Ed Wulfe Retail Forecast at O'Connor & Associates March 23rd, 2011

Ed Wulfe could not remember a worse time in real estate than 2008 - 2010. All the negative factors lined up for that perfect storm. But today the corner has turned and positive signs are showing up with population growth being the key factor.
 Other key factors are an occupancy rate of 86% and  stable rental rates. New retail being built and opened in 2011 will hit around 1 M Sq Ft. a huge drop from 6M in 2008 and 3M in 2009. Less space being built should push up rental and occupancy rates. Anchor tenants will play a major role with HEB, Walmart, Phoenicia and Whole Foods leading the way.
Another standout has been Restaurants. Everyone thinks they are a chef. Some well funded ones are even anchor tennants.

Shadow Inventory Keeping Transactions Down

According to Dr Mark Dotsour, Chief Economist, Real Estate Center at Texas A&M University; commercial real estate transactions are down 80% over the last three years and no relief in sight till banks get rid of their "Shadow Inventory". Dr. Dotsour spoke to this at both the CCIM CRE Forecast in February and First American Title Multi Family Forecast March 4th both in Houston. This "Shadow Inventory", with no known value, is being held by banks with the OK of the Federal Government. It seems that there could be 700 to 1,000 bank failures if this inventory was marked to market. But until that happens transactions will remain low.

ULI Houston Development of Distinction Awards

The Urban Land Institute (ULI) Houston Chapter announced its 2011 Houston Development of Distinction Awards last night in the Cystal Ballroom of the Rice Hotel.

“The awards program is the centerpiece of ULI’s efforts to identify and promote


best practices in all types of real estate development,” said ULI Houston Executive

Director, Ann Taylor. “The finalists were all worthy of recognition, and we hope

the winners will move on to the ULI Americas competition, held annually in

Washington, DC.”

This year’s Development of Distinction Award winners are:

Capitol Oaks – developed by Lovett and nominated by InTownHomes, in the forprofit category

Children’s Museum of Houston – developed by Children’s Museum of Houston

and nominated by Jackson & Ryan Architects, in the not-for-profit category

Brays Crossing – developed and nominated by New Hope Housing, in the not-forprofit category

Greenway Plaza – developed by Century Development, owned by Crescent, and

nominated by Ziegler Cooper Architects, in the heritage category.
 
Award Finalists also included: BP Helios Plaza – developed by BP America,


nominated by Gensler; Houston Museum of Natural Science at Sugar Land –

developed by the City of Sugar Land, nominated by Newland Communities; and Monarch School’s Chrysalis Building – developed by The Monarch School,

nominated by Momentum Bay.

Two developments were also given Honorable Mentions: The Terraces –

developed and nominated by Kaldis Development Interests; and Memorial Park,

Living Bridge – owned by the City of Houston Parks and Recreation Department,

nominated by Clark Condon & Associates.

SIOR Luncheon Jan 11th, 2011

Norm Adams President of Adams Insurance Service was guest speaker today at SIOR and was garnering financial support to repeal Houston's Prop 1. Known as the "Rain Tax" Norm believes that the Houston ballot last November was illegal in 4 ways and feels that the pending lawsuit can win on any one of the 4 points. They are looking to raise $150,000 to support the lawsuit.

The Pastors Council is one of the groups supporting this repeal and lawsuit. They feel that if the "Rain Tax" goes through that it will spell the end of tax exempt status for Churches.

ACRP Breakfast - discussing "Katy - The #2 Boom Town"

Discussing "Katy - The #2 Boom Town"

October 28, 2010

The Association of Commercial Real Estate Professionals (ACRP) hosted breakfast with Lance LaCour, President/CEO Katy Area Economic Development Council, to speak on what has happened to make Katy The #2 Boom Town.

