O’Connor Apartment Forecast Luncheon

BY RAY HANKAMER
rhankamer@gmail.com

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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CCIM Luncheon – Chris Brown, City Of Houston Controller

BY RAY HANKAMER
rhankamer@gmail.com

Chris Brown was quick to explain that he came from a real estate oriented family, and that an MBA, a stint with an investment banking firm, and six years as Deputy City Controller gave him not only experience for his job as Chief Financial Officer  for the City, but experience to speak to a large room full of commercial real estate people. Brown focused on several topics:

Taxes:

  • The revenue cap passed by voters a few years ago leaves the City ‘handcuffed’ when it comes to funding the services needed by our burgeoning growth
  • Additional / alternative taxes under consideration include CBD congestion tax; tax on short term residential rentals, aka VRBO and AirBNB; encouraging greater density of development, concentrating more taxable assets on smaller tracts; commuter tax on those who live outside Houston but who commute in and use City services; and others
  • Taxes for still unfunded City personnel obligations going forward, now that pension reform has been accomplished
  • City policies encourage developers to build ‘up’ and not ‘out’ -high rise instead of low rise – further intensifying taxable base on finite land inside City limits

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Interview With Artist – And Real Estate Talent – David Adickes

BY RAY HANKAMER
rhankamer@gmail.com

RH: Welcome to RED News, David. You have been the Dean of the Houston Art Community for decades now, but most people don’t know that you have had a shrewd eye for real estate deals over the years. Before we get into that, though, can you give our readers a summary of your career in painting and sculpture, including your early studies?

David Adickes: Yes…I studied painting in Paris with Fernand Leger, one of the modern biggies, for two years: 1948-50. I returned to Houston and had shows at several galleries and museums, including the Museum of Fine Art. The first big sculpture I did was for real estate developer Joe Russo at his Lyric Center building, The Cellist.

Joe was unsure if he had done the right thing putting this large sculpture up. (I wired it to ‘play’ classical music for about twelve hours a day.) About the same time, other building owners had put up large expensive sculptures by Miro and Dubuffet, one of which cost $1 million, so Joe commissioned a Houston poll to see where his The Cellist ranked of these three. It topped the list with 85% approval, so he was happy!

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UH Bauer College Institute for Regional Forecasting – Robert W. Gilmer, Ph.D., Speaker

BY RAY HANKAMER
rhankamer@gmail.com

Takeaway: Houston’s economy is on a solid footing moving forward, although there is lingering weakness in office and in multi-family as Harvey occupancy dissipates.

Bullets:

  • Houston has moved into a new growth cycle, although oil prices are subject to international political risk, and improved technology can find and produce more oil with fewer rigs and fewer jobs
  • Oil jobs are returning, but slowly and the industrial sector has still not gotten over the loss of oil fieldrelated shrinkage of manufacturing space; there is no anticipated return of oil & gas employment to the previous peak
  • Global growth is accelerating and with it the growing need for oil & gas
  • Most of the big refining and chemical plants are complete or nearing completion; their feasibility was based on lower-cost oil & gas; jobs in that construction sector are shrinking

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O’Connor & Associates Land Forecast Luncheon

BY RAY HANKAMER
rhankamer@gmail.com

Speaker: Kirk Laguarta / Land Advisors

Bullet Points:

  • Large master-planned communities of the future will be near the Grand Parkway and beyond.
  • Developers who used to access the huge sums needed from banks now access them from equity investors who have a medium- to long-term horizon. These investors are from the money centers and are yield-driven.
  • Some large developers have been acquired by or have very close relationships with their sources of their funding. The developers have in some cases traded potentially higher
    profits for lower risk.
  • The Houston economy has many ‘drivers’ and lot development has continued apace even through the periods when oil prices dropped. This give assurance to investors.

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Interview with Howard Rambin, Houston Developer

BY RAY HANKAMER
rhankamer@gmail.com

REDNews: Good morning, Howard: To those of us with ‘grey hair’, you are an icon in commercial real estate in Houston. Can you share-for the benefit of newcomers to the CRE game-a summary of your career, including your educational background and how you first got started in real estate?

Howard Rambin: I attended high school at Deerfield in Connecticut and Kinkaid in Houston, and University of North Carolina and SMU. Starting at nine years old I had part time summer jobs ranging from paper boy, golf caddy, grocery clerk, truck mechanic assistant, bank clerk, YMCA coach, and work at a CPA firm.

In my first job out of college my firm was suddenly sold and I found myself out of work, married with a child. I had a friend who developed apartments, so I thought I could do it, too, so I got investors and bought an apartment project. Then I developed a Howard Johnson motel on the Gulf Freeway, and later a Hilton on Dairy Ashford and I-10.

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