CYPRESS TOWER REDO
SAN ANTONIO (San Antonio Business Journal) – KBS Realty Advisors of California will spend just over $4 million to upgrade the downtown Cypress Tower at 1222 N. Main Ave.
The lobbies, restrooms, elevators and mechanical systems and café will be renovated, and KBS is adding a conference center. KBS' plans also include speculative office suites ranging from 1,500 to 3,000 square feet.
The more than 156,000-square-foot tower is currently 63 percent leased.
The renovations are scheduled for completion this year.
RIVER OAKS RARITY
HOUSTON (Houston Business Journal) – Construction has begun on the first high-rise residential property to be developed inside the 610 Loop in the past two decades.
The 30-story, upscale 2727 Kirby condominium tower in the River Oaks area is being financed by Torreón Capital LP of Austin, while an undisclosed fund trading on the New York Stock Exchange is providing a loan.
The 23 residence floors will house 84 units. Prices will range from $500 to $800 per square foot, with an $8.3 million price for the 10,000-square-foot penthouse, said local developer Mike Atlas, owner of Houston-based MDA Holdings LLC and majority owner in the tower.
Total development cost is about $90 million, and the units will ultimately sell for a combined $130 million, Atlas said.
ASPEN'S ASPIRATIONS
AUSTIN (Austin Business Journal) – Aspen Properties Inc. has purchased the three-story Plaza on the Lake office building on 4.5 acres just off Capital of Texas Highway.
The seller is Prime Real Estate Equities I LP, which is a partnership between USAA Real Estate Co. and Prudential Real Estate Investors. Travis County tax rolls currently assess the more than 78 percent leased property at $18 million.
Aspen is also developing two office projects. The Park on Aspen Lake, which was formerly called Tower of the Hills, will be built in two phases. Phase one will be an almost 211,000-square-foot building. Phase two, which is expected to begin by this fall, will include another 316,000-square-foot building.
Work also continues on a 105,000-square-foot, three-story building with a fitness facility and parking garage at Aspen’s Prominent Pointe development.
At completion, Aspen's total northwest portfolio will rise to 2.1 million square feet spread among nine Class-A and Class-B properties.
OIL PRICES DRIVING JOB GROWTH
COLLEGE STATION (Real Estate Center) – The latest economic figures indicate that the state’s economy continues to generate more jobs than the national average. From March 2006 to March 2007, Texas nonfarm employment rose 2.3 percent compared with 1.5 percent for the United States.
The state’s seasonally adjusted unemployment rate fell from 5 percent in March 2006 to 4.3 percent in March 2007.
Higher oil prices continue to boost employment in the state’s natural resource and mining industry, which consists mainly of oil and natural gas extraction. The industry gained 20,400 jobs from March 2006 to March 2007, an annual growth rate of 11.5 percent. It ranks first in job creation, followed by the leisure and hospitality industry, professional and business services, construction, and education and health services.
Most new jobs are being created in large metro areas. Austin–Round Rock posted its seventh consecutive month of more than 4 percent annualized employment growth rate. Dallas-Plano-Irving and Houston–Sugar Land continue to generate jobs at annual growth rates of more than 3 percent.
The Midland metro area had the lowest unemployment rate in March 2007 followed by Odessa, Amarillo, and Austin–Round Rock.
For more information, see the full report on the Center's website.
WATERFORD HARBOR COMPLEX SOLD
KEMAH (globest.com) – Venterra Properties Inc. and GE Real Estate of Connecticut have purchased the 11-year-old, 200-unit Park at Waterford Harbor apartments from New York Life Insurance Co.
The 96 percent leased, gated complex is on almost 11 acres at 1420 Marina Bay Dr., with views of Clear Lake. It is also close to NASA's Johnson Space Center, one of the region's largest employers.
Updates are planned for the Class-A complex, which consists of one-, two- and three-bedroom apartments ranging from 744 to 1,485 square feet. Monthly rents range from $780 to $1,583.
Holliday Fenoglio Fowler LP’s Dallas and Houston offices assisted in brokering the transaction and arranging financing through UBS Investment Bank, which secured a ten-year, interest-only loan at just over a 5.5 percent fixed rate.
SECOND-HOME SALES MIXED
WASHINGTON (National Association of Realtors) – Second-home sales were mixed in 2006, with the combined total of vacation- and investment-home sales accounting for 36 percent of all existing and new residential transactions — down from 40 percent of sales in 2005, according to the National Association of Realtors (NAR).
NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales rose 4.7 percent to a record 1.07 million in 2006 from 1.02 million in 2005, while investment-home sales fell sharply, down 28.9 percent to 1.65 million in 2006 from a record 2.32 million in 2005. By contrast, primary residence sales fell 4.1 percent to 4.82 million in 2006 from 5.02 million in 2005.
Twenty-two percent of all homes purchased last year were for investment, down from a 28 percent market share in 2005, while another 14 percent were vacation homes, up from a 12 percent share in 2005.