The EDC’s mission is to establish the Katy area as the premier location for families and businesses through planned economic growth and development. Within the last five years, the 2,280,500 SF of new / expanded industrial development created 1,647 jobs while medical and office growth brought nearly 10,000 new jobs. Along with recruiting new industries the EDC has adopted an “Economic Gardening” approach to ensure the expansion and survival of existing businesses. The Katy Area EDC supports entrepreneurship through implementation of the Synchronistic Existing Business Interview Program and provides technical assistance to existing businesses with incentives, permitting, site selection, and financing.

Fostering master-planned communities like Cinco Ranch and Woodcreek Reserve aid in creating an image for Katy. Lance hopes to grow the Katy “brand” into a cornerstone of Greater Houston, providing opportunities for excellence in business, education, healthcare, recreation and living.

Left to Right Bob Bellomy - Hermes Architects John Kruse - Holt Lunsford Commercial

Left to Right Paul McGuire - Green Bank Fred Cook - Wilson, Cribbs & Goren, P.C.

Lance LaCour
President/CEO
Katy Area Economic Development Council

Lance LaCour President/CEO
Katy Area Economic Development Council

West Houston's position on Proposition 1: For Better Streets and Drainage

For Better Streets and Drainage

The West Houston Association is strongly supporting Proposition 1, the City of Houston Charter Amendment proposal for funding road and drainage infrastructure. Here is why: when something is broken or does not work, fix it. Without the means to fix the problem, renewing Houston will remain only a pipe dream.

The proposed pay-as-you-go, dedicated fund financed 60 percent from existing revenue sources, a new drainage user fee and impact fees for new development will improve, repair and replace 70-80 percent of Houston’s street and drainage systems over the next 30 years. Houston would indeed “renew” itself. As any driver of Houston streets and many property owners in the City can attest, too many of Houston streets are in deplorable condition. Due to inadequate or obsolete drainage in some areas, what should be an easily manageable rainfall regularly translates into damaged property. Further, flooded streets severely restrict the movement of emergency vehicles, at times they are needed most. The proposed Charter Amendment is the only way any real progress can be expected by citizens who often complain the most about these conditions.

Currently there are no predictable sources of funds to address this problem. Because of other budget priorities over the last 20 years, the City has committed less than $100 million per year for street and drainage work. This sounds like a lot of money, but in a city the size of Houston the needs are far greater. The City’s own facilities inventory (GASB-34 Report) shows the current value of its aging facilities to be approximately $10 billion. Do the math. We need $400-500 million per year over the next 20-30 years and we are funded at less than $100 million per year. At its historical funding levels, Houston will never make any significant progress on the repair, replacement and upgrades needed for our streets and drainage systems. In fact it will not even keep pace with the rate of deterioration that worsens as systems age.

West Houston Association’s support for this proposal is explicitly conditioned on the establishment of a dedicated fund by the charter amendment that protects the funds for their intended purpose. And, that the user fee being applied to all properties in the city—residential and commercial, public and private. While these fees are common in most major American cities this is a first for Houston, and the key to making the program work.

There are some who are trying to posture this proposal as a new tax, and worse a backdoor tax on non-taxable entities. The proposed Charter Amendment requires City
Council to establish a drainage user fee that will fund approximately 40 percent of the total program. Under the Mayor’s plan the user fee is based on the amount of storm
water run off a land owner contributes to the city’s drainage systems. The concept is not new; Houstonians pay monthly user fees for water and sewer service. Incorporated in these fees are funds to renew, replace and expand those systems. Streets and drainage should be treated the same way. Citizens, school district busses, church parishioners, they all use the city streets, and rain water from their properties drains into the city storm sewers. It is critical to the success of the program that all users of the system bear their fair share of the burden. Exempting certain users from paying their fair share means the remaining users (primarily homeowners) have to pay a higher price and this is simply not fair.

In addition new development will pay its share for new impacts on the systems. The process for creation and implementation of impact fees is governed by state law. The
city will have to follow these laws in administering this part of the proposal, providing additional safe guards for property owners.

