On account of the diverse local economy and a tech employment base in high demand by global firms, the Austin industrial market has realized a recovery that should sustain continued rent growth with a healthier inventory delivery schedule over the next 24 to 36 months. Austin has added nearly 105,000 jobs during the economic recovery through May 2013, bringing total employment 9 percent above its previous peak in late 2008. The unemployment rate, at only 5.4 percent in May, is more than 200 basis points below the national average of 7.6 percent. The broad tech sector expansion, including new facilities underway for Apple and Samsung, and the strong housing market are driving robust growth in construction employment, while all three areas represent key supports for industrial tenant demand. On the heels of record net absorption in 2012 of 2.1 million square feet — an annual total not experienced in more than 15 years — industrial vacancy in Austin has fallen to 12.5 percent, a low not seen since the market’s peak in 2007. An important differentiating factor for the market today versus the 2007/2008 cycle is the limited amount of construction. When vacancy rates fell to 11 to 12 percent …
Texas Market Reports
The boom is back and stronger than ever in Austin, making the city a top destination for retailers and investors. Bass Pro Shops, H&M, Trader Joe’s, Fresh Plus, In-N-Out Burger, Gander Mountain and Five Below are among the list of well-known national retailers that have opened or announced plans to open their first Austin area stores within the last year. Meanwhile, a growing list of retailers in the Central Texas market are expanding, including Whole Foods Market, H-E-B, Walmart and Alamo Drafthouse, a locally-based chain of movie theaters. As host of the U.S. Grand Prix, the Austin City Limits Music Festival, the SXSW music festival and conferences, and ESPN’s Summer X Games (starting in 2014), Austin enjoys a certain cachet and glowing national and international media, but the coolness factor isn’t nearly as important as hard numbers for expanding retailers, and Austin’s numbers are impressive. The Central Texas economy is expected to add more than 35,000 jobs this year, including thousands of well-paying positions at Apple, GM, Samsung, National Instruments and Visa. More than 70 people move to Central Texas each day, and the Austin MSA is now the 11th-largest city in the nation, according to the U.S. Census. Signs …
Population and employment growth are providing a substantial boost to the Austin apartment market. Metro-wide vacancy is hovering in the mid-4 percent range and is 150 basis points below the average historical rate. Rents also increased measurably. In addition to rising job and resident totals, limited new apartment product in recent years supported an average quarterly rent growth of 1.2 percent, compared to three-month gains of roughly 1 percent in the year prior to the recession. The most notable economic news in the metro is Apple Inc.’s substantial expansion. Over the next eight years, the company will construct and staff a 1 million-square-foot, 39-acre development in Austin’s Far Northwest submarket. Day-to-day operations will yield more than 3,600 new hires, doubling the metro’s number of Apple employees. In the near-term, LegalZoom Inc. plans to add 600 new employees before the end of the year. Additionally, Accenture and General Motors hired a combined 700 workers during the first half of 2013. Beyond the large job announcements, both small and large businesses are hiring, attracting new residents and fueling apartment demand. In the 12-month period ending in the second quarter of this year, total nonfarm employment in Austin increased by 28,900 positions, a …
The Austin industrial market is comprised of 37.2 million square feet, representing investment-grade buildings that are not owner-occupied and larger than 20,000 square feet. While that may seem like a smaller tertiary market in terms of square footage, Austin has proven to be a dynamic market, attracting interest and commitments from both creditworthy tenants and high-profile investors. As of mid-year 2013, Austin’s industrial market is 12 percent vacant and trending in the right direction with positive absorption of 215,000 square feet, according to NAI REOC. There was no new notable construction from 2010 to 2012, which helped vacancy rates decrease as existing tenants expanded and new tenants entered the market. The recovery was highlighted by positive absorption of more than 2 million square feet during 2012. While some of the absorption was associated with short-term warehousing needs for Samsung’s $3.6 billion expansion of its semiconductor fabrication plant in northeast Austin, the market reached a state of equilibrium. As the market stabilized, investment sales activity increased with institutional capital acting as a major player. In the past 18 months, several noteworthy transactions took place including: – Karlin Real Estate purchased three former Dell facilities totaling more than 900,000 square feet; 297.9 …
Houston has long been characterized by its energy presence, earning titles such as “The Energy Capital of the World” and the “Petro Metro.” The American drilling renaissance has brought about significant changes on a national and international scale, and the boom is projected to be sustainable for decades. As a result, energy companies are shifting operations back to the U.S. Houston is at the heart of the American oil industry, and as companies grow and expand their footprint in the U.S., the Houston office market is positioned to experience significant growth. The economic impact of the shale boom has been felt throughout Texas. The Eagle Ford Shale, one of the most significant oil and gas plays in the country, spans 14 producing counties and had an economic impact of $46 billion in 2012. Surrounding cities, such as San Antonio and Corpus Christi, are experiencing growth in all product types to accommodate the population and employment gains in the region. Midland has become one of the most expensive places in Texas thanks to the Permian Basin, while the Dallas/Fort Worth metro area, with the Barnett Shale in its backyard, continuously tops various economic health indices. But Houston, home to 87,418 headquarters, …
