The Austin retail market is holding steady in the current economy due in no small part to positive media coverage. According to Sherry Sanchez of NAI Austin, numerous media organizations have placed the city near the top in many “best of” ranking lists. These honors have helped keep the retail market stable because job seekers from all over Texas have been coming to Austin, moved by reports of finding better jobs in the Capitol City. “There's a big huge flight of people moving to central Texas who don't even have jobs yet,” she says. “We have job opportunities all over the map for people from blue-collar workers to white-collar workers.” Companies in the city are also spurred on by stimulus money aimed at green energy projects. Finally, the stability of government jobs means a large number of Austinites are gainfully employed. But because no markets anywhere in the country are thriving, these factors mean that Austin is simply staying ahead of the glut. “We're not seeing attrition as rapidly as they are in a lot of parts of the country. Our service providers are hanging in there — some are expanding — and our restaurants are doing well,” Sanchez says. …
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The abundance of completed units delivered to the market has had the biggest effect on the Dallas/Fort Worth multifamily sector. From September 2008 to September 2009, almost 15,000 units were completed in the Metroplex — nearly double the 7,600-unit annual average during the previous 5 years. Occupancy in the Dallas area dropped 0.2 percent to 89.8 percent during the third quarter of 2009, its lowest point since early 2005. However, occupancy for newer product held steady, while occupancy in older product tiers has suffered. The 1990s-era properties were the only product age category to achieve occupancy of more than 90 percent in the quarter, posting 92.4 percent occupancy. During the third quarter, 2000s-era product posted an 89.4 percent occupancy rate, and 1980s-era product posted an 89.8 percent occupancy rate. MPF Research forecasts that occupancy will drop 170 basis points to 88.1 percent in the next 12 months, given the huge stock of new deliveries expected to hit the market. New construction deliveries will also cause rents to drop further while rent concessions are expected to increase. One planned construction project is the redevelopment of the historic Continental Building downtown. The Dallas City Council approved $17 million in tax increment financing …
Historically, hotel rooms in San Antonio have either been in the central business district (CBD) or near the airport and “loop land.” In the 1980s and ’90s, there were two top golf resort properties built — Hyatt Hill Country Golf Resort near Sea World and Westin La Cantera Golf Resort near Six Flags Fiesta Texas — that attracted a new set of business. Additionally, the highway-located budget properties began posting strong numbers. In more recent years, hotel chains have recognized the need to cater to a mid-to-upscale market of tourists and small business road warriors who were unable to find hotel rooms during special events (such as The Final Four) for large conventions or during the busy summer months. Mid-upscale properties, including Marriott, Intercontinental Hotels, Hilton, Starwood, Sheraton, Hyatt, Doubletree, Drury, as well as boutique CBD/River Walk properties such as The Valencia, Watermark Hotel & Spa and Hotel Contessa, were developed and changed the entire complexion of the hospitality market in San Antonio. This year, there have been three major developments that are impacting the hospitality market in San Antonio: • The completion of a 1,000-room Hyatt Regency hotel/condo project adjacent to the Convention Center on the River Walk • …
The impact of today’s worldwide economic downturn and credit crunch is significant, but it is in no way the worst in history, especially for Houston. Houston was hit harder than other markets in the 1980s; in a way, this guaranteed that the city would be ahead of the rest of the nation in terms of avoiding a recession. Compared to the rest of the country, current demand for retail space in the area continues to be high, and the city has a relatively low vacancy rate of about 10 to 12 percent. Houston’s economy is still largely based on energy, but to a lesser extent than in years past. Houston’s growing population and strong economy continues to fuel a reasonably healthy retail market. A relatively low unemployment rate and a low cost of living are driving forces of the resilient market. In 2008, as most of the country was experiencing downsizing, Houston had a net gain of approximately 57,000 jobs in the region. Residents have continued to shop, but the habit of buying has changed — or it has at least slowed down a bit. Nonetheless, retailers consistently say Houston is one of the strongest performing markets in the country. …
Overall, the Austin office market is facing many of the challenges that other major metropolitan areas are confronting. However, the Austin market has relatively strong employment fundamentals and continues to attract office-using employers and skilled employees. The office market should rebound earlier and stronger than the national bounceback once positive absorption returns, with the South, Southeast and CBD submarkets leading the way. Austin currently boasts the strongest employment market of any major metropolitan area in the country, though significant weakening in the office sector is projected due to overbuilding. The amount of vacant space increased by more than 1 million square feet in 2008, an addition of 14 percent to existing inventory. These additions shifted the leverage in lease negotiations to tenants, resulting in lower rents and elevated concessions; this was particularly true in the Northwest and Round Rock/Georgetown/Cedar Park submarkets, which experienced the greatest increases in inventory. As a result, asking rents are forecast to fall to $24.66 per square foot, and effective rents are projected to end 2009 at $20.72 per square foot, annual declines of 6.2 percent and 7.1 percent, respectively. Office investment sales have slowed as financing constraints hamper the market. The median sales price, however, …