Ad valorem taxes are based on assessed values, which over time can go up as market conditions improve; in other words “tax creep”. The proposal calls for a user fee. Once set by City Council it can only go up, or down, by an act of Council. Under the proposed Charter Amendment the proceeds from the fee will be solely for the enhancement and replacement of street and storm drains in the City of Houston and can not be used for any other purpose.

This will be a significant program that finally will take care of Houston’s most critical infrastructure problems. It will create many jobs in Houston. The alternative: Left
unattended our streets and drainage systems will continue to deteriorate at an increasing rate and at a cost we can’t keep up with.

No one likes paying more fees anymore that they like having to re-roof their house. But eventually a new roof is necessary or everything in the house is at risk. Like a house, streets and drainage infrastructure must be maintained and at some point repaired or replaced when it wears out. We are confident that this plan will allow the City of Houston to finally do just that. This is simply good public policy.

* * *The West Houston Association is a non-profit organization established in 1979 and is comprised of firms and organizations dedicated to quality growth in the region. Its mission is to aggressively pursue public policies that enhance quality of life, quality growth and promote economic development in one of the fastest growing areas in the United States. http://www.westhouston.org/ 820 Gessner Ste. #1310 Houston, TX 77024

O’Connor Apartment Forecast Luncheon

Comments from speakers Greg Austin of Jones Lang LaSalle and Teresa Lowery of Colliers International at recent O’Connor Apartment Forecast Luncheon:

October 20, 2010

By Ray Hankamer Jr.

We have just about come full circle from 2007, when multi-family sales were at all-time high. Then cap rates and interest rates were in the 5.0 to 5.5% range and they are back there now, with too much money chasing too few good (Class A) deals. In 2007 the “value depression” started with single family collapse on the West Coast and moved East. Job losses and rising cap rates went hand in hand as buyers were few. By 2008 sales of multi-family were down 40% and by 2009 down another 60%. Special servicers for CMBS portfolios hinted of a “tsunami” of distressed projects about to hit the market. But they never did. Buyers are still waiting for them, and in the meantime, some of the distressed notes have been sold (avoiding foreclosure of the assets), with lenders accepting some discounts to 80-90% of original loan, but now, thanks to their extending and keeping a level head, some lenders are only having to take discounts of 5%, and even now they are selling off some loans at par.

Houston’s multi-family occupancy is now 89.4%, lower than some other of the metro markets in Texas, but climbing nonetheless. There is positive rental rate growth, although ten per cent concessions are still the norm in Houston.

The market has returned to equilibrium and builders are starting to plan for construction of new supply, and construction lenders are ready, with loans of value in the 65-75% range. Demand is now starting to lead supply, and some additional multi-family demand is expected as single family foreclosures proceed in the area. Occupancies of 91.2 in Houston are predicted by next year, although Austin is in the 94-95% range.

As for distressed multi-family, Houston has the 4th highest level of 20 nationwide markets, with $1.4 billion (52 troubled assets). Many of these distressed situations are being handled by servicers selling the loans, and this should pick up speed. Buyers should keep some powder dry.

NAIOP Houston Chapter Announces Important Information on Proposition 1...

	NAIOP Houston Members and Associates, NAIOP Houston stands steadfastly opposed to the City of Houston’s Proposition 1 and we strongly encourage our membership and industry associates to join our efforts to defeat this initiative at the ballot box this November. Prop 1 is a new property tax disguised as an assessment. We oppose Prop 1 for the following reasons: Currently, there is no concrete information or guidelines on how the collected money will be spent.   The details of this multi-BILLION dollar program are still lacking with the election only a few weeks away. This fund has a minimum 20 YEAR LIFE and WILL be extended for an additional 20 year period unless a 2/3 vote by City Council terminates it at renewal.  It is a PERPETUAL back-door tax increase. A $.032 per square foot of impervious cover charge is being contemplated. This would result in a $1,400 annual assessment on 1 acre of improved land or $28,000 over the initial 20 years.  A representative 120,000 square foot industrial building on 6.5 acres would be assessed about $7,000 annually, resulting in the equivalent of  23% INCREASE in the City of Houston portion of an owner’s tax bill. That’s $140,000 over 20years….and that’s only if the assessment rate isn’t increased at some point.  ALL property will be assessed these fees…homesteads, commercial property, paved vacant land, schools, and churches. Therefore, tax exempt organizations will be taxed and local school districts, which are ironically a tax assessor, will be taxed as well. HISD has already requested an exemption from Prop 1 citing the need to fire teachers or raise taxes if the measure passes.  A new fee assessment for our citizens could not come at a worse time. We are struggling to emerge from the Great Recession, growth has stagnated again, and Houston area unemployment is near 9%.... is it really prudent to increase our government funding burden…..again?  We ask you, our members and associates, to quickly get up to speed on this important issue and actively oppose it. Please see (http://stopprop1.com/). NAIOP Board of Directors

