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How long will investors wait before plunging back into this sector?


Dallas and Austin developers share challenges of 2020, outlook for 2021

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CCIM COMMERCIAL REAL ESTATE FORECAST COMPETITION HYBRID EVENT February 18, 2021 * 8:00 AM Location: Norris Conference Center – City Centre and Zoom

Defenders: Industrial: Rob Stillwell, CCIM Newmark Land: Dave Ramsey Newquest Properties Medical: Brandy Bellow Spinks CBRE Multi-Family: Geoff Simpson Kaplan Companies Office: Ryan Clark Mission Companies Retail: Tenel Tayar Fifth Corner

Keynote Speaker: Mark Dotzour, PhD.


Challengers: Industrial: Wesley Williams Boyd Commercial Land: TBD Medical: Chris Wadley JLL Multi-Family: Joseph Bramante, CCIM TriArc Real Estate Partners Office: Eric Siegrist Parkway Property Investments Retail: Richard Buxbaum Radius Realty

MODERATORS: Industrial: Jane Nodskov, CCIM, ICO Commercial Land: Ed Taravella, CCIM, Taracorp Medical: Beth Young, Colliers Multi-Family: David Schwarz, CCIM, Newmark Office: Henry Hagendorf, CCIM, Tanglewood Property Group Retail: Josh Jacobs, The Blue Ox Group

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IN THIS ISSUE 12 Features Houston’s healthcare sector takes a pause, but for how long? Houston saw incredible growth over the past 10 years, including incredible expansion within its healthcare sector. Like most asset classes, that activity came to a halt with the pandemic. How long will investors wait before plunging back into this sector?


Max optimism for multifamily: Dallas and Austin developers share challenges of 2020, outlook for 2021 As the pandemic tightened its grip on America, the health and safety of residents became top priorities for multifamily owners, operators and developers. What does this mean for those in the trenches in Austin and Dallas?




Growth opportunities in unusual times Many businesses struggled mightily during the past year. Those that are finding ways to stay afloat—and set a course for a post-pandemic rebound—are the ones who used this time to make the most of opportunities. Whether identifying inefficiencies or new lines of business, the entrepreneurial sprit remains alive and well. Professional and personal: IREM Houston offers unique networking and educational opportunities In times of economic stress, commercial real estate professionals may be at a loss as to how they can improve or expand their prospects. That’s why organizations such as Institute of Real Estate Management can be rewarding for anyone looking to get a leg up.


17 19

Texas Economic Forecast for 2021

Economic forecast 2021: Dr. Mark Dotzour, commercial real estate economist

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This is a commercial real estate publication, so naturally, I’d like to talk about vaccines.


Since the start of the COVID-19 pandemic, we’ve all been holding our breath (sometimes literally), waiting for a vaccine to save us. This anticipated salvation has not just been from the deadly disease itself, but the resulting seizeup of the world’s economic gears. “Once we have a cure,” you or I or countless others have said, “then we can get back to business.”


Well, now we have a vaccine. Two, in fact, with a handful of others in Phase 3 trials. Incredibly, the Moderna and Pfizer vaccines have around 95 percent efficacy—far better than most epidemiologists would have predicted last spring. And on top of that, the first jabs came in record time, mere months after the outbreak instead of the typical years to bring such pharmaceuticals to market. The economy, unfortunately, is not going to switch back on with the speed that it shut down last March. For one thing, the vaccines both require two separate doses, effectively doubling the time for massive rollout. They also require incredibly tight temperature controls, which also invites the probability of slower distribution. And despite what most believe, vaccination is not an immediate green light to go to the salon or the office or the movie theater. The current understanding is that an inoculated individual can still spread COVID-19 to others, even if he or she won’t get sick. Additionally, there are new mutations of the virus and we don’t know yet if the approved vaccines will be effective against these variants. There remain a number of unknowns, but even with what we do know, it’s clear that the economy is going to slowly recover. For example, I personally won’t feel comfortable dining indoors for quite some time and I probably will never again visit a buffet. Commercial real estate is constantly molded by disruptions, two of the most recent being e-commerce and the gig economy. From those disruptions there has been pain, but also opportunity and entrepreneurialism. COVID-19 has been the biggest disruption for quite some time. I look forward to the incredible changes it will bring upon our industry, and I hope they come soon.

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Houston’s healthcare sector takes a pause, but for how long? BY MATT BAKER

Mason Creek MOB in Katy, Texas, recently acquired by Montecito Medical.