In terms of location, 29 percent of vacation homes were purchased in rural areas, while 24 percent were in resorts, 22 percent were in a suburb and 10 percent were in an urban area or central city. Detached single-family homes accounted for 67 percent, while 21 percent were condos, 8 percent were townhouses or rowhouses, and 4 percent were other.
One-quarter of vacation homes were purchased in the Northeast, 13 percent in the Midwest, 38 percent in the South and 25 percent in the West.
Suburbs accounted for 37 percent of investment-home purchases, while 22 percent were in a rural area, 18 percent were in an urban area or central city, and 7 percent were in a resort area. Detached single-family homes accounted for 63 percent, while 26 percent were condos, 6 percent were townhouses or rowhouses, and 5 percent were other.
The median price of a vacation home in 2006 was $200,000, down 2 percent from $204,100 in 2005. The typical investment property cost $150,000 last year, down 18.3 percent from $183,500 in 2005.
NAR’s 2006 Investment and Vacation Home Buyers Survey includes the typical age and income of buyers.
BIG BOOM IN ROBERTSON COUNTY
HEARNE (The Eagle) – A $4.7 million Holiday Inn Express, along with a wave of new businesses, could signal an economic boom for Hearne, a town that has seen little growth in recent decades.
Holiday Inn Express will open a 63-room hotel early next year, a move that will create 25 new jobs and generate property taxes for the city. The hotel will be built at the northern end of Texas 6 on a 2.55-acre lot shared by AMA's Mexican Restaurant.
The hotel is not the only new growth the town is seeing. Four new businesses have already opened in Hearne over the past year, and five more will open by next spring. The nine new businesses will provide or retain almost 200 jobs in Robertson County, said Kent Brunette, director of the Hearne Chamber of Commerce and the city's economic development chief.
More than 200 new drilling permits issued recently for Robertson County and two new electrical power plants promise even further growth.
"We're in the middle of a boom," Brunette said. "I think Hearne's time has come."
PROMONTORY POINTE SOLD
SAN ANTONIO (globest.com) – Advenir Inc. has purchased the city’s second largest Class-A apartment complex from Metra United.
The Florida-based investment group paid close to the original $42 million asking price at a mid-5 percent cap rate for the 596-unit Promontory Pointe.
Built in 1995, the 96 percent leased complex at 4114 Medical Dr. features one- and two-bedroom apartments ranging from 747 to 1,378 square feet. Monthly rents range from $699 to $1,199 per unit.
Cushman & Wakefield of Texas Inc. brokered the sale. Advenir will manage the property.
CONROE'S CONNECTION
CONROE (Houston Chronicle) – This semirural town straddling I-45 about 40 miles north of Houston has experienced a 96.5 percent increase in residential permits issued between 2003 and 2006.
Growth continues with 229 permits issued during this year’s first quarter, according to city records. Home starts also have soared by 220 percent over the same period, according to Metrostudy, a Houston-based consulting firm.
Conroe experienced a 33 percent population increase between 1990 and 2000, and a 28 percent increase in the past five years, jumping to more than 47,000 residents in 2005, according to census data.
Residential growth also has attracted major businesses and retail, such as Fortune 500 McKesson Corp. pharmaceutical company. ReedHycalog, an oil-and-gas-drill-bits manufacturer, is building a facility to move its world headquarters to Conroe.
Friendswood Development Co., the developer of Kingwood, is currently building the city's first master-planned community, Graystone Hills, on 350 acres west of I-45. Four home builders will offer houses ranging from $180,000 to $400,000. The community will include 750 homes, greenbelts, parks and a pool.
The company has also opened a subdivision called Hidden Creek. The development will have more than 1,200 homes priced from about $100,000 to $180,000.
Read about Conroe in the Center's 2007 Texas Real Estate Market Report for Houston–Sugar Land–Baytown Metropolitan Statistical Area (MSA).
ROOFTOPS FOLLOWING RETAIL
AUSTIN (Austin American-Statesman) – Homes and apartments will soon spring up around Southpark Meadows, a 1.6 million-square-foot shopping center being developed by Endeavor Real Estate Group LLC at I-35 and Slaughter Lane.
Lennar Homes Inc. plans to put 383 homes on its Reserve at Southpark Meadows, which will be built on 80 acres the Miami-based builder bought from Endeavor.
Preparations for streets, utilities and drainage for the first 121 lots will begin next month. Construction on the homes will start about six months later, with the first buyers expected to move in next April or May. Prices will range from $280,000 to $350,000. A second and possibly third phase would add another 260 homes in similar price ranges.
Grand Prairie–based Fairfield Residential LLC has two apartment projects totaling 670 units planned for the area. Grading work will begin soon on the first project. The 426-unit initial phase will be ready next spring, with second-phase units following shortly after. Final construction on both will wrap in late 2008.
The average-size unit in phase one — 879 square feet — will rent for about $990 a month, while the average-size unit in phase two — 926 square feet — will rent for about $1,075 a month.