Editorial IREM Luncheon Thursday OCT 7th

Editorial IREM Luncheon Thursday
October 7, 2010

At the IREM Houston luncheon, Dr. Richard Murray, Ph. D. gave his valuable insight on Houston’s changing demographics and future. Dr. Murray covered topics concerning the commercial real estate community. He addressed Proposition I to political campaign funding. Furthermore, he provided a fact-based and historical approach to speculate the outcome of the mid-term elections.

“About seventy percent of Houstonians vote straight party,” Dr. Murray noted. He mentioned that no single party will gain a dominant position from the upcoming elections. The Democrats were successful in passing major bills and legislation however, continuing this theme is highly unlikely for either party in the next term. Proposition I, doubtful to pass, is losing momentum because of the taxing for school districts, churches and other tax exempt entities.

left-to-right

Frank Staats – IREM Houston President - Crescent Real Estate Equities

Dr. Richard Murray – Speaker, An Insider’s View of How the Election Will Affect You!

Mary Butler- IREM Houston President Elect – Granite Properties

GreenPainters U.S. launch happy hour at New Living

GreenPainters U.S. launch happy hour at New Living on September 29th, 2010

I stopped into New Living to check out a local sustainability initiative. At REDNews we have committed to educating all sides of sustainability within our publication. REDNews’ GREENews will include information about Energy Star/LEED Certified properties and eco-friendly products and services available to the community.

 

New Living has formed GreenPainters U.S., an initiative to educate and certify "Green Painters" in how to work with sustainable coatings and how to green their business techniques. At this launch party, I ran into Steven Stelzer the program director of the Green Building Resource Center (GBRC). The city endorsed GBRC displays a wide array of eco-friendly products and methods geared towards educating the public in sustainable design components for their homes and businesses. New Living is a product/service donor of the GBRC.

Houston Solar Tour OCT 2, 2010

Houston Solar Tour 
October 2, 2010

The Solar Social was an opportunity to meet and greet those with a similar passion for renewable energy choices. The venue sat in front of the Gerald D. Hines College of Architecture at The University of Houston. Geared towards education, the event hosted several booths with well connected individuals of the Houston sustainability movement. The fun wasn't over at noon. In fact, it just it was just beginning as the attendees boarded the appropriate buses to go view actual commercial and residential solar PV systems of the Houston area.

Left to right:
Heather Smith -USGBC EP Chair
Lisa Lin -USGBC EP Chair Elect
Maria Pesantez -USGBC EP Green Films Coordinator
Laura Spanjian -City of Houston, Director of Sustainability

Changes to the Historic Ordinance , Houston

Lee Girard asked me to pass along this information.

We have about a week to effect the city council vote on the proposed new Historic Ordinance. We are planning an organizational meeting for our supporters and would like for you to attend and bring your concerned neighbors.

