YOUR COMMERCIAL REAL ESTATE MARKETING SOURCE
Dismantling Dodd-Frank: Trump takes aim at financial services regulation
The future of shopping centers: ICSC Highlights
2,215 Lots 2,000,000 sf Commercial 931 Apartments 875 Acres-Total
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Pete Dwyer 512.327.7415 email@example.com www.dwyerrealty.com For more information about the property, please see page 8
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IN THIS ISSUE
Sales & Leases 1 – 3, 5, 7, 11, 13 – 15, 19 – 21, 29
"You Ain’t Seen Nothing Yet" 8 - 9 The Future of Shopping Centers 10, 12, 18 Blighted to Brilliant 16 – 17
Environmental Services 30, 43 Land Servicing 44 Legal Services 41 Photography 42 Real Estate Loans 20
CIVIL FAIR PLAY Dismantling Dodd-Frank 24 – 26
O’Connor Industrial & Office Forecast 29
Events 32, 34, 36 Social 33, 35 ,37 Bulletin 38-40 4
RAY'S BUZZ Land Advisors Land & Housing Forecast 28
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Letter from the Publisher
YOUR COMMERCIAL REAL ESTATE MARKETING SOURCE
Ginger Wheless ginger@REDNews.com
Margie Gohmert info@REDNews.com
As 2016 comes to a close, I hope you are happy about your successes and optimistic about the upcoming New Year.
We’ve included several Texas ICSC speaker recaps in this issue related to the paradigm shift going on in retail. Read what Scott Lynn & Nick Egelanian had to say regarding “The Future of Shopping Centers” starting on page 10. The Civil Fair Play column is a discussion about the Dodd-Frank regulations and whether they will be dismantled which you can find starting on page 24. We enjoyed talking with Pete Dwyer about his developments in the Austin area. He is truly a force to be reckoned with! Three massive downturns have not deterred him from thriving and expanding his company’s developments in Central Texas. I hope you have a wonderful Holiday Season with family and friends which includes counting your many blessings, one of which is how lucky we are to be living in the U.S.A.
Janis Arnold email@example.com Anne Farrell Peterson info@REDNews.com Sue Durio info@REDNews.com Andrea Slaydon info@REDNews.com Brandi Smith info@REDNews.com
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“You ain’t seen nothing yet”
Central Texas' Dwyer Realty boasts impressive portfolio
BY BRANDI SMITH
How do you start a fourdecade career in the real estate industry? If you’re Pete Dwyer, the answer is by trying to fake out your father. “The summer between my sophomore and junior year at the University of Texas, I was planning on goofing off and water skiing. My dad had other intentions. He said, ‘No, you have to take at least one class in the summer,’” explains Dwyer. “Back in 1976, you could take a one-week real estate salesman's class and get your salesman's license. So I technically accommodated my father's wish and I took a one-week real estate course.” Later that summer, one of Dwyer’s neighbors, an older man who lived across the street, started chatting with him. “I started telling him about my newfound real estate prowess from my one-week course. He said, ‘You know what? I'll be your first customer,’” Dwyer recalls. The neighbor had just purchased a three-plex property down the street and was interested in selling it. He offered seller financing if Dwyer could come up with 10 percent down on the $49,000 deal.
"I put together all of my savings, sold my boat and cobbled together $4,900. I bought that tri-plex at the tender age of 21" - Pete Dwyer “I put together all of my savings, sold my boat and cobbled together $4,900. I bought that tri-plex at the tender age of 21,” Dwyer says. “Real estate has been in my blood every since.” 8
“There's always a little bit of pain with the gain” Flash forward 40 years and Dwyer, now owner and president of Dwyer Realty Companies, is a force to be reckoned with in Central Texas. His projects run the gamut from Austin’s first Sustainable Roadway project - Parmer Lane in Wildhorse Ranch - to Presidential Glen, a 1,600-home master-planned community in Manor, and ShadowGlen, a 3,500home golf course. In 2010, his efforts resulted in the Austin Business Journal honoring him with the W. Neal Kocurek Commercial Real Estate Lifetime Achievement Award. “When I was giving my acceptance speech, I said, ‘I've got to think that part of the reason I got this award was because I'm one of the few people still left standing. The reason I'm one of the few people still standing is because this has happened to me several times before.” He’s referring, of course, to the Great Recession, as well as the savings and loan crisis of the ‘80s and
the dot-com bust of the ‘90s. “Unfortunately for most developer types like me who have been in the business for so long, we've been through these nasty things called cycles,” Dwyer says. “We don't ever see them coming enough in advance to become insulated from them. So there's always a little bit of pain with the gain.”
"The reason I'm one of the few people still left standing is because this has happened to me several times before" - Pete Dwyer Dwyer says, having lived through and survived three massive downturns for the industry, he has learned how to weather the storm, so to speak. “The weathering the first time wasn't quite as
pretty. Weathering the second time, I was a little bit more prepared,” he says. “Weathering the third time, we actually thrived and expanded our business, because we saw it coming and we were prepared.”
Dwyer attributes that success to the relationship a developer builds with investors, partners and lenders. “If they have confidence in you to say, 'Hey, I've got this, I'm at the helm. It’s going to be stormy waters, but together we can navigate through.
“You're not in the fray or the fight” Though the industry’s cycles seem to stay the same, Dwyer says he’s seen the industry itself change considerably over his four decades in it. “One of the biggest things that we all talk about right now, especially in the Austin area, is the affordability crisis,” he says, explaining that the average home price was $149,000 ten years ago. Now that average is closer to $300,000, an almost 200 percent increase. “With all the regulations and the battles and the cost of doing business that have evolved here in Austin, it’s very difficult to produce a house in that price range west of Interstate 35,” Dwyer adds. Cost and environmental battles are two reasons Dwyer gives for why he says he’s started to focus his attention east of I-35.. “On the eastern part of Travis County, a lot of money has been spent building highways and a lot
of money has been spent providing infrastructure,” Dwyer explains. “You get a lot of density that you wouldn't normally get, because you're not in the fray or the fight.”
“One of the best portfolios that I've ever had”
property’s history dates back to the 1870s when George Eppright established his homestead there. After more than a century in the Eppright family, Col. George Eppright endowed the tract to the Texas A&M Foundation, dictating that it be sold upon his passing.
Dwyer Realty Companies is currently working on three major projects in eastern Travis County.
“I ended up buying it,” Dwyer says of purchasing the nearly 1,500-acre property in 1999.
Las Entradas, or “The Entrances,” will provide a walkable community straddling US 290 East. Combining mixed-use and transit-oriented development, it will include a neighborhood commercial center, conference center, an amphitheater and 59-acre park, along with hike and bike trails. Located just nine miles east of downtown Austin, the location is ideal.
Just 15 minutes from downtown, the nearly 1,500acre, master-planned residential and commercial community will provide a wide range of housing: approximately 2,400 homes, more than 1,000 apartments and 200 condos. The community will be nestled in the natural hills, valleys and trees just beyond the city of Manor, near SH 130 and US 290, and include more than 20 miles of hike and bike trails.
“You get a lot of density that you wouldn't normally get, because you're not in the fray or the fight" - Pete Dwyer
“This is probably one of the best portfolios that I've ever had,” Dwyer boasts.
Just south of Las Entradas, Lagos is a 675-acre, high-density master-planned development that will include “single family, multi-family and mixed retail/ commercial land uses.”
Finally, there’s Wildhorse, a planned community Dwyer bills as “the new edge of Austin.” The
He suspects even more good news for the industry to come as Texas continues its rapid population growth. “The whole mega-region between Dallas, Fort Worth, Austin, San Antonio and Houston, I think, has a very, very bright future. We don't have as many regulations and constraints on the economy like some of the other East and West Coast markets do,” Dwyer says. "You ain't seen nothing yet." l For more information or a marketing brochure, contact Pete Dwyer at Dwyer Realty in Austin at firstname.lastname@example.org or 512-327-7415 December 2016
The Future of Shopping Centers: ICSC Highlights
BY ANDREA SLAYDON
What is it about a shopping center that makes it successful? Big named stores? Well-known restaurants and entertainment? The formula that has worked in the past is changing and experts say, of course, it all comes down to what the consumer wants. This sign of the times also points to the end of the traditional shopping mall. These were just some of the highlights from the International Council of Shopping Centers Texas fall 2016 conference. “There is a paradigm shift going on in retail now,” said Scott Lynn, Founder & Co Principal of Metropolitan Capital Advisors. “Some investors are following these entertainment, lifestyle, restaurants or food service oriented projects and they are saying, ‘I think that’s less risk today because that’s where people are spending their money.’” Metropolitan Capital Advisors is a real estate investment-banking firm that specializes in arranging financing for commercial developers and owners. Lynn and his team have arranged more than $12 billion of debt and equity transactions for various types of commercial property. At the ICSC Texas conference, Lynn moderated a panel looking into the changes in shopping centers. Bottom line: traditional bricks and sticks real estate with a Target or Walmart and nail salons and dry cleaners, for example, are not exactly what the buyers want anymore. “They want to sit down on patios and drink craft beers and fine wines and have gourmet nachos with all that,” said Lynn. “They’re spending, every time they go, $50 and that’s really where people are going today.”
