Everyone is buzzing about the significant amount of speculative construction all over Texas. For the first time since 2008, San Antonio’s office construction is picking up the pace with 928,395 square feet of speculative development underway. Local developers with conservative land positions are taking the lead on all of these developments as they respond to an increasing need for relevant office building options for corporate firms—something San Antonio has not had since 2009, when Concord Park II, Overlook at the Rim, Plaza Las Campanas and others were delivered. Both the Far North Central and Northwest submarkets have witnessed the bulk of recent absorption activity, offering newer, more efficient office options near the more modern residential subdivisions and retail developments. The Northwest submarket also accounts for one-third of San Antonio’s total rentable building area for office space. As of Q4 2014, the Northwest submarket absorbed 342,927 square feet, while the North Central submarket absorbed 312,856 square feet. Two great examples of success in these submarkets are WestRidge One at La Cantera (completed in Q4 2014) and Éilan Buildings I and II (completed in Q1 2011). These two projects are responsible for 253,976 square feet of absorption in the past two years …
The Amarillo Economic Development Corp. (EDC) is celebrating its 25th anniversary this year and it’s amazing to compare the state of our local economy in 1989 to today. Back then, Amarillo’s unemployment rate was higher than the national average and consumer activity was in a state of decline. What job opportunities did exist in Amarillo in the late 1980s were in a limited number of industry sectors. We were in a state of economic inertia. I joined the Amarillo EDC twenty years ago and thus have been able to witness and participate in the transformation that has followed. Legislation allowing the establishment of a local economic development sales tax, enacted in Texas in 1989, was overwhelmingly adopted by Amarillo voters that fall. Early on, that economic development sales tax revenue stream brought us about $6 million per year. Next year we expect those revenues will approach $18 million. That statistic alone is testament to the extent Amarillo’s economy has grown in 25 years. As Texans, we’ve been fortunate to have the nation’s strongest economy for several years and Amarillo has definitely contributed, having engaged in projects with companies like Tyson, AIG, Blue Cross Blue Shield and Atmos Energy. One of …
It’s safe to say that the recent drastic drop in oil prices is a hot topic everywhere, and it certainly dominates the discussion in Houston real estate. As we read market predictions of how long it will take for the price of oil to rebound and the impact it will have on the economy, we must try to predict on a micro level what the consequence will be to tenants and landlords. With the price of oil below $50 per barrel and still declining, it is understandable why the uncertainty of the market is causing many tenants to put their space requirements on hold or reconsider their occupancy plans altogether. Despite the Greater Houston Partnership’s projection for 63,000 new jobs to be added in Houston in 2015 and the countless construction cranes that can be seen all over the city, the daily announcements of layoffs, reduced capital expenditure plans and mergers leave considerable room for doubt and uncertainty about the market. Although the Houston economy is more diverse today than it was 30 years ago, a strong correlation between the price of oil and office rental rates remains. The Houston employment and real estate market will, however, benefit from its …
During the 2013 Legislative Session, the Texas Legislature established a state tax credit against franchise taxes equal to 25 percent of eligible costs and expenses incurred in rehabilitating certified historic structures. Combined with the 20 percent federal historic tax credit, owners and developers of historic properties in Texas have significant incentives to revitalize and rehabilitate rather than demolish qualifying historic structures. Texas is not well known for preserving historic buildings. While the federal historic tax credit was enacted in 1986, this incentive alone was not enough to prompt owners and developers to negotiate the process of completing a certified rehabilitation with the Texas Historic Commission and the National Park Service. Take for example Mike Sarimsakci’s 211 N. Ervay project located in Dallas. While the building is listed on the National Register of Historic Places and is an example of 1950’s and 1960’s architecture, prior to the enactment of the Texas credit, Sarimsakci did not consider utilizing tax credits because he could raise the capital privately. Further, many tenant brokers indicated that many of the office tenants he sought were searching for unique spaces that had character and a story to tell. The enactment of Texas’ state historic credit altered this …
In the third quarter of 2014, the Oklahoma City multifamily market recorded 11 transactions totaling 1,537 units for a sales volume of $82.4 million. This is an average price per unit of $53,625. The third quarter experienced a significantly higher sales volume than the first quarter of 2014, increasing 305 percent. The total sales volume for 2014 overall has reached $182.7 million, which is 33 percent lower than the same time period in 2013, when the total sales volume was just over $272 million. However, the total units sold was down only 11 percent compared to last year, which indicates the quality of assets trading is lower than those properties trading in 2013. For example, in the first three quarters of 2013, just over $215 million in Class A properties were sold, compared to just over $37 million in 2014. This is an 83 percent decrease in total volume of Class A properties and caused the total multifamily average price per unit to drop by 24 percent. This is not an indication of values declining. In fact, the opposite is true. Properties that are being fully marketed and that are providing access to as many buyers as possible are fetching …
