5 Things to Know About San Antonio

San Antonio’s retail market has seen occupancy climb over the past 12 months, to a 93 percent rate.

 

Five  key things to know about the San Antonio retail market are:SONY DSC

 

 1.The market continues to see new retail construction, which topped 1.4 million square feet in 2014, but it is limited mainly to anchor space for users. Construction of small-shop speculative space continues to be limited for 2015, reflecting developers’ desire to ensure that retail construction does not outpace retail demand.

2.The market’s available space continues to shrink as leasing continues during a time of constrained construction. Several long-vacant boxes, like a former department store, have been backfilled in recent months. Other trade areas are seeing construction of small-shop neighborhood centers to meet demand for space in trade areas that are essentially completely leased.

3.Grocery stores continue to dominate the construction of new space. The most active is Walmart, which opened five Supercenters and four smaller Neighborhood Markets in 2014, and which has more locations on tap for 2015. H-E-B, the market’s No. 1 grocery, also added two new stores last year and has more in the works. The most high-profile non-grocery project, Dominion Ridge, opened with a high-end mix of office and retail/restaurant space for concepts including Silo Elevated Cuisine, Aldaco’s Mexican Cuisine, Di Frabo Italian, Posh Sushi, Toy Zone, iRun, CuppenCake, First American Title, Salons by JC and several others.

4.Walmart and H-E-B will dominate construction again this year. Walmart is opening at least three stores in 2015, and H-E-B has stores in the works to open this year and next.

5.Other retailer concepts expanding in 2015 include Top Golf, with a 65,000-square-foot entertainment concept, its first in San Antonio, and Gold’s Gym, LA Fitness and others.

 

[The Weiztman Group]

5 Things to Know About Dallas Fort Worth

 

Dallas/ Fort Worth’s retail market is currently reporting an occupancy rate of approximately 91 %, its highest occupancy since 2004.cfiles5633

 

Five key things to know about this dynamic market are:

1.  D/FW, with more than 190 million square feet serving one of the fastest-growing markets in the country, ranks at or near the top nationally in terms of job growth, population growth, apartment and office construction and overall economic activity.

2.  In terms of construction, grocery stores dominate new projects. For 2015, Kroger Marketplace, the grocer’s 123,000-square-foot concept, is the most active traditional grocer with five new locations opening in 2015 and at least two store expansions.

3.  D/FW is also seeing a number of new and expanded mixed-use projects in 2015. Park Lane in North Dallas expanded with new retail space for retailers including a Forever 21 concept called F21 red and the first J. Crew Factory store in Dallas. New mixed-use project West Plano Village opens this year with AMLI apartments, street level retail and restaurant space and second-level office space. Restaurant and retail space is for concepts such as Kona Grill, Princi Italia, AT&T flagship and others.

4.  During 2014, the market only added 2 million square feet of new space, a blip on a 190-million-square-foot inventory. For 2015, D/FW is on track to add at least 3 million square feet, still a relatively restrained total but one that would rank as the highest construction level in seven years. New space is being added by Kroger, WinCo Foods, Whole Foods Market, Walmart, Target, Fresh Market, Cinemark, Trader Joe’s and others.

5.  We can’t talk about construction without highlighting the massive 560,000-square-foot Nebraska Furniture Mart, which opened earlier this year and which is prompting area development, including a new Best Buy-anchored center now under construction.  In other words, Nebraska Furniture Mart is the anchor creating what is basically a new retail district, almost overnight.

[The Weitzman Group]

5 Things to Know About Houston

Houston’s retail market posted its best overall occupancy rate in years, with only 4 % of the market’s 150 million square feet vacant.USA-Houston

  Five key things to know about the market follow below:

 

    1. The rapid drop in the price of oil is leading some to question whether the market can maintain that high level of occupancy in 2015. However,        the economy today is far less dependent on energy than in the 1980s, so the impact should be lessened, and lower gas prices are increasing  consumers’ disposable income.

 

2. The market is growing, with 157,000 new residents last year, and the metro area population now totals around 6.6 million.  During the 12 months from March 2014 to March 2015, the Houston area added 82,500 net new jobs.

 

3. Even as the market tightens, the new construction remains constrained by historical standards. During 2014, the market added just 1.7 million square feet, and 2015 is on track to see that total exceeded, but not by a significant amount. New space this year is coming from Whole Foods, Sprouts, LA Fitness, Costco, Cabela’s, Walmart Neighborhood Market, Fiesta Mart and others.