As Houston As Houston continues to create jobs and power the economic engine of Texas, every segment of the multifamily sector continues to push higher. With more than 100,000 jobs added in the past year alone, the newly hired and the job-hungry are leasing up available space in Houston faster than units are being delivered to the market. Demographics demonstrate a growing shift toward rentals for the city in general. For the first time since 2005, Houston apartment occupancy is averaging more than 90 percent. As the energy, medical, service and construction industries continue to expand in Houston, demand will remain strong across the board for Class A, B and C product. New multifamily construction is heavily concentrated within the Inner Loop, Energy Corridor and the vicinity of The Woodlands. The development pipeline trends toward these job-ready markets as Houstonians dream of shorter work commutes and “live, work and play” scenarios. Multifamily options inch toward this dream, providing retail, dining and entertainment options on property or nearby. But living the dream does not come cheap. While convenience is desirable, these benefits can be packaged at a steep price. Houstonians, however, are more than willing to pay premium prices for premium …
The Houston metro retail market is attracting retailers and investors from across the world because of its booming economy and impressive job growth, primarily in the energy and healthcare sectors. Since 2012, Houston’s local employment has grown, on average, around 4 percent year over year. As developers continue building and leasing large office and medical developments, notably in The Woodlands and Energy Corridor, retail space has been and will continue to be in high demand. ExxonMobil is currently developing its 385-acre campus near the intersection of Interstate 45 and the Hardy Toll Road in The Woodlands. The development alone has more than 3,000 workers on site every day. With completion slated for 2015, nearly 10,000 workers will re-locate to the campus from the Houston area, as well as from Virginia and Ohio. Another notable development recently announced is ConocoPhillips’ 850,000-square-foot lease of Trammell Crow’s Energy Center Three and Four in the Energy Corridor. Energy Center Three, with expected occupancy in the second quarter of 2015, and Energy Center Four, with expected delivery in the second quarter of 2016, will house approximately 2,100 employees in the submarket. In addition to ConocoPhillips, The University of Texas MD Anderson recently acquired approximately 35 …
The top 10 fastest growing subdivisions in San Antonio had a combined 1,832 housing starts in fourth quarter 2012, according to a recent report from housing-market research firm Metrostudy. And that number is already up with 2,042 new home starts in first quarter 2013, a 24.3 percent increase over the same time period last year. So far, builders are on track to build 8,478 homes this year, as major markets in Texas continues to outperform the nation. Alamo Ranch is the bright star in the bunch. Statistics solidly place this northwest subdivision in the top spot of San Antonio’s fastest growing subdivisions with 649 new housing starts in fourth quarter 2012. Bulverde Village, in second place, saw 169 new home starts during the same time. April single-family home sales rose 14 percent over last year and 4.5 percent from last month, according to the San Antonio Board of Realtors. In keeping with the boost in housing, retail is showing solid, if slow, growth. San Antonio retail occupancy rates increased for the fourth consecutive quarter, reaching 94.5 percent in first quarter 2013. And while rental rates remain fairly flat, according to research from Delta Associates, the second half of 2013 is …
The Dallas/Fort Worth industrial market has performed very well during the past three years. Healthy market fundamentals have created an environment in DFW that is highly conducive for robust growth, though the sluggish national economic recovery will cause some volatility in the pace of that growth. Strong job gains, an expanding position as a global distribution hub and local market confidence are all characteristics driving industrial market performance. The warehouse/distribution sector drove demand in the DFW industrial market during the first quarter of 2013, with flex space also in demand. Net absorption of industrial space across the Metroplex totaled 1.3 million square feet during the first quarter of 2013, with warehouse/distribution product accounting for 62 percent of the space taken. This compares to 2012 when net absorption of warehouse/distribution space totaled 8.8 million square feet, making up for move-outs in the manufacturing sector. Total net absorption for all product types was 8.3 million square feet during 2012. Industrial inventory is expanding in DFW with approximately 3.7 million square feet of industrial space under construction or renovation as of March 2013. This compares to 2.1 million square feet under construction or renovation one year ago. Developers are responding to a lack …
Improvement in Dallas Dallas office market fundamentals has been supported by economic concentrations in the finance/insurance, energy and technology sectors, as well as the amenity-driven desirability of infill submarkets, namely Uptown and the Arts District. Yet, any discussion of Dallas area office expansions must begin with State Farm Insurance. The firm has accounted for a significant portion of activity, leasing more than 2 million square feet of office space in Richardson and Las Colinas in the past year. Banks and financial firms, including Frost Bank, Wells Fargo, Capital One and USAA, are expanding as improving economic conditions support lending and investment activity. With a 500,000-square-foot expansion by Denbury Resources in Plano and the growing presence of Crosstex Energy and Alon USA in Dallas, it is clear that the new energy boom is a positive for North Texas offices too. Leasing activity among technology firms is strong with Ericsson’s new building underway at its Plano campus being the most notable, although smaller software and telecom companies are also expanding, such as Hawkeye Communications in Uptown Dallas. Overall office vacancy in Dallas/Fort Worth has fallen 210 basis points (bps) from its peak in 2010. While this is certainly a strong recovery, it …