One great example is Village on the Parkway in Addison, Texas. The mixed-use center, owned by Lincoln Property Company, The Retail Connection, had a $43 million initial acquisition price with a total $85 million project cost.
“What they were able to do, at least initially, is a transaction that was de-leveraged,” explains Lynn. “It didn’t have a lot of financing on it. It was done with a lot of cash initially. Once they got the big tenants signed up, that being AMC and WholeFoods, Continue on Page 12
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Continued from Page 10
current market value and let’s be partners. You guys go find the tenants, we’ll contribute the land, we’ll go to the bank together and borrow the balance of our net off our land.’” said Lynn, “This type of deal would usually throw up a red flag but because of the history with Jones, the community and Lincoln Properties, the deal worked.” The Parke in Cedar Park, Texas is a 42 acre site of land acquired from DR Horton with no entitlements or pre-leasing. Endeavor took the land risk due to the success of their Target anchored center in close proximity. The Parke is anchored by Whole Foods, Dick’s Sporting Goods, DSW, ULTA, Old Navy, and others. Grand opening is planned for April 2017. Another significant development from the ICSC conference was talk of cap rates between beautifully anchored power centers with long-term leases and great credit versus some of the specialty stores with no credit. “There just wasn’t as much differentiation for credit versus non-credit as one might have thought. That’s just a sign of how hot the market is and how starved for product people are,” said Lynn. “They’re paying big prices for this well-branded, not necessarily well-anchored, by well-branded retail.” Lynn says the biggest surprise for commercial real estate right now: entertainment retail seems to be valued as highly as traditional anchored retail. l Scott Lynn is the Founder & Co Principal of Metropolitan Capital Advisors, a real estate investment-banking firm that specializes in arranging financing for commercial developers and owners. During the past twenty-five years, Scott and his colleagues have arranged over $12 billion of debt and equity transactions for every kind of commercial property imaginable. The team at Metropolitan Capital Advisors have been consistently ranked as one of the TOP 25 Finance Intermediaries in the U.S. then they went to the bank and the bank was able to give them financing. “ When you exclude the two anchor tenants, the vast majority of the new tenants at Village on the Parkway are restaurants. “The reason that center is so successful and popular today is because it’s got a grocery store, it’s got a theater which is entertainment and it’s got the major draws which are all those restaurants,” said Lynn. “People are coming to this center to eat and entertain themselves.” Lynn said the challenge on these heavy restaurant center projects is their high capital expense outlay and the probability of success is far from 100% because it’s heavily driven by tastes and opinions. The Domain NORTHSIDE in Austin, Texas has a very traditional, outdoor setting. It’s owned by Endeavor Real Estate Group & Northwood and is anchored by Nordstrom and Restoration Hardware. The difference 12
for this project is the restaurant choices. It’s all chefdriven, non-branded, non-chain restaurants. Because of the strong anchors of this shopping center, this “specialty restaurant row” works. “Once the leases were signed there, they were able to leverage that at almost 80% of cost,” said Lynn. “When you have specialty, non-named brands, chefdriven restaurants, no credit, for the first time this concept, no brand recognition, the leverage drops.”
The Post Department Store Era Nick Egelanian, President of Siteworks Retail Real Estate Services, is a leading expert on retail and the shopping center industry. For ICSC his focus was retail in the post department store era. He says
Compare the Domain NORTHSIDE to Las Colinas Specialty Retail in the upscale area of Las Colinas in Irving, Texas. Most of the tenants are well known brands that have multiple locations including Del Frisco, Chuy’s, and Ascension Coffee. The owner of the land is Cowboys owner Jerry Jones. This project was a rare agreement because it was as simple as Jones shaking hands with Lincoln Properties and making a deal. “They said, ‘Look, we’ll contribute our land at the Continue on Page 18
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DAYCARE FACILITY FOR SALE
Price REDUCED for Business and land and building $3,500,000; or $1,500,000 for just the business.
Very successful, established North Houston/ South Woodlands Daycare, owner retiring, A+ location, $500,000 DIBITDA (Discretionary Income Before Interest Taxes Depreciation Amortization)!!! • Corner tract, 1.5 +/- acres, located at a signalized intersection. Hard corner offers future expansion or ground lease, build to suit opportunities or ; and
• 8,050 square foot building, with 3,000 square foot, oversized playground; and
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6830 Wilcrest Drive • Houston, TX 77072 713.939.8181 ext. 118 | email@example.com
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¾ Location: SWC/U.S. 290 and W. Little York, Houston, Texas
14902 - 14990 Norhtwest Freeway Houston, Texas 77040 42,659 s.f.
¾ S/C Size: 42,659 s.f. ¾ Total Size: 86,985 s.f. w/k-1 ¾ Year Built: 1982, renovated 2004 ¾ Sale Price: $6,750,000.00 ¾ Terms: All Expenses are passed through to Tenant, including Management Fees.
¾ CAP Rate: 8% ¾ Tenants: Subway, La Fogata, Tex Mex, La Fontaine Hall, NW Chinese Buffet, K-1 Speed is a Co-Tenant--Owned By Others ¾ DEMOGRAPHICS: 1 mile - 2,733 2mile - 69,152 5 mile - 266,570
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The information contained herein, while based upon data supplied by sources deemed reliable, is subject to errors or omissions and is not, in any way warranted by George Polydoros, or Plydoros & Associates. This information is subject to change without notice.
Blighted to Brilliant
The Revitalization of Cities Across Texas and the Lasting Community impact.
BY ANDREA SLAYDON
Abandoned buildings, decaying properties and vacant spaces bring about all sorts of problems for communities. From an increase in crime to plummeting property values, it’s really something that impacts us all across the board. Luckily, some see these blighted areas as a chance to create a win for everyone. From Houston to Dallas and Austin to Fort Worth… once neglected areas are now thriving places for the community. It’s not just changing the landscape of these cities, but it’s bringing in money for businesses, investors and real estate companies. “By changing the landscape of an area you are giving people a place to live, a place to work, a place to go shopping,” said Mark Greiner, Senior Managing Director of Cushman and Wakefield Real Estate in Austin. “It’s a win / win / win for everyone involved. Transforming old dinosaurs into cool, new, mixed-use properties unleashes the value of development in that area.” Across the state of Texas most big cities have areas that were once under-utilized and are now thriving segments of the community.
The East End of Houston has come a long way in the past 15 years. Since 2000, the area east of downtown also known as “EaDO” has seen significant growth. Patrick Ezzell, Director of Economic Development for the Greater East End Management District says they expect the total new residents will have exceeded 10,000 in the next few years. More people moving to the area means more businesses moving in as well. “In addition to the construction of new 16
residential, hundreds of older homes have been purchased and renovated,” said Ezzell. “We have experienced several new retail starts as a result of this.”
Several new retail centers are opening up and are under construction in Houston’s East End. Various commercial development projects underway include: Hunington Properties, Inc with 3,667 square feet of space for lease at The Shops at Navigation, CBRE with 18,000 square feet of retail at the Lockwood Center, Wulfe & Co with 25,216 square feet of retail at the Gulfgate Center and New Hyde Park Inc. has 10, 327 square feet of retail at the Heron Center off Navigation Boulevard. The current Houston Metro light rail construction is also bringing new development to the area.
“Currently Lovett commercial is planning a significant transit oriented development near the Lockwood station,” said Ezzell.
Lovett Commercial will have 349,000 square feet available for redevelopment at the Harrisburg/Lockwood Center. That’s in addition to another retail development across the street with 18,200 square feet for retail available. “The East End has experienced significant increases in land prices as a result of the new development, but it is still a bargain when compared with most neighborhoods surrounding the down-town area,” said Ezzell.
Discovery Green is a 12 acre park in the heart of downtown Houston that was acquired by the City in 2002. Hargreaves Associates, a San Francisco landscape architecture firm, was responsible for the design. Since opening in 2008, the park has served as a catalyst for 625 million dollars in downtown development. The changes helped set records. In 2011 the office development Hess Tower sold for $442.5
million dollars, the highest price per square foot for commercial space at the time in Houston. The 844,763 square foot building is fully leased through June 2026 to Hess Corp.
The revitalization of the space in Downtown Houston has been a big win for developers and the city. Barry Mandel, President of Discovery Green Conservancy says the focus is attracting people to downtown Houston.
“Each year, we offer hundreds of free events catered to all interests and we are home to beautiful, interactive art installations for visitors to enjoy,” said Mandel. “With so many upcoming developments in Downtown Houston as well as the Super Bowl, we are certainly expecting to welcome more visitors to the park.”
There is an estimated one billion dollars in future office, hotels and housing projects in the pipeline in the area around Discovery Green. More than one million people are expected to visit Discovery Green for the 2017 Super Bowl Fan fest. The free festival runs from January 27 - February 5th leading up to the Super Bowl at NRG stadium.
The Pearl Brewery complex in San Antonio is a great example of turning something old and run-down into something more. In 2001, the long running brewery closed down leaving behind a deteriorating 22 acre complex. Spokesperson for the Pearl, Elizabeth Fauerso, says when the project started everyone was telling them it would fail. “There was conventional wisdom saying it would not be a successful project because of lack of disposable income in the neighborhood. This was a very dilapidated neighborhood but it’s adjacent to downtown, Fort Sam, parts of the river,” said Fauerso. “San Antonio is an odd real estate market because of both high value and low value real estate so if you use
a typical evaluation model to predict how new development will do, it just doesn’t do it justice.” The private equity firm Silver Ventures bought the property in 2002 and turned the space into a successful mixed-use development with a focus on food.
