Market Reports

Mixed-Use Settings Bolster Office Prospects in Texas

by Taylor Williams April 27, 2021

By Taylor Williams The COVID-19 pandemic has cast a shadow of uncertainty on both the short- and long-term fates of many office buildings, but mixed-use developers in Texas are hardly reluctant to continue to include this use in their projects. Philosophies behind mixed-use projects vary in terms of which components lead and which ones follow. Some developers view retailers and restaurants as the connective tissue that dots the networks and thoroughfares and that creates the walkable experience. Others see residential as the nucleus of the project that from the beginning provides critical mass and a user base for the retail and restaurant tenants during non-working hours. But in either case, the office use remains an important piece of the puzzle as a driver of traffic to retail during the nine-to-five window and as an impetus for leasing a unit at a nearby residential building. Overall Uncertainty No mixed-use developer professes to know when society will officially deem office buildings ready for re-occupancy, or the extent to which many large office users will continue to rely on complete or partial remote-work programs. But they remain bullish on the property type as it exists within larger projects that incorporate other key uses …

April 27, 2021

Affordable Housing Market Reports Multifamily Texas Texas Market Reports

Supply of Affordable Housing Plays Catch-up to Demand in Texas

by Taylor Williams April 21, 2021

By Taylor Williams The fundamental forces of job and population growth that drive demand for market-rate multifamily properties are hard at work on the affordable housing sector in Texas, and it doesn’t appear that a supply-demand equilibrium is in the cards anytime soon. In addition, a perpetual shortage of low-income housing tax credits (LIHTCs) and other government-issued subsidies that are required to finance new development of affordable housing are working to keep supply growth in check. Throw in a global pandemic that has cost millions of people their jobs and depleted their savings, potentially forcing them to seek less-expensive housing, and you have a supply-demand dynamic that is far from balanced. The situation is further exacerbated by the fact that there is some overlap between workers in industries hit hard by the pandemic, such as leisure and hospitality, and the types of renters who need or qualify for affordable housing. Texas is hardly the only state facing these lopsided market conditions. According to a 2020 report by the National Low Income Housing Coalition, when it comes to housing that renters whose income levels are at or below 30 percent of their area median income (AMI) can afford, the United States …

April 21, 2021

Industrial Market Reports Texas Texas Market Reports

San Antonio Industrial Market Moves in Lockstep with National Trends

by Taylor Williams April 16, 2021

By Joe Iannacone, vice president of development, Titan Development; and Rob Burlingame, SIOR, CCIM, senior vice president, CBRE While industrial was a preferred investment vehicle prior to the pandemic, the impacts of COVID-19 have further cemented the property type’s place as the favorite asset class among investors. Newly implemented safety precautions related to COVID-19 have accelerated established trends toward e-commerce and delivery-based shopping. The pandemic has also exposed various weaknesses in the global supply chain, spurring predictions of a return to domestic manufacturing and processing of raw material. As more consumers have yielded to the convenience that e-commerce provides, investors of all types have acknowledged the strength of industrial fundamental metrics, causing demand to spike in the process. As a result, investors have spent the past year seeking existing and new industrial development opportunities to capitalize on what many see as a trend that will likely continue. The increased level of vaccine administration on the horizon has further accelerated this interest in industrial properties, with many experts predicting a return to somewhat normal living, working and shopping habits by the middle of 2021. On a more micro level, one subtype of industrial real estate — cold storage — could also …