There are several trends that are shaping the Dallas industrial market right now. The uncertainty of financial markets and lack of liquidity is certainly hampering the market. Limited access to capital is withholding business expansion. We are also working with motivated landlords that are helping make successful tenant representation transactions, whether it is a restructure or a new deal. Equity is sitting back and waiting for values to continue to fall. I’m seeing short-term commitments on renewals; tenants are reluctant to make large commitments. There is minimum activity in the market as tenants are just making do with what they have. There is growing space availability as more bankruptcies create more inventory — and also opportunities. For example, tenants like Home Interiors and Fitz & Floyd have left the market, creating more available space. There are many 30,000-square-foot to 80,000-square-foot clients in the market but not as many big deals. We have made some deals on space and land that had previously not been available. Tenants are looking for facilities with extra storage areas and ability to secure the truck court. Facilities that have access to DFW airport and 30-foot clear height or greater are a big plus in this …
While the San Antonio office market has not been as directly impacted by the national economic slowdown as other markets, it is being impacted by excess deliveries and slower absorption overall. This has led to slightly lower effective rents and a rise in vacancy rates. Previously stable markets, in general, are holding level occupancies; however, there are several pockets where the vacancy rate exceeds 20 to 30 percent. This is primarily a result of newly constructed space that is not being absorbed, rather than tenants moving out of existing office space. Many would anticipate a larger reduction in rents with the current vacancy levels, but rents have not declined to the extent one would expect in a down market, as newer buildings continue to market their space at higher rents and existing stable building owners have declined to reduce rates to any significant degree. Two transactions in particular have impacted the San Antonio market in a very positive fashion. The sale of the 150,000-square-foot 300 Concord Plaza, Tesoro’s old headquarters, to Whataburger, which is relocating its home office to San Antonio from Corpus Christi, is worth noting. This transaction subdued concerns of the impact this vacancy would have had on …
While the national economy and commercial real estate in general look to have a tough year ahead of them, Houston and multifamily real estate have a little more room for comfort, although not enough for complacency. Houston is projected by some to have the strongest job growth in the United States for 2009, and multifamily is the only commercial property class to maintain some semblance of normalcy. Houston benefits from the diversity of its economy. Houston has also greatly benefited by one sector in particular, oil and gas, which saw its greatest rally in history just as the financial sector saw its darkest days. Houston continues to maintain an unemployment rate almost 3 percent below the national average and is ranked 18 of 392 U.S. MSAs by Moody’s Economy.com for employment growth between now and 2013. Unlike other commercial real estate (CRE) asset classes, multifamily has been more successful fighting off the financial crisis that shut down the CMBS market and essentially froze CRE transactions across the country. Steve Duplantis, senior managing director of CBRE in Houston, is only aware of one investment grade retail transaction and one investment grade office transaction in the past year. So far this year …
The Dallas Fort Worth (D/FW) office market has gone through another successful quarter. First quarter 2009 ended with a positive net absorption of 1.2 million square feet and a vacancy rate of 16 percent. Fortunately, the first decline in D/FW job growth was not felt until January 2009. These two major trends have set D/FW up for the “last in first out” model of recovery. This is a much different trend than experienced during the last two major recessions, and this time D/FW is the right market to be in to ride out the recession. One of the major factors that has put D/FW in this positive light, as compared to the rest of the other major office markets across the country, is the preleasing of 241,500 square feet of the 965,387 square feet of new construction that came online in the first quarter. The D/FW office market as a whole has experienced positive net absorption for the last 6 years. The following are a few of the large deals that contributed to this. Torch Mark Corporation took 150,000 square feet at Stonebridge Ranch, AIG leased 138,010 square feet at South Tower, Texas Capital Bancshares. Inc signed on for 94,940 …
In general, the economy has created an atmosphere of cautiousness as companies rethink expansions and settle for the status quo. Many companies, such as those engaged in the auto industry, are experiencing a reduction in orders and are reducing their production, inventory and workforce to adjust to this trend. On the bright side, Foxconn’s industrial park south of Santa Teresa, New Mexico, will provide thousands of new jobs to the region. Suppliers and logistic companies that service Foxconn will locate on both sides of the border, affecting Santa Teresa as well as west El Paso, as the companies compete for a piece of the pie. Fort Bliss has substantially benefited from the BRAC realignment (See “A Strong Pulse” on the cover). With additional brigades being located at Fort Bliss, the further development of the base infrastructure, housing and tactical facilities are in full swing. With the influx of the more than 60,000 people (which include military personnel and their families), the El Paso region will require additional city/county governmental services, educational facilities, off-base housing and vendors to accommodate this growth in the community. The benefit to the El Paso community will be affected exponentially. Overall, the market is not in …