The Houston healthcare sector, like the overall market itself, witnessed incredible growth over the past decade. That activity came to a skid, however, leaving owners and occupiers attempting to navigate the choppy waters brought about by the pandemic. All market metrics—from absorption to vacancy to investment activity—either remained relatively stable or trended in discouraging directions, according to Q3 research compiled by Transwestern. For example, absorption during the quarter was less than that of a typical dialysis center, totaling just 456 square feet. Granted, just barely positive absorption is better than negative, but that figure is tempered even further by the 70 bps quarter-over-quarter vacancy rate increase to 13.1 percent. One contributing factor to this rise in vacancy is the approximately 252,000 square feet of new healthcare space that came online, less than half of which was pre-leased. 8


The largest delivery during the third quarter was Bissonnet Medical Plaza, a 53,000-square-foot MOB in the Bellaire submarket. All across Houston, multiple projects are in the pipeline that will add additional healthcare supply. In or near the TMC alone there are three hospital facilities now under construction, totaling more than 733,000 square feet. The largest of these is the 427,000-square-foot O’Quinn Medical Tower going up on the Baylor St. Luke’s McNair campus, scheduled for completion in early 2024. The twobuilding UTHealth Public Education Mental Health Hospital will comprise 220,000 square feet when it wraps construction this December. Slated to deliver in the fourth quarter of 2023, the MD Anderson Cancer Center Proton Therapy Center will occupy 86,500 square feet. A pair of developments in The Woodlands—both scheduled for completion early next year—will bring over 592,000 square feet of healthcare space to

“Healthcare is an always-in-demand sector to a degree, so high-quality properties should continue to attract credit-worthy tenants and investor interest.” that submarket. The Memorial Hermann Woodlands tower expansion will be over 332,500 and the Houston Methodist Woodlands project will add another 260,000 square feet. Looking across the Houston area, 14 out of the 17 submarkets that Transwestern tracked saw a rise in vacancy. The most dramatic quarterly increases were in Bellaire and Conroe which rose, respectively, 220 bps to 10.6 percent and 200 bps to 15.8 percent. Though the Near North didn’t see much additional vacancy this quarter, it still has the highest availability with a 24.7 percent vacancy rate. The Texas Medical Center (TMC) and Clear Lake scored the lowest vacancies across the metro with 8.1 and 8.3 percent, respectively. The metro’s $27.24 per square foot average asking rent during the third quarter represents a 90 bps drop from the previous quarter and is down 120 bps yearover-year. More than half of all submarkets saw asking rents reduce; the Near North commanded the lowest rent at $20.76 per square foot but the Inner Loop saw the most precipitous fall, dropping 1,140 bps quarter-over-quarter to $27.44 per square foot. Asking rents are highest in the 290 Corridor, The Woodlands and the South submarkets, all of which were just north of $30 per square foot. Given overall capital hesitancy at the height of the pandemic late last year, and the performance of Houston’s healthcare sector, investor activity was subdued in the third quarter. The most notable transaction saw Montecito Medical acquire Mason Creek MOB from Read King Commercial. The 30,000-squarefoot building, located in Katy, Texas in the Far West submarket, is fully leased to Village Medical and Memorial MRI & Diagnostics. While the pandemic certainly cooled transaction velocity, investors continue to have interest in healthcare assets, especially those that are well-leased to tenants with good credit. And with continued job growth in the sector, this interest is sure to pick back up. Houston added 2,500 healthcare jobs in the third quarter, rising to 6,600 from one year prior—before the start of the pandemic. There were nearly 8,000 new jobs during that time in the ambulatory health care services subsector, which includes offices of physicians, dentists and practitioners, among others.

compound the recessionary forces brought about by COVID-19. Add to that the incredible growth that the market witnessed in the previous decade—spurred on, in part, by healthcare expansion—and there are going to be near-term increases in vacancy across sectors. The long-term outlook is far more bullish. Healthcare is an always-in-demand sector to a degree, so high-quality properties should continue to attract creditworthy tenants and investor interest. The wider asset class will have to wait until after widespread vaccine rollout, and for the supply-demand landscape to return to balance. Assuming the vaccines prove to be effective and are distributed quickly (and no variants of the virus create new issues), pent up demand for Houston-area healthcare space could begin to have an impact as soon as late 2021.

FEBRUARY 25, 2021


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This job growth is projected to continue for years to come. A study by Center for Houston’s Future found that healthcare—which currently accounts for 12 percent of employment across the region—will see an explosion over the next 17 years, with one in four newly created jobs being in the healthcare sector. Houston is currently facing more hurdles than most other U.S. markets as the pandemic has also led to a collapse in the energy sector. This will only FEBRUARY 2021