April 16, 2021

Market Reports Multifamily Texas Texas Market Reports

San Antonio Multifamily Market Maintains Healthy Supply-Demand Balance

by Taylor Williams April 14, 2021

By Sean Sorrell, senior managing director, JLL Last year, San Antonio’s multifamily sector was one of the only markets nationally in which the 2020 absorption exceeded that of previous years. Moreover, the city’s development pipeline was already contracting after 2019, so additional supply reductions in 2020 and 2021 due to COVID-19 should result in rebounding occupancy across the metro. The market is maintaining balance in terms of supply and demand and is poised to elevate its national prominence. The San Antonio multifamily market ‘s overall inventory is approaching 185,000 units, having grown by roughly 8 percent over the last two years. Ongoing supply growth has marginally outpaced demand, but even in the face of COVID-19, the overall market is approximately 92 percent occupied. JLL’s research shows that nationally, more than 6 percent of apartment renters have vacated their units since April 2020, either moving back in within parents or “coupling up” with roommates. San Antonio experienced very little of this effect, with an occupancy loss of less than 1 percent due to this temporary phenomenon. These displaced renters are likely to re-enter the apartment market in the near term, and, with ongoing in-migration, we anticipate the San Antonio market should …

April 14, 2021

Market Reports Retail Texas Texas Market Reports

Where Does the San Antonio Retail Market Stand One Year into the Pandemic?

by Taylor Williams April 9, 2021

By David Nicolson, president, Weitzman San Antonio In March 2020, health officials first used the term “pandemic” in reference to COVID-19. Since then, our communities, economy, commercial real estate industry and retailers and restaurants have gone through a year of challenges that few could have foreseen at the start of 2020. The fact that today we are in better shape than we could have predicted during the shutdown a year ago shows that the disruptions caused by the pandemic have been met with innovation, creativity and plain hard work. Here in San Antonio, those disruptions did result in a number of retail and restaurant closings. But since the second half of 2020, we’ve seen an upswing in tenant demand. In terms of closings, Sears closed its 150,000-square-foot store at South Park Mall and its approximately 134,000-square-foot store at Rolling Oaks Mall. With these store closings, Sears — once the nation’s largest retailer — no longer has a presence in the San Antonio market. Other closures include Stein Mart (three box vacancies), Pier 1 (five closed stores), Gold’s Gym (three closed locations) and Tuesday Morning (one closed location). Combined, these closings resulted in approximately 564,000 square feet of total vacancy being …

April 9, 2021

Acquisitions Market Reports Multifamily Texas Texas Market Reports

El Paso Multifamily Investment Demand Remains Strong Through First Quarter of 2021

by Taylor Williams April 7, 2021

By Jack Stone, director of investment sales, Greysteel “What do you have in El Paso?” The country is over a year into the pandemic, and Greysteel is still receiving calls on a daily basis from groups asking just that. We sold thousands of units in El Paso over the two years leading up to COVID-19, and there’s no end in sight. In fact, even in these uncertain times, demand seems to have grown. Attracted to the higher yields, strong tenant base and increasingly diversified economy, investors are coming to El Paso in droves. It’s no secret that the Texas multifamily market has been hot. Out-of-state groups were first drawn to markets like Dallas, Austin, Houston and San Antonio because they offered higher yields with fewer regulations than markets like New York and California. But it was only a matter of time before even those cities, which are seeing with cap rates begin to compress 4 to 5 percent, got too hot. Investors subsequently began exploring other options and turned to cities like El Paso, where the fundamentals were strong and yields still attractive. Demographic Advantages El Paso’s multifamily market has always had a strong tenant base. New players in the …

April 7, 2021

Market Reports Multifamily Texas Texas Market Reports

Texas Multifamily Developers Navigate New Minefields

by Taylor Williams April 2, 2021

By Taylor Williams The past 12 months have thrown multifamily developers a full nine innings’ worth of curveballs, and while many owner-operators have successfully adjusted to the various challenges brought on by the pandemic, they are still tasked with figuring out how much staying power these disruptions will ultimately have. To be sure, the major markets of Texas remain well-positioned for multifamily growth. Even amid a global health crisis, the Lone Star State has maintained its status as a national leader in population growth, having added 374,000 residents between July 2019 and 2020, according to the most current data from the U.S. Census Bureau. The reporting of final census numbers for 2020 has been delayed by the pandemic. But the Texas Legislature has already committed to a redistricting plan that is likely to increase the state’s number of congressional representatives in the coming years — a significant and visible response to its exceptionally healthy population growth. In terms of jobs, no city has garnered more attention for major moves in the past 12 months than Austin, first landing the $1 billion Tesla Gigafactory that will come on line later this year, then receiving a commitment from Oracle to relocate its …

