers alike, largely because of convenience-oriented technologies. Apps like Postmates and TaskRabbit have made it possible to outsource running errands to other people. Online grocery delivery services like Instacart and Shipt allow customers to do their shopping with a few quick clicks. Even Uber has gotten into the game with delivery features like UberRUSH for errands and UberEATS for meals. According to Tom Lile, president of retail development firm Gulf Coast Commercial Group and a conference panelist, such products and services have already begun to influence Houston developers’ thoughts on parking. “Fifteen years ago, if you were building a power center, you absolutely had to have five parking spaces per 1,000 square feet …

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FeaturesOfficeTexasTexas & Oklahoma Feature ArchiveUncategorized

Business Parks Energize the Lone Star State

by Jaime Lackey

Speculative development and e-commerce tenant demands are driving forces in Dallas and Houston’s industrial markets. By Brian Lee The biggest developments in the biggest state in the lower 48 are making big news: industrial business parks in Texas’ top markets continue to show strong development and leasing activity. Cushman & Wakefield shared a “very encouraging” industrial outlook on the Dallas-Fort Worth metro area. With slightly less than 24 million square feet of absorption in 2016, market demand continues to outpace supply, which included 22 million square feet of new construction last year. PwC and Urban Land Institute ranked the metro second nationally for real estate prospects in 2017 and fulfillment centers No. 1 in both the development and investment categories, ahead of 23 other property types. “The evolution of the e-commerce sector continues to shape the industrial market as a whole,” says Adam Hammack, senior director of Industrial Agency Leasing in Cushman & Wakefield’s Dallas office. Site selection factors for large e-commerce users comprise fresh building functionality, modern infrastructure and the ability to attract and retain labor, which includes nearby transit and retail options for industrial park personnel, according to Hammack. Focusing on the effects of the energy downturn doesn’t …

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Conference CoverageMultifamilyTexasTexas & Oklahoma Feature ArchiveTop Stories

Apartment Locators, Property Managers in Houston Cash In On Rent Slump, Say InterFace Panelists

by Taylor Williams

HOUSTON — While it’s not an ideal time to be a multifamily property owner in Houston, it is a good time to be working on behalf of one. With their clients sitting on excess supply, apartment locators — middlemen who match tenant preferences to properties — are being increasingly called upon to deliver tenants. Locators work on commission, typically earning about 20 percent of the first month’s rent for their services. But in Houston’s soft market, that figure is rapidly rising. Ricardo Rivas, chief investment officer at Allied Orion Group and one of several panelists who spoke at the InterFace Houston Multifamily conference on March 28, noted that while locators are costly, the services they provide in a down market are crucial. “They [locators] are our best friends right now,” Rivas said to 175 industry professionals who gathered at the Royal Sonesta Hotel. “We reach out to them, we throw them parties and we give them big incentives to bring tenants over.” Todd Marix, a senior managing partner in HFF’s Houston office who spoke on an earlier panel, addressed the rising operating costs that landlords are facing. In his view, fees paid to apartment locators are quietly doing major damage …

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MultifamilyStudent HousingTexasTexas & Oklahoma Feature ArchiveTop Stories

InterFace Student Housing Brings Industry Executives to Austin

by Taylor Williams

AUSTIN, TEXAS  — Over 1,200 leaders from across all facets of the student housing industry descended on Austin last week for the 9th annual InterFace Student Housing conference, held at the J.W. Marriott. The conference concluded April 7 after two-and-a-half days of networking and educational sessions on topics ranging from the state of the industry, to leasing and marketing, development and design. While the industry is evolving, sunny skies continue to be the forecast for years to come. Rising rental rates are coupled with record-breaking levels of asset sales, and an increase in institutional and foreign investment, further legitimizing the sector. The conference kicked off Wednesday, April 5, with the 6th annual SHB Open Golf Outing at Barton Creek Resort & Spa, and then moved to the third floor of the J.W. Marriott Austin, where a record-breaking number of attendees met to network and dine over a range of industry topics. The afternoon began with a round of Speed Networking, where over 100 industry experts participated in short, four-minute conversations designed to spur discussion and foster new relationships. The group then moved into 25 InterFace+ Info Roundtables on topics ranging from the possible obsolescence of interior amenities, to international student housing opportunities and …

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Conference CoverageFeaturesMultifamilyTexasTexas & Oklahoma Feature ArchiveTop Stories

Millennials in Houston Multifamily Driver’s Seat, Say InterFace Panelists

by Taylor Williams

Tenant concessions, ranging from free rent to complimentary carpet cleanings to distribution of gift cards, have become the norm in Houston’s multifamily market over the last few years. And according to several industry experts who spoke at the InterFace Houston Multifamily Conference on March 28, it’s the millennials who are taking advantage of them. Houston has become an especially attractive destination for millennials in recent years. According to a survey by JAXUSA Partnership, which tracks demographic trends throughout major metros, between 2010 and 2013, the metro ranked sixth in population growth of residents age 20 to 29. Tenants receive fewer concessions in submarkets without a lot of new construction. In Houston, this primarily means suburbs — The Woodlands, Pearland, and Katy. In submarkets closer to downtown, where there is generally more construction, concessions have come to serve as bargaining chips for prospective renters. For Houston landlords, operating in a market where concessions have become standard has made lease renewals harder to come by. Stacy Hunt, executive director of multifamily development and management firm Greystar, sees a direct correlation between millennials and lease renewals. “Properties in [sub]markets where you have a lot of millennials — Downtown, Heights, Washington Avenue — it’s tougher …

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Conference CoverageFeaturesMultifamilyTexasTexas & Oklahoma Feature ArchiveTop Stories

Job Growth, Oil Stability to Spur Houston Multifamily Rebound, Predicts Data Researcher

by Taylor Williams

Tumbling rents, landlord concessions and weakening levels of absorption have defined Houston’s multifamily market for much of the duration of the oil bust that spanned from late 2014 to mid-2016, but the multifamily market is now on the mend, says a third-party multifamily data analyst. Bruce McClenny, president of Apartment Data Services, which tracks the vital signs of nearly 3,000 multifamily properties nationwide, believes Houston’s multifamily market is about nine months past the rock-bottom point. As the opening speaker at the Interface Houston Multifamily Conference before 170 industry professionals on Tuesday, March 28, McLenny explained why he believes that a turnaround, albeit a slow one, has already begun. “The first six months of 2016 was the bottom, economically,” McLenny said during the conference, which was held March 28 at the Royal Sonesta Hotel in Houston’s Galleria neighborhood. “Things have gotten better from that moment on. There’s absorption out there. Through the first two months of this year, we had more than 1,900 units absorbed.” In 2016, submarkets on the city’s south and east sides — Pearland West, Baytown, Pasadena, Galveston — fared markedly better than submarkets in other parts of town, according to McLenny. All four of these submarkets attained positive …

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