RECON
Real Estate Center Online News
October 23, 2009
Copyright 2009. All rights reserved.
Material herein is published according to the fair-use doctrine of U.S. copyright laws related to non-profit, educational institutions. Items attributed to sources other than the Real Estate Center at Texas A&M University should not be reprinted without permission of the original source.

TEXAS TURBINES LEADING ENERGY INDUSTRY

WASHINGTON (American Wind Energy Association) – Texas leads the nation in total megawatts of wind-generated energy installed and in megawatts added during the third quarter.

The American Wind Energy Association (AWEA) reported this week that Texas added 436 megawatts of energy during the third quarter alone, 185 more than that added by the second leading state, Oregon.

The wind farms that comprised this addition to Texas clean energy production were Panther Creek III, Roscoe IV and Sunray II, with 199.5, 197 and 39 megawatts created, respectively.

The state’s total operating wind capacity is at 8,797 megawatts.

Texas wind farms Gulf Wind, Papalote Creek and Penescal II are currently under construction. When completed in 2009 or 2010, they will generate 283.2, 179.9 and 201.6 megawatts of power, respectively.

GAINES TAKES ON RECESSION IN RED ZONE PODCAST

COLLEGE STATION (Real Estate Center) – The federal government has enacted a number of plans designed to help pull us out of the recession. How effective have they been so far?

That's one of the questions we ask Research Economist Dr. Jim Gaines on this week's edition of the Real Estate Red Zone podcast. In the nearly 15-minute interview, Gaines also talks about how Texas is faring compared with the rest of the nation, and what is needed to recover from the recession.

Also, Edie Craig gives us the scoop on big deals happening in small towns, and Cydney Donnell with Mays Business School talks about recent recognition for the school's Master of Real Estate program.

To subscribe to the Real Estate Red Zone, just click on the RSS feed found on the podcast page. The free podcast is also listed in iTunes.

So join us in the Red Zone for a half hour of talk about Texas real estate. And be sure you tell your friends about it.

CRE CAP RATES RETURNING TO EARLIER LEVELS

COLLEGE STATION (Real Estate Center) – Cap rates on commercial real estate (CRE) are likely to move back to levels seen in 2002 and 2003, said Real Estate Center Chief Economist Dr. Mark Dotzour earlier this week in Las Vegas.

Dotzour was speaking to an audience of 700 at the Real Estate Investment Securities Association's Annual Conference.

"This move from the historic low cap rates of 2006 and 2007 back to 2002 levels means that commercial property values are likely to be 30 percent to 45 percent below the values at the peak of the market in mid 2007," he said.

He said overall price declines will vary from city to city, with the biggest overall declines in the nation's largest cities.

“The bidding frenzy for commercial real estate was hottest in the largest metro areas, which traditionally attract bidders from all over the world," he said. "Smaller cities, such as Amarillo and Lubbock, never saw the same bidding pressures. Consequently prices never spiked and, consequently, they won’t have as far to fall.”

SPRING VALLEY LAYS OUT RUG PLANS

FARMERS BRANCH (globest.com) – A&S Spring Valley Holdings has purchased a 116,651-sf flex building from Jim Pattison Development US Inc.

A&S is the holding company for Loloi Rugs, which will move to the space from Inwood Rd. after refurbishing the 1970s facility and adding a small showroom.

The building stands on five acres at 4501 Spring Valley Rd.

CB Richard Ellis’ Dallas office represented the seller, while Dallas-based Gilbert Commercial LP represented the buyer.

DOTZOUR IREM AUSTIN'S KEYNOTE SPEAKER

AUSTIN (Institute of Real Estate Management Austin) – Real Estate Center Chief Economist Dr. Mark Dotzour will be the keynote speaker at IREM Austin's 2009 Economic Forecast Forum.

Dotzour will cover the local, regional and national economy at the half-day conference, which is scheduled for Nov. 4 at the Hyatt Regency.

Registration for the half-day conference is $55 for IREM Austin members and $85 for nonmembers.

Visit IREM Austin's website for more information.

