Tag Archives: Real Estate


 Nowhere will this be more important than in commercial real estate.

The Coronavirus Recession has made it impossible for many businesses to pay their rent. Real estate professionals need to practice some common sense to avoid triggering a collapse that hurts us all.

The real estate industry is built on credit, and when cash doesn’t flow from tenants to building owners to banks, loans are not repaid to the companies that service those mortgages.

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Mortgage servicers are not the end of the line, though, because they have packaged those loans into bonds and sold them to investors, many of whom have taken loans using the bonds as collateral. If too many small businesses fail to pay their rent, it can trigger much bigger problems.

The threat is real. The U.S. economy will likely contract 7.8 percent in 2020 due to what Deutsche Bank calls the largest decline in consumer and business spending since the Great Depression. Most commercial tenants are service businesses that rely on consumer spending.

“Volatile financial markets and the growing uncertainty of future tenant cash flows have slowed (commercial real estate) activity. Hotels and retail space appear to be most affected,” industry analysts at Wells Fargo wrote in an investor’s note. “Social distancing and the preponderance of stay-at-home orders has severely cut into consumer spending.”

The Great Recession of 2008 started this way in the residential mortgage market. A high rate of residential defaults crushed the mortgage bond market. When a mortgage servicer fails to pay investors, they drag down the value of the servicer’s stock and all mortgage-based bonds.

TOMLINSON’S TAKE: Slide in oil prices could signal permanent change to the energy industry

Value destruction in the $16 trillion commercial real estate debt market could drag down all financial markets. The industry hopes the Federal Reserve will step and buy bonds soon, but billionaire investor Carl Icahn told CNBC television last month he’s betting on a collapse.

“The banks went out and loaned money against a lot of shopping malls, office buildings, hotels, and retail,” Icahn said. “A lot of these bonds now are in grave danger.”

If business people all along the credit chain practice some common sense and innovation, though, they can avert a crisis.

“If you have an overreaction, we’re going to have bigger and deeper problems,” Brad Freels, chairman of Midway, a Houston developer of more than 46 million square feet of commercial and residential properties. “If everybody just sits still and doesn’t panic, we can get through this.”

No one has seen a recession quite likes this one, but with almost 40 years in the business, Freels has seen quite a few others. As a property owner with office, retail, multifamily, hotel, and restaurant tenants, and a developer with mortgages to pay, he is in the eye of the commercial real estate storm.

Companies leasing property need to pay what they can be based on their income and not try to game the system, Freels said. They need to take advantage of every available government program to help them pay the rent and keep employees on the payroll.

Before asking for relief, the business owner should run the numbers and explain what kind of break they need and for how long, understanding that they need to pay as much as they can to keep the credit system on life support.

Property managers need to get creative, Freels added. Landlords need to manage up as much they manage down and know their numbers. Thanks to banking reforms, landlords have more equity in their property than in 2008, which means the mortgage company or bank knows their collateral is good, or at least it was going into the crisis.

Mortgage servicers need to understand that forbearance is better than a foreclosure. Allowing property owners to pay only the interest on their mortgages for a few months and extending the life of the loan is preferable to declaring a default and taking possession of a property no one wants.

Lastly, investors have little choice but to accept lower dividends and share prices. The defining characteristic of the Coronavirus Recession is its universality. No geographic area, industry, or nation is immune from it, so real estate investors have few other places to put their money.

No one is going to make as much money as they were expecting, and many will lose money as restaurants, retailers and other businesses never come back. Now is not the time to get aggressive, only cooperation will cushion the blow for the economy as a whole.

 


James Beard Award-semifinalist Jonny Rhodes may be best known for his smash hit restaurant Indigo, but it’s his new grocery store, Broham Fine Soul Food & Groceries, that he wanted to open first.

The 2,000-square-foot store opens April 1 at 2019 Bennington St., near the Hardy Toll Road and the 610 Loop. It will sell food targeted for individuals of African descent, almost all handmade by Rhodes and his team — and they’ll teach customers how to use the more unfamiliar goods, he said. The intent is eventually for the entire stock to be either handmade or grown by Rhodes. But because the store is opening early to help people amid the coronavirus pandemic, the garden Rhodes is creating for the store’s produce isn’t ready yet.

Products at the store will include sodas, sauces, condiments, pastries, jellies and butter, ice creams and popsicles, deli meat, sausages and dried items like jerky, all handmade. Typical items like dill pickles and hot sauce are sold alongside more unusual fare, like okra seed coffee ice cream and fermented strawberry and grapefruit soda.