Max optimism for multifamily: Dallas and Austin developers share challenges of 2020, outlook for 2021 BY BRANDI SMITH As the pandemic tightened its grip on America, resident safety and wellbeing remained the highest priorities for High Street Residential, one of the most prolific multifamily developers in the Austin area. “We worked closely with our management partners to immediately adjust our operating practices to better enable social distancing within common spaces, such as creating a reservation system to better manage congestion within pool and fitness spaces,” said Matteo Pacifici, senior vice president at High Street. “We also implemented enhanced cleaning protocols to ensure safety within our common areas and enhanced our virtual leasing capabilities, providing new options for potential residents to research, tour and ask questions to property staff and residents virtually.” While many of the changes made in multifamily environments were made with the short term in mind, it’s becoming clear that some may outlast the pandemic that prompted them. “We expect that the composition of units will change in the future as more residents adapt to working from home regularly. We expect buildings in the future will provide more flexible unit formats to accommodate working from home by offering more dedicated office space within units themselves,” Pacifici said. “We also expect to see a greater emphasis on common workspaces within buildings versus other amenity offerings.” In Dallas, multifamily development and construction company, Oden Hughes, is also designing its communities to better accommodate the increased number of employees who will continue working from home. “We’re incorporating large co-working spaces into more of our projects and creating separate spaces for working within more units ranging from small nooks to home offices,” said managing director Howell Beaver, who oversees development in the DFW area. Adapting to work-from-home demand isn’t the only trend these multifamily developers have observed throughout 2020. In Austin, Pacifici said a steady flow of out-of-state residents to Texas continues to bring young, well-educated employees to the city. “Despite this positive trend, we did see slower leasing activity from existing Austin residents,” he said. “As market conditions deteriorated in the spring of 2020, existing landlords offered attractive concessions and reduced rents to help 10


Matteo Pacifici

Howell Beaver

Ben Browder

retain existing residents. This led to less demand for new apartments by existing Austin residents.” The team at Oden Hughes is keeping its eyes on East Austin and Northeast Austin. “East Austin remains very popular among young professionals drawn by the area’s close proximity to downtown and a great restaurant and bar scene that hopefully will recover by the end of the year,” said Oden Hughes vice president of development, Ben Browder, who oversees development in Austin. “Northeast Austin is also becoming more attractive as a major expansion of U.S. 183 nears completion. This project will significantly reduce commute times for workers heading downtown and to Northwest Austin.” Dallas suburbs are outperforming the infill markets as well, according to Beaver, who points out that is the opposite of what we saw coming out of the Great Recession. “The suburbs have been on fire, from both a leasing and transactions standpoint,” he said. “Our Lenox Castle Hills community in Carrollton was our best lease up yet company-wide, with all 430 units leased up in just over a year.” Beaver suggested that millennials are leaving the city after having kids, fueling demand for housing in North Dallas suburbs, such as Frisco, Plano, Garland, McKinney and Carrollton. “The trend has accelerated during the pandemic as more families and single young professionals have sought more living space,” said Beaver. Looking ahead, he said he’s optimistic about the multifamily sector in the Dallas market as the area adds new jobs and residents and home prices rise. Beaver said young professionals are drawn to Texas by the lure of the low cost of living and availability of high-paying jobs.

“It was a tough year for everyone, but we were very fortunate to be able to adapt.”

“The Dallas economy is very diverse and also continues to attract companies seeking to lower their cost of doing business and the cost of living for their employees. CBRE, Charles Schwab and the aviation supply company Incora all announced plans to relocate their headquarters from California to the DFW area last year, while California-based advanced manufacturing firm Titans of CNC announced a major expansion in the area,” Beaver said. “We believe that more companies from expensive coastal areas will relocate to or expand operations in DFW in 2021 and beyond.”

Similarly, Pacifici added that Texas’ capital city recovered a higher percentage of jobs lost during the pandemic than any other market in Texas and is outperforming most other major cities in that regard. “Austin is also benefiting from a wave of corporate office relocations and expansions announced over the last 12 months that will translate into thousands of new jobs in the metro,” he said. “These factors should contribute to improving performance.” Those relocations and expansions are predicted to add more than 10,000 jobs to the Austin market over the next few years. Tesla alone, Browder said, is expected to employ more than 5,000 people at its under-construction gigafactory.

“At the same time, Austin’s extremely low housing inventory continues to push single-family home prices out of reach for more and more workers even in the suburbs,” he said. “The combination of strong population growth, low housing inventory and rising home prices will continue to fuel demand for more apartments in 2021, particularly in locations near employment centers, retail and recreational amenities.” If Austin and Dallas multifamily developers have proven anything this year, it’s that they can overcome once-in-this-lifetime challenges and even celebrate some successes, including Oden Hughes’ 10th year in business. “We broke ground on new developments in the Austin, Dallas and Houston areas while also continuing to grow our third-party general contracting businesses in these markets,” said Beaver. “It was a tough year for everyone, but we were very fortunate to be able to adapt.” Being able to find and focus on those silver linings is how the most successful developers push forward, a trait that will help propel them into 2021 and beyond.

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Growth opportunities in unusual times BY SCOTT NORTON

Here at TexAmericas Center, we knew that we didn’t want to change our entire business model for a pandemic that might only last a year or two. But at the same time, we knew our clients needed something more.