 

4. Malls are big in Houston. Houston has the distinction of seeing two major mall expansions in the works at a time when enclosed-mall construction nationwide is all but dormant. This year will see a 555,000-square-foot expansion of Baybrook Mall and the expansion of leading mall The Galleria, including redeveloped space created when Saks relocated to a new space within the malls, as well as a new multi-family tower. Houston is also seeing some large mixed-use projects, including CityPlace, a north Houston project designed to have a mix of uses, including 400,000 square feet of retail, upon completion.

 

5. The 2016 market is already coming into shape. For example, Kroger Marketplace just broke ground on a 123,000-square-foot store in Clute, and more new retail is coming from H-E-B and other anchors. [ The Weitzman Group] 

Who Drove the Bus That Ran Over Us: By Janis Arnold

who drove
Detlef Hallermann an Associate Clinical Professor and Director for the Reliant Energy Trade Center at Texas A&M University

Detlef Hallermann is an Associate Clinical Professor and Director for the Reliant Energy Trade Center at Texas A&M University.  He began his talk at the April 2015 land conference with this disclaimer: All thoughts are my own and I bear no responsibility for your investment decisions based on this presentation. Hang on, the ride is just beginning! In the United States, production is growing and increasing, although our supply is constrained by transportation issues. We’ve got too much crude in the wrong places at the same time we are seeing an increase in Middle Eastern unemployment and unrest.

OPEC figured that if they could cut back on their production, they could keep prices up. They tried to work with Russia. They wanted to cut production in Russia and each OPEC producer 3%, believing that they could get $80 oil, except they all cheat and none of them trust each other. Hence none of them would agree to the collective cuts. Therefore, the current crude market became one big football game.

In North American, the players / producers, are plentiful. There are lots of them out there, sort of like Pop Warner football. With respect to the minor OPEC players, those are all family run businesses, and a lot of those guys are producing quite a bit of oil. Regarding dominant OPEC members, that’s primarily Saudi Arabia.

World oil production levels are up. Over a five-year period we’ve doubled our production, Saudi Arabia is now the second largest producer. Other countries are significant and in Canada, they’ve doubled their production in the last five years as well.who drove 2

The United States is the refining capital of the world; we’re importing at a lower rate due to the production in our country. Our light crude oil imports have shrunk to a tanker a day, and this is from Canada; we’re getting none from Nigeria and Angola,. Needless to say, this is having an impact in those countries. The good news is that we’re really close to becoming energy self-sufficient in North America. We produce 9% of the world’s energy, and we refine and export back out to the rest of the world. The obvious take-away from this fact is that refining firms are good places to put investment money these days as the refining companies are making big profits right now.

North American Transportation Summary: The Keystone Pipeline got shut down again. We still need to move crude from Canada to the U.S. down to Gulf of Mexico where it can be refined.  Keystone alternative: Enbridge Mainline: bringing oil from Canada to Chicago; our crude in Cushing, Oklahoma was selling at $50, we flooded that market. Without the Keystone Pipeline, we would ship by rail crude from Canada to the Gulf Coast, and a little over a million barrels a day will reach ports from Canada. Within two years we likely won’t need to import crude oil from outside of North American. Regarding North American Production: there has been significant growth for the last 2-3 years, and this is just starting to slow down.

With OPEC, we’re seeing a goal line stand. This is really punishing Russia, which supports Iran and Syria. Saudi Arabia is unhappy with this state of affairs. Yeman, the closest neighbor to Saudi Arabia, is in trouble. People have stopped paying attention to the Saudis and they are worried because they don’t control everything that they see. The Saudis are more worried about the Iranians than they are about us. Islamic clerics have historically been in control of what happens in the region and that has changed.

In the second quarter of the game this year, we saw North America’s response: January 2 was national “lay off your contract land-men” day. They kept going until 2015. Now we see rig personnel being laid off, and service companies are experiencing huge layoffs. To put this in perspective, bear in mind that General Electric lays off 10% of their work force every year, and our oil and gas companies grew their workforce by 15% to handle increased demand, suggesting that layoffs aren’t significant at 7%. It is also important to note that producers haven’t laid off anyone; the layoffs are in service companies.

Gas vs. oil: We’ve seen more drops off in crude oil than in natural gas, which hasn’t changed much. We’re going to end up making a lot more money on natural gas as we start exporting.

Horizontal vs. vertical rigs:  In 2009 all vertical rigs that were laid off didn’t come back, the ones that returned came back as horizontal rigs.

Saudi Rig Activity: From Oct 13, there has been a steady increase in rig counts going up. This is when the Saudis started realizing they were losing their monopoly producer status. Increasing their rig rates going up signaled that they were taking off their kid gloves.

What does this suggest for the rest of the year: The companies that don’t have much leverage will be the first to go. Those with a percentage of production that is hedged may be in trouble. Firms with a lot of debt are the most vulnerable.