OFFICE LEASING STRONG; CLASS-A SOARS
HOUSTON (Grubb & Ellis) – The city’s office leasing market had one million square feet of positive net absorption during first quarter 2007 with the highest levels in the Class-A market.
New and expanding tenants occupied nearly 775,000 square feet of Class-A space, while the Class-B market had 227,610 square feet of positive absorption. The Class-C market lagged far behind with 22,238 square feet.
Houston’s overall vacancy fell by 48 basis points to 14.3 percent (down 3 percent from a year ago), reaching its lowest level in five years. Class-A vacancy has seen a dramatic improvement, dropping 4.3 percent from a year ago to 11.7 percent.
Full-service asking rents for Class-A space increased by 77 cents to $25.42 per square foot per year (PSF/YR), a $3.23 PSF (or 14.6 percent) increase over last year, the largest annual increase experienced since 1998. Full-service asking rents for Class B space increased by 31 cents to $18.03 PSF/YR, a 76 cent (4.4 percent) increase over last year.
Recent issues of RECON contain office market information on Dallas–Fort Worth, Austin and San Antonio.
AUSTIN INDUSTRIAL VACANCY DROPS
AUSTIN (grubb-ellis.com) – Austin’s overall industrial market vacancy fell by 70 basis points to 9.3 percent during this first quarter, reaching its lowest level since 2001 when vacancy stood at 9 percent.
The city’s industrial leasing market started 2007 posting almost 461,000 square feet of positive net absorption during the first quarter. In 2006 the area experienced nearly 1.9 million square feet of growth, marking one of the highest annual absorption totals ever recorded.
The R&D-flex sector saw the largest quarterly gain, registering just over 322,000 square feet of net absorption. R&D-flex space in 2006 saw nearly 800,000 square feet absorbed throughout the area, with a large portion of the demand coming from call center tenants.
Standard industrial properties posted more than 130,000 square feet of growth during the quarter, the lowest vacancy rate (4.9 percent) of all industrial types. However, warehouse-distribution took a step back, recording a mere 8,500 square feet of absorption after being 2006's top performer with 817,000 square feet of growth.
Overall, area asking rents increased during the first quarter by a penny to $7.09 triple-net per square foot per year, a $1.02 improvement over the same time period last year.
For more information, see Grubb & Ellis Industrial Market Trends Reports.
SA INDUSTRIAL SEES MODEST GROWTH
SAN ANTONIO (grubb-ellis.com) – San Antonio’s industrial market ended this year’s first quarter with a modest, but positive, absorption growth of more than 189,000 square feet, which represents the smallest amount of quarterly space gains since the close of 2005.
Overall vacancy dropped 20 basis points to 9.7 percent.
The general industrial sector featured the largest quarterly absorption gain with more than 169,000 square feet, resulting in vacancy falling by 1.1 percentage points to 9.5 percent.
R&D-flex gained almost 37,500 square feet of positive growth, bringing vacancy to 10.6 percent. Meanwhile, warehouse-distribution closed this quarter with just over 17,500 square feet of negative absorption. However, this small space loss left vacancy unchanged at 9.5 percent.
New construction increased by over 260,000 square feet with over 1.4 million square feet currently under development. This construction is mainly concentrated in Port San Antonio and the city’s south side.
For more information, see Grubb & Ellis Industrial Market Trends Reports.
HOUSTON INDUSTRIAL KEEPS PACE
HOUSTON (grubb-ellis.com) – Houston’s industrial market kept up its first quarter pace, registering 1.6 million square feet of net absorption. In 2006, positive absorption was recorded at more than 5.2 million square feet.
Warehouse-distribution product once again featured the largest quarterly absorption gain with nearly 1.2 million square feet of positive growth.
R&D-flex and standard industrial product posted more than 298,000 and 139,000 square feet of quarterly absorption, respectively.
Meanwhile, developers added 2.3 million square feet of new space to Houston’s industrial inventory base during the first quarter.
Despite the positive absorption, Houston’s industrial vacancy increased by 30 basis points to 5.9 percent as new space deliveries outweighed tenant demand for the second consecutive quarter.
Standard industrial product experienced the only quarterly decline in vacancy, subsiding by ten basis points to 4 percent, its lowest level since third quarter of 1998.
Warehouse-distribution properties saw vacancy increase by 50 basis points to 5.4 percent. R&D-flex vacancy grew by 40 basis points to 14.3 percent, largely attributed to the delivery of new construction rather than a drop in demand.
Despite the steady leasing momentum, overall first quarter asking rents declined by eight cents to $5.02 triple-net per square foot per year (NNN PSF/YR), largely as a result of R&D-flex rents falling by 60 cents to $7.76 NNN PSF/YR.
However, standard industrial product saw an increase of 11 cents to $3.78 NNN PSF/YR, reaching its highest level in seven years as a result of the rise in demand for manufacturing space. In addition, asking rents for warehouse-distribution space increased by a penny to $4.53 NNN PSF/YR.
For more information, see Grubb & Ellis Industrial Market Trends Reports.
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