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February 8, 2011 
 
 
A MODERN DAY NAFTA

Hear opening remarks from Hines SVP John Mooz at our Houston Sustainability Summit at the sparkling BG Group Place, pre-certified for LEED Platinum. It's Feb 24, so sign up now!

 

OK, so former Mexican president Vicente Fox actually called the Greenspoint Hispanic Business Center a "synthesis of NAFTA," but we thought we'd make you all feel old with that headline.

 

Vicente (who's conveniently followed by an arrow everywhere he goes) hit up Greenspoint last week to the delight of district president Jack Drake (delivering a standing ovation). Greenspoint District hosted Vicente, Mexican senator Silvano Aureoles Conejo (from Michoacan), and 50 local business leaders. The area is a hotbed for Mexican investors, and Vicente was drawn by the HBC, founded last year by Alejandro del Valle and Lucia Marcellini. He was especially interested in the HBC Executive Suites, which Alejandro (who also owns call center Contact Line in the area) opened last May to cater to Mexican businesses. Alejandro hopes to rent space in the six-story, 120k SF building to 300 Mexican companies. So far 15 are on board, and he plans to build another facility next door when the first leases up. That may not take long, as more Mexican entrepreneurs, including himself, have been moving to Houston in the past few years.

Jack Drake and Vicente Fox

If you know Jack, you’re used to his animated poses. He and Greenspoint District’s Rhea Davis tell us the submarket is 12 square miles, encompassing 18M SF of development and 809 CRE owners. Hospitality is big there, too: 17% of all hotel rooms in Houston, the largest concentration in the metro. Greenspoint also has Houston's largest business park, Pinto Business Park, at 1,000 acres (impressive since the entire submarket is 7,370 acres). Jack says Greenspoint would like to be known as a public art district, and the Ida Gaye Gardens will open in a few weeks. Named after the developer’s mother and designed for seniors, it abuts a seniors affordable housing complex and won an H-GAC planning award.

Jack Drake and Michelle Wogan

We snapped Jack with Transwestern’s Michelle Wogan, who has been vice chair of Greenspoint’s board for 12 years and active in the area her entire career. She tells us Greenspoint’s Class-A office market has been considered the tightest in the city for a long time, and indeed its vacancy is 4.9% (the second lowest is the CBD's 6.3%). Supply is low, and there’s been no new spec high-rise Class-A development since the '80s. She says the submarket does well because of its proximity to the airport and easy access to all parts of the city. Michelle’s re-leased several blocks numerous times and says they go fast. The most recent large Class-A deal was the 100k SF Southwestern Energy, snapped up within six months of going on the market.


Bisnow
MONEY MONEY MONEY
 
MBA

Is money burning a hole through the pockets of commercial mortgage bankers? Not quite, but we’ve been out in San Diego with about 2,300 of them at the Mortgage Bankers Association’s annual CRE finance and multifamily convention, so we do know what’s heating up. Fundamentals are improving, so assets are becoming more financeable, and thus real estate is looking good as a global investment again. Here’s MBA 2011 chairman and moderator Michael Berman (CEO of CWCapital), KeyBank Real Estate Capital EVP E.J. Burke, Cohen Financial CEO Jack Cohen, Morgan Stanley managing director Timothy Gallagher, Principal Real Estate Investors CEO Patrick Halter, and PNC Real Estate/Midland Loan Services EVP Diana Reid. Tim says during the boom, Morgan Stanley made casino and construction loans, which it shouldn’t have done, and the “spotlight on us right now is so much brighter than it’s ever been” to make sure we do things right. Jack says it’s all about the jobs, pointing out that CRE values and the number of jobs are about the same as 10 years ago, and yet there is more space to fill (thanks to efficiency).

 
PNC Real Estate/Midland Loan Services EVP Diana Reid

We’re about halfway through the distressed loan workouts and delevering, Diana says, and the process is slow—asset by asset, borrower by borrower, situation by situation. The good news: The flow into special servicing is now equal to the outflow. As FDIC bank closings pick up, it’s part of the sign that we’re working our way through the distressed loans. E.J. says there’s a perception that there are tons more to come in bad debt, but the top 25 banks’ higher-quality loans make up 85% of the market, while the remaining 7,750 small banks that typically did the riskier deals (think construction loans) make up just 15% of the market. Expect rising deal volume this year, but keep an eye out for rising interest rates, Egypt, and, of course, Dodd-Frank details: 100 of the 300 rules and studies filling out that regulatory skeleton deal with lending.


Bisnow
FILLING UP
 
Retail vacancy

Retail vacancy has begun to stabilize over the past year, owing to the backfilling of big-box spaces that have been vacant since '08 and '09, according to Grubb & Ellis. It helps that there weren’t major retailer chain closures or failures in 2010. (The downside, of course, is no more epic games of laser tag in empty Circuit City's.) Many retailers are optimistic about Houston’s long-term health, so occupancy rates are likely to improve gradually in 2011. 2M SF of retail is under construction, but most new projects were pre-leased prior to the downturn. Limited new construction will allow the market to find a healthy supply/demand balance. Grubb & Ellis says grocers, restaurants, discounters, and pharmacies are hot. What's not? Books, video rentals, specialty clothing, and office supplies.


Bisnow
SNOW(LESS) DAY
 
Aurora Evans

We didn’t mind our precipitation-less days off, but one reader did respond to our question about how he would've used a real snow day. The National Realty Group’s Michael Evans tells us he’d spend the day playing with his five-year-old daughter, Aurora, pictured in the Dallas snow earlier this year. When not dreaming of snow angels, Michael’s marketing Oak Ridge North Commerce Park, which his company developed. He recently closed a three-acre land purchase where the buyer plans to build a 50k SF cheerleading school. The park is 40-acres of undeveloped land (retail and commercial sites available) not including the eight buildings that went up in Phase I. Four of those have been leased up and one sold. See, it pays to read to the bottom!

 
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