Greater Waco’s economy is on a roll. Positioned halfway between Dallas and Austin, Waco is a prime destination for companies and individuals that want access to large metro areas without the hassles of traffic, expensive real estate and labor shortages. With newly completed facilities, such as Baylor University’s McLane Stadium and major downtown redevelopment projects, Waco is hitting the radar for new development opportunities. September 2014 marked 26 months of positive economic growth for the area, with 6.2 percent growth in the third quarter of 2014 alone. Major players, including Baylor, have played a tremendous role in elevating the status of Waco as a dominant player in the Central Texas region. Just as Texas has seen significant growth since 2008, so too has Waco. One major contributor to Waco’s economic success has been employment growth. Employers are creating new jobs in the area, with 1,500 more positions now in place, 108,200 compared to 106,700 in September 2013. Construction, manufacturing, healthcare, hospitality and logistics remain strong drivers for the economy. The result is a community with a 5 percent unemployment rate and residents with more disposable income. Retail Developers Step Up Spending was up 5.1 percent through the first nine months …
Texarkana, riding a long-term economic boom with perfect positioning between Dallas and Little Rock, has enjoyed growth fueled by billions of dollars in external interstate projects, including I-30, I-369 and I-49, and hundreds of millions of dollars on the redevelopment of the city’s interstate infrastructure. An abundance of water has secured large-scale industrial developments including the recently opened John W. Turk Jr. Power Plant, Domtar and International Paper. Red River Army Depot (RRAD), the largest employer between Dallas and Little Rock, facilitates one of the largest wheeled and tracked military vehicle manufacturing centers in the world. RRAD coexists with TexAmericas Center, the largest industrial park in Texas, to offer an unmatched land resource of 12,000 acres along with abundant rail access. Texarkana’s strategic positioning, coupled with three interstates, ample rail and the proposed Red River Navigation Project, ensures long-term economic viability. H. Ross Perot, Texarkana’s native son, has endowed millions of dollars to the city’s education, the arts, scouting and the Salvation Army to name a few. Perot has been a major contributor to Texarkana College and Texas A&M University-Texarkana, helping facilitate the expansion of A&M’s four-year university programs to their new Bringle Lake campus, with a strong focus on …
Positive economic indicators in the San Antonio metro area are bolstering commercial real estate operations. Companies are expanding or relocating to San Antonio, attracted by the diverse economy and skilled workforce. Over the past year, all major employment sectors contributed to job gains. San Antonio recovered all of the jobs lost during the recession some time ago and there is no sign of slowing down. One of the strongest economic contributors is the extraction of oil and natural gas in the Eagle Ford Shale south of San Antonio, which generates thousands of jobs and billions of dollars in output. Heightened production in shale is boosting construction. Recently, Republic Midstream announced a $400 million pipeline and terminal system at Eagle Ford Shale. Additionally, the expanding government sector is fueling job growth due in part to the region’s extensive military operations. As employment prospects grow and a comparatively low cost of living draws new residents to San Antonio, demand for rental housing is strengthening. With single-family home prices on the rise, the renter pool is growing as the gap between owning and renting widens. Effect on Multifamily Sector Capitalizing on these trends during 2014, multifamily developers will deliver one of the largest …
The Houston retail market has changed dramatically in recent years, but 2014 has seen historically strong real estate fundamentals to date. It is a sign of considerable economic strength that per capita personal income reached a new peak in 2013, even while Houston experienced the largest change in population across U.S. metro areas, according to the latest estimates from the U.S. Census Bureau. Houston’s population increase of nearly 137,700 over the year ending in July 2013 outpaced all other metro areas, with New York in second place (111,749) and Dallas/Fort Worth in third (108,112). Additionally, with Houston employment growth among the strongest in country, it should come as no surprise that household incomes are rising and retail sales are strong. A Retail Landlord’s Market Retail occupancy in Houston reached nearly 93 percent during the first quarter of 2014. While retail availability is extremely limited across the city, it is particularly tight inside the Loop as well as in the northwest areas inside of Beltway 8. Class A product is in high demand across all submarkets, so much so that the highest profile centers currently have no availability. However, despite this high demand, retail construction activity is less than a quarter …
Purpose-built student housing has always been a dynamic market segment with unique challenges and opportunities. As an asset class, student housing fared well during the recent downturn, but the micro-market nature of these developments precludes too many generalizations. What makes a university a strong market for new student housing is in large part due to the dynamics at work in that specific university community. In addition, student housing being developed today reveals a trend toward high-end finishes and lavish amenities. Hyper-local Market On a national scale, the student housing market is large and growing. As the recession drove more people back to college, developers began adding new beds to campus communities across the nation. The swelling ranks of college enrollment, even as the job market declined, is one reason student housing continued to provide strong returns in a weak economy. But within a university community, there is a finite market for off-campus housing. For example, if a university has 20,000 students, one-third may live on-campus and one-third may commute or live in conventional housing. The other third — 6,500 students — in the market for off-campus housing likely represents the total market. If there were already 5,000 beds available, the …