RESIDENTIAL CONSTRUCTION'S UNCERTAIN FUTURE

WASHINGTON (Associated Press) – While an extension on the homebuyer tax credit remains under discussion, building permit applications fell 1.2 percent and overall residential construction rose 0.5 percent in September.

Construction rose 7.1 percent across the South last month. On a national scale, construction of single-family homes rose 3.9 percent to an annual rate of 501,000, while multifamily construction fell 15.2 percent. Overall residential construction posted a seasonally adjusted annual rate of 590,000 units.

The National Association of Home Builders’ index of builder confidence fell from 19 in September to 18 in October, a slip that builders attribute to the upcoming expiration of the homebuyer tax credit.

Real estate agents and homebuilders are urging Congress to extend the $8,000 rebate for first-time homebuyers, but some analysts and lawmakers argue that most homebuyers who receive it would have bought a home anyway.

The Associated Press also reported that the number of tax returns fraudulently claiming eligibility for the $8,000 credit could jeopardize efforts to extend the program. As of the end of September, the IRS has frozen over 110,000 refunds pending civil or criminal examinations, identified 167 criminal schemes and commenced 115 criminal investigations.

FINANCIAL PROTECTION AGENCY APPROVED

WASHINGTON (Associated Press) – The House Financial Services Committee approved the creation of the Consumer Financial Protection Agency to protect consumers from predatory lending, abusive overdraft fees and unfair rate hikes.

Worries from the financial industry persuaded the committee to apply restrictions to the agency, which still has to be approved by the full House and the Senate.

Retailers, auto dealers, real estate brokers, lawyers, cable companies and accountants would be among those exempt from agency oversight.

GALVESTON RECEIVES FEDERAL AID FOR IKE DAMAGES

GALVESTON (Galveston County Daily News) – The city council has voted to spend $104 million of its $160 million federal Community Development Block Grant disaster recovery funds on its homeowners, awarding Massachusetts-based Camp, Dresser and McKee the management duties for the program.

The funds will be used to repair or rebuild an estimated 1,180 owner-occupied homes. A $7 million piece of the grant will be spent on repairing 280 rental properties.

Anyone can apply for repair assistance, but the city will give priority to residents who qualify as low- to moderate-income citizens.

Camp, Dresser and McKee will begin screening applications immediately, but construction is slated for spring. Under federal guidelines, all work will be completed within two years.

SA INDUSTRIAL MARKET 'RELATIVELY STABLE'

SAN ANTONIO (Grubb & Ellis) – The Alamo City’s industrial market continues to be relatively stable despite some negative effects of the recession, according to the third quarter 2009 industrial market report from Grubb & Ellis.

The local industrial leasing market continued to tread water by posting 53,946 sf of positive growth as the year-to-date absorption tally increased to 165,245 sf. Although leasing activity remains well below the pace seen in the past two years, the local market has still managed to post modest absorption gains this year supported by the expansion of some area businesses.

However, the market appears to be stuck in neutral, at least until the current economic and financial woes play out and companies feel more confident about the economic outlook.

Because no one can accurately predict whether the market will continue to move in the right direction, expect landlords to continue offering generous concession packages in their efforts to attract and retain tenants. Landlords that are in a position to negotiate aggressive agreements may benefit from the fact that many companies are redefining their revenue growth strategies, reorganizing operations, reducing costs and positioning themselves for what many economists project will be an early-2010 turnaround for San Antonio’s economy.

Grubb & Ellis' complete third quarter 2009 industrial market report for San Antonio is available online.

AUSTIN INDUSTRIAL DOWNTURN CONTINUES

AUSTIN (Grubb & Ellis) – Even though Austin has fared better than many parts of the nation by posting modest job losses over the last year, the third quarter 2009 industrial report from Grubb & Ellis shows the area has not been immune to the downturn.

During the third quarter, further contraction among industrial tenants pushed the citywide absorption level deeper into the red with 112,750 sf of negative absorption.

This marked the fourth consecutive quarter of negative growth, pushing the year-to-date absorption tally to 1.2 million sf, its highest level since 2002.

