Texas Market Reports

RGV Retail Market Displays Creativity, Resourcefulness in Response to Pandemic

by Taylor Williams June 7, 2021

By Lupita Gutierrez-Garza, principal, and Christian Gutierrez, senior associate, Southern Commercial Real Estate Group The impacts of COVID-19 on the retail sector in the Rio Grande Valley (RGV) have mirrored those of the rest of the country. However, the way the region responded was different from the way it addressed past crises, such as natural disasters, and even very different from past responses to local problems like peso devaluations and drug cartel activity along the border. The response was multifaceted and included many trial-and-error situations. But through sheer determination and quick thinking by local leadership, regional landlords and tenants managed to mitigate all the uncertainty to not only survive, but to thrive. What made a difference in the region was the behind-the-scenes build-up of its economic infrastructure that has slowly been chipping away at the inequities the region has endured for years. Infrastructure build-up has been ongoing for over a decade and has come in many forms, including education and medical, industrial and logistics, aerospace technology and wind energy. All of these sectors managed well during the peak of the pandemic and continued to expand at phenomenal paces. Their growth has piqued a lot of outside interest and investment …

June 7, 2021

Market Reports Restaurant Retail Texas Texas Market Reports

Food & Beverage Industry Returns to Growth Mode in Houston

by Taylor Williams June 2, 2021

By Jason Baker, principal, Baker Katz At a time when commercial real estate professionals see promising COVID-19 metrics and a better-than-expected vaccine rollout as signs that the end of the pandemic is near, it’s natural to examine where some of the most interesting and encouraging signs of recovery are already popping up. Food and beverage (F&B) has certainly weathered the pandemic storm as well as any other retail sector. Understanding what comes next in F&B — what the next generation of successful concepts might look like and how the industry will likely evolve — begins with appreciating why the sector has remained relatively resilient during the pandemic. In telling that story, we can start to get a sense of what’s next for F&B concepts and real estate strategies, both in the Houston market and across the country. F&B Ascends It’s not surprising that F&B is having a moment. It was the hottest commercial real estate category before the pandemic, and it remains the most consistent industry bright spot today, though industrial players might disagree. Demand remained high throughout the pandemic, especially for quick-service and fast-casual concepts. A handful of newer players were hit hard early during the COVID-19 outbreak, but …

June 2, 2021

Industrial Market Reports Texas Texas Market Reports

Buyers Crowd Texas Industrial Markets

by Taylor Williams May 26, 2021

By Taylor Williams E-commerce has revealed some fundamental truths about how humans consume goods, mainly that price point and convenience are by far the most important criteria in purchase decisions. The COVID-19 pandemic has served to further ingrain these mentalities and to suck more people into the world of online shopping in the name of adhering to public health guidelines. According to the U.S. Census Bureau, in 2020, a year in which a global health crisis spurred furious increases in online shopping, total e-commerce sales clocked in at $791.7 billion, up a staggering 32.4 percent from 2019. E-commerce sales accounted for 14.4 percent of all retail sales in 2020 — essentially double the 7.3 percent proportion in 2015. In addition, the National Retail Federation (NRF) is projecting that e-commerce sales will grow by 18 to 23 percent in 2021, yielding a total annual sales volume in excess of $1.1 trillion. Based on 2020 figures provided by the NRF, which cited total retail sales of just over $4 trillion, the e-commerce component is now poised to account for more than a quarter of the market. Especially in the early days of the pandemic, the need to minimize shopping trips and shelter …

May 26, 2021

Industrial Market Reports Texas Texas Market Reports

Large-Scale Industrial Development Ramps Up Throughout El Paso

by Taylor Williams May 19, 2021

By Doug Derrick, SIOR, managing broker, NAI El Paso The remarkable pace and volume of industrial growth that has defined the major markets of Texas over the past decade is making its way to El Paso, as evidenced by larger projects for marquee tenants and elevated levels of institutional capital targeting the market. The COVID-19 pandemic has boosted the appeal of industrial assets of all varieties, crowding the space with capital sources, driving up prices and creating lower yields on new investments. This holds especially true in high-growth markets like Dallas and Austin, which is why institutional investors are beginning to target secondary markets like El Paso, where assets can be acquired at lower prices. El Paso is experiencing the same growth in e-commerce and online shopping as the rest of the country. This market also continues to benefit from international trade and manufacturing across the border, adding another unique form of demand for developers and owners in our border town. Over the past decade, the volume of El Paso’s exports has doubled, with much of those goods flowing to Mexico. We expect to see manufacturers continue to locate operations in markets other than China, which should increase demand for …

