Houston CRE Market

10 Must Reads for the CRE Industry Today (July 8, 2016)

 

  1. Oil price rout slams Houston's commercial real estate market “The prolonged slump in oil prices has slammed the office market in the U.S. energy industry hub of Houston, where more than 10 million square feet is available and vacancy rates are at their highest in 20 years, the real estate firm CBRE reported. Thousands of energy industry employees have lost jobs and companies have slashed their capital budgets during the steep slide in crude prices, which are still down more than 50 percent since 2014. CBRE found that 10.2 million square feet of commercial real estate was available to sublease at the end of June, as companies sought to shrink their footprint and get others to cover the terms of their leases.” (Reuters)
  2. Here’s how to find luxury real estate in a ‘second-tier city with a story’ “With post-Brexit uncertainty in the U.K., an ongoing international migrant crisis, terrorism threats globally, and a potentially destabilizing presidential election looming in the United States, it seems impossible to predict where to find a safe investment, let alone where investors can find luxury values today. While there isn’t a simple answer, there are some guiding principles defined by a buyer’s motivation. For real estate buyers that want to grow their capital or achieve an income, Yolande Barnes, the director of world research at Savills, recommends purchasing a secondary property in a 'second-tier city with a story.' These are smaller, but still vibrant cities that are doing well in the digital age, or places that are currently having a creative renaissance.” (MarketWatch)
  3. Economy Watch: FOMC Meeting Details Reasons for Interest Rate Hike Delays “Low interest rates aren’t poised to rise, meaning real estate finance will continue to be low-cost for borrowers that have the best credit. That’s one of the side effects of the Fed re-thinking its informal (and never committed to) schedule of interest rate hikes this year. Those hikes are on hold. 'Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,' the FOMC noted in the minutes of its latest meeting (June 14-15), which were released on Wednesday. 'Even so, many remarked that they were reluctant to change their outlook materially based on one economic data release.' On the whole, the Fed says it’s optimistic (not using that word) that the labor market will see a resumption of monthly gains in payroll employment 'that would be sufficient to promote continued strengthening of the labor market. However, some noted that with labor market conditions at or near… maximum employment, it would be reasonable to anticipate that gains in payroll employment would soon moderate from the pace seen over the past few years.' The next labor report is due on Friday.” (MultiHousing News)
  4. Brookfield Completes Rouse Buy “Brookfield Asset Management has completed its acquisition of Rouse Properties for its affiliate, BSREP II Retail Pooling LLC, under a previously agreed upon merger under which BSREP II Retail Holdings Corp. joined its parent company. 'The Rouse team has built a great company with a strong platform and differentiated assets and we are pleased that Brookfield recognizes the value we have created in becoming a leader in our sector,' David Kruth, Rouse chairman of the special committee of the board of directors, said in a prepared release at the time of the original agreement...Under the terms of the merger, Rouse’s shareholders, excluding Brookfield and its affiliates, will receive $18.25 per share in cash. With Brookfield affiliates already controlling about one-third of Rouse’s outstanding common shares, approximately 82.4 percent of the common shares not held by Brookfield and its affiliates voted last month in favor of the all-cash merger. With the deal now official, Andrew Silberfein will vacate his position as CEO of Rouse, with COO Brian Harper now filling the role.” (Commercial Property Executive)
  5. L.A. County office market heats up in second quarterIn April, Hasbro Inc. announced that it was ditching its old Burbank office for one about double the size in the city’s media district as part of a major corporate expansion. The reason the Rhode Island toy maker decided to sign a nearly 80,000-square-foot office lease? It needed more room for its growing number of Los Angeles-area employees. That deal reflected an improving regional economy and office market in the second quarter as concerns over the national economy faded from the beginning of the year. Countywide, the average monthly asking rent hit $3.02 a square foot, up from $3 in the first three months of the year, according to Los Angeles real estate services firm CBRE Group Inc. Vacancy, meanwhile, dropped from 14.8% to 14%. The improvement was widespread, touching every major L.A. County office market from downtown to the South Bay, with growing businesses moving into larger spaces. Such an improvement indicates that “all of the key drivers in L.A.’s diverse economy” are contributing to economic growth, CBRE said in its quarterly report.” (Los Angeles Times)