Coming off a year when business shifted unpredictably, opportunities for growth now abound in ways we’ve never seen before. The COVID pandemic sent shockwaves through developments that previously seemed impenetrable. Office space sat empty, with rental revenues deteriorating, as employees worked from home. Restaurants struggled to stay open with carryout orders. Retail stores remained quiet as online orders grew dramatically. But behind the scenes, other industries could barely meet demand. Rail car storage yards burst to capacity, as railroads sought out places to park unused cars. Manufacturers turned away from their longtime affair with just-in-time models, instead looking for warehouses to store the goods that would help them ride out business fluctuations and employee down time. 12


Scott Norton

So, we tweaked our business model to best serve our clientele for 2020 and 2021. That included building warehouse spec space, adding third party logistics services and using existing spaces in unique ways. Continued on Page 14>

“Any way you look at it, warehouse space is becoming the next big growth opportunity for developers.”

We added an expert logistics provider to our staff last year, giving our clients the ability to not only store their inventory here, but also have us manage it. There’s little doubt that we are established and connected in the TexasArkansas region. We know the best transportation options and the right people to call to keep supply chain issues to a minimum. Our growth-mode clients appreciated the new service, which let them focus on birds-eye strategies rather than internal logistics. Particularly for those companies transitioning away from just-in-time manufacturing, having expert guidance available to manage new inventory filled a gap before it had the chance to emerge.

Growth Opportunities

At present, TAC has 12,000 acres and three million square feet of commercial and industrial property. Part of our appeal is our ability to lease, develop and finish business space—and now also, inventory management. We are, indeed, a one-stop shop.

Boosting warehouse space

Unique solutions

Those strategies, while effective in normal times, became an obstacle during the pandemic when customer demand shifted, and manufacturers experienced unplanned shutdowns. The companies who successfully met customer demands during that time did so in large part because of any warehousing solutions they implemented. Be it raw material or finished goods, businesses were able to operate without hiccups when they had extra inventory on hand.

One way we are doing that is by offering cold storage for vaccines, a market in high demand. We’ve been able to transition existing warehouse into cold storage facilities, opening up an entire market.

< Continued from Page 12

Across a swathe of industries, some of the lean principles that have ruled the past generation of business are being pushed aside.

For many companies, the solution hasn’t focused on opening a single, large warehouse. Oftentimes, it’s more effective to launch warehouses in multiple sites. By spreading inventory throughout the region, it cuts down on transportation time while simultaneously offering an insurance policy; an outbreak at one site won’t necessarily derail your entire region. Another site can simply ramp up operations.

There’s little doubt that successful developers will emerge from the pandemic, having used creative solutions to fluctuating market demand.

And like others across the country, we are experiencing demand for rural locations. Just as city dwellers are seeking out more rural settings to offer them more space from neighbors, so are businesses turning to smaller markets to set up shop. TAC has long been in high demand for companies looking to take advantage of its low costs of utilities, taxes, overhead and labor. Each of those categories tend to run at least 20 to 30 percent lower in Texarkana than in other major Texas MSAs.

Likewise, the consumer trend toward online shopping isn’t likely to end with the pandemic. Now that customers have experienced the benefits of online shopping—ease of access, price comparison tools and time savings—it’s unlikely they will return in droves to physical retailers.

In rural America, companies might find the amenities they want without risks that come along with a dense population. Likewise, lower startup costs make multi-site operations more feasible, and transportation efficiency abounds outside of city centers.

That means, rather than large footprints for showrooms, companies instead will need to invest in warehouse space, strategically placed throughout their market area, to quickly and efficiently deliver their wares.

There’s no doubt, success in 2021 won’t come from using moves out of the traditional playbook. These are unique times, ones that call for creativity and innovation. Look for opportunities and be limber enough to meet them where they are.

Any way you look at it, warehouse space is becoming the next big growth opportunity for developers. TAC launched a 150,000-square-foot spec building in 2020 for precisely that purpose. We know that our clients don’t want to wait on construction time once their need for space arises. So, we already have space available to suit their needs.

Third party logistics

We had tossed around the idea of providing third-party logistics services here at TexAmericas Center in the past. But 2020 made it clear the time was now. 14


Business growth is out there. It’s our time to find it.

About the author

Scott Norton is Executive Director and CEO of TexAmericas Center.

Professional and personal: IREM Houston offers unique networking and educational opportunities BY BRANDI SMITH Six years into her career in commercial real estate, Kaci Hancock walked into her first luncheon for the Houston chapter of Institute of Real Estate Management (IREM). “I remember thinking, ‘Oh, my gosh. This is so overwhelming. I don’t belong here. I don’t fit here,” said Hancock. “Then Jo D. walked up to me.” Jo D. Miller, the chapter’s executive director, introduced Hancock to some of the others in the room, warmly welcoming the then-assistant property manager into the IREM family. “That was a key moment in my IREM life. If it hadn't been for Jo D. taking the initiative or noticing that there was a new person in the room who was

Kaci Hancock

Jo D. Miller

Lindsay Konlande

looking a little lost, I probably wouldn’t have come back,” Hancock said. “Because of that moment, I am now the 2020 president!” Continued on Page 16>

City Management FEBRUARY 2021


“In my career with IREM, it has been just a true pleasure to see how uniquely special this organization is and how it affects people's lives because the relationships are so sincere. It is obviously very professional, but it's also a network of people caring about people and supporting each other.” IREM < Continued from Page 15 IREM Houston is made up of hundreds of CRE professionals with similar stories. Many joined the organization for its educational opportunities only to find, like Hancock, a kind of family within their field. “We tend to support each other and treat each other like we are family—and I love that,” said Hancock, now operations director for REIS Associates, LLC. “I love that we don't just network with each other. We support each other inside and outside of IREM.” “In my career with IREM, it has been just a true pleasure to see how uniquely special this organization is and how it affects people's lives because the relationships are so sincere,” said IREM associate director Lindsay Konlande. “It is obviously very professional, but it's also a network of people caring about people and supporting each other.” That network is focused on one goal: educating and lifting up people in the CRE industry. IREM offers real estate and property management certification that is recognized on an international level. Programs include Certified Property Manager (CPM), Accredited Residential Manager (ARM) and Accredited Commercial Manager (ACoM) for individuals. “A lot of employers now are seeking out credentialed real estate managers, especially those with a CPM,” Hancock said. “I think IREM provides a phenomenal opportunity—not only to further your career path, but also to increase your knowledge through all of the educational offerings the organization provides.” The opportunities offered by IREM aren’t reserved for newcomers. Konlande said even someone with 25 years of experience can benefit from continuing education. “We have options that could potentially get you a raise or the ability to open up your own organization,” she said. 16


IREM also offers companies the option to pursue Accredited Management Organization (AMO) certification or the Certified Sustainable Property (CSP) program. “Those are all credentials through IREM that are very recognizable within the commercial real estate industry,” said Hancock. “They give you an overall advantage.” And they connect you with the heart of IREM: the people. “Initially, you just sign up for classes and network with your peers. But you start to cultivate these relationships. Then next thing you know, someone in one of your classes who’s on a committee wants you to join or get involved,” Hancock said. “You come for the education, but you thrive off of the relationships and camaraderie.” The group that belongs to IREM is as diverse as they come with members in all different sectors of different ages with different experience levels. “It’s a welcoming place for anyone of any background and at any level of their career,” said Konlande. Echoed Hancock, “It really is like no other organization because of its welcoming environment and the connections that will last you a lifetime. It pays off professionally and personally.” For more information about IREM, visit IREMHouston.org.

Texas Economic Forecast for 2021 BY RAY HANKAMER Moderator: Reid Wilson, Wilson Cribbs & Goren. Panelists: John Hammond, Riverway Title; Patrick Duffy, Colliers International; Robert Cromwell, Moody Rambin; Josh Friedlander, NewQuest Properties; Stewart Geise, CBRE Austin; Corey Ferguson, Raintree Commercial; Scott Norton, Texamerica Center.


In spite of the COVID troubles of 2020, there are a lot of “green shoots” in commercial real estate in Texas, and 2021 promises to be a year of renewal and opportunity, with new COVID-inspired efficiencies. Each quarter this year should be better. That said, there will also be a lot of rough spots between borrowers and lenders, landlords and tenants, evictions and rent deferrals/forgiveness, and so on. Overall, it may be ’23 or ’24 before full return to stabilization. Companies and employees from higher cost of living states are moving to Texas cities, which will create new needs here for transit and other forms of mobility and public services. • Real estate opportunity funds are raising billions of dollars, and are looking for opportunities • Even with the onset of COVID early in 2020, most pending real estate transactions DID close as forecast

• Real estate lawyers are busy as landlords and tenants alike face debt stress, and create plans for new development • Big question which will be answered as we move forward into the year: what kind of space do tenants really want for their employees, and for the continued dynamism of their companies? The trend is not yet clear to landlords or tenants; how will landlords react to tenants’ changing needs when the tenants themselves do not know what how their needs will develop? • Employees may be “elevator-averse” well into the future, and this will impact high-rise office settings; trends are gently pointing away from CBD and to less dense settings in the suburbs; there is a lot of vacant office space on the market; some tenants are even configuring to larger SF in their offices to increase distancing • By the third quarter we will know better where the economy is going • Industrial has been the strongest segment in CRE during COVID and Continued on Page 18>




< Continued from Page 17

logistics has held up well, as deliveries + e-commerce have fostered growth; with increased focus on delivered food, cold storage facilities are in increasing demand • O&G upstream seems to be stabilizing and beginning to “return” with price per bbl at $50…more rigs coming back to work; this will drive industrial occupancy and office occupancy; increased activity in O&G will also affect other businesses such as high-end restaurants, and hotels where industry conferences take place • Retail in first half of ’20 was bad, but by mid-year was beginning to return to normal, with some hit hard and some booming, such as grocery, liquor and pet supplies; the hard hit ones will come back in ’21, if they make it; good times are ahead for most retailers; big box spaces vacated by some retailers usually are quickly re-leased/re-purposed; development of retail follows rooftops; retail landlords are both abating and deferring rental payments to keep good tenants who are going through momentary stress—"blend and extend” is a term some are applying to landlord efforts to work with tenants • Restaurants have been mixed, with those with patio/outdoor seating and drive-thru surviving, and those featuring high-end high-service suffering; new restaurant construction and renovation of existing will see the “COVID features” included for the future, including necessary use of endcaps on strip centers for drive-thru windows • Multifamily has fared well except for the lower-class projects, where there are rent-stressed tenants • Office has seen churning of tenants as some have moved to higher class, newer buildings which have lowered their rates; quoted rents have fallen 1020% in some cases to hold existing tenants in a highly competitive market; it is hard for tenants with leases coming up for renewal to make decisions given uncertainty about their future remote working policies; some landlords and tenants are agreeing on shorter-term lease renewals to give the future time to come into focus; office building operating expenses are falling in some cases, and savings are passed on pro-rata to tenants, resulting in lower monthly rents; occupancy has remained strong in CBDs in spite of large percentages of workers working from home • Medical real estate development is influenced most by population growth; however, expansion has been slowed as COVID cases have displaced the more profitable elective surgery revenue for hospitals; many smaller practices are leaving the hyper-dense medical centers and are moving to the suburbs, where the patients and their families live; smaller urgent care facilities are taking the place of emergency rooms in some cases • With regard to investment sales, there continues to be lots of money waiting on sidelines for opportunistic buys • In addition to lower rental income, office landlords are looking at physical upgrade costs for more distancing and ventilation improvements, and there is

the problem of people not wanting to crowd in elevators; there is a significant difference in the acceptance by tenants of pre- and post-2003 era buildings; addition of glass partitions and addition of spacious “collaborating space” may be required in some building to retain and attract tenants • Houston remains very competitive with the two other coasts in rental rates and cost of living • The Houston economy is bigger than the economies of thirty-one states, and is growing; we are “in a good place” economically; we have lots of land, and growth is spilling over into Waller and Chambers counties • With regard to new development, the major Texas cities have a lot of land to grow, except Austin, which has topographical and mobility challenges; proximity to ports (sea and air), to major highways/parkways/loops and to rail drives development in this day of e-commerce and logistics/delivery; Austin city fathers are examining the San Francisco area to see what has worked there; a large mobility project is up for voter approval in Austin; California “immigrants” are transforming Austin, which has a new moniker: “Silicon Hills” • Repurposing of a large, abandoned government base near Texarkana is creating relocations for many types of companies which depend on rail and highway access and two- to eight-hour driving time to numerous metro areas with populations 450,000 and above; over 12,000 acres are in redevelopment there; successful re-development in spite of inertia which comes from dealing with government bureaucrats

advertiser index CCIM Houston................................................................................................ 3 City Management LLC.................................................................................. 15 CRG Texas........................................................................................................ 2 Evergreen Design Group.............................................................................. 11 La Marque....................................................................................................... 5 Lane Property Tax Advocates..................................................................... 7 Littwitz Investments, Inc............................................................................ 17 National Environmental Services, LLC...................................................... 23 Phase Engineering......................................................................................... 20 RSB Environmental....................................................................................... 13 The Real Estate Council - Greater Ft. Worth........................................... 9

Economic forecast 2021: Dr. Mark Dotzour, commercial real estate economist BY RAY HANKAMER


• There will still be choppy waters after the storm, a COVID hangover; but we should be bullish about late summer, when vaccinations reach their peak • Americans have been saving heavily and there is huge pent-up demand for travel, cruising, visiting national parks, concerts, gyms, theatres, weddings, college attendance, business travel and conventions, shopping, new homes, etc.,…deferred gratification is not an American (or Texan) attribute so spending is destined to return at an accelerated rate • Office building landlords will be watching tenants as they return to the new normal, which will still center on collaboration in a central location, but perhaps less than before, and blended with some lingering work-fromhome • Distribution of vaccines, layered on top of booming e-commerce, has stressed logistics and has created delays, and has led to spiraling shipping costs • Mortgage rates may rise some, but Fed will not kill housing boom, since it underlies any economic recovery; interest rates may be at their lowest points right now

• America will continue to attract massive inflows of international investment since we have “the rule of law” in this country; international investors recognize the names of our largest cities over those of smaller ones, and the ones they know will receive the investment dollars; money continues to flow into our country; Dotzour is bullish on real estate in the coming year • Although we can expect President Biden to tweak a lot of economic issues, in the end he should not deviate materially from current policies, given that a large percentage of his donors are Wall Street and corporate-related • 2021 will see a lot of undeployed “dry powder” available to power a recovery from the COVID year of 2020 • Institutional lenders are increasing their allocation of available loan funds to real estate for 2021, which should spur development at interest rates which should stay low • Big cities used to be dangerous and scary places to live; some are regaining that reputation as citizens there are experiencing COVID-related economic hardships; suburbs and some secondary and tertiary cities will see growth from de-densification in cities • Currently there is a surprising trend in suburban housing: investors are building single family-style home for rent/lease

