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

Market Reports Retail Texas Texas Market Reports

The Houston Retail Market: What’s Changed After A Year of the Pandemic

by Taylor Williams March 15, 2021

By Shawn Ackerman, president of Houston retail, Henry S. Miller Brokerage COVID-19 is on everyone’s mind. From landlords to tenants, all are desperately trying to predict the future, because the past has destroyed many businesses. Retailers such as Luby’s, Chuck E. Cheese, Lane Bryant, 24 Hour Fitness, Gold’s Gym, Pier 1 Imports and Tuesday Morning all filed bankruptcy in 2020. Not only did numerous tenants file for bankruptcy, but many more are also barely holding on. What does the future hold for Houstonians? Only time will tell. Until the market stabilizes, we will continue to compare notes with others in the retail sector on how best to navigate. Of course, market uncertainty is not only a retail issue. The unemployment rate, while down considerably from the double-digit numbers seen at the onset of the pandemic, remains a cause for concern. Laid-off workers don’t have the disposable income they may have had while employed. Many people have thus curbed their shopping habits. Until the job market gains traction, retailers will have to be patient to see the long-term effects of this roller coaster ride. Mall Struggles Continue Heaviest hit in the retail section have been malls. With anchors like J.C. Penney, …

March 15, 2021

Industrial Market Reports Self-Storage Texas Texas Market Reports

Dallas Self-Storage Development Maintains Slow But Steady Construction Trajectory

by Taylor Williams March 12, 2021

By Mirela Mohan of STORAGECafé The self-storage industry closed 2020 on an upward path, seeing stable or rising rental rates and elevated construction activity across the board after an uncertain year. According to our data, new construction stayed on a steady trajectory throughout the year, with 49.4 million square feet of new product added nationally — slightly less than the volume of new development in 2019. This came as a natural consequence of the high existing inventory which, combined with the shock of the pandemic, eventually led to the asking rate plunge in the first half of 2020. Rates Plunge, Then Revive The existing high inventories put downward pressure on asking rates in 2020, and the arrival of the pandemic only accentuated the existing trend. However, after rents bottomed out at $112 per month in May, street rates started picking up. By December 2020, national street rates had reached $118 per month, a 3.5 percent year-over-year increase. This slow but steady supply growth was mostly linked to consistent demand that emerged from both traditional sources such as moving and downsizing, as well as from new sources created by last year’s disruptive events. For example, college students began to need short-term …

March 12, 2021

Market Reports Single-Family Rental Texas Texas Market Reports

The Single-Family Rental Sector Has Grown Up, and Texas is Ripe for Opportunity

by Taylor Williams February 23, 2021

By Mark Wolf, CEO and founder, AHV Communities The single-family rental (SFR) sector began its institutionalization during the Global Financial Crisis when so many homeowners found themselves unable to pay their mortgages. The mass quantity of repossessed homes was sold off on courthouse steps or at large in-person or online auctions, with mega-landlords amassing the homes and renting them out as investments. At the time, that business model was the only one widely recognized or, notably, well capitalized. However, the sector would not ultimately remain a one-trick pony. Alternate visions for single-family rentals have subsequently emerged. The most widely known model, which is oftentimes incorrectly characterized today, is the purpose-built rental community. Built from the ground up and delivered as a contiguous, cohesive communities — basically the opposite of existing randomly located distressed homes purchased and leased — the purpose-built SFR community is on the rise. Texas is currently one of the hottest states for new development of these communities. The activity is undoubtedly fueled by the ongoing in-migration of individuals and families from other states flooding into the Lone Star State in favor of lower taxes, high quality of life, friendly business climate and an overall affordable cost of …

February 23, 2021

Company News Industrial Market Reports Texas Texas Market Reports

Shifting Investment Patterns Prompt IPA’s Industrial Expansion in Texas

by Taylor Williams February 19, 2021

By Taylor Williams The decision by Institutional Property Advisors (IPA), a division of Marcus & Millichap, to recently bring its investment sales services for the Dallas-Fort Worth (DFW) industrial market not only represents an opportunity to gain share of a booming market, but also to capitalize on a pronounced shift in buying patterns. COVID-19 has drastically accelerated demand for e-commerce services and industrial space on the leasing front. As investors that put new acquisitions on hold early in the pandemic regain their aggressiveness and as more capital sources diversify into the asset class, the line between requirements for institutional and private investors is growing blurrier. Ultimately, the shift in investment philosophy for industrial product in major markets boils down to private buyers targeting assets that have typically been considered institutional quality. This trend is a factor of several marketplace tendencies: the cautiousness with which institutional capital proceeds, the willingness of private investors to accept lower returns and the general mixing up of the Tier 1 industrial buyer pool. Like demand for industrial product from both tenants and the capital markets, the creeping of private buyers into the institutional space was taking place before the pandemic. But the overlap has become …

February 19, 2021

Market Reports Texas Texas Market Reports

Exclusive Survey: New Administration Worries Texas Real Estate Professionals

by Taylor Williams February 5, 2021

By Taylor Williams At a time in which politics pervades nearly every facet of life and business, and in which ideological divides are wide and getting wider, commercial real estate professionals in Texas have some concerns about how the Democrats’ newfound control of two of the three branches of the federal government will impact business. President Joe Biden has been sworn into the nation’s highest public office, and Democrats now hold control of both houses of Congress following the Senate runoff elections in Georgia that flipped two seats from red to blue. That chamber consists of 50 members on each side of the aisle, with Vice President Kamala Harris representing the tie-breaking vote as head of the Senate. In conducting its three annual forecast surveys for brokers, developers/owners and lenders, Texas Real Estate Business received a multitude of opinions on how and to what extent the new political regime will impact deal volume and velocity. Respondents also weighed in on how the changing of the political guard will affect ancillary issues such as taxes, regulation and marketplace confidence. Unsurprisingly, out of all the brokers, developers and lenders who provided written responses on how the political landscape will affect commercial real …

February 5, 2021

Market Reports Retail Texas Texas Market Reports

Pent-Up Demand Grows for Experiential Retail in Texas

by Taylor Williams January 7, 2021

By Taylor Williams With widespread vaccination several months away and the federal government having passed additional relief legislation, the end of the COVID-19 pandemic appears to be in sight. To that end, retailers and restaurants that have survived the public health crisis can, with some reservations, start to look toward the rebound phase. Because there’s no question that American consumers are itching to make up for lost eating, drinking and socializing time, provided they can do so in what they feel are safe environments. “Our biggest point of optimism for 2021 lies in the fact that people want to go out, eat, shop and be entertained,” says Lucas Patterson, executive vice president at metro-Dallas based Bright Realty. “As we continue to respond to the pandemic, people are increasingly ready to get out of their homes, be with others, eat at restaurants, have drinks and listen to music. We believe we can offer those opportunities as soon as the time is right.” “Looking forward, our biggest source of positivity involves consumers’ built-up savings and pent-up demand for human connection in a more normal existence,” adds Terri Montesi, CEO of Trademark Property Co, the developer behind mixed-use projects such as Victory Park …

January 7, 2021

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