The combination of diminished leasing demand, increased supply and corporate consolidations precipitated by the economic recession has led to a growing supply of vacant space over the past year.

Austin’s citywide vacancy rate has now remained in double-digit territory for five consecutive quarters and stands at its highest recorded level since 2003. As a result, landlords have been forced to reduce asking rents to attract and retain tenants.

Grubb & Ellis' complete third quarter 2009 industrial market report for Austin is available online.

TEXAS' EXISTING HOME SALES, PRICES UP

TEXAS (Real Estate Center, CNNMoney.com) – A total of 18,643 existing single-family homes were sold in Texas last month, a 4 percent increase from September 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 2 percent to $147,900 during the same period, and the state finished the month with a 7.1-month inventory of existing homes.

Here is how select Texas cities fared in August (data current as of Oct. 23, 2009):

Sales Change from Last Year, Median, Price Change from Last Year Months' Inventory
Austin 1,974 up 8% $182,700 no change 6.4
Beaumont 146 up 76% $131,400 down 3%  8.9
Bryan–College Station 128 down 12% $152,500 up 8%  7
Dallas 4,010 down 7% $156,400 up 4% 6.3
El Paso 485 up 8% $130,000 down 3% 8.7
Fort Worth 744 down 13%  $112,500 down 4% 6.7
Houston 5,315 up 31%  $155,600 no change 6.5
Lubbock 248 no change $111,000 down 2%  5.5
San Antonio 1,604 down 3% $146,700 up 2%  8.1
Wichita Falls 106 down 24%  $121,100 up 35%  7.5

Additional home sales data for these and other major Texas cities are available on the Center's website.

Meanwhile, the National Association of Realtors reported today that, nationally, year-over-year sales of existing homes were up 9.2 percent last month. The median price of homes sold in September was $174,900, down 8.5 percent from last year.

LATEST TIERRA GRANDE ONLINE

COLLEGE STATION (Real Estate Center) – Should you run for tangible investments like gold and land when the economy tanks? What's the new cash cow for landowners? What does the future hold for commercial real estate?

The Real Estate Center's research team addresses these questions and many more in the latest issue of Tierra Grande magazine.

Article reprints are available for free on the Real Estate Center's website.

FURNITURE FILLS POINT NORTH ONE

HOUSTON (globest.com) – Furniture Brands Inc. has leased 97,150 sf at the 158,940-sf Point North One, putting the distribution facility at 100 percent occupancy.

The company will consolidate into the space at 8210 Humble-Westfield Rd. from several temporary locations in early 2010.

Duke Realty Corp.’s Houston office represented the REIT leaser, while Furniture Brands Inc. was self-represented.

Point North One is the first phase of the 52-acre Point North Cargo Park in the city's north submarket.

ALAMO CITY MULTIFAMILY OCCUPANCY INCHES UP

SAN ANTONIO (San Antonio Express-News) – Third quarter apartment figures did not move much from the second quarter, but occupancy did increase, according to apartment research firm RealFacts.

After a second quarter that brought new units onto the market, which attributed to one of the worst San Antonio quarterly performances in years, the occupancy rate climbed about two points to 91 percent between July and September.

The increase is largely due to college students returning for the fall semester and renting apartments, said Steve Monroe, first vice president with CB Richard Ellis in San Antonio.

However, third-quarter occupancy actually fell 1 percent from a year ago. RealFacts takes into account new complexes of 100 units or more that rent at market rate.

San Antonio maintained the cheapest rent in Texas' major metro areas, falling less than half a percentage point from the second quarter to $725 per month.

Austin was the most expensive, with an average rent of $825. Houston rents averaged $791 per month and Dallas–Fort Worth’s $781.

UT MEDICINE SAN ANTONIO'S NEW HOME

SAN ANTONIO (San Antonio Business Journal) – The University of Texas Health Science Center at San Antonio officially opened its 286,000-sf Medical Arts & Research Center yesterday.

The eight-story building at 8300 Floyd Curl Dr. is the new home of UT Medicine San Antonio.

@ THE CENTER
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