• Tax cuts are not the answer for higher economic growth; while outsourcing manufacturing we have exported domestic jobs; cost of manufactured goods has dropped for Americans, but at a cost in jobs; however, as recently as November 2019 there were 10.8 million job openings in US

• Forbearance by landlords and lenders has been common in 2020, but that is tapering down, and “loan-to-own” will be evident in 2021, as some landlords and lenders run out of ability to forestall foreclosure; some loans will be restructured, however, ongoing, and eviction policies will vary

• Retraining for today’s jobs is urgently needed, but for someone in mid-life it is not always easy to retrain into an entirely new field

• Inflation is probably not about to skyrocket, due to many factors

• World competition is healthy for consumer prices if it comes without tariffs, and two-way commerce between countries is healthy and keeps the containers full both ways, and lowers shipping costs

• The coming years will be very entrepreneurial, and will provide an exciting future to many; it will be hard to find employees for some industries; enhancing existing human capabilities and re-training those in shrinking industries will be key to filling jobs.

• Contributing to job loss is employment cutbacks by governments on all levels due to their shrinking tax collection during current slowdown • We must embed climate change considerations into our policy and business agendas; we should set a goal of net-zero emissions from all buildings new and old in the U.S. by 2030, and adopt the necessary building codes, trending towards the LEED standards for all commercial buildings… although this moves up the costs of construction FEBRUARY 2021


Cushman & Wakefield hires new Director of Houston Office



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1 ULI San Antonio 2021 Real Estate Outlook and Emerging Trends Program. 2 CREMM Christmas Party 2020. 3 Houston Gulf Coast CCIM Chapter award scholarships at recent meeting. 4 Commercial Real Estate Mellinial Misses Christmas Party 2020. 5 CREN is proud to have SR Striping and Painting back as a Clay Shoot Sponsor 6 Houston Gulf Coast CCIM Chapter award scholarships at recent meeting.

Meredith T. Cullen has joined Cushman & Wakefield as Director based in the firm’s Houston office. He will partner with Cushman & Wakefield Vice Chairman David L. Cook to lead the seven-person land brokerage team. “We are excited to add Meredith, a seasoned commercial real estate professional, to our team,” said Tim Relyea, Managing Principal of Cushman & Wakefield’s Houston office. “Meredith is a well-known and respected real estate professional who has been integral in a variety of development and investment activities throughout Houston.” Cullen joins Cushman & Wakefield from Cullen Realty Group, a firm he created in 2013 that specializes in marketing, dispositions and acquisitions of land, ranches, buildings, homes, condominiums and other properties. He is part of the H. R. Cullen Family, a family with deep roots in the Houston community for more than 100 years. He has completed more than 200 transactions valued at more than $300 million. Cullen joins a Cushman & Wakefield team that has closed more than 4,892 assignments valued in excess of $5.2 billion, including more than 1,600 land transactions totaling more than 210,000 acres valued at $3.4 billion over the past five decades under the leadership of Cook, a top land and industrial broker in Texas and globally for Cushman & Wakefield. “I am honored to join Cushman & Wakefield, a top-tier commercial real estate services firm known for its culture and spirit of collaboration,” Cullen said. Cullen served six years in the U.S. Marine Corps Forces Reserves and was awarded the U.S. Navy and Marine Corps Achievement Medal. He is a board member of the Cullen Foundation, the Harris Health System and HCA Houston Healthcare, and is a member of the Houston Association of Realtors. He is also a former board member of The Baylor Hospital Foundation and The Methodist Hospital Foundation. About Cushman & Wakefield Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @ CushWake on Twitter.




CENTERPOINT PROPERTIES 800 Town and Country Blvd., Suite 500 Houston, TX 77024 Website: centerpoint.com Key Contacts: Danielle Radtke, dradtke@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on large rail, port and trucking infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success—no matter how great the challenge.

BROKERAGE FIRMS FRANKEL DEVELOPMENT GROUP 5311 Kirby Drive, Suite 104 Houston, TX 77005 P: 713.661.0440 Website: Under Construction Key Contact: Bruce W. Frankel, President, brankel@frankeldev.com Services Provided: Frankel Development Group offers over 33 years of experience and expertise in the retail real estate business. Services include tenant representation, shopping center/project leasing, investment sales, land sales, and development services. Company Profile: Headquartered in Houston, Frankel Development Group provides comprehensive brokerage services for its clients throughout Texas with an emphasis on the Houston MSA. The company represents over 25 "best-in-class" retailers and restaurants, 15 property owners, and possesses a skillset and depth of experience unmatched in the marketplace. Notable Clients/Transactions: Notable retailers include Orangetheory Fitness, Burkes Outlet Stores, UBREAKIFIX, Escalante's Fine Tex-Mex & Tequila, Three Dog Bakery, Fred Astaire Dance Studios, Pump it Up, WaveMax Laundry, and Rush Cycles.