“Early on, real estate experts were saying you could only support three restaurants. We now have 19 food and beverage establishments that are all very successful,” said Fauerso. Besides restaurants there are also 324 apartments, 13 retailers and 18 resident businesses.
“The success of Pearl has acted as a blueprint of a lot of things that are happening around us to indicate that yes, people want to live in a place that has a distinct and true character,” said Fauerso. “It has helped the real estate surrounding the project. What was once the lowest property values are now some of the highest in the city. You see all types of developments like multi-family, mixed-use, corporation relocating, small businesses sprouting up. The school world has improved.”
A new wine bar called High Street Wine Co. is the newest addition to the Pearl, opening up in October 2017.
The Mueller project is just three miles from downtown Austin and is on the way to becoming an energetic new hub for central Austin. The 700-acre Mueller site was vacated when Austin’s airport relocated in 1999. In the place of the airport now sits 5,700 homes and 4 million square feet of office and retail. “Texas Mutual Insurance Company is moving its headquarters, bringing 700 employees to Mueller by 2018,” said Ken Blaker, Senior Vice President of Development, Catellus Development Corp. “In retail we’ve announced seven new restaurant concepts joining Alamo Drafthouse in the developing Aldrich Street town center.” For Mueller, the secret to renovation success has been working together with the surrounding community. “It all started with the former airport’s citizens who passionately worked so hard with the City of Austin to establish a set of goals and create a concept that’s the basis of all things Mueller,” said Blaker. “Many of them remain engaged in how Mueller is
implemented. By so many measures, Mueller is a resounding success: affordable housing, sustainability, the public-private partnership, open space uses, land and building design, neighborhood compatibility and more.”
B.D. Riley’s Irish Pub, Lick Ice Creams, Halcyon Coffee + Bar + Lounge, Stella Public House and J.T. Youngblood’s will each debut at Aldrich Street in Mueller by early 2017. B.D. Riley’s Irish Pub at Mueller’s town center is being constructed just outside of Dublin, Ireland and will later be disassembled, packed and transported to Austin to be reassembled there.
The Seaholm Project in Austin is transforming a long-dormant power plant on the edge of downtown Austin into a unique multi-use area. The development team for Seaholm Power LLC includes Southwest Strategies Group, Inc., Centro Development LLC, State Street Properties, La Corsha Hospitality Group and Capital Project Management.
Once complete, the 5 acre site on the shores of Lady Bird Lake will include 143,151 square feet of office space, 280 high-rise condos, 48,363 square feet of retail shops and restaurants and meeting spaces. The project is expected to create more than 200 jobs and produce two million dollars a year in tax revenue alone.
The Fort Worth Stockyards is a historic district that is located in Fort Worth, north of the central business district. The area is a former livestock market which has been around since the 1800s. The stockyard now consists of dozens of shopping and entertainment venues. The famous Billy Bob’s Texas is one of many night clubs and concert locations.
downtown Dallas, was once just a warehouse district with places for interior design professionals. In recent years it has evolved into an eclectic community with more than 370 shops and design showrooms, boutiques and bistros.
The Design District is also expanding to the west in the next few years, into the new and old Trinity Districts. Recently, a bowling alley has been added and there are plans for a large outdoor entertainment facility on Irving Boulevard.
In September 2017, Dallas based Gatehouse Capital Corp was selected to build a new 18-story Virgin Hotels Dallas in the city’s Design District. The 240 room luxury hotel will include meeting spaces, a roof top terrace, spa and pool. Construction is set to begin in March 2017.l
Secret to Success? How do developers know which areas will be good for revitalization and profit? Greiner says there is no true rule, but it’s often about location and need.
“It comes down to supply and demand,” said Greiner. “Development and revitalization happens because there is a demand for places to put restaurants, cool bars and maybe concert venues. People want to be where there are unique and interesting things to do.” One project at a time, improvements to the biggest and best areas of the Lone Star State are making a real difference for the real estate industry and beyond. l
Development updates include the makeover of the historic Mule Barns, which is currently underway. Fort Worth Heritage Development is working together with Majestic Realty of California and the Hickman family, longtime owners of the property. The project is already attracting potential tenants. The Dallas Design District, located in
Continued from Page 12 (The future of shopping centers)
that could absorb the cost of working in a mall, no longer works because discount apparel is available everywhere. The model of discount retailing is now the norm.
“The brands that were exclusive brands to us in the 90s and 2000s-for example Coach, etc, now they have discount versions. The wallet I buy for $175, the coach outlet store has 10 different versions that are $45-55. The average person can buy this. This is happening to all the brands,” said Egelanian. Companies have dramatically expanded their customer base by doing this. So, what is in the future for shopping retail centers? Egelanian points to a development in Boston, Massachusetts as a good example. “In every way it looks like a sophisticated mixed-use project with wide streets, restaurants, a subway line running near it and entertainment is part of it,” he said, “but one major difference: every apparel retailer in it is off-priced; every apparel retailer is a factory store. You are going to see more and more of that in the future.”
Commodity Retail: Apparel Over 275 New T.J Maxx, Marshall’s, Ross, and Nordstrom Rack Stores in 2016 in order to understand what’s really going on in retail today you have to understand where it came from. “Back in the 60s, 70s, and 80s the mall was an extension of downtown. Malls had department stores as anchors and everything else a downtown would have,” said Egelanian.
Then, in the 80s, specialty big box and chain stores really started spreading across the country. Egelanian said that is what started the destruction of the department store model. “We’ve had a reduction in market share going on for 30 years. It’s been so slow, so drip, drip, drip that most of us didn’t see it happening,” he said. “Of the 700900 regional malls in the country right now at some point we will have less than 200. I think it will take about 10-15 years.” Here’s something that might surprise you. Egelanian said contrary to what some people believe, online shopping is not killing brick and mortar sales. “The entire internet accounts for less than 10% of all retail sales,” Egelanian explains. “The fastest growing category in brick and mortar is apparel but there is a fundamental change in how this works.” Egelanian said for retail stores there is a race to the bottom on prices. The model that worked really well in regional malls, which was basically a high price
Besides the addition of discount retailers Egelanian agrees restaurants are a huge part of a shopping center’s success. “A lot of people in the industry call the restaurant the new department store,” he said. “The same money you would invest in the department store 30 years ago, you will invest in 5-6 restaurants today. They drive the same amount of traffic and the same amount of revenue. Mall centers don’t get that same bang.” When it comes to the success of shopping centers, it comes down to what the customer wants. For more highlights from the International Council of Shopping Centers Texas Fall 2016 conference check our website: rednews.com. l Nick A. Egelanian Considered a leading expert on retail and the shopping center industry, Nick A. Egelanian pioneered the segmentation of retail into Commodity and Specialty sub-groups as the author of the retail chapter of the Urban Land Institute's Professional Real Estate Development: The ULI Guide to the Business, 3rd Edition in 2012.
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Vacant Land/Industrial Industrial Hot Spots
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Nov 11, 2017 December 2016
civil fair play
Dismantling Dodd-Frank: Trump takes aim at financial services regulation BY BRANDI SMITH Trey Morsbach, HFF
In the weeks since Donald Trump was elected the 45th president, we have started to learn more about the policies he plans to enact and, in some cases, reverse. It appears one piece of legislation falling into the latter category is the DoddFrank Wall Street Reform and Consumer Protection Act. Within days of the election, Trump’s team began releasing details about his position on financial services, posting a lengthy statement on his website.
“Bureaucratic red tape and Washington mandates are not the answer,” the statement
reads. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”
“Regulation tends to overplay”
To fully understand Dodd-Frank, its purpose and its challenges, we must venture back in time nearly a decade.
Josh White, CBRE
Kristin Sexton, CBRE
As a result, Congress rushed to fill the holes it saw in financial services legislation. ThenSen. Chris Dodd and then-Rep. Barney Frank, both Democrats, helped write the 2,300-page Dodd-Frank law, passing it with only four Republican votes total in the House and Senate.
“The banks got overly aggressive relative to lending against the capital that they had on their balance sheets,” says Trey Morsbach, senior managing director at HFF’s Dallas office. “They were highly leveraged, so they were making risky and riskier loans with less capital than in an ideal situation.” We are all too familiar with the fallout that followed: the housing bubble burst and Great
From the beginning, Republicans worried the legislation added too many layers of regulations on the banking industry.
“Regulation tends to overplay, so it tends to overcompensate,” Morsbach says.
Congress approved Dodd-Frank in 2010, while the international banking community was tackling very similar issues. The Basel III Accord, agreed upon by the members of the Basel Committee on Banking Supervision, went into effect in January 2015. “Basel III, in concert with Dodd-Frank, are really the two pieces of both domestic and international governance and regulation that have meaningfully affected the way banks are lending,” says Morsbach. 24
“It's causing banks to be much more conservative”
Dodd-Frank, in its effort to prevent another scenario like the one that led to the Great Recession, enacted several major agency changes, including two that affect the commercial lending industry. The Volcker Rule prohibits affected banks from proprietary trading for their own accounts and from investing in private equity funds or hedge funds. The result is a lack of liquidity for commercial real estate markets, raising costs and slowing growth.
Another part of the bill tackles risk retention with securitization. It requires that lenders retain 5 percent of all loans, which sometimes results in a higher cost of lending and difficulty in finding a lender for higherrisk borrowers. “There's a handful of things that they can no longer do, and so it's causing banks to be much more conservative,” Morsbach says.
“The most-talked-about acronym in CRE”
On the international side, Basel III is also having a very real impact due to its creation of a concept called High Volatility Commercial Real Estate, or HVCRE.
“It's undoubtedly the most-talked-about acronym in the commercial real estate,” says Morsbach. The regulation mandates that borrowers who originate a commercial acquisition, development and construction loan must meet a 15 percent equity requirement. Additionally, the leverage on the loan
cannot exceed 80 percent of the estimated completed value of the project. If the borrower isn’t able to meet those conditions, the loan is then subject to a 150 percent risk weight requirement. “It’s very specific in terms of what would trigger an HVCRE classification, but if you are HVCRE, you need 150 percent more capital against that loan than you did yesterday,” Morsbach explains. “It's a 50% increase in capital, which is real. That's a significant move on banks' balance sheets, which has a myriad of effects.”
“We're seeing banks with probably the best real estate portfolios from a credit perspective. I can't recall another time that they've been as healthy as they are now.” - Trey Morsbach The most obvious effect is pricing. Because capital is more expensive than debt, lenders are reporting increased costs, which some are passing along to borrowers. “I would tell you that I think there are some aspects of Basel III and the Dodd-Frank legislation that aren't necessarily rational,” Morsbach says. “Over time they may get amended.”
“Much more bank-friendly and much less borrower-friendly”
The combined impact of Basel III and Dodd-
Frank has been measurable, according to Morsbach. He cites a recent poll of all banks, large and small, conducted by the Federal Reserve and Morgan Stanley. “The question was simple: by property type, are your credit underwriting standards tightening, staying the same or loosening?” he says. “Thirty percent, a third of all banks, said they're tightening.”
Morsbach calls this the “exact opposite” of where banks were in 2007, when most banks weren’t tightening credit standards. “It's having the appropriate impact because it's designed to make loans and banks more disciplined. Banks are so fearful to have an HVCRE-qualified loan that they're not offering loans that they offered yesterday,” he says. “We're seeing banks with probably the best real estate portfolios, from a credit perspective. I can't recall another time that they've been as healthy as they are now.”
“In 23 years, I've not seen the construction lending market as challenged as it is today. There is liquidity, and there is construction lending happening, but it’s becoming much more difficult to attain" - Trey Morsbach That positive outcome for banks, though, is balanced by new challenges for borrowers. “The structures and credit in the individual loans are much more bank-friendly and much less borrower-friendly,” Morsbach says. “In 23 years, I've not seen the construction lending market as challenged as it is today. There is liquidity, and there is construction lending happening, but it’s becoming much more difficult to attain.”
“People need us more”
As those loans become more of a challenge to procure, Morsbach and his team at HFF have become even more valuable. “We, and organizations like ourselves, become more important. With uncertainty in the market and with some difficulty getting loans, people need us more. Our construction lending audience is up,” he December 2016
says. “Construction lending at the industry level is decreasing, but construction lending assignments for firms like us are increasing.”
New numbers from CBRE back up Morsbach’s statement. In its firstever annual report on the financial services industry, the company examined the impact of heightened regulations. It found the industry is turning to “active” markets, such as Dallas/Fort Worth. “This growth is due to the robust talent available in the Dallas/Fort Worth market as well as the low cost of doing business in the area,” says Kristin Sexton, CBRE’s managing director of labor analytics.
“Dallas is a city with a very deep labor pool that can allow financial services companies to expand rapidly,” says Josh White, executive vice president in CBRE’s Dallas office. “In addition, Dallas is becoming a mature, metropolitan city that can now compete with established markets in terms of access to the arts, culture and urban living opportunities, all of which make it a very appealing option for companies that are looking to relocate.” In addition to Dallas/ Fort Worth, San Antonio also made the list of cities that offer the “best mix of labor availability and cost for shared services jobs, which include backoffice roles such as accounting, human resources, legal and finance,” according to CBRE.
While the financial services industry booms, Morsbach offers up two pieces of advice for developers. First, adapt.
“That may mean you have to be prepared to come with more equity, you may have
“Dallas is a city with a very deep labor pool that can allow financial services companies to expand rapidly,” says Josh White.P to be prepared to provide better guarantees, or you may have to be prepared for a higher cost of capital,” he says. “There are implications that the better developers are able to navigate because they're either well-capitalized or they've got better balance sheets.” Morsbach says the other action a developer can take to help in the lending process is develop what he calls a “holistic” relationship with the bank. “Banks are, I would say, probably biased against expanding their construction lending and exposures. They typically reserve the construction lending dollars for their better customers,” he explains. “Developers who have depository relationships, account 26
relationships and treasure and management services are more likely to get construction financing.”
“If you want to read the tea leaves …”
Despite some of the challenges his clients face in this new era of financial regulation, Morsbach calls the changes a “net positive” for the industry.
"If conditions remain the same, the result will be a landlord market in roughly two years," says Trey Morsbach. “If you really want to pull the string a little bit and think about the future, I can paint a picture where we're already not oversupplied from a new supply/new construction perspective as an industry,” he says. “If you look at the statistics, we're still below historic averages in terms of new supply. That was coming into 2016. This year, we've actually seen a pullback in supply largely because the construction lending environment is not allowing it.” “That's a bit of prognostication,” Morsbach admits, “but if you want to read the tea leaves, it's a possibility based upon a general pullback and construction lending and availability that is causing some difficulty to get projects done.”
Many factors will come into play and determine whether Morsbach’s prediction becomes reality, including president-elect Trump’s changes to Dodd-Frank. Though he hasn’t released specific details of his plan, his site dictates “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.” We should learn early in 2017 what that means for America’s commercial real estate industry. l
Land Advisors-Houston Land and Housing Forecast - 11/15/16
Speakers: Duane Heckman, Land Advisors; Travis Nichols, Tudor, Pickering, Holt & Co.; Kirk Laguarta, Land Advisors; John McKinnerney, Castle Hill Partners; Mike Inselmann, Metrostudy; Jesse Thompson, Federal Reserve Bank; Dan Naef, Rise Communities
BY RAY HANKAMER email@example.com
TAKEAWAY: There is not an oversupply of lots, and given the lengthening time periods for entitlements and development, it will be tricky keeping enough new lots in the pipeline to satisfy expected near and intermediate term demand for them. Houston has led US cities in new home starts over last 20 years and this is not expected to change.
• As investments, high net worth individuals are buying up
300 acre + tracts around the Houston Metro area suitable for residential development, as bets on Houston’s future
• Grand Parkway and ease of commuting on it stimulates lots of residential growth
• We are seeing about 25,000 annual home starts on average, 2nd highest in US, even while we are in a bit of a slowdown
• From land acquisition to delivery of finished lot to a
homebuilder can take up to 30 months, so judging the cycles so as to not have a lot of capital tied up is challenging
• Houston is a land of
opportunity and our population will double to 9 million in the Metro area in next 20 years, creating demand for hugely expanded transportation, drainage, and utility infrastructure
• We will need to convert
200,000 acres of raw land to builder lots in next 20 years, an astounding number
• Much of this growth will
come west, northeast, and south of Grand Parkway, as well as along 288 south
• Texas GDP growth will take it from 10th in the world to 8th in
the world by the end of 2016, moving our state ahead of Russia and Canada
• Houston contributes ½ of state’s GDP • Some restraints on housing growth are shortage of capital from skeptical Wall Street lenders, corporate uncertainty, affordability, crude oil prices
• With the slowdown in oil prices however, development prices
• Some homebuyers are holding off to watch the job economy before committing to a new home
• These times are difficult for homebuilders, but they are still profitable
• Homes are going on smaller lots so developers can afford all the
amenities in their communities; buyers are more knowledgeable and are more careful shoppers
• It is challenging as always to keep lot inventory and home sales in equilibrium
• Developers are
challenged by the long wait to recoup their infrastructure investments from Municipal Utility Districts (MUDs), unlike markets like Las Vegas, where recoupment comes quickly
• Global demand for oil
will continue to increase, ensuring Houston’s overall growth and economic health
• Houston attracts
people from other states and other countries because it is so affordable to live here
• Driverless car technology will enable commuters to live further out and to work during their commutes
• New homes now including locked 4’ x 4’ doors next to garage
doors for delivery of groceries and packages-the delivery company will have a code-doors can be opened by homeowner from inside the garage to retrieve deliveries
• The sheer magnitude of Houston’s future growth is very difficult to imagine because of its projected scale l
are coming down as contractors and their subs struggle to adjust to slightly lower demand
O’Connor & Associates Industrial Forecast
Speakers: Tom Lynch-CBRE; Blake Warren-Stream Realty Partners BY RAY HANKAMER firstname.lastname@example.org
Takeaway: Industrial vacancies in Houston overall are so low that Houston is the envy of most other markets in the country: 6% average vacancy over last ten years. In spite of vigorous new delivery of product all around Houston, absorption is strong, especially in NW and SE, with some weakness (believed to be temporary) in North-IAH sector. Houston is healthy and Industrial is very bullish.
• Lots of economic drivers will keep industrial strong • Only 10% of Industrial deals since 2011 have been energy-
Houston Metro area
driven, a testament to Houston’s multiple economic drivers
• Needs for local distribution to local population drive location
bankruptcies but instead we continue to grow, giving local private investment a chance to take advantage of the best opportunities
• Since 2012, 24 million SF of new industrial projects have been
• Ironically Wall Street still thinks Houston will have real estate • With the south side of our ship channel providing twenty-five miles of developable sites, we have a unique situation not matched anywhere in the world
• Some cities have 2 or 3 economic engines-we have 5 or 6 • 70% of our industrial product was built in the 80s or before, so moving forward we will have demand for new state-of-the-art product, and absorption prospects for it look good
• The industrial sector has been responsive to the slowdown and end of the cycle, so there is not a large overhang of unleased space
• In the SE sector shovel-ready industrial land values have doubled in recent few years from $3 SF to $6 SF
• Overall demand for rail-served sites is shrinking, but those
industries that have to have it, have to have it, so where it is available it is valuable
• Projected ongoing demand and absorption is strong across the
and product type-the closer a facility can be to the end user, the lower the transportation costs delivered or under construction and this new product is already 72% leased when taken as a whole l
O’Connor Office Forecast Luncheon Speakers: Sanford Criner, CBRE; Griff Bandy, NAI Partners; Bruce Rutherford, JLL Takeaway: The office segment in Houston has lots of excess due to vast amounts of sublease space being returned to the market by retrenching oil & gas companies. Return to positive absorption will be 2018 at the earliest. BY RAY HANKAMER email@example.com
• The current oil crash is spreading now to other sectors, i.e those
• There have been 90 O&G bankruptcies so far in TX this year,
• After this recovery we may never again have so many
• Houston has a very bright future and this is a ‘once in a
supplying goods and services to the Oil Patch employees in the O&G sector
with more yet to come…more layoffs will be coming
generation opportunity’ for companies to move here due to availability of cheap office space
• This ‘crash’ has instead been a long and slow decline, with projections still being revised downward
• This downturn is worse than that of the ‘80s but companies are better capitalized so there is less pain
• Office demand has a 98% correlation to job growth (or decline) • Between 1980-84 Houston doubled office SF and those 35 year
• There have been 192 sub-leases signed this year, and most have been small deals l
old buildings are now losing tenants to brand new buildings which have deeply discounted lease or sub-lease rates
• Owners of older buildings are beginning to invest to bring their
buildings up to current standards-where possible-and there will be a good market down the road for these upgraded buildings
• We have the largest inventory ever of sub-lease space available on the market: 12 million SF, and 3 million has been average on a historical basis
• Tenants in Class B buildings are taking advantage-when their leases expire-of moving up to Class A buildings, which often have discounted rents
• There are heavy concessions to tenants desiring to lease space,
including up to 18 months free rent loaded on the front end, free parking, etc
• Rental rates are being discounted up to 35% from asking rates • 90% of sub-lease space is only available in 50,000 SF and up
chunks-landlords are hesitant to chop up these chunks, because of the expense of building out larger open plan space into corridors and offices-landlords are sitting back waiting for full floor tenants
• Small spaces are in demand by new private equity start-ups • West Houston and CBD have largest blocks of available new and sub-lease space
• Hotel, Condo, Retail Site - Cruise Terminal Galveston, TX • Freeway Sites - I-20 - Monahans, TX • 30 Acres Commercial/Rail Serviced - Tomball, TX • 12 Acres Residential/Commercial - I-45 - Huntsville, TX • Hotels - Statewide
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• Of the entire US office market, Houston is the only city with a
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• O&G-related employment makes up about 50% of demand for Houston office space
• Tenants with leases expiring in Class A buildings are attracted
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40 Years Experience As Developer, Owner / Operator and Commercial Broker
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BOMA Austin: Committee Meeting: Community Outreach – Lady Bird Conference Room – 11 am – 12 pm CREW Austin: Hard Hat & Heels - AMLI Mueller CTCAR: CE Course: “Site & Subdivision Plan Process” – Austin Board of REALTORS – 2 pm – 4 pm
RECA AUSTIN: reca.org REC SAN ANTONIO: www.recsanantonio.com RETAIL LIVE: retaillive.com TABB AUSTIN: www.tabb.org/austin_chapter.php TABB SAN ANTONIO: www.tabb.org/san_ antonio_chapter.php ULI AUSTIN: austin.uli.org ULI SAN ANTONIO: sanantonio.uli.org
BOMA San Antonio: Committee Meeting – Northwood Tower – 12 pm – 1 pm CREW Austin: Community Services Committee Meeting – ZAX on Barton Springs – 11:30 am – 1 pm *BOMA Austin: Board of Directors Meeting – Texas Medical Association – 7:45 am – 9:15 am *CREW Austin: Board Meeting IREM San Antonio: Holiday Party – Argyle Club – 11:30 am – 1 pm
BOMA San Antonio: Community Service Coat & Blanket Drive - 12 pm - 1 pm CREW Austin: Membership Committee Meeting
BOMA Austin: Committee Meeting: Finance – Prominent Point, Building 1 – 10:30 am – 11:30 am *CREW San Antonio: – December Luncheon – Norris Conference Center – 11:30 am – 1 pm IREM Austin: Holiday Party – Westwood Country Club – 11:30 am – 1 pm
RECA: December Awards Luncheon – Four Seasons Hotel – 11:15 am – 1 pm *RECA: City of Austin Committee Meeting – RECA Conference Room – 12 pm – 1 pm ULI Austin: Monthly Breakfast Series – Emerging Trends – The Headliners Club – 7:30 am – 9 am *ULI San Antonio: Holiday Mixer – JazzTX – 5:30 pm – 7:30 pm
*BOMA Austin: Holiday Luncheon – Austin Country Club, Centennial Room – 11:30 am – 1 pm CREW San Antonio: Holiday Party - Quarry Golf Club
ULI San Antonio: Advisory Board Luncheon – Silver Ventures Offices – 11:30 am – 1 pm – Invitation Only
BOMA Austin: Committee Meeting: Membership – 8310 N. Capital of Texas Hwy, Bldg. 1, Suite 225 – 2 pm – 3 pm
BOMA San Antonio: Board Meeting – CBRE Conference Room – 11 am
The events listed are confirmed at the time of printing. Please make sure to check with the event host for any changes. For the full listing of events, visit REDNews.com.
CENTRAL SOUTH TEXAS
CTCAR PROPERTY INFORMATION EXCHANGE Patrick Rose of Corridor Title speaking about Hays County at CTCAR breakfast on November 10.
CHRISTMAS IN OCTOBER More than 100 volunteers from RECA helped out at Sammy’s House on October 22 to renovate the organization’s classrooms and exterior spaces.
ANNUAL GOLF CLASSIC – NOV. 3 Great times were had at the RECA Annual Golf Classic at Avery Ranch Golf Club. They even had fun with the upcoming election.
IREM AUSTIN FALL FORECAST L to R, Keynote Speaker Gervais Tompkin, Gensler; forum participants, Rob Gandy, Cielo Property Group; Volney Campbell, Collier International; Michele Gary, Endeavor Real Estate Group; Ben Bufkin, Endeavor Real Estate Group; forum moderator Steve LeBlanc, Capridge Partners, LLC; and Kent Collins, Centro Development.
CREW AUSTIN CAREERS DAY CREW Austin held their 10th Annual Careers Day at the Ann Richards School on November 4.
IREM SAN ANTONIO 2017 BOARD AND COMMITTEE MEMBERS AT THE LEADERSHIP ORIENTATION MEETING ON NOV.7 Front row, L to R, Donna Schmidt, Treasurer; Bart Marlar, Admissions; Mid-row, L to R, Tiffany Korbell, Board Member; Angelica Castillo, Commumity Outreach; Madlyn Lane, Secretary; Back row, L to R, Steve Rodgers, 2018 President Elect; Lyndsay Walbran, 2017 President; Mike Noll, Legislative; and Sally Flanagan, Board Member
2016 BOMA SHOOTOUT
BOMA Austin held their annual Shootout on October 27 at Reunion Ranch.
AUSTIN MEMBERS AT CREW CONVENTION IN NEW YORK L to R, Shirley Sheffield, Carrie Holt, Rosalie Keszler, Katy Lumpkin, Kathy Carr, Yvonne Heerema, Alexis Michael, Elena Cutshall, and Marcy Phillips
BOMA DALLAS: bomadallas.org BOMA FORT WORTH: bomafortworth.org CORENET NORTH TEXAS: northtexas.corenetglobal. org CREW DALLAS: crew-dallas.org CREW FORT WORTH: crewfw.org/ IREM DALLAS: irem-dallas.org IREM FORT WORTH: www.fortworthirem.org
Philanthropy's Role in Community Change
7 pm - 9 pm
NAIOP: northtexasnaiop.com NT CCIM: chapters.ccim.com/northtexas NTCAR: ntcar.org REC DALLAS: recouncil.com REC GFW: recouncilgfw.com TABB DALLAS: www.tabb.org TABB FORT WORTH: www.tabfortworth.com/ ULI NORTH TEXAS: northtexas.uli.org
ULI North Texas December 7 Holiday Party and Thank you Celebration
7 pm - 11 pm
2 Friday 3 Saturday
BOMA Fort Worth: Habitat Home Build – 5424 Farnsworth Ave. - 8 am – 3 pm REC Dallas: Speaker Series: Philanthropy’s Role in Community Change – Hilton Anatole – Coronado Ballroom – 7:30 am TABB DFW: TABB Christmas Party – 5:30 pm BOMA Fort Worth: Habitat Home Build – 5424 Farnsworth Ave. - 8 am – 3 pm BOMA Fort Worth: Habitat Home Build – 5424 Farnsworth Ave. - 8 am – 3 pm
BOMA Fort Worth: December Luncheon – Petroleum Club - 11:30 am - 1pm *BOMA Fort Worth: Allied Town Hall Meeting – Petroleum Club - 1:30 pm - 3pm CORENET North Texas: Holiday Party – 6 pm – 9 pm CREW Fort Worth: CREW and REC Holiday Party – The Space - 6 pm – 9 pm REC GFW: CREW and REC Holiday Party – The Space 6 pm – 9 pm
BOMA Fort Worth: Government Affairs Committee Meeting - 11:30 am – 12:30 pm – Invitation Only CREW Fort Worth: Treasury Committee Meeting – 1 pm IREM Dallas: Executive Council Meeting – 12 pm IREM Fort Worth: Holiday Luncheon – Joe T. Garcia’s – 11:30 am – 1 pm ULI North Texas: Holiday Party and Thank You Celebration – Cloud Nine at Reunion Tower – 6:30 pm – 8:30 pm
North Texas NAIOP: “The State of Dallas Real Estate” featuring Steve Brown, Real Estate Editor for the Dallas Morning News - Dallas Country Club - 7 am – 9 am North Texas CCIM: Annual Holiday Volunteer Event – Family Gateway
CREW Dallas: Holiday Awards Luncheon – Ritz-Carlton - 6 pm – 9 pm CREW Fort Worth: New Member Breakfast & Orientation – Righteous Foods – 7:30 am – 8:30 am
CREW Fort Worth: Communications / PR Committee Meeting – 9 am – 9:30 am
CREW Fort Worth: Programs Committee Meeting – 11:45 am – 1 pm
BOMA Dallas: Engineering Lunch and Learn – Bank of America Plaza - 11:30 am – 1 pm
The events listed are confirmed at the time of printing. Please make sure to check with the event host for any changes. For the full listing of events, visit REDNews.com.
REC of GFW
COWTOWN POKER RUN Top: L to R, Martin Noto, First Financial Bank; Lynn Montgomery, PlainsCapital Bank; and David Berzina, InsightsEDC Bottom: Winners of prizes at the Poker Run event
ULI NORTH TX BREAKFAST
Top: L to R, John Kidwell, WillMax Capital Inc.; Corey Manning, Marsh & McLennan Companies; and Dale Farquharson, Insperity
Middle: L to R, Pete Winters, Page; Cheryl Costello, TD Industries; and Neil Anderson, Wier & Associates
Top: L to R, Larry Good, GFF; Courtney Naudo, Deloitte; and Linda McMahon, President and CEO of The Real Estate Council
Bottom: L to R, Aaron Haas, The Howard Hughes Corporation; Mark Bulmarsh, The Howard Hughes Corporation; Don Wilder, Wilder Belshaw Architects Inc.; and Jeff Gunning, CallisonRTKL Inc.
Middle: Panel speakers, Keynote speaker, TREC staff, and sponsors Bottom:L to R, Jonathon Hetzel, Madison Partners LLC; Grant Wickard, GFF; Scott Rohrman, 42 Real Estate, LLC; Jeffrey Good, GFF; and Scott A. Kanaga, GFF
REALSHARE DALLAS CONFERENCE
Top: Panel members for DFW Big Deals and Dealmakers L to R, Steve Fried, Mesa West Capital; Bill Brown, Granite Properties; Diane Butler, BBG; Rick Graf, Pinnacle; Tony Creme, Hillwood; and Mark Miller, NAI Robert Lynn Participants enjoy the cocktail reception
L to R, Sara Rivera, Whelan Security; Christy Earley, RESTORx of Texas; Michelle Forrester, Lincoln Property Company; and Kim SolCruz, Pritchard Industries Southwest
L to R, Bob Heckel, Capstone Commercial; Debi Carter, North Texas CCIM; Steve Burris, Capstone Commercial; and Keith Goodman, Seacoast Commerce Bank
ACRP: acrp.org BACREN: bacren.com BOMA HOUSTON: houstonboma.org CCIM HOUSTON: ccimhouston.org CORENET: houston.corenetglobal.org C.R.E.A.M.: creamtx.com CREN: crengulfcoast.com CREW HOUSTON: crewhouston.org FBSCR: fbscr.com
Houston December 2 Annual Awards Extravaganza
5 pm - 7:30 pm
Annual Holiday Party
11 am - 2 pm
5 pm - 7 pm
*CREW Houston: Annual Holiday Party – River Oaks Country Club – 5 pm – 7 pm
BOMA Houston: Annual Awards Extravaganza – Hotel Zaza - 11 am – 2 pm
CORENET: Holiday Party – Café Annie – 5 pm – 7:30 pm
CCIM Houston: Houston Party – La Colombe d’Or – 6 pm – 9 pm IREM Houston: Holiday Party – Public Services Wine & Whiskey – 6 pm – 10 pm
Greater Houston Partnership: Houston Economic Outlook – Royal Sonesta – 10 am – 1:30 pm
C.R.E.A.M.: Holiday Party – Black Walnut Cafe – 5 pm – 7 pm
O'Connor: Retail Forecast Lunch – Hess Club – 11:30 am – 1 pm AREAA|CCIM: Election is Over: Now What's Next For Commercial Real Estate - 7:30 am - 10 am $40 | Members / $55 | Non Members
HRBC: – December Breakfast with Lt. Gov. Patrick – Junior League - 7:30 am – 9 am - $65 for non-members
GREATER HOUSTON PARTNERSHIP: houston.org HREC: houstonrealestatecouncil.org IREM HOUSTON: iremhouston.org NAIOP: naiophouston.org O'CONNOR & ASSOCIATES: poconnor.com SIOR: www.sior.com TABB GROUP: www.tabb.org ULI: houston.uli.org
ACRP: Holiday Party – Sam Houston Hotel – 6 pm - 9 pm FBSCR: December Meeting – Greater Fort Bend EDC – 8 am – 9 am
The events listed are confirmed at the time of printing. Please make sure to check with the event host for any changes. For the full listing of events, visit REDNews.com.
RIVERWAY TITLE POKER TOURNAMENT Riverway Title hosted their annual poker tournament at Cadillac Bar.
ACRP BREAKFAST Top:L to R, Steve Jackson, E3 Electric, Ltd; Jeanne Jullien, Gorrondona Engineering Services, Inc.; and Marty McAdams, McAdams Associates Middle: L to R, Diane Schenke, Greater East End; and ACRP President Jason Atkinson, Stantec Bottom: L to R, Caitie-Beth Truitt, Weisser Engineering & Surveying; Ty Eckley, KCTC Inc.; and Rin Willis, Belvoir Real Estate Group
Middle: L to R, Travis Land, NAI Partners; Dr. Ray Perryman, guest speaker; John Silberman, NAI Partners; and Griff Bandy, NAI Partners Bottom: L to R, Chris Haro, NAI Partners; Kim Mathis, NAI Partners; and Luis Garza, Vigavi Realty
LUNCHEON Top: L to R, Joe Loverdi, South Texas Survey Associates; Jerry Wilkins, Investment Consultant; and James Dismukes, Phase Engineering L to R, Imad Abdullah, Landmark Architects; BACREN President Wayne Rutledge, Rutledge Commercial Real Estate; guest speaker Reid Wilson, Wilson, Cribbs, and Goren ; and Anthony MarrÃ©, Wilson, Cribbs, and Goren
TEXAS ECONOMIC OUTLOOK Top: L to R, Will Stacy, Simpkins Group; Jamie Cornelius, Sowell & Co.; Michael Keegan, NAI Partners; Dave Holland, Q10 Kinghorn, Driver, Hough & Co.; Larry E. Peters Jr., Q10 Kinghorn, Driver, Hough & Co.
HOUSTON BOMA ANNUAL GOLF TOURNAMENT
IREM Food Fest was a blast with wild game dishes served by more than 20 teams, food included Pumpkin Seed Crusted Smoked Elk, Alligator Chili, Blue Duck Burgers
Top: PJS Houston Team Bottom: Constellation Team
CENTRAL SOUTH TEXAS bulletin
AUSTIN, TX INDUSTRIAL SALE Miami, Fl-based real estate investment firm Adler Kawa Real Estate Advisors purchased Kramer 1-5 at Braker Center, a portfolio of five single-story, light industrial buildings that total 296,781 sf on Kramer Lane. Hale Umstattd & Leah Gallagher of Transwestern represented the seller, HPI Real Estate Services & Investments. OFFICE LEASE Buildfax leased 3,414 sf at the Heierman Building, 115 E. Fifth St. Jason Steinberg & Haley Smith represented the landlord, & Gaines Bagby with CBRE Group Inc. represented the tenant.
Photo courtesy San Antonio Business Journal
AUSTIN, TX OFFICE LEASE
Trammell Crow Company & joint venture partner, Principal Real Estate Investors, have added new tenants to their 500 W. 2nd Street Building. Deloitte, King & Spalding & CBRE Group Inc., have signed longterm leases at the building. The Class AA, speculative, 29-story office tower features 500,436 sf which includes 11,000 sf of streetlevel restaurants/retail space. The building is approximately 60 percent leased and is scheduled for completion in February 2017.
Bill Holder has joined Turcotte Real Estate Services, Inc., a San Antonio-based, independently-owned, commercial real estate services firm .
OFFICE LEASE Agile Velocity LLC leased 3,160 sf at Westpark Office Complex, 8140 N. MoPac Expressway. Jay Austin & Kelly Woodruff with CBRE Group Inc. represented the tenant. OFFICE SALE Austin real estate investor Cheryl Ogle purchased Park Forest, a three-building, 88,273 sf office property at 4201 W. Parmer Lane. Michael Murphy of Aquila Commercial represented the undisclosed seller and Jeff Henley of The Kucera Cos. represented the buyer. OFFICE SALE KBS Realty, an investment firm in Southern California, purchased Stonebridge Plaza I & II totaling 386,101 sf located at 9606 N. MoPac Expressway. Heitman of Chicago reportedly sold the buildings for $124 million. OFFICE SALE Azrieli Group, headquartered in Israel, purchased Aspen Lake Two, a 128,990 sf building located at 13785 Research Blvd for $40 million, reportedly. The seller was Patrinely Group in Houston. OFFICE SALE Alaska Mental Health Trust purchased Amber Oaks Building G, 13640 Briarwick Drive from California-based Menlo Equities. The 101,223 sf building reportedly sold for $22.4 million or $221 per sf. OFFICE SALE Eurus Capital Partners reportedly purchased the 121,901 sf Astrium Office Center building located at 8701 N. MoPac Expressway for $21.5 million. RETAIL LEASE The Friends Club leased 16,596
sf at 8110 Springdale Road. Barret Espe & Robby Eaves of Retail Solutions represented the landlord & Darren Siegel of Don Quick and Associates Inc. represented the tenant. UT SYSTEMS PROJECTS The University of Texas System Board approved spending $392 million from its endowment to build nine projects, including an Energy Engineering Building on the UT Austin campus. Also approved was negotiations for a ground lease with Trammell Crow Co. to redevelop a downtown block on Sixth Street. Other projects approved were $45 million for collaborations between Dell Medical School at UT Austin & MD Anderson Cancer Center.
CEDAR PARK, TX OFFICE/INDUSTRIAL DEVELOPMENT CBRE Capital Markets’ Debt & Structured Finance team arranged $13.6 million in acquisition and development financing and $3.9 million in equity for Brushy Creek Corporate Center, a twobuilding, 321,180 sf development located at 183/620 & SH45 area. CBRE arranged the loan on behalf of the borrower, IGX Brushy Creek, LLC, led by Ron Mills. Mike Landon of CBRE’s Dallas office & David Aaronson of CBRE’s Houston office facilitated the loan. RETAIL LEASE Party City leased 14,987 sf at Lakeline Village & Plaza, 11066 Pecan Park Blvd. in Cedar Park. Dave Burrgraff, David Simmonds & Drew Smith of Retail Solutions represented the landlord & Buck Cody with Endeavor Real Estate group represented the tenant.
LEANDER, TX RETAIL LEASE Petco Animal Supplies Stores Inc. leased 12,500 sf at Crystal Falls Parkway & Glass Drive in Leander. Rodger Anderson with CBRE Group Inc. represented the tenant. RETAIL LEASE Timeless Interiors leased 9,683 sf at 1110 S. RR 620 in Lakeway. Patrick Ley & Haley Smith with ECR represented the landlord.
NEW BRAUNFELS, TX OFFICE SALE The New Braunfels ISD purchased a 26,036 sf building
formerly owned & occupied by Wells Fargo for $4.85 million. The property is located at 1000 N. Walnut Avenue and will be utilized for administrative offices. RETAIL LEASE Burlington Coat Factory of Texas leased 40,439 sf in New Braunfels Town Center at Creekside, located at the intersection of Interstate 35 & FM 306 from NewQuest Properties. Ashley Strickland & David K. Meyers of NewQuest Properties represented the landlord & John Graul of Eleven Eleven Commercial Realty represented the tenant.
SAN ANTONIO, TX MEDICAL OFFICE CONSTRUCTION Construction is slated to begin this month on The Oaks at University Business Park. R.L. Worth is constructing the 65,000 sf Oaks IV to add to the current three-building property which is scheduled to be completed by March 2017. MEDICAL OFFICE SALE A local doctor operating the private CN REI LLC purchased the Packard Building at 1123 N Main Street. The two-story, 36,339 sf office property was 72 percent occupied at the time of the sale. The Bank of San Antonio financed the deal with a $4.8 million mortgage. RESIDENTAL DEVELOPMENT A residential community of about 190 homes is being planned just off I-35 on one of the few large plots of undeveloped land in the area. San Antonio development firm Presidio Group bought the 42 acres of land at the southwest corner of the crossing of Judson Road & Gunn Road. RETAIL SALE GrayStreet Partners sold the 41,607 sf Ingram Park Plaza shopping center located at 6151 NW Loop 410 to the San Antonio Eye Center, one of its long-time tenants, who occupies approximately one-third of the center. RETAIL SALE Houston-based commercial real estate firm Weingarten Realty purchased a former Target’s 8.57 acre site located at I10 & DeZavala. The Target store was closed due to hail damage & is located just south of Weingarten’s Fiesta Trails Shopping Center.
ARLINGTON, TX INDUSTRIAL SALE
Howell Properties, LLC sold its 12,344 sf building at 2901 Galleria Drive to NP Arlington Industrial, LLC. Matt Dornak & Luke Davis with Stream Realty Partners represented the seller & Coy E. Garrett & Associates, Inc., represented the buyer.
BENBROOK, TX VACANT LAND SALE
Scarlett Realty Investors LLC sold 10.51 acres at 3510 Boston Ave. in Benbrook, TX to BB Villas at Boston Heights Housing. Director Jim Sager & Ben McBroom with Transwestern represented the seller.
CARROLLTON, TX OFFICE/WAREHOUSE LEASE
Revolution Retail Systems LLC leased 63,055 sf at 1400 Valwwod Parkway in Carrollton, TX. Bob Lutrell of Jackson Cooksey Inc. represented the tenant & Brian Pafford & Jason Miller of Bradford Commercial Service represented the landlord.
DALLAS, TX INDUSTRIAL LEASE
ATC Transportation LLC leased 75,676 sf at 12750 Perimeter Drive. Matt Dornak & Ryan Wolcott with Stream Realty Partners represented the landlord & Hanes Chatham with Stream Realty Partners represented the tenant.
OFFICE DEVELOPMENT/ LEASE
Dallas-based commercial real estate company Cawley Partners will break ground early next year on FOURTEEN555, a new 480,000 sf office development located at 14555 N. Dallas Pky. Bill Cawley, Addie Ludwig and Jeremy Duggins with Cawley Management will handle leasing for the project which is expected to wrap up in late 2018. Houston-based Occidental Petroleum Corporation’s chemical division reportedly leased 120,000 sf in the building.
Jacobs Engineering Group will relocate its world headquarters from Pasadena, CA to the Harwood Center in Dallas where the firm already occupies 100,000 sf. The International technical professional service firm has leased an additional 16,563 sf across the 12th and 13th floors of the 36-story, 723,963 sf, and Class A tower at
1999 Bryan St. in Dallas’ central business district. Rena Padachy & Doug Jones of Cushman & Wakefield of Texas represented the landlord, Fortis Property Group, while Matt Heidebaugh, also from Cushman & Wakefield of Texas, represented Jacobs Engineering Group.
24/7 Customers Inc., leased 34,098 sf at Gramercy Center South located at 18451 North Dallas Parkway in Dallas. Matt Wieser & Ryan Evanich with Stream Realty Partners represented the landlord, Capridge Partners. Site Selection Group, LLC represented the tenant.
FARMERS BRANCH, TX INDUSTRIAL LEASE
Billingsley Co. secured its first tenant at the company’s newest industrial development within Mercer Business Park with the signing of leading bath and kitchen supply distributor Moore Supply Co. to a 10-year, 105,800 sf lease.
FORT WORTH VACANT LAND SALE
Whitehead-Smith Investments, Ltd. sold 9.02 acres at 12801 & 12775 Harmon Road to Harmon Fund LP. Principal Lester Day with Transwestern represented the seller.
The Vinnedge Building LP sold a 40,000 sf office building at 2100 N. Main St. and 108 N.E. 21st St. in Fort Worth, TX to LMC Properties, Inc. Principal Sarah LanCarte with Transwestern represented the seller.
FRISCO, TX BUSINESS PARK DEVELOPMENT
The Frisco Economic Development Corp. plans to develop a 216 acre business park, called Frisco Park 25, at the northwest corner of Preston Road & Rockhill Parkway. Construction on the roads and utilities into the project are expected to start soon, with the initial phase of buildings getting underway in 2018.
Texas Scottish Rite Hospital for Children has disclosed plans for a new project at its 40 acre campus. The 345,000 sf facility is located at the northeast corner of Lebanon Rd. & the Dallas North Tollway. The Hospital is set to open in the fall of 2018.
Construction on Frisco Station development has begun with the groundbreaking of The Offices One building located at 6160 Warren Parkway. Scheduled to deliver in Q3 2017, the 228,000 sf, sevenstory office building represents phase one of the Frisco Station, a massive 242-acre master-planned development that will incorporate multifamily residences, town homes, hotels, restaurant and retail space, a corporate campus, highrise office towers and a medical component. Clint Madison, Chris Taylor, Johnny Johnson and Lauren Napper of Cushman & Wakefield have been selected to handle leasing on behalf of ownership.
GRAND PRAIRIE, TX RETAIL DEVELOPMENT
IKEA will open a second store in the Dallas-Fort Worth area on a new 290,000 sf location in Grand Prairie, TX. Dallas-based developers MYCON general contractors are developing the project on a 30-acre site north of I-20 and east of State Hwy. 161 and Mayfield Road. Construction on the project is expected to wrap up in fall 2017.
Photo courtesy of PR Newswire
ARLINGTON, TX STADIUM DEVELOPMENT
The Cordish Companies has broken ground on the opening phase of Texas Live! located between Globe Life Park, home of the Texas Rangers, and AT&T Stadium, home of the Dallas Cowboys. The project will include 200,000 sf of dining & entertainment space, a 5,000-capacity outdoor event pavilion, a 300-room full-service convention hotel and a 35,000 sf meeting and convention facility.
IRVING, TX INDUSTRIAL SALE
BLJC PPTIES LLC sold its 7,000 sf building at 1720 Peters Road to Midnight Mechanics, Inc. Henry S. Miller represented the seller & Hanes Chatham with Stream Realty Partners represented the buyer.
Kristie McBee, RPA, CPM, CCIM has joined Westmount Realty Capital as Senior Director-Asset Management.
Dallas-area developer KDC broke ground on the first phase of a 155,000 sf medical office development at the intersection of Gateway Dr. and State Hwy. 161.. The 95,000 sf , three story facility will be anchored by Healthcare Associates of Texas. Phase II, a 60,000 sf medical building, will be occupied by an ambulatory surgery center and medical offices. Kyle Jacobs of Rubicon Representations in handling the leasing of the project which is expected to break ground in early 2017.
Ryan Tharp has joined Transwestern’s Dallas Office as Director of Research.
LEWISVILLE, TX INDUSTRIAL LEASE Georgia-based Alpha Insulation & Waterproofing Inc. leased 25,445 sf at Creekside 121 located at 301 Leora Lane. Joe Santaularia of Bradford Commercial & Brock Wilson represented the tenant. December 2016
SOUTHEAST TEXAS bulletin Kristen McDade has joined Berkadia as Senior Director
BAYTOWN, TX RETAIL DEVELOPMENT
H-E-B has broken ground on a +80,000 sf store at the corner of Garth & Hunt roads which is adjacent to Baytown Shops near the San Jacinto Mall. The store is expected to open by the end of 2017.
CYPRESS, TEXAS INDUSTRIAL DEVELOPMENT Lauren Geary has joined Berkadia as Marketing Coordinator
Wade H. Greene, IV, CCIM has joined Waterman Steele as a Vice President
Dory Gordon has joined Carrington Real Estate Services LLC as area vice president & manager
Liam Robinson has joined Davis Commercial Real Estate
Trevor Hightower, formerly with CBRE, has founded WorkFlourish, a management company built to develop co-working space.
Henry “Bubba” Harkins has joined JLL as senior vice president.
Taylor Schmidt & Reed Vestal of Lee & Associates have achieved their SIOR Designations
The Howard Hughes Corporation is adding 200 acres of industrial development to Bridgeland, their master-planned community. The property is located on the northwest corner of the 11,400 acre development.
MASTER-PLANNED COMMUNITY DEVELOPMENT
Archie Dunham & his son Cary Dunham plan to develop Dunham Pointe, a 1,327 acre masterplanned community south of US 290 between Mueschke & Mason Roads and just north of Bridgeland development. The development calls for a major school site on 145 acres and 300 acres of commercial development as well as 2,500 single family homes. The developer hopes to break ground in June 2017.
HOUSTON, TEXAS DISTRIBUTION/ MANUFACTURING DEVELOPMENT
Ravago-Americas, a subsidiary of Belgium-based Ravago purchased 200 acres in Cedar Port Distribution Park for the construction of a 1.5 million sf distribution & manufacturing campus. NAI Partners’ John Ferruzzo, John Simons & Joel Michael represented TGS Cedar Port Partners & Gray Gilbert with CBRE represented the buyer.
New York-based Berkadia, a joint venture between Omaha, Nebraska based Berkshire Hathaway & New York-based Leucadia National Corporation has leased 18,500 sf in San Felipe Place at 2229 San Felipe Street. Brad Beasley & Clark Thompson of Colvill Office Properties represented the landlord, Hines. Berkadia is nationally represented by Cushman & Wakefield.
Houston-based ITW Global 40
Brands, a division of Illinois Tool Works, has leased approximately 25,075 sf at Park Ten Center at 16200 Park Ten Blvd. Kevin Wyatt of Lincoln Property represented the landlord and Beau Kaleel of Cushman & Wakefield represented the tenant.
TechSpace Holding Company, a shared office space provider, leased 46,092 sf at 2101 CityWest Blvd. Eric Siegrist & JP Hutcheson of JLL represented the landlord, Parkway Properties.
Station Houston, an innovative technology company leased 25,412 sf at 1301 Fannin Street. John Burke of JLL represented the landlord and Matt Dickson of CBRE represented the tenant.
PROFESSIONAL OFFICE SALE
Drs. Jose Iglesias, Alfonso Cordoba, Jose Sagbini, Phillip Sutton sold the Red Oak Surgical Arts building located at 17203 Red Oak Drive. Rosa Dye of The J. Beard Real Estate Company represented the seller and the undisclosed buyer was represented by Danny Nguyen of DN Commercial.
Houston-based owners are moving forward with the development of Rotana Mediterranean Restaurant at 3111 Chimney Rock, which was formerly occupied by Big Woodrow’s bar.
HUMBLE, TX SCHOOL CONSTRUCTION
The Humble Independent School District purchased 15.3 acres on the east end of the Fall Creek development near I69 & Beltway 8 for school expansion. The property was purchased from JNC Development. Mark Wimberly of Houston Commercial Development represented the buyer
KATY, TEXAS MIXED-USE DEVELOPMENT
Trademark Property Company & Westside Ventures is developing a mixed-use town center on 82 acres at the northwest corner of Mason Road & I-10. The initial phase will include retail, restaurant, residential, hotel & office space on 60 acres. The larger 82 acre site is part of a 107
acres tract owned by Westside Ventures.
Raising Cane’s Restaurants has ground leased a 32,956 sf pad site in Stableside at Falcon Landing, located at the corner of Gaston Road & Falcon Landing Blvd. Austin Alvis & Brad Elmore with NewQuest Properties represented the landlord & Jonathan Probst of the Retail Connection represented the tenant.
The University of Houston System purchased 46 acres for its new Katy campus at the northeast corner of I10 & the Grand Parkway from Parkside Capital. The tract will be part of a 125-acre master-planned, mixeduse development which has been rebranded as University Center.
PEARLAND, TEXAS INDUSTRIAL DEVELOPMENT
Houston-based McKee Tessa LLC, a company that builds underground concrete structures, purchased 17 acres of land at 700 Almeda-Genoa Road for the construction of a 55,000 sf company expansion. Michael Keegan & Clay Pritchett of NAI Partners represented the seller & Chase Spence of Colliers International represented the buyer.
American Modern Green LLC, the Houston-based subsidiary of Modern Land of China, has broken ground on Ivy District, a $300 million mixeduse project at the southwest corner of SH 288 & Spectrum Blvd. The development will feature apartments, townhomes, retirement homes, retail, office, a hotel & a conference center.
PORTER, TEXAS OFFICE DEVELOPMENT
McKinley Development Company is building a 40,000 sf office on 2.8 acres at the northeast corner of US 59 & East Martin Drive. McKinley’s parent company is Yihai Group, based in Dalian, China, the largest residential developer in Lianing. The developer plans to break ground next year on its first residential community in Cleveland, Texas.
A. A. Realty Company 14 ABC Realty Advisors 15 Berkadia 20 Caldwell Companies 7 Capital Retail Properties 1-SE Texas, 5 CREW Austin 21 Dwyer Realty Companies 1 - C/So Texas First Warranty Realty 19 Greenberg & Co. 13 Hankamer Commercial Brokers, LLC 29 Levcor, Inc. 13 IMN 42 National Environmental Services, LLC 43 Paris Economic Development Corporation 19 Phase Engineering, Inc. 30 PlusCorp 42 Polydoros & Associates 15
classifieds & index RBF Credit Union 20 Ridge Development Company 15 Robert C. Watson Associates, Inc. 21 Showalter Law 41 Signorelli Company 2 Southwest Realty Advisors 21 Tarantino Properties Inc 11 Texas CRES,LLC 20 TIG Real Estate Services 19 WA Development 3 Waller County EDC 21 Windrose Group 44
In Next Month's Issue... Affordable Housing & Mixed-Use Strategies
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