  6. Chicago Sun-Times Printing Plant Reborn as Data Center “Hold the presses! The former Chicago Sun-Times printing plant in the city’s Pilsen neighborhood has been transformed into a state-of-the-art data center to serve the growing demand by downtown businesses and clients in need of cloud solutions, colocation and other data center services. The 30-acre site is owned by QTS Realty Trust, which bought the shuttered printing plant for about $18 million back in 2014. QTS, an international provider of data center, managed hosting and cloud services, selected Mortenson Construction to redevelop the 317,000-square-foot building into a mega data center. Mortenson said on its web site that the construction cost is about $80 million. The first phase has been completed and features 48,000 square feet of raised floor and associated critical power. When fully developed, the building will support a total of 133,000 square feet of raised floor encompassing 24 megawatts of power. QTS said it has the ability to add 213,000 square feet of raised floor and 32 megawatts in Building 2 for a total of 346,000 square feet of raised floor and 56 megawatts of power within the campus at 2800 S. Ashland Ave.” (Commercial Property Executive)
  7. The major projects that could change Fifth Avenue “Fifth Avenue is not usually a New York City laggard, but it’s been a decade since a major development has gone up on the tony stretch. Back in 2006, the Midtown-based Stawski Partners built the 325,000-square-foot tower at 505 Fifth Avenue (at the corner of 42nd Street). That building is home to the private equity firm American Capital and Norges Bank on the office floors and H&M’s more upscale brand COS on the retail levels. Before that, you’d have to go back a few more decades to the boom of the 1980s, when a certain developer (who is now running for president) built the 58-story Trump Tower at 725 Fifth Avenue. 'The reality is that Fifth Avenue is kind of a tired block,' said Eric Anton, an investment-sales specialist at the commercial brokerage HFF.” (The Real Deal)
  8. Real Estate for the 1 Percent, With Art for the Masses “For most of the last century, residential and commercial developments in New York City tended to marry architecture and art with that kind of ambivalence, if they married them at all: lobbies with a few pretty, unremarkable paintings; courtyards with pleasant design pieces or plop art by sculptors whose work rarely showed up in the museums around town. But the landscape is starting to change, leading to what will soon be an almost walkable itinerary of some serious art in and around Manhattan buildings. The phenomenon is propelled largely by the same factors that are making it more difficult for artists themselves to live and work in the city: a concentration of global wealth with its eyes trained on real estate and luxury developers trying to stand out to attract a piece of that wealth.” (The New York Times)
  9. New bricks-and-mortar concept taps into consumers’ digital photo obsession “Blink is eyeing retail expansion thanks to new financing. Billed as a "photo shoot studio experience,” blink combines a bricks-and-mortar studio experience with real-time digital photography technology. The start-up company, which recently closed on a $3.6 million Series A round of funding, recently opened a location at Fashion Island, in Newport Beach, Calif., with another at Westfield Topanga, Canoga Park, Calif., this fall. The company opened its pilot location, at Corte Madera Mall, Corte Madera Town Center, Calif., about two years ago, and also has a store at Valley Fair, Santa Clara, Calif.  Designed as an experiential photography studio that inspires creativity and self-expression, Blink employs proprietary technology that makes it  easy for consumers to book shoots and buy images online via their computer or mobile device at the company’s site. The 'Blink experience' consists of a 10-minute (or longer) shoot with a professional photographer. The result of each shoot is a collection of hundreds of photographs that consumers (and businesses) can view, buy and share instantly via Blink’s website.” (Chain Store Age)
  10. Residences by Armani/Casa closes $305M construction loan “The developers of the Residences by Armani/Casa in Sunny Isles Beach just closed on a $305 million construction loan in what is likely the largest financing deal for the year. Dezer Development and the Related Group, along with Rockpoint Group, secured the financing from Wells Fargo and the Blackstone Group, records filed on Thursday show. The Real Deal previously reported that Dezer and Related were set to close on a $315 million loan for the project when the developers hosted their groundbreaking ceremony in March. At the time, Gil Dezer and Carlos Rosso said more than 65 percent of the 308-unit tower was under contract, which comes out to about 200 units and $650 million in sales. It’s expected to total nearly $1 billion once it sells out. Coastal Construction is the general contractor for the planned 56-story, 649-foot tall tower at 18975 Collins Avenue...Condos will range in size from 1,350 square feet to 4,160 square feet, and in price from about $2 million to more than $15 million for the Giorgio Armani-furnished penthouse, which comes with a trip to Italy to meet Armani himself.” (The Real Deal Miami)
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish