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July 2, 2014
Multifamily Rent Growth Best in Texas
Austin and San Antonio can flex their multifamily muscles as they lead the state in rent growth, we learned at Bisnow's fifth annual DFW Multifamily Summit in Dallas last week. (The folks in Big D have another reason—besides SXSW—to be jealous.)
Milestone Apartments REIT COO Steve Lamberti (between IPA Texas director Drew Kile and Behringer SVP/chief investment officer for multifamily funds Bob Poynter) says there's nothing on the horizon that should derail strong activity and San Antonio and Austin's rent growth (from 6.5 to 7%) is above Houston's at 5% and DFW's at 4%. (It's not a competition, but if it was, we'd be winning by a lot because we're much better.) The growth is fueled by the strong job increases and continued business relocation and expansion.
San Antonio-based Embrey EVP of development John Kirk says Embrey is doing a lot of “gurban” deals with surface parking, interior corridors, and elevators for the multi-level deals. In San Antonio, most of Embrey's renters are all about convenience so proximity to employment and grocery stores is key. (People haven't wanted to stay this close to home since they had to ride horses everywhere.) Embrey is currently developing the Dominion Apartments at 23910 I-10W in San Antonio. The firm is also responsible for developing the Can Plant at Pearl as well as Can Plant 2 and 3 (and eight others in San Antonio, two in Austin, one in Live Oak, and one in Bee Cave.)
Austin's Most Dynamic Area Gets More Medical
Cedar Park MOB II is open and ready for tenants. Peloton partner Kevin Granger (who's leasing the project for developer J Jacobs) tells us Cedar Park is one of the fastest-growing areas in the country, and lots of new rooftops means demand for new healthcare. (For each new person there are two new feet, and that means we need more podiatrists, stat!) Cedar Park Hospital is expanding (like its recent announcement that it'll JV with Dell Children's), and it's been very vocal about needing more MOB space. As J Jacobs chairman Jimmy Jacobs tells us, there was a void in the area, which this project helped fill.
Cedar Park MOB I filled quickly, and Kevin believes this second building will follow suit. It opened with one 8k SF tenant locked in (the Orthopedic Associates of Central Texas), and he has proposals out for about 25k SF more. Kevin says the 80k SF facility is spectacular, with high finishes and direct connection to Cedar Park Hospital. Plus, it's got lots of excess parking and is right behind 1890 Ranch, which offers an abundance of retail and amenities. Jimmy's goal: Convenience and efficiency that will give residents full access to unparallelled medical services. Check.
Office, Industrial Rents Spike
Class-A and -B office rental rates in Austin are up more than 30% in the last 10 years (Class-A from $21/SF to $34/SF gross and Class-B from $17/SF to $24/SF), says NAI Houston partner Griff Bandy. Over this same 10-year span, Class-A and -B office inventory experienced more than 1.5M SF positively absorbed on average each of those 10 years, says Griff (here with his son). But wait, there's more: more than 3M SF of office space is under construction, too. He's also bullish on San Antonio, where industrial rental rates are at all-time highs as well. In San Antonio, the industrial sector is burning up the market in support of the Eagle Ford Shale play. Griff is also the partner-in-charge leading the launch of NAI Global into Austin and San Antonio, where NAI is looking to hire market leaders/partners in both cities.
Got an Office Dog?
Yoga. Stress balls. Therapy. Exercise. Back rubs. Meditation. Expressive writing. Spa days. Or, get a dog. Here's one of our local reporter's three mutts: As you can see, she's trained Guinness to write her issues. (His grammar is fantastic, but his humor is a little ruff.) How does your puppy make your life easier? Send us a picture and tell us what makes your dog special, catie@bisnow.com or tonie@bisnow.com. Here's a few examples of top dogs in Houston and Dallas-Fort Worth.
YOU TELL US: Millennials and the 'Burbs
Millennials are ditching their cars for public transit, bikes, and walking and have more money to spend on rent (and non-prescription eyeglasses). But when they have get married and have families, many believe they'll head back to the 'burbs. So are today's urban developers over-relying on the tastes of Millennials who might not be in their projects 10 years from now? Tell us your thoughts by clicking the poll to the left, and make sure to read our special report on walkability in this week's National Real Estate Bisnow newsletter.
4th Bisnow Video
By popular demand, Bisnow Education offers a 4th instructional video for those of you looking to make a killing in the real estate game:
"HOW TO VALUE PROPERTY"
Peter Linneman, founder of the Wharton School's real estate program, shares his unparalleled knowledge on the topic, and such issues as:
the difference between net operating income and cash flow
subsidized vs. unsubsidized properties
discounting cash flow
CAP rates, in depth
and numerous other topics
All for just $59, but wait – there's more: Purchase all four Bisnow Education videos for the incredible price of $149 and we'll send you an exclusive Peter Linneman mouse pad! Just kidding. This isn't QVC—yet.
No, knowledge and sophistication will be your rewards. Even if you're a world-weary real estate vet or investor, you'll find fresh insight and new angles that will re-ignite your brilliance; and newbies will be able to digest the information in bite-sized, five-minute spoonfuls that will go down like candy.
