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January 19, 2010 
 
 
FOGGY FUTURE FORECAST

Please join the over 400 already signed up for our first ever Dallas Happy Hour & Schmooze. You won't want to miss this premiere gathering of Dallas's finest in real estate. Jan. 286-8pm, Preston Center. Free drinks and hors d'oeuvres, if you sign up now!

 
McGraw-Hill Construction hosted industry forecasts at the Marriott in Las Colinas and the Aonn Center in Chicago last week (hat tip to our Windy City office for covering). Here's its economist Bob Murray, who offered less dire predictions for DFW than the Windy City.
 
McGraw-Hill economist Bob Murray

Less dire, yes, but out of habit we'll start with the bad news. In Texas, Bob says, deterioration of the state’s fiscal health will be a big issue, as sales tax revenues are down. Numbers show a mixed picture that the corner is being turned, but it’s not enough traction that recovery is certain. He says that won't happen this year. Commercial building starts were down 55% from 2008 to 2009. Yet, some bright spots include the $300 million Dallas Convention Center Hotel project that started this year.

McGraw-Hill economist Jennifer Coskren

McGraw-Hill economist Jennifer Coskren says Texas commercial construction was the poster child for a very bad 2009. She’s not expecting a repeat of the 80s (though we just read that Pee-wee Herman is making a comeback, so, let's check our facts), but property values, rents, and vacancies are not expected to make a comeback until 2011, at the earliest. Office was hit hardest, with construction sliding and Dallas vacancy creeping up to 22%.

More points a la Jennifer:

  • Infrastructure looks to remain strong: Projects from the Recovery Act and the state’s Proposition 12 bond funding, plus projects from the public/private North Tarrant Express, will get started this year.

  • Recovery is not going to be uniform: Housing will recover, while multifamily doesn’t look good. Forget about commercial construction in '10 and don’t count on manufacturing either.

  • Place your bets on education and healthcare. Expect a healthcare increase in 2010, as the new Parkland Hospital gets underway. A few hours south, Fort Hood will replace its hospital this year, too.

GSA DEALS: NOT JUST IN DC
 
HFF analyst Trent Agnew and senior managing director Danny Miller

Last week, the Houston and Dallas offices of HFF worked together to arrange a financial JV for a 69k SF General Services Administration border control facility in McAllen. Bisnow’s Houston reporter met with analyst Trent Agnew and senior managing director Danny Miller, who tell us they typically arrange outright sales, but in this case arranged a refinancing so the owner, McAllen Customs Border Patrol, could keep the property. (Besides wanting to maintain management, McAllen owns contiguous land, and if GSA expands, McAllen wants that contract, too.) The building is new, with processing, admin, emergency HQ, and a maintenance facility for CBP vehicles. Danny tells us finding investors wasn’t hard—GSA has 95% renewability: some of “the best credit you can have.”

The facility has updated capabilities (eg, it’s bomb-resistant) and more space (accommodating 350 agents) than old properties, and is situated between the new and old international bridges to Mexico. Danny and Trent describe it as “location-driven and mission-specific,” (which we think means border control doesn't have much need for space in Milwaukee or Poughkeepsie). They say it’s a modern prototype for border control facilities. Direct that praise to designer TAG International, developers Live Oak-Gattesman and FD Partners, and Harvey-Cleary Builders.


More HFF: $65M Dallas Refinance

 
1700 Pacific

HFF’s Dallas office arranged a $65 million refinancing for 1700 Pacific, a 49-story, Class A, downtown office tower. On behalf of Berkeley Investments, HFF managing director Steve Heldenfels and senior managing director Whitaker Johnson placed the five-year, fixed-rate loan with ING Investment Management. (HFF is the correspondent for ING.) Berkeley Investments is owned by Jon Hamilton and the Hamilton family. The 1.3M SF 1700 Pacific was recently renovated and is located between Elm and Pacific Streets (as compared to exclusively on Elm, which, we hear from sources at Bisnow Hollywood, would be a nightmare.)

 
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