April 2, 2021

Industrial Market Reports Texas Texas Market Reports

Demand Surges Throughout East Houston’s Industrial Market

by Taylor Williams March 31, 2021

By Travis Secor, senior associate, JLL Nationally, e-commerce and warehouse supply have been the center of the industrial real estate conversation. It’s easy to get lost in the latest data related to the impact of COVID-19 and speculation on where a major online retailer’s newest distribution centers will land. Houston has received its share of the industrial real estate spotlight over the years. The narrative over the past decade will tell a story about the wild vacancy swings experienced through each development cycle, always in perfect harmony with the boom-and-bust oil reputation the city has crafted over the years. Current headlines highlight the possibility of another major glut in warehouse supply resulting from our latest development binge. While the case for an overbuilt market has major validity, you cannot broadly paint Houston’s industrial sector like that. To understand the complexities and nuances of Houston’s industrial market, it’s important to know the unique personalities of each geographic submarket and the events that shaped it. Northeast Houston When oil prices fell to around $10 per barrel in the late 1980s, commercial real estate professionals might not have been bullish on the absorption prospects for the industrial development spree that had taken place …

March 31, 2021

Market Reports Office Texas Texas Market Reports

Despite Current Pain, Long-Term Needs for Office Space Won’t Disappear in Houston

by Taylor Williams March 24, 2021

By Dustin Devine, vice president, Avison Young In 2020, COVID-19 further compounded the issues Houston’s office market was facing with depressed oil and gas prices. With many office users implementing work-from-home policies — although a shift back to the office is in progress — and minimal business travel, there was weak demand for office space in 2020. Houston’s office market is expecting a resurgence of sorts beginning in mid- to late-2021 due to increased vaccine rollouts and work-from-home burnout, along with commodity prices continuing to tick upward. Increased demand will not occur overnight, however, as it will take years to absorb all of the current available space. Most activity at present is expiration-driven. Although Houston’s economy today is more diversified than it was in the 1980s, much of the city’s business either revolves around or touches the oil and gas industry. Avison Young’s recent Office Market Report shows that current citywide office availability is over 25 percent, with nearly 6.5 million square feet of sublease space available. With availability rates and the amount of sublease inventory at such high levels, it is clear that many industries are hurting, including commercial real estate. As a firm, we are doing whatever we …

March 24, 2021

Market Reports NAI Texas Texas Market Reports

Roundtable: Brokers From NAI Partners Discuss Austin’s 2020 Performance and 2021 Expectations

by Taylor Williams March 17, 2021

As one of the fastest-growing markets of the past decade that continues to make headlines for high-profile developments and corporate relocations, Austin has had some economic and demographic cushion from the headwinds brought on by COVID-19 over the past year. While leasing and investment sales activity essentially froze at the onset of the pandemic, as it did in virtually every major U.S. market, Austin’s strong growth in office-using jobs, natural pace of in-migration and vibrant culture all contributed to a swift and stable rebound. With a full year of pandemic living now under the belt, it’s a good time for a by-the-numbers evaluation of the public health crisis’ impacts on various property types within the state capital. In addition, it’s an appropriate point at which to reflect on the degree to which pandemic-accelerated trends like online shopping and working from home are going to influence future deals and projects. These shifts in consumer behavior have major implications for all commercial asset classes. To that end, Texas Real Estate Business conducted a roundtable discussion with leasing and investment sales professionals representing multiple property types at the Austin office of NAI Partners. What follows are their edited responses: Tyler Jaynes: Industrial’s Staying …

March 17, 2021

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