Our Reach Is Vast
STNL Transactions 2019 IN TEXAS
Criteria:
• Single Tenant Retail in Texas
• Sale Date: 1/1/2019 12/31/2019
• Investment Properties
• In 2018 there were 522 trades
MT Transactions 2019 IN TEXAS
312
Criteria:
• Multi Tenant Retail in Texas
• Size: 5,000+ sq ft
• Sale Date: 1/1/2019 12/31/2019
• Sale Price: $400,000+
• Exclude Bulk Portfolio Sales
• In 2018 there were 298 trades
Transactions Per Region
Multi Tenant Type
Multi Tenant Type
IN AUSTIN/SAN ANTONIO
IN AUSTIN/SAN ANTONIO
Multi Tenant Type TRANSACTIONS IN DFW
IN DFW
STNL Type
TRANSACTIONS IN TEXAS
US High Rental Rates
RENT PER SQUARE FOOT
US Average Rental Rates
RENT PER SQUARE FOOT
MSA Population
Square Miles in MSA
PER SQUARE MILE
DFW Population Per Square Mile
10,000,000 PEOPLE (2030)
Primary City AVERAGE
RENTAL RATES
Disposable Income
MEDIAN HOUSEHOLD INCOME
NUMBER OF TOURISTS PER YEAR (2018)
Not to be a success, but to be of Value
— Albert Einstein
Mark Dotzour
Good
Fishing Ahead,
but Keep an Eye on the Clouds
Dr. Mark G. Dotzour
Longest U.S. Economic Expansions
Current expansion began in June 2009
• Mar 1991 to Mar 2001 120 months
• Feb 1961 to Dec 1969 106 months
• Nov 1982 to Jul 1990 92 months
• Jun 1938 to Feb 1945 80 months
• Nov 2001 to Dec 2007 73 months
Current expansion as of January 2020 is 128 months
HOW LONG CAN IT LAST?
First Focus: The Good Fishing
Why 2020 Will Be Slower
• Auto industry appears to have peaked
• Trucking and shipping industry has peaked
• Low oil and gas prices will pressure energy sector
• Trade negotiations with China cause uncertainty
• Businesses not using tax benefits to expand
• Congress won’t be interested in growth
• Federal budget deficits can’t get too much higher
• Presidential election uncertainty
300K
Source: Bureau of Labor Statistics
266,000 in November
Rate of Wage Growth 1960 to present
Source: Federal Reserve Bank of St. Louis 4%
Job Openings in America Looking for
Workers
Source: Bureau of Labor Statistics
Texas Employment Since
1940
13.6 million in Nov 19
Source: Bureau of Labor Statistics
Source: Federal Reserve Bank of St. Louis
Household Owners Equity in Real Estate
$18 trillion
Source: Federal Reserve Bank of St. Louis
Source: The Conference Board
Household Debt Service Payments as a Percent of Disposable Personal Income
Source: Federal Reserve Bank of St. Louis
Small Business Confidence:
Percent of Respondents
Source: National Federation of Independent Business
New Single-Family Houses Sold Since
1963
Source: Federal Reserve Bank of St. Louis
New Single-Family Housing Starts Since
1959
1965 Population:
194 million
1 million units
Source: Federal Reserve Bank of St. Louis
Leading Index of Economic Indicators 1982 to present
Source: Federal Reserve Bank of St. Louis
Texas Leading Index
Source: Federal Reserve Bank of Dallas
Houston Business-Cycle Index
Source: Federal Reserve Bank of Dallas
Looking For Signals of Change
Source: Federal Reserve Bank of St. Louis
Large Corporate Hiring Plans: Next 6 Months
Q3-19 Q2-19 Q1-19 Q4-18
Source: Business Roundtable
Corporate Bond Spread
Source: Federal Reserve Bank of St. Louis
The Future of Interest Rates
Inflation Moves the 10-Yr Treasury Rate
(unless the Fed intervenes)
Inflation rate
10-Year Treasury rate
Source: Federal Reserve Bank of St. Louis
Inflation Rate since 2000
Source: Federal Reserve Bank of St. Louis
Economists Have
Overestimated Inflation Since 2007
Predicted Inflation
Actual Inflation
Source: University of Michigan and Federal Reserve Bank of St. Louis
Effective Fed Funds Rate
Source: Federal Reserve Bank of St. Louis
10-Year Government Bond Rates
January 9, 2020
United States 1.851% Canada 1.593% UK 0.812%
Germany - 0.225%
France 0.062%
Italy 1.393%
Japan - 0.005%
Source: CNBC.com
Treasury has Refinanced the Federal Debt
Average Interest Rate on:
March 1, 2000 6.555% 8.505%
March 1, 2007 5.055% 7.551% March 1, 2018 2.347% 4.162%
Source: U.S. Treasury
Source: Congressional Budge Office
If rates went up 2%, interest expense would Increase by $440 billion.
Just the increase of 2% would consume 13% of all federal income.
If rates went up 2%, interest expense would increase by $440 billion.
Source: Congressional Budge Office
Just the increase of 2% would consume 75% of all Medicare payments, or 45% of Soc Sec payments.
CRE Trajectories: Sales Volume
CoStar reported sales volume in 12 months ended November 2019 was 3.7% higher than a year earlier.
CoStar reported that sales that include secondary and tertiary markets were up 5.7% in the same period.
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
CRE Trajectories: Absorption
CoStar reported aggregate absorption of CRE space in 3Q2019 was much lower than previous years:
feet
3Q
3Q
3Q
3Q
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
CRE Prices Continue to Escalate
CRE Trajectories: Prices
RCA reported Nov prices 8.7% higher YOY.
Green Street Advisors Index up 2.5% YOY.
Industrial up 13.6%
Apartments up 9.3%
CBD Office up 5%
Retail up 3.4%
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
