HOUSTON – April 2017 was the strongest April in the history of Houston real estate for single-family home sales, reports the Houston Association of Realtors.
The record-setting April followed a record March. The strong Spring sales indicates that the Houston market may be heading toward its best year on-record.
A total of 6,583 single-family homes sold in April, up 3.1 percent from the 6,387 sales in April 2016, HAR reports.
The city known for horizontal expansion might be the most flexible in the U.S. when it comes to investment in CRE. Houston is the largest American city without zoning regulations. High-rises can crop up next to single-family homes, or on lots previously occupied by industrial facilities, with little or no red tape. In the past, the market for single-family homes in Houston pushed development away from the urban core. Developers several years ago were purchasing tracts of land over 1,000 acres to build master planned communities in suburbs like The Woodlands. Large land purchases outside of the Inner Loop have slowed, and interest has moved toward higher-density construction closer to Houston’s center. Residential developers have shifted their focus to lots ranging from 10 to 15 acres, with utilities and entitlements already in place. City officials have added benefits to sweeten the deal, offering $15K/unit for building multifamily Downtown.
In Houston’s East End, land development possibilities are transforming a sparse area on the edge of Downtown into an up-and-coming hub for residential and commercial activity. The addition of a four-mile light rail line and the $7M in pedestrian improvements underway will help attract development to the neighborhood’s 16 square miles of empty or underused industrial land. But Downtown has some competition for higher-density development. As the local government pushes for increased density, investors can leverage the ability to transform less popular asset classes into those that are in demand, thanks to the city’s laissez-faire approach to land use. The breadth and flexibility of city zoning has allowed areas outside of Loop 610 to develop mixed-use “town centers.” Suburbs like The Woodlands and Sugar Land, 20 and 30 miles from Downtown, respectively, advertise walkable urban amenities. CityCentre, an upscale development in Memorial City, advertises a live/work/play experience 14 miles west of Downtown. “Higher density tends to happen around the centers of employment,” said Todd Mason, an Avison Young principal specializing in industrial, land and investment sales. “So you have Downtown, but there are other areas in the suburbs that are starting to pop up. Developments like Sugar Land Town Square and Market Street in the Woodlands, a town center area with several big office moves, like Exxon.” Regardless of location, the flexibility offered by Houston’s lack of zoning is good news for land investors. They will never be locked into one asset class on their land. “In a zoned community, once you have your product on the ground, it is a barrier to entry for the next guy,” Mason said. “There really isn’t a barrier in Houston.”
Without those barriers, development can happen at a much faster rate. A site can go from greenfield to finished product in under 18 months, instead of the three years it would take in highly regulated cities like New York or Los Angeles. Property type conversions can happen just as fast and with limited restrictions. “That is the distinction in Houston,” Mason said. “For land investors it is a little less risky because if apartments are hot right now, you can sell into the multifamily market. If apartments are down and office buildings are hot, you can sell to office developers or retail developers. A developer is not limited by artificial regulations that may have nothing to do with demand.” Institutional investors have caught on to the possibilities and lower risk in Houston. City officials have to make urban density worth their participation, but given the ease of development, it should not be that difficult. “With less cost to entitlement, and fewer political entanglements, developers can bring their product to the market much faster and cheaper,” Mason said.
For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at: www.houstonrealtyadvisors.com Thank you for your interest.
Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
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By the time August rolls around, there will be about 350 fewer J.C. Penney, Macy’s, Sears and Kmart stores at retail shopping centers across the U.S.
For some of those properties, the loss of these stores could be the final blow that puts them out of business. Yet in other instances, the vacancies will provide landlords an opportunity to reinvent the space for more in-demand tenants — allowing them to charge a higher rent, to boot.
From growing retail chains to dining and entertainment, here are some of the tenants who are filling in malls’ empty anchor space, according to a new report by JLL.
Yard House
Started in Long Beach, California, back in 1996, Yard House is known for its massive draft beer selection. The restaurant has roughly 70 locations. As part of its expansion, the company has leased space in a former Sears location at the King of Prussia mall near Philadelphia. It opened last month.
Nobu
As seen with Yard House, dining at the mall is no longer limited to a dowdy food court. New York hot spot Nobu is bringing its latest high-end sushi joint to a former Saks Fifth Avenue location at The Galleria in Houston. It is scheduled to open this fall.
Wegmans
Once limited to open-air shopping centers, grocers like Wegmans have slowly been creeping into vacant retail and mall spaces. The frequent visits grocery stores generate make them attractive to landlords, and shoppers benefit by being able to consolidate their trips. Wegmans will take over a former J.C. Penney store at Boston’s Natick Mall in 2018.
Punch Bowl Social
As consumers spend more of their discretionary income on experiences, landlords are increasingly recruiting tenants who provide some form of entertainment. Punch Bowl Social is an adult gaming center that brings billiards, darts and bowling together with food and cocktails. Punch Bowl opened in a former Nordstrom space at Indianapolis’ Circle Centre Retail Mall last year.
Dave & Buster’s
Dave & Buster’s is another entertainment concept infusing a dose of fun in America’s malls. It has opened three locations in former Sears stores, according to JLL.
KidZania
The fun isn’t limited to adults. KidZania, a recreational learning center that lets children roleplay as a firefighter or chef, will open its first U.S. location next year. Making its debut at the Stonebriar Centre in Frisco, Texas, KidZania will fill a custom new space.
Primark
Though a large chunk of vacant space is being filled by nontraditional tenants, up-and-coming retailers are also stepping in. Irish fast-fashion chain Primark is one example, having taken up a portion of the space formerly occupied by Sears at several Northeast malls.
Ulta
Ulta’s expansion plan will bring 100 more of its beauty shops to the U.S. this year. This fall, it will take over a portion of a former Sears at College Mall, in Bloomington, Indiana.
For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at:https://www.houstonrealtyadvisors.com Thank you for your interest.
Houston Retail Shopper
Houston retail is on the rise. New research from CBRE shows discount retailers and high-end shopping centers continue to strengthen their balance sheets as both financially strained, and financially savvy, customers alter their shopping habits. It is a classic Barbell Effect. The Barbell Effect occurs when technological innovations, shifting demographics and changing shopping patterns disrupt ingrained business practices of a specific industry. Those companies that fail to adapt end up contracting into the center of the barbell. Companies that are able to pivot successfully in this new landscape move toward the ends, where there is ample room to expand. Close to 6,000 discount stores opened throughout the U.S. from 2010 to 2015, with sales increasing from $30.4B to $45.3B, according to research firm Conlumino. This 50% growth rate easily outpaced the 17% in overall retail sales during the same period.
At the other end of the barbell, top-tier shopping centers are continually expanding their tenant mix, locking in major players. In Houston, Simon has recently expanded the Houston Galleria with a two-story, 198K SF Saks Fifth Avenue flagship store opened in 2016. Additions include 35 luxury retailers. In Fort Worth, Simon and Cassco Development are close to opening Phase 1 of the Shops at Clearfork, boasting 380K SF of luxury and specialty retail.
Malls are not going extinct, but they are changing. Retailers who are able and willing to adapt quickly will gain greater market share and be able to keep their doors open indefinitely, CBRE reports.
For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at: www.houstonrealtyadvisors.com Thank you for your interest.
Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Please follow me on Twitter at https://twitter.com/edayres, my blog at
https://houstonrealtyadvisors.com/blog/
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Houston-based Whitestone REIT (NYSE: WSR) announced April 19 it plans to buy Blvd Place, a mixed-use development in Houston’s Galleria area, and build an additional phase.
The real estate investment trust also announced it would buy Eldorado Plaza in the Dallas area in a separate transaction. Combined, Whitestone is spending $204.6 million on the two deals, which are expected to close in May.
Blvd Place is a Class A lifestyle center with 216,944 square feet of leasable space in the Galleria area. Whitestone also acquired approximately 1.43 acres of developable land, where the REIT will build another phase of the development.
Blvd Phase II-B will be a six-story, 137,000-square-foot building, including 46,000 square feet of retail space on the first two floors and 91,000 square feet of office space on the top four floors. Whitestone expects the project to cost $45 million, but information about the construction timeline was not included in the announcement.
Houston-based Wulfe & Co. developed the first two phases of Blvd Place along Post Oak Boulevard near the southwest corner of the San Felipe Street intersection near the Galleria. The second phase — which includes a Whole Foods Market and the regional headquarters for Frost Bank — opened in 2014 and won the Houston Business Journal’s 2015 Landmark Award in the Mixed-Use Project category.
In 2012, Houston-based Apache Corp. (NYSE: APA) bought 6.4 acres in between the first two phases of Blvd Place. That deal was a finalist for a 2013 Landmark Award, but the company has yet to begin developing the land. In 2015, permits were approved for the company’s new tower, but Apache later extended its nearby lease through December 2019.
In late 2015, CEO Ed Wulfe told the HBJ he hoped to kick off the third phase of Blvd Place, which was was expected to be two levels of retail and four levels of office. That phase was expected to be behind the existing buildings along Post Oak in the Galleria area.
The existing Blvd Place development is 99 percent leased in the galleria area. Whitestone plans to fund a portion of the acquisition with $80 million of asset-level mortgage financing. However, the REIT is still negotiating terms with potential lenders and does not have any binding commitment letter or definitive loan documents yet.
Also on April 19, Whitestone announced a public offering of 8.1 million common shares, which is related to the Blvd Place and Eldorado Plaza deals. The proceeds will allow Whitestone’s operating partnership to repay a portion of the debt under the REIT’s unsecured revolving credit facility, which then will be available to fund a portion of the deals.
The underwriters will have a 30-day option to purchase up to an additional 1.2 million shares. SunTrust Robinson Humphrey Inc. is the book-running manager of the offering. BMO Capital Markets and JMP Securities are also acting as book-running managers. Wunderlich Securities, J.J.B. Hilliard, W.L. Lyons LLC, Janney Montgomery Scott, Ladenburg Thalmann and Maxim Group LLC are acting as co-managers for the offering.
Eldorado Plaza is in McKinney, Texas, and contains 221,577 square feet of leasable space. Whitestone has the option to purchase an additional 1.86 acres of developable land, where the REIT could build 24,000 square feet of additional space in the Galleria. Eldorado Plaza is 97 percent leased.
https://www.bizjournals.com/houston/news/2017/04/19/houstons-blvd-place-mixed-use-development-sold-to.html
Houston-based Hines announced March 30 it acquired the Underwood Distribution Center, an industrial park in La Porte, from BlackRock for an undisclosed amount.
The Class A park currently has five buildings totaling 2.2 million feet, which are 100 percent leased, and three development parcels. Current tenants include CRC, DNow, GIS, Northern Safety, Packwell, PolyOne and others, according to a statement from Hines.
Hines will rebrand the park as Independence Logistics Park and begin developing Building 6. The 167,000-square-foot front-load distribution building is expected to be complete in the fourth quarter of this year.
Randy Baird, Judd Clements and Jim Foreman of Cushman Wakefield represented BlackRock. Hines has renewed the leasing assignment for the park with Billy Gold, Gray Gilbert and Jeff Everist at CBRE.
With the acquisition of the park near the Port of Houston, Hines now has industrial parks in three corners of Houston. The developer broke ground on Beltway Southwest Business Park in 2015 and opened the southwest Houston park in 2016. A few years earlier, Hines partnered with New York-based investment firm Kohlberg Kravis Roberts & Company LP (NYSE: KKR) and Houston-based Pinto Realty Partners to develop Pinto Business Park in northwest Houston.
“We have been targeting the southeast market for some time, and this opportunity presented a good match for our recently expanded industrial investment platform,” Palmer Letzerich, Hines senior managing director, said in a press release. “We are excited to anchor our presence in the submarket with this large scale distribution park. Now rebranded as Independence Logistics Park, we look forward to putting our Hines brand of stewardship and management on the park and expanding with our new building and working with the CBRE team on leasing.”
For more information regarding this property contact Houston Realty Advisor’s to get a fair quote on this property today.
HOUSTON- Skanska announced Wednesday in a press release that that it will start construction on Capitol Tower, a 35-story office development in downtown Houston, after reaching a lease agreement with Bank of America.Bank of America leased 210,000 SF and it expects to move into the new building in first half of 2019. JLL represented Bank of America.CBRE represented Skanska, which announced several years ago its plans to build a 35-story office tower on the site, a block bounded by Capitol, Rusk, Milam and Travis streets.
In recent weeks, several large construction cranes have been erected on the site, indicating that Skanska was ready to start. The foundation for the new tower was poured in August 2015 and a parking garage has been built on the site. In October of 2014, the 18-story Houston Club building was demolished to make room for Skanska’s Capitol Tower, 800 Capitol.The tower, designed by architectural firm Gensler, offers 754,000 SF of office space and an expansive, two-level atrium that features more than 26,000 SF of retail and restaurant space.For years, Bank of America has been the anchor of the Bank of America Center, a tower developed by Hines at 700 Louisiana.”Houston is an important growth market for Bank of America,” said Hong Ogle, Houston President, Bank of America. “We are pleased to be the anchor tenant at the tower, giving us the opportunity to co-locate our Merrill Lynch, U.S. Trust, Global Banking & Markets, Retail and Home Loans teams so we can have stronger collaboration in better serving our clients while ensuring responsible growth to our company.”Last fall, Skanska engaged the CBRE real estate firm to find tenants even as the Houston office market showed signs of weakness. Downtown has a significant amount of vacant space and sublease space.
Houston has the highest office vacancy rate (21.5 percent) in the nation, according to a recent report by Marcus & Millichap.
Houston recorded almost 800,000-SF of negative absorption in the first quarter, says NAI Partners.
Business and community leaders recently gathered to celebrate West Houston’s growth and newly completed “missing mile” of Park Row, at an event hosted by Wolff Companies and The Energy Corridor District.
Park Row, a four-lane major thoroughfare that runs parallel to the Katy Freeway (I-10), now stretches continuously from Dairy Ashford Road at I-10 to the City of Katy. The new segment, which connects Dairy Ashford to the Addicks Park and Ride, broke ground in 2013 and was opened to traffic earlier this month. The road provides an important alternative route to the Katy Freeway and the new segment will open up public transportation options for those who work, live and play in The Energy Corridor.
Park Row is home to some of the largest corporate headquarters in Houston, including ConocoPhillips, Worley Parsons and Mustang Wood Group. More recently, it has become a new address for some of the city’s best medical institutions – such as Texas Children’s Hospital and Houston Methodist, who owns land on both sides of Park Row in Wolff Companies’ Ten Oaks, and The University of Texas MD Anderson Cancer Center, who owns land on both sides of Park Row in Wolff Companies’ Central Park.
“The completion of Park Row not only represents a dramatic improvement in transportation in West Houston but also Houston’s can-do attitude. This was a very complicated project which required many different businesses, organizations and governmental entities to work together to ultimately increase economic activity and quality of life,” said David S. Wolff, Chairman and President of Wolff Companies. “We are celebrating more than the completion of an important thoroughfare which has become one of the best business addresses in Houston, we are celebrating the collaborative spirit that built both this road and West Houston.”
Highlighting the event was an all-star panel of business and government leaders – key architects of the West Houston community – who praised the public-private partnerships that have been vital to West Houston’s past and continued growth. With David Wolff serving as moderator, panelists were William Burge, president of Ayrshire Corporation and Chairman of the Grand Parkway Association; Larry Johnson, President and CEO of Johnson Development Corporation; Matt Khourie, CEO of Trammel Crow Company; Carl Sewell, Chairman of Sewell Automotive Companies; and the Hon. Jon Lindsay, former Texas Senate Senator and former Harris County Judge.
From left to right: Moderator David S. Wolff moderates a panel discussion with William Burge, Jon Lindsay, Larry Johnson, Matt Khourie and Carl Sewell. Photos courtesy of The Energy Corridor District.
“We brought together leaders in the West Houston community who represented a variety of sectors – housing, office, land development, retail and government. They represent a larger body of leaders who have worked together to make West Houston what it is and who will continue to collaborate to ensure West Houston’s continued growth and success,” said Carolyn Wolff Dorros, Executive Vice President of Wolff Companies.
David S. Wolff, far right, with Michael G. Wyatt, Managing Director of Core Real Estate, Aaron Thielhorn, Managing Director of Trammell Crow Company and Edward Griffin, President of Griffin Properties.
The panelists unanimously listed excellent schools, high-quality and affordable housing and jobs as the essential ingredients that fostered the growth of West Houston.
Reflecting on West Houston’s success, Khourie said, “The evolution of quality in West Houston is noteworthy. Developers along I-10 have upped their game with projects built to last. Continued investment in schools and healthcare will be catalysts for continued growth.” Sewell, who recently transformed an older property in The Energy Corridor into an elite Mercedes-Benz dealership campus concurred, “Where you have great school districts, you have great development.”
Commenting on priorities for the future, Johnson, Lindsay and other panelists agreed that drainage improvements should be at the top of the list.
Asked what West Houston might look like in 25 to 50 years, Burge quipped, “We’ll be in San Antonio by then, but you will always see the initial footprint by people like David Wolff and many others who came here when there was nothing but rice fields.”
The event brought together real estate, industry sector and community leaders who share a common bond: build a better West Houston.
The first segment of Park Row was developed in the 1970s in Park Ten by Wolff, who envisioned the need for an alternate route to the Katy Freeway. The newly opened “missing mile” segment included the design and construction of Park Row from the intersection of the I-10 HOV/Tollroad access ramp at the Addicks Park & Ride lot to the thoroughfare’s existing terminus just west of the intersection of North Eldridge Parkway; a four-lane bridge over Langham Creek; water, sanitary sewer and storm water drainage infrastructure; and street lighting and landscaping. The two-phase project was facilitated by a public/private venture between The Energy Corridor Management District and the City of Houston.
About Wolff Companies
Now in its fifth decade, Wolff Companies has been a leader in developing master-planned, mixed-use business communities in the Houston area. The company’s developments include: Beltway ; Park 10; Interwood; Westway Park; First Crossing; Ten Oaks at the Texas Medical Center – West Campus and Central Park . The American Society of Landscape Architects, Scenic Houston, Keep America Beautiful, the American Institute of Architects and the Municipal Art Commission have all recognized Wolff Companies’ developments for enhancing and preserving the natural beauty of land, while meeting the ever-changing needs of business. For more information, please visit www.wolffcompanies.com.