FRIEDMAN REAL ESTATE 34975 W. Twelve Mile Road Farmington Hills, MI 48331 P: 888.848.1671 Website: friedmanrealestate.com Key Contacts: David B. Friedman, President/CEO; Gary Goodman, Sr. Managing Director-Brokerage Services Services Provided: Friedman offers a full range of real estate services including commercial and multifamily property and asset management, tenant and landlord representation, investment and loan sale advisory, space planning, design and construction and a unique platform of lender-focused bankruptcy, receivership and distressed asset services. All services are provided in-house, though a single point of contact, which guarantees that clients receive the most timely and efficient service available in the marketplace. Company Profile: Founded in 1987, Friedman Real Estate is one of the largest privately held commercial real estate organizations in the nation; currently managing over 16M SF of commercial space and more than 21,000 apartment homes located throughout the country. Friedman’s commercial brokerage team has over 800 current listings with $20 billion in closed transactions. Recent Transactions: Friedman Real Estate recently sold the 2,953 square foot retail-restaurant space on Imperial Valley Drive in Houston Texas. Friedman’s Neha Abassi advised the seller in the transaction.

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CONSTRUCTION COMPANIES/GENERAL CONTRACTORS ALSTON CONSTRUCTION COMPANY 1300 W Sam Houston Pkwy S, Suite 225 Houston, TX 77042 P: 713.904.2899 10440 North Central Expressway, Suite 720 Dallas, TX 75231 P: 214.363.0551 Website: alstonco.com Key Contact: (Houston) Nick Dwyer, Director of Business Development, ndwyer@alstonco.com (Dallas) Brittany Schneider, Director of Business Development, bschneider@alstonco.com Services Provided: Alston offers a diverse background of design-build experience, general contracting and construction management of industrial, commercial, healthcare, retail, and municipal projects. Company Profile: Alston Construction is celebrating 35 years of excellence in 2021, and we believe our success comes from being a true partner. With 21 offices nationwide, we have market knowledge throughout the country, which provides clients with the best building methods and materials available. Our goal is to provide quality, cost efficient projects that leave a positive experience for our clients and their communities. Notable/Recent Projects: Park 249 - 817,920 SF LEED tilt-wall warehouse facility park including interior finishes for Amazon in Houston, TX; McKinney National Business Park – 150,000 SF warehouse/distribution tilt-wall facilities in McKinney, TX; Restaurant Depot – 59,565 SF preengineered metal retail building with cold storage in Pasadena, TX; Valley View Lane Warehouse – 160,000 SF warehouse/distribution facility in Farmers Branch, TX

CADENCE MCSHANE CONSTRUCTION 5057 Keller Springs Road Suite 500 Addison, TX 75001 P: 972.239.2336 F: 972.239.1214 Website: cadencemcshane.com Key Contact: Will Hodges, President, whodges@cadencemcshane.com Services Provided: Cadence McShane Construction Company offers over 30 years of experience providing design-build, construction management at risk, preconstruction and general construction services on a national basis. The rm’s diverse expertise includes specializing in the Education, Multifamily, Senior Living, Commercial and Industrial market sectors. Company Profile: Headquartered in Dallas, Texas with regional offices in Austin, Texas, Houston Texas, and San Antonio, Texas, Cadence McShane Construction Company provides comprehensive construction services on a local, regional and national basis for a wide variety of market segments. The firm is the builder of choice in the state of Texas and its surrounding region as it deploys a culture of relentless service with an entrepreneurial spirit that originates from inside of each individual and helps constantly deliver reliable results of excellence. Notable/Recent Projects: Hermosa Village Apartments –Leander, TX – 238 modern farmhouse inspired garden-style units, offering one- two- and three- bedroom options.

DEVELOPERS PROLOGIS 2021 McKinney Ave., Suite 1050 Dallas, TX 75201 P: 847.420.8321 Website: prologis.com Key Contact: Kate Rutherford, Regional VP, krutherf@prologis.com Services Provided: Prologis provides approximately 1,600 real estate professionals worldwide with extensive local market knowledge and development expertise to meet complex logistics and distribution requirements. Customers include third-party logistics providers, transportation companies, retailers and manufacturers. Company Profile: Prologis, Inc. is the global leader in logistics real estate with a focus on highbarrier, high-growth markets. As of September 30, 2019, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 797 million square feet (74 million square meters) in 19 countries. Prologis leases modern logistics facilities to a diverse base of approximately 5,100 customers principally across two major categories: business-to-business and retail/online fulfillment.


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2021 SAVE THE DATES! February 16th: Houston: Industrial/Logistics February 25th: Dallas: Industrial March 25th: Texas: Rio Grande Virtual Event March 26th: Dallas: Multifamily


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Profile for REDnews

REDnews February 2021 Issue  

Commercial Real Estate articles, properties, advertisements, and upcoming events.

REDnews February 2021 Issue  

Commercial Real Estate articles, properties, advertisements, and upcoming events.

Profile for rednews