Time: Thursday, October 30, 6:30 PM

Place: Better Homes and Gardens, Anderson Properties, 741 E 11th Street

It is likely that we are going to have to collect a large number of petition signatures in a short amount of time, so it is key that we are organized.
As you may know, the city, specifically Ms. Lovell, promised the Heights a re-vote. They are reneging on that promise and now mandating that we get 25% of homeowners in each district to sign a petition indicating they want a re-vote. Further, this has to be accomplished in 15 days! The city has also indicated that they will not give us that required form ahead of time, so we will really only have 15 days. This will be a challenge in larger districts. Of course, that is the intent. There are a number of city council members who agree that this is unfair. Those Council Members are putting pressure on Ms. Lovell to make some changes. We need to keep this in front of them and at the top of their Agenda. Outraged constituents also give political cover to the Council people who are supporting our cause.

It is URGENT at this point that we make our voices heard to City Council.

We have five major points that we are fighting for:
.
1. Every existing Historic District be resurveyed with 67% of owners and land area for approval to become a protected historic district

2. New districts will be created with 67% of owners and land area for approval to become a protected historic district

3. That all design guidelines must be developed for each neighborhood and presented to the neighborhoods before the vote takes place

4. That there be a mechanism/process for all Protected Districts to pursue withdrawal as a Historic District after the first year of designation is complete

5. That when a district completes the process for withdrawal from protected status it goes directly to council for reconsideration not a non-elected official or Commission

We need to have as many people driving these points home to council as is possible! Please email and call council and the Mayor. Go to our web site for contact information - ResponsibleHistoricPreservation.org.

What else can you do?
Plan to speak at City Council on Tuesday, October 5 at 2:00. You will need to call the city secretary at 832-393-1100 to make your appointment to speak. You can call the day before or by 11:00 the day of the meeting to reserve your spot. We are planning to have a lot of people speaking, so you will probably only be able to get a one-minute spot to speak. That makes it easy. Our main point is a resurvey for all districts is the only fair way to handle this. If you want to get up and say one sentence, that’s it. It has been made very clear to us that the number of people speaking at council sways the vote. I know the time is inconvenient and we all have jobs. It is really quite important to look Council in the eye and tell them you care about about your property rights.

Mary Wassef
Realtor, ABR, CLHMS
Keller Williams Realty- The Heights

REDNews Advisory Board Appreciation Party

We changed the format of our Advisory Board meeting and turned it into a party Thursday night, September 30th at Grotto.

Kevin Dalrymple with Clay & Co, Jim Carney with REDNews, Liz Westcott-Brown with Tarantino, Beth Young and Henry Hagendorf with Grubb & Ellis. Thomas Boran with REDNews, Angela Sandoval and Marisol Varate with Tarantino, Suzanne Page-Pryde with Page-Pryde Properties and Peggy Rougeou with Tarantino

Ginger Wheless with REDNews, Ed Taravella with Taracorp, Jim Carney with REDNews and Peggy Rougeou with Tarantino

Women in The Fast Lane of Real Estate

Wednesday, September 29th, The Greater Houston Women's Chamber of Commerce put on a "Business Style (Fashion) Show at the Riverway Omni before a crowd in excess of 500. Beth Wolff with Beth Wolff Realtors and Beth Young with Grubb & Ellis were Co-Chairs and were joined by 24 top real estate producers as models.

Style Show MC's Stephen Skoda with M Penner and Beth Young with Grubb & Ellis

Raquel and Andrew Segal and Lee Girard

Henry and Haley Hagendorf

Dawn Landry and Robert Kramp

Westchase District's 15th Anniversary Party at Rio Ranch

Westchase District's 15th Anniversary Party at Rio Ranch, Thursday September 23rd, 2010

Two founding members of Westchase District: Jim Murphy and Paul McDonald

Attendees at Westchase Anniversary Party

County Proclamation of Westchase Day September 23rd

Ft Bend Society of Real estate Breakfast and O'Connor Office Forecast Luncheon

Ft Bend Society of Real estate Breakfast Tuesday/21


Bob Graff, Missouri City, Dr John Novak, Curtice Commercial/Colliers and Jim Cockrill, Coldwell Banker United

O'Connor Office Forecast Luncheon Wed 9/22

Paul Frazier, Brookfield Properties, Laura Van Ness, Central Houston and Brad Fricks with Stream Realty

Melanie Fregoe Edmundson with Phase Eng, Jim Murphy, Westchase District and Kathleen O'Connor with O'Connor and Assoc.