Bear in mind that 80-90% of the mailbox money comes in during the first 3 years. Right now we’re not seeing a lot of blood in water; that’s going to start but slowly, and dependent upon the amount of reserves a company has. Borrowing base re-determinations happen every spring and fall. Companies at risk are those with a high PDNP. Most of the independents did a real good job of hedging, and banks incentivized the companies to hedge 2016. Right now oil and gas companies are holding their breath.

They don’t want to lay off people, because they don’t want to have to rehire if prices come back up. Fiscal Break Even Prices aren’t the same across the playing field. Related to International Blood Flow, a citizen of Saudi Arabia gets 40K a year. The royal family pays them to live there. Unemployment is very high. Saudi Arabia, with oil prices of $55 a barrel, has a huge deficit, if oil prices continue to fall, they, being self-financed, will likely have to blink first.

 

Predictions for the rest of year:

Domestically, there will be no Mergers & Acquisition / Divestiture Activity until June/July. We’ll see banks refining and restructuring of lending agreements. We’ll see independents converting PE Debt into Equity. We may also see production declines starting in Q 3. Again, this will not be hemorrhaging so much as restructuring. We will also see production declines starting in Q3. American companies and business are amazingly resilient. One Austin company that was seeing $55 a barrel production is now at $43 a barrel. Over here, we’re adapting.

Internationally: At the June meeting, Saudi Arabia will instill some quotas, and the producers will agree to this because of how badly they have all been hemorrhaging this past year.  By Q4, we will see signals of are covering industry,

Facts that will drive prices: decreasing supply domestically, Eagle Ford, Balkan, Permian, seeing immediate and dramatic response on the supply side

 

Example: In December 2014 after oil prices fell, there were more SUVs sold in one month than in the previous 24 months, that shows you how quickly Americans respond to lower oil prices, with an increase in demand

 

Others factors that may come into play: international supply disruption (ISIS), unemployment in Middle East stands at 40-50% so it is easy to understand why so many people can take off work to join ISIS.

Supply growth related to an increase of refining capacity throughout the world

Likely we will see supply and demand responses, prices respond; we’ll come up to $58 a barrel slowly working in fits and starts. There is still an inventory of wells that need to be completed; slowly companies will bring one rig on where they previously had 7 or 8 going. New permits will be issued. The industry will get worse before it gets better. We’ll have a volatile Q2-3 and by the end of 2015 maybe we’ll be up to $70 a barrel.

 

[By Janis Arnold of REDNews]

Outlook For Texas Land Markets: By Janis Arnold

T Land markets 2
Dr. Charles Gilliand

Charles Gilliand is the Real Estate Center’s land market expert. He has been studying land prices since the 1980s and is known throughout the state as the man to go to if you have questions about Texas land. In 2010, he was inducted into the Farm Credit Bank of Texas Hall of Honor for his “significant contributions to agriculture.” At the Center, Dr. Gilliland concentrates on research of appraisal issues, development issues, property rights, rural land markets, property taxation, water marketing, and associated issues. Despite all of the bad news we heard in 2014, none of that bad news made any difference in land prices. Corn prices were down 51 percent, cotton dropped 29 percent and oil staggered 50 percent. Rig counts in the Eagle Ford were down 49 %; in the Permian Basin they are down 54 %, and overall in the U.S. they are down 50 %. None of this seems to matter, as the response has been: who cares?

We continued to see a strong demand for recreational properties. There was a strong demand for croT Land marketsp land and prices went up 9 percent. Land prices are up 33 percent since 2009, and up 124 percent since 2004. In 2014, the statewide average for land was $2,364 per acre. It took us 38 years to top $1,000 per acre and only 9 years from that point to top $2,000 an acre. The average price for small tract rural land in 2014 was $5,049 per acre.

Historically, we see a strong and close co-movement between oil and land with land prices following oil prices after a one to three year lag. In other words, we might expect land prices to go down 1-3 years after oil drops. Therefore, oil prices have been the leading indicator of Texas land prices. When oil stalled in 1980, land stalled in 1985. During the years between 1985-2000 prices remained pretty stagnant.

Monthly oil prices started to decline in December 2014 and in January 2015, so a case could be made that oil prices haven’t had time to act on the land markets yet. Texas personal income in relationship to land prices may have more effect on the amount of land that changes hands as opposed to the actual price of the land. Our current economic issues include: oil prices, drought, bumper crop depress prices, rising interest rates (?), and a currency ‘struggle’.

Prices seen in rural land for 2014:  In region one, large tracts were up 10%, and small ones were up 12%. Small was defined as 160 acres or smaller. Out in the Panhandle and South Plains, there was not a lot of activity. What we did see was that larger property prices went up, but there was some retreating on smaller properties. The number of 2014 transactions was similar to what we saw in 2012 and 2013. In region 3 small property prices were strong at about $2,500 an acre, while larger ones were a little bit flat.

In the northeast section, small property is defined as less than 33 acres. Large property was up about 8%. During the last couple of years, the level of activity increased quite a lot; this area was the last one to start increasing after the big downturn in 2009, and the total number of acres was up substantially.

In region 5, the Gulf Coast and Brazos Bottom area, small property (less than 43 acres) is taking a break after a pretty big increase in 2013. Large properties did increase 10% but there was no remarkable movement in this area.

Region 7, comprised of Austin, Waco, and the Hill Country, defines small property as less than 50 acres. The average price was $7,764 per acre, while large price properties averaged $3,238. It’s a different market than it used to be. The Hill Country volume of activity was up again in 2014, although not quite the level we saw in 2005.

What lies ahead in 2015? A diversified economy will protect Texas. We anticipate a modest slow-down and for markets to continue to forge ahead. However, it will take time to work off the glut. It may be that diversification is less than we thought, and it may be that 2015 will be challenging for Texas.

We may want to make arrangements, as in preparing for some stormy weather. We expect to see some scrambling to find solutions, as buyers and sellers realign their desires and willingness to buy. This year we expect to see a slowdown in the number of acres that change hands, but prices are anticipated to stay steady or perhaps even improve. The key to our expectation that land prices aren’t going to decrease significantly despite what is happening in the oil market is this: Where else is a person going to invest money, especially as foreign investors still need to find a place to park their money.

 

[Janis Arnold for REDNews]

In a League of their own: Women in Texas Commercial Real Estate

Commercial real estate has long been a male-dominated field, described by one female manager in Houston as “a sea of white men in blue blazers.” But the demographics are changing, not in landslide fashion, but in a slow and gradual progression. Women now account for 43 percent of CRE professionals in the field, according to advocacy group CREW Network, but the U.S. Bureau of Labor and Statistics reports those women are still making 78.2 percent of their male counterparts.

Susan Hill
Susan Hill

“I think that now there is a much higher level of awareness of the importance of diversity in the industry,” says Susan Hill, a lead producer at HFF who has financed Houston landmarks, such as the Bank of America building. “There are plenty of studies showing that when you have a higher level of senior women in leadership, not just in your company but on your board, your company is more productive.”

Their paths may be quite different, but get to know Texas’s female leaders in commercial real estate and you’ll find they share some striking similarities. From brokers to lawyers to engineers, their success is due in no small part to their drive, initiative, outlook, risks and support.

‘Work a little harder’

Debra Gilbreath
Debra Gilbreath

“My story is a little unique,” starts Debra Gilbreath, partner at Dow Golub Remels & Beverly, LLP. The late-in-life attorney spent 13 years working and taking night classes to earn her undergraduate degree, then quit her full-time job to attend law school.

“When I was in high school, I wrote in my yearbook that I wanted to be an attorney. It just took me a whole lot longer to get there,” Gilbreath says. “I never lost sight of what it was that I wanted and what I felt inspired me, but I just had to work a little harder to get there.”

Once she received her law degree from Tulane University, Gilbreath accepted a job in Houston. Her first case was a large multi-portfolio purchase that ignited her passion for real estate.

“I really didn’t think I wanted to be a real estate lawyer,” says Gilbreath. “But once I was exposed to it, it was really a great fit.”

‘Actions speak for themselves’

Hill also stumbled into real estate. Seeking a job right out of college, she accepted a position as receptionist at HFF. Twenty-eight years later, she’s now the company’s senior managing director, having completed more than $6 billion in transactions.

“Any time there was anything extra or someone needed help on another team, I always said, ‘Yes, I will take on more,’” says Hill. “That’s how I really got there.”

Gayle Brand
Gayle Brand

“I have learned that actions speak for themselves and that hard work and perseverance do pay off,” says Gayle Brand. The 25-year real estate veteran started her career answering phones at a small title company, eventually working her way up to president of Chicago Title Houston.

Laurie Baker
Laurie Baker

“When opportunities present themselves, you have to put yourself in the spotlight, particularly for assignments that are tough and challenging,” points out Laurie Baker, senior vice president of fund and asset management for Camden Property Trust. “A lot of times, the best time to do it is when no one else wants it, which is even scarier. But you’re in a win-win situation because [your coworkers] are rooting for you because they didn’t want that role.”

“I know for a fact that I’ve taken on a number of responsibilities that no one else wanted because they found them to be messy,” Baker says. “I, in turn, found them to be tremendously rewarding.”

‘Focus on myself’

Viewing a challenging assignment as a new opportunity is another key to success for Baker and her peers. When the real estate market started its downward slide in 2007, what could have been viewed as a career-ending recession was instead recategorized as a chance to learn and grow.

In Baker’s case, she had just changed roles within Camden, raising capital for a private equity fund. With the recession deepening, that meant slowing down and being patient.

“That couple of years, for me, were extremely challenging. It’s not in my nature to not be doing,” says Baker. “I did a lot of self-reflecting.”

By the time the market turned around, Baker had received her sales and broker licenses and was actively involved in Commercial Real Estate Women (CREW), a women’s networking group devoted to achievements in commercial real estate.

“I threw myself into committees and got on the board, was president of CREW Houston last year and this year I’m president-elect for the CREW Network,” Baker says. “All of that happened while I had probably the greatest obstacle of my career because the market had crashed and we were at a standstill, patiently waiting for things to turn. I could have just sat there and waited and missed out on growing in other ways.”

Stephanie Anderson
Stephanie Anderson

Continued growth, whether personal or professional, is also stressed by Stephanie Anderson, partner at Ward, Getz and Associates, LLP.

“I’ve always made it a priority to focus on myself in every aspect of my life,” she says. “I’ve learned that maintaining the focus on yourself and keeping it off your peers is the best way to excel in your goals and aspirations.”

Though that kind of spotlight can dredge up negatives, such as shortcomings or failures, using it to highlight successes is another principle that sets these women apart.

“I always focused on my advantages instead of my disadvantages,” Hill says. “I think as a women in real estate or a woman in any career, you really have to focus on that.”

“Surrounding yourself with positive influences and like-minded people is key,” says Brand. She says she intentionally avoids negative people and makes an effort to learn and improve herself by “reading, attending worthwhile conferences and learning from successful people I want to emulate.”

‘With that risk comes great reward’

Along with that optimism, CRE leaders credit confidence with their success. They admit, though, that it can sometimes be difficult for women to take the risks needed to advance.

“Men will say, ‘Hey, I want this position,’ knowing they’re missing some skills that are necessary to be successful in that position, but knowing they’ll learn them along the way,” Hill points out. “I think women need to be more comfortable doing that because I think we hold ourselves back when we don’t take that next career step thinking we may not necessarily have all the skills.”

It may be a challenge, but Hill says it’s one worth accepting: “Don’t limit your own career because you’re not willing to take that risk. With that risk comes great reward. We just have to educate women and get them comfortable to take those risks.”

Gilbreath, who quit her full-time job to go to law school at age 34, admits it took courage to make the leap.

“That was a huge risk,” she says. “But it’s one that’s paid off mightily for me in so many ways because I’m really very happy with what I do. It’s being able to trust yourself enough to take that chance.”

‘All about being supportive’

Perhaps the greatest source of the confidence needed to take risks is the support network these women have built for themselves, in which mentors play a huge role.

“[They] allow you to make mistakes in a safe environment, then pull you aside to tell you how to improve and do better the next time, but they want you to make those mistakes,” explains Baker. “It’s all about being supportive, being a guiding light for those who sometimes need someone to fall back on, to check in and make sure they’re going in the right direction.”

Many of the women, including Gilbreath, cite multiple mentors who helped guide them at various times in their lives.

“I think as you grow and evolve professionally and personally from a mentor is different,” she says. “So it’s important to be very aware of what it is you need at that particular time in your career.”

Ultimately, those mentors are woven into a network that includes clients, peers and friends — a resource that can provide guidance, encouragement, inspiration and support. Anderson says CREW helps add to that network, building professional relationships and personal connections.

“There is a certain camaraderie found by sharing female perspective in a professional environment. We are able to relate to one another by sharing similarities through our careers,” she explains.

“[CREW] has a very unique culture and all the members are really supportive of one another,” says Hill. “That allows for a very safe environment in which to practice your skills, whether that’s getting up and speaking publicly, building your business or learning how to become a better networker.”

“From scholarships, to mentoring, to educational opportunities and more, [CREW members] work every day to make commercial real estate a better platform and career for women,” says Brand.

‘Different perspectives, differing opinions’

And so the field of commercial real estate will continue its evolution, adding more diversity to its ranks to answer the need created by the community.

“It’s more women, more Asians, more Hispanics, more African Americans,” Baker explains. “Commercial real estate needs that diversity to enrich our organizations with different perspectives and differing opinions. Unless you hire those individuals, it’s going to be really hard for our companies to understand our customers’ needs.”