Rhodes has never been interested in selling others’ goods. Over time, the store will be 100 percent self-sustainable.

“That way, we’re not buying produce from local farmers; we are the local farmers for our own grocery store,” Rhodes said.

Rhodes and his wife, Chana, are making the grocery store’s savory goods, while pastry chef Meredith Larke is handling all sweets and baked goods.

Meanwhile, Indigo is currently closed until September, which is not unusual for the acclaimed restaurant. Rhodes actually closed the restaurant at 517 Berry Road even before Harris County ordered restaurants to close their dining rooms. He brought over his entire staff — five people — from Indigo to Broham.

“I couldn’t take care of them,” he said.

Rhodes isn’t concerned with expansive growth, at least not right away. With the “grow its own supply” model, Rhodes says Broham is unlike any other grocery store in the country. It’ll take time to get its systems in place.

“We’re not a finished product, and I don’t think we’re looking to be a finished product any time soon,” Rhodes said. “One of the favorite things about Indigo that I’ve loved, and I think that people loved, was that we were open about not being a finished product, but the evolution.”

Rhodes hopes his store, located in the Trinity Groves neighborhood along with Indigo, sets an example for others to grow their own food. He also hopes that it cuts into the force of “food apartheid” — a term he uses instead of the food desert. He learned it from celebrity chef Marcus Samuelsson, according to a recent Texas Monthly article. It means a food shortage created by design, harking back to neighborhoods designed to disenfranchise African Americans. Growing your own food, Rhodes said, would be especially impactful now.


The Houston Association of Realtors has been making changes to help keep the residential real estate market going amid the coronavirus outbreak while also keeping people safe.

HAR President and CEO Bob Hale spoke at a Tuesday, March 24, Harris County Commissioners Court meeting about the need to include residential and commercial real estate among the list of “essential” services exempt from Harris County’s new “stay home, work smart” order. Currently, $2.4 billion of residential real estate is pending sale, with $800 million scheduled to close in the next 10 days, HAR said in a statement.

When Harris County’s written order was released Tuesday afternoon, it classified real estate services among professional services that are essential “when necessary to assist in compliance with legally mandated activities or to further essential businesses, essential government functions, or critical infrastructure.” Even before the order was released, HAR already was developing a platform for virtual open houses and virtual showings, per the statement. The platform would allow customers to watch the tours and open houses on HAR.com at scheduled times, and HAR members would then be able to share the recordings on their agencies’ websites and social media.

“The safety of our members, their clients and families is the most important thing to us during this difficult time,” HAR said.

Even before Harris County’s March 24 order, HAR has been taking steps to adapt amid the pandemic. On March 20, HAR announced that information about open houses would not be displayed on HAR.com for most Texas markets, including Houston and Austin, effective immediately.

“Most of the national real estate franchises and many large brokers have either canceled all in-person open houses or are strongly encouraging their agents not to hold them,” HAR said in a March 20 press release. “Realtors are urged to utilize virtual open houses and video tours to help slow the spread of the coronavirus.”

Many Realtors told the Houston Business Journal last week that they were canceling open houses and opting to show their listings via apps like FaceTime and Skype. Others have begun to post video tours of properties online.


Houston Realty Advisors Inc. has a new listing available FOR LEASE in Pasadena, TX. This property is located at 906 Witter St. it’s a Flex/ Warehouse/ Office Building. containing 13,450 Square Feet of Building.

For more information please contact us.

Commercial, Real Estate, HRA, Alex Ayres Photography, Pasadena

Photo of exterior and by Alex Ayres Photography

Alex Ayres Photography, Commercial listing, Pasadena, interior, offices

1 of the 7 offices on this Listing. Photo credit: Alex Ayres Photography

Alex Ayres Photography Privacy Gate

Privacy gate

Break room Alex Ayres Photography

Break room Photo credit: Alex Ayres Photography


 

The boutique small real estate firms of Houston are now even smaller. Chicago-based Cushman & Wakefield purchased Colvill Office Properties and now more Houston local brokerage offices are being absorbed by the largest brokerage firms in the world. Chip Colvill, the founder and former president/CEO of Colvill Office Properties, joins Cushman & Wakefield as Executive Vice Chairman.