Paul Frazier feels that the next 3 quarters will be flat or uncertain for CBD market then we could see a bump in gross rental rates to over the current $34. He noted that 67% of Class A space in CBD was built between 1970 and 1984.

Brad Fricks sees recovery in most office markets in 2011 when quite a few leases are up for renewal with The Energy Corridor expected to recover by mid 2011 with Westchase and CBD to follow. The Galleria is now in recovery phase with forecasts of 1 to 3 new buildings projected.

Houston BOMA Tuesday August 31st, 2010

Can You Implement Changes At Your Property to Encourage a Greener Environment?


The answer is yes and a panel of experts including Morris Chen, Dave Johnson and Andre Lehr gave many examples of low cost and no cost items to make your buildings more Eco friendly at the BOMA sponsored event yesterday. In additions to citing methods for implementing programs, many examples of the return on investment for property owners were given.

Andre Lehr, Morris Chen, Dave Johnson and Chuck Moore

Laura Spanjian, Director, Mayor’s Office of Sustainability with The City of Houston announced that the City is implementing a Houston Green Office Challenge. The purpose of the Green Office Challenge is to help participants achieve strategies that reduce energy, waste and water usage and will ultimately reduce overhead costs to owners. Plus the City of Houston will also be providing funds to support these initiatives. Watch for their official announcement next Tuesday!

Laura Spanjian

View the complete video of this event here.

RERAlliance Financial Reform Luncheon

Financial Reform was the topic of the Luncheon that RERAlliance presented Tuesday August 31st. The well attended event offered some fresh faces and comments concerning the "Roadblocks to Commercial Real Estate Recovery".

Phil Lewis with RERAlliance led the discussion which included John Heasley with the Texas Bankers Association and Julie Cripe with OmniBank.

John Heasley

Julie Cripe

 According to John; 95% of the mortgage loans in the past 3 to 4 years would never had been made if not for Fannie Mae and Freddie Mac. Julie says that Commercial Real Estate is out of favor in DC where housing is a "Sacred Cow" and small business is seen as an economy booster. So that leaves out CRE.
The still unanswered question that came from the audience was: "Publicly banks say they are lending but my loan officer says no".

View the complete video of this event here.

Ted Jones at ACRP/SIOR August 26th, 2010

Ted Jones with Stewart Title was the featured speaker this morning, August 26th. His message on the new business model for the 2011 economy is pretty simple. It's Adapt, Mitigate, Migrate or Die.

Brian Cogburn with Hyde Park Investments, Reid Wilson with Wilson, Cribbs & Goren and John Duffie with Nelson Duffie Interests

Once again; it's a good thing this is Texas. Real estate values in Houston are basically twice as good as the US averages. This also looks like the best buying opportunity since 1988/1989. And best bets are land and hotels.

                 Marty McAdams with McAdams Associates and Melanie Fregoe Edmundson with Phase Engineering

O'Connor Retail Forecast Wednesday August 18th, 2010

Kathy Riggs and Kathleen O'Connor both with O'Connor and Associates and Speaker John McFarlin with Coldwell Banker Commercial United
John McFarlin with Coldwell Banker Commercial United is neither economist nor a retail expert but he gave a great presentation today at the O'Connor Retail Forecast Luncheon. John is an ex football coach who knows how to prepare for the upcoming opposition and in this case it's the retail economy.
Where is Retail going? It's going to the Internet and the brick & mortar will more and more be turning into discount and outlet locations. For example: Macy's is devoting it's entire capital expenditure budget to e commerce. They expect a return of $5.50 for each $1.00 allocated. Target will be expanding 350 of its stores to feature groceries. The major drugstores are doing the same thing. They want to be convenient one-stop-shops.