BoyarMiller Capital Markets Breakfast Forum

Takeaway: The local and national economies are hot, but prudent businesses are thinking and planning ahead to be ready for the next (inevitable) recession.

Where are we now in the economic cycle?
• Economy is still expanding but is in the late stage of the current cycle, which has lasted ten years so far
• There is a lot of borrowing going on and businesses are feeling comfortable taking risks-lending/borrowing has been ‘cheap and easy’
• There are lots of mergers & acquisitions (M&A) going on, but buyers are paying full price and more, hoping to improve productivity of acquired company
• The Feds are slowly raising historically very low interest rates to head off possible inflation, which puts a damper on business values because more cash will be needed to service debt
• Many businesses are experiencing ‘their best year ever’ and there is lots of momentum going forward, with a 4% growth rate in the national economy
• We are in an inflated market, with values 5-15% too high-business owners / managers should prepare now for recession so they do not panic when it hits
• There is over $1.5 trillion buying power on the sidelines looking for yield, a huge overhang of excess capital
• New funds are having an easy time raising money

When will the recession come, and what should one do to plan for it?
• The recession could hit mid-to late 2020 but no one really knows
• M&A activity usually has a six year cycle-we are in the 8th year
• Old stodgy established brand companies are looking for groovy new acquisitions to show they are still in the game, and can continue to appeal to contemporary customers
• If the Feds raise interest rates quickly, that could hasten the recession, and vice-versa
• Now is a good time to sell your business while buyers are paying premium rates-thorough preparation is critical in packaging your company to take it to mark-remove any question marks a buyer may have in advance of putting it up for sale
• Operating businesses should establish a cash cushion to carry them through the unforeseen circumstances which always accompany a downturn
• Give your business a stress test now: what would happen if suddenly you lost one or more of your best customers, or hit other major snags?
• Every economic bubble stems from relaxing of discipline, and so far no great departure from discipline has made itself visible in our economy
• Business owners are people of action and when a recession hits, sometimes they take hasty and unwarranted actions which increase the negative impact-best strategy is to prepare, wait and see, and look for opportunities that can be picked up at favorable prices
• The onset of a recession is not a time to panic and to depart from your established successful business plan-avoid knee-jerk reactions

What will be the impact of tariffs on the economy and business climate in general?
• So far minimal, but the initial tariffs have not yet had time to filter down, nor have other countries gotten all of their reciprocal tariffs against us in place
• They are worrisome and concerning since they don’t seem to be part of a cohesive plan and in past business cycles imposition of tariffs has not had a happy ending for the US or world economies
• The administration is playing with fire
• They create new and un-needed risks for the economy going forward

Read this forum in PDF format here

O’Connor Office Forecast Luncheon – Speakers: Bryant Lach, JLL; Kevin Wyatt, Lincoln Property Company

Takeaway: Houston has a 24% vacancy of office space, including primary and sub-lease inventory, and it is not going away any time soon, as companies down-size, and, “right-size”, learning how to make do with less space than before the downturn in 2014.

Read the detailed forecast here

O’Connor & Associates Land Forecast Luncheon-Speaker: Clint Hankla – Director, Lee & Associates


Takeaway: The land market in the Houston Metro area is on a “sugar high”, and it is a good time to be a seller while the market is booming. Interest rates will probably rise ongoing. Inventories of usable land are shrinking and prices are rising.

• Lots of activity on the west side of town as distributors seek warehouses to support the ‘last mile’ of delivery to consumers.
• Lots of ongoing activity on southeast side to support increased activity at the Port of Houston, where rail-served sites are in demand and selling at a price premium.
• There is no industrial ‘spec’ development at the moment (without pre-leasing).

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Ray interviews Leven Rambin


Note: Two months back, Ray’s Buzz interviewed Howard Rambin, who mentioned how he had helped his daughter, Leven, get her start acting by hiring professional show business agents/managers from the very start, and by validating her as a person and young professional. Here is my conversation with her:

Ray: Leven, we heard a couple of months back from your dad about his career. Now let us hear a little bit about yours! How did you get started in acting?

Leven: I started acting in plays at St. Francis Episcopal and my mom and dad were smart enough to enlist the guidance and help of a local acting teacher, Elyse Lester. My dad always encouraged me to work hard. Watching him run Moody Rambin with diligence and passion and relentlessness instilled in me a work ethic and boldness and inspired me to make him and myself proud.

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SPEAKER – Stephen Reiter, Jones | Carter Engineers Management Issues Following Harvey

Takeaway: Mathematical calculations using more pinpointed data, plus on-the-ground observation following Hurricane Harvey, have resulted in modifications to tighten requirements affecting construction in the 100- and 500 year floodplains.

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O’Connor Apartment Forecast Luncheon


Speakers – Stacy Hunt, Executive Director-Greystar; Ricardo Rivas, CEO-Allied Orion Group

Takeaway: Nationally and locally the multi-family (MF) segment is very healthy.

  • MF starts nationally are at a record of 300-350,000 units per year
  • Sales of single family homes are lagging as renters are renting longer and Millennials are choosing to rent instead of to buy
  • Fancy student housing projects ‘train’ college grads to look for the same amenities in their apartment projects
  • Between 2010 and 2017 tenant ‘turnover’ has fallen from 62% to 52% per annum, and the longer occupancy periods save money for MF operators nationwide as they pay fewer locator fees, renovate less often, and lose less revenue in the gaps between rentals
  • There is a lot of individual and institutional equity available for MF developers now, and quality of MF developments is getting higher nationwide on average

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