Houston’s commercial property values will continue to trend upward in 2020 as demand for development opportunities expands amid the region’s positive job growth, according to Deal Sikes, a leading Houston-based valuation firm.

“Although there are a few exceptions, the real estate market in Houston is headed for another good year,” said Mark Sikes, a principal with Deal Sikes. “The region’s economy is healthy and although the energy industry is in a lackluster period, the overall economic outlook is outstanding.”

Houston’s industrial market is attracting interest from around the nation and research indicates that more than 15 million square feet of warehouse space are under construction in the Greater Houston area.

“Prices for land or urban infill development property has risen significantly in recent years,” Sikes said. “Rising land prices have pushed the wave of industrial development farther away from the center of the city and outer suburban land prices have increased accordingly.”

Property values in the urban core of the city remain strong as developers and builders locate buildings for redevelopment or seek sites that are appropriate for new construction, Sikes said.

“Multifamily construction is strong in Houston and researchers report more than 25,000 units are now under construction, although the pace is expected to be slightly more moderate in 2020 as the new inventory is absorbed,” Sikes said. “Investor demand is good and multifamily valuations have not yet peaked in most submarkets.”

Newer office buildings and Class A towers under construction are leasing briskly, although Houston’s office market is the most sluggish sector.

The Texas Medical Center, where more than 100,000 people are employed, is a source of growth for Houston and several hospitals and research facilities are expanding.

“Houston’s commercial real estate values will be on a solid upswing in 2019,” said Matthew Deal, a principal with Deal Sikes. “With Houston expected to gain population significantly in the next decade, the long-term forecast must include rising property prices that will be very impressive over the long haul.”


Lee & Associates was awarded the leasing and management of five Houston office buildings totaling 430,000 square feet in 2019.

The company’s landlord agency team will lease and manage 550 Westcott (83,366 square feet); 4101 Interwood (80,000 square feet); 1505 S. Highway 6 (63,487 square feet); 16430 Park Ten Place (110,408 square feet) and 10101 Southwest Freeway (102,292 square feet).  The buildings range from Class A to Class B.

“Our recent success has been due to the depth of our team and the focus we have on technology and platforms for today’s digital marketplace,” Robert LaCour, Lee & Associates principal said in an announcement.

Lee & Associates added a property management group in 2019. The company specializes in commercial real estate services for office, industrial and land real estate investments


Deal Sikes

Commercial property values in Houston should trend upward in 2020, as the region’s positive job growth will increase demand for development opportunities, according to Houston-based valuation firm Deal Sikes. Bisnow/Catie Dixon Matthew Deal and Mark Sikes DATACENTER INVESTMENT CONFERENCE & EXPO (DICE) SOUTH 2020 APRIL 9, 2020 | REGISTER NOW   FEATURED SPEAKER ROMELIA FLORES Distinguished Engineer & Master Inventor, IBM “Houston’s commercial real estate values will be on a solid upswing in 2019,” Deal Sikes principal Matthew Deal said. “With Houston expected to gain population significantly in the next decade, the long-term forecast must include rising property prices that will be very impressive over the long haul.” The firm said rising land prices have pushed industrial development farther away from the center of the city, and outer suburban land prices have increased accordingly. But that hasn’t stopped development: More than 15M SF of warehouse and industrial space is under construction in the greater Houston area, the firm said. Meanwhile, property values in the urban core remain strong, as developers and builders locate buildings for redevelopment, or seek sites that are appropriate for new construction. “Multifamily construction is strong in Houston and researchers report more than 25,000 units are now under construction, although the pace is expected to be slightly more moderate in 2020 as the new inventory is absorbed,” principal Mark Sikes said.  “Investor demand is good and multifamily valuations have not yet peaked in most submarkets.” Though newer office buildings and Class-A towers under construction are leasing briskly, Houston’s office market is its most sluggish sector, according to the firm. The energy industry — a juggernaut in Houston’s leasing arena — is in the midst of a downturn, which is hurting growth. The healthcare sector is faring better. The firm identified the Texas Medical Center as a source of growth for Houston, pointing to the expansion of several hospitals and research facilities. “Although there are a few exceptions, the real estate market in Houston is headed for another good year,” Sikes said. “The region’s economy is healthy and although the energy industry is in a lackluster period, the overall economic outlook is outstanding.”


In Houston, a new facility for The Center for Pursuit held its groundbreaking on a site in the East End.