May 19, 2021

Market Reports Restaurant Retail Texas Texas Market Reports

Food & Beverage Users Spearhead El Paso Retail Market’s Recovery, Growth

by Taylor Williams May 12, 2021

By Adam Frank, president, River Oaks Properties As one of the sector’s largest owners and developers, we have been witness to a number of uplifting and heartbreaking outcomes wrought by COVID-19 in the El Paso retail market over the last year. We’ve spent countless hours working with the 800 or so tenants that comprise our portfolio, negotiating rent deferrals and restructured leases, helping them navigate the newly launched Paycheck Protection Program and devising creative real estate solutions to help keep their businesses afloat. In some cases, these efforts have helped tenants keep their doors open. In others, the economic impacts of COVID-19 ultimately hit the employee bases and operating budgets of tenants — especially those of the mom-and-pop variety — too harshly for them to survive. But through the good, bad and universally unprecedented challenges of 2020, we have seen one category of retail — food and beverage — position itself as the clear leader in the recovery and inevitable return to growth of the broader El Paso market. As is often the case during economic downturns, the grocery sector has performed well over the past year, with both large- and small-format players looking to expand in El Paso. River …

May 12, 2021

Industrial Market Reports Texas Texas Market Reports

Industrial Landlords in Texas Should Beware of Higher Property Tax Assessments

by Taylor Williams May 5, 2021

By Darlene Sullivan, partner, and Justin Raes, tax cunsultant, Popp Hutcheson PLLC While some commercial property types struggled to stay relevant in 2020, industrial real estate seemed supercharged by the pandemic. This year, tax assessors are likely to use strong investor and occupier demand for some industrial properties to support significantly higher assessments for all industrial real estate. They may see this as a solution to make up for value losses in the hospitality, retail and office sectors. That means industrial property owners should prepare for major assessment increases and begin building arguments to establish their properties’ true taxable value. E-commerce in Perspective If e-commerce was rising before 2020, it skyrocketed after the initial shock of the pandemic. The e-commerce share of total retail sales jumped to 16.1 percent at the end of the second quarter of 2020 from 11.8 percent in the first quarter and 10.8 percent a year earlier, according to the Census Bureau. As e-commerce grew, so too did industrial leasing demand, as online retailers secured spaces to process incoming goods and fulfill orders for shipment to consumers. The e-commerce operations driving the surge in demand brought with them a list of demands to serve their logistical …

May 5, 2021

Hospitality Market Reports Texas Texas Market Reports

Let’s Get Real About Hotel Real Estate in Texas

by Taylor Williams April 30, 2021

By Steve Van, president & CEO, Prism Hotels & Resorts While 2020 was a trying year for companies in every industry, the hospitality sector has been really taking it on the chin. Restaurateurs and airline executives might disagree, but hoteliers have arguably had it worse than any other industry. The financial impact on the hotel business from COVID-19 is 10 times worse than the hit from the late 2000s recession — and that’s a very big deal. With the rate of business travel falling off a cliff and leisure travel down more than ever around the world, 2020 was a year that many hospitality executives would like to forget. But that doesn’t mean the sky is falling — or that brighter times aren’t in store. But what do those timelines look like? How should hotel professionals be managing the current crisis, and what are the real estate implications for investors? Let’s take a clear-eyed look at the good, the bad and the ugly and try and answer those questions by examining key trends and thinking about what’s likely to come next for hotel developers, operators and investors. Southern Sunshine One important caveat to the story of catastrophic hotel business drop-offs …

April 30, 2021

Market Reports Mixed-Use Texas Texas 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

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