 

An interpretation of mixed-use development, The Center for Pursuit’s next-generation facility broke ground this week in Houston’s East End, where it will relocate in 2021 to serve, support and empower the city’s adults with intellectual and developmental disabilities (IDD).

From its new campus, which starts construction next month, the nonprofit organization will also reach out into its neighboring communities with programs, public spaces and some retail, including a café.

Sitting on 3.8 acres of previously paved property, the new facility will encompass four buildings totaling 129,000 square feet, a 7,000-square-foot park and a 257-car parking structure.

The new buildings include a residential tower of 41 units; a programs building for adult training, employment services, and adult activities; a health and wellness building with fitness, medical clinic, cafeteria and café; and an administration building housing a welcome center, conference space, incubator workspace for other non-profit startups and one of the vocational programs.

A United Way agency, the 60-year-old organization now serves 450 clients, has 40 residents and provides daycare to 300 severely disabled adults, many of which arrive by Metro van daily, according to organization sources at the groundbreaking event.

The pedestrian-friendly project’s new location on an infill parcel near downtown is served by Houston’s Metro Rail, something key to site selection, project leaders said at the event, attended by representatives of city, county and state government, related agencies, East End community leaders and current clients.

Including property acquisition and improvements, the project’s total cost has an estimated value of $71 million, said Charles C. Canton, the center’s president, and CEO. Construction is slated to begin in early February, with completion substantially completed in early 2021, he noted in a follow-up statement.

Funds raised to date have included the sale of the organization’s long-term facility on six acres overlooking Buffalo Bayou as well as a phased capital campaign. The most recent push, tagged “Strive,” closes the remaining $16.5 million sought, Canton said.

Part of the new project’s vision process (and fundraising) was a 4,000-mile bike ride to assess best practices at 30 facilities coast-to-coast, led by David C. Baldwin of SCFPartners, a board member and Pursuit Foundation trustee, and a series of charrettes. Integrating and providing choice to the spectrum of constituencies served by the facility was paramount to the planning, he said.

Historic Community, Industrial Neighborhood

Houston’s East End is a multi-ethnic community where many of the city’s early industrial properties are under redevelopment, re-purposing, and replacement by both commercial and residential uses, especially townhomes.

Meanwhile, Buffalo Bayou Partnership last fall revealed its park and recreation master plan for the five-mile stretch of the bayou winding through the East End.

With gentrification concerns, a neighborhood issue, having community input as part of the new center’s planning process so that there was a relationship of trust established, said Marilu Garza, chief development officer for the organization.

Gensler’s Houston office designed the campus, excluding the residential tower, designed by Tramonte Design Studio with contractor Arch-Con.

The larger project team also includes landscape architects TBG Partners and construction by Harvey-Cleary.

“The beauty of the design is that it supports The Center’s mission of everyone having value and purpose,” noted Kristopher Stuart, Gensler principal, and design director, in a follow-up inquiry. “The Center for Pursuit and its board are to be applauded for the bold initiative they are taking to imagine a facility that not only serves their clients differently but also helps the rest of the society imagine a different role for these unique individuals.”

Open and Activated for Opportunity and Outreach

The project required creating a collection of buildings that serve their unique purpose while embracing the unique East End community, Stuart said. The buildings incorporate warehouse-style brick and exposed, painted steel beams to “reflect the historically industrial yet emerging character” of Houston east of downtown. In addition, the “aspiration” was for the facility to be embedded in the life of the surrounding community as well as a participant in it.

Garza noted the new site and build-out has higher visibility for the organization. “We want to be seen,” she said. “It’s important that the community embrace us.”

Canton said, “We’re excited by the quality of the new buildings.” To have renovated the existing ’70s vintage existing facility was cost-prohibitive. Hanover Co. acquired the property last year as part of its plans for a mixed-use development.

Since then, The Center for Pursuit has moved its administrative functions, programming, and daycare for severely disabling clients to a temporary facility south of downtown. The organization’s residential building, however, remains in use until the completion of the new residential building on the new campus, so that residents need only be moved once, Garza said.

Margaret Wallace Brown, city planning director, said the center’s new campus is an example of transit-oriented development, a city initiative.

At the groundbreaking, Houston Mayor Sylvester Turner spoke of Houston’s notable diversity, adding “being diverse means little if you’re not inclusive,” which the new facility has as part of its mission. The beauty of the center’s build-out — for a population often overlooked, he said — “speaks to our city’s values.”