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January 5, 2011 
 
 
CAPITAL RETURNS

Join us for a look at what Forbes Magazine called "One of the Best Places to Get Ahead." Bisnow's The Future of Fort Bend County. Jan. 27. Sugar Land Square. Early bird prices fly away soon!

 

Liquidity. Cash. Moula. It’s back, according to CBRE vice chairman Jack Fraker. Exhibit A: In 2010, a CBRE Texas partnership of Gary Carr, Russell Ingrum, Josh McArtor, and Jack closed 28M SF for $2B in sales with 13M SF of that in Texas.

 
Jack Fraker

Jack (here speaking at Bisnow Dallas’ July 29 Capital Markets event) says he and his team have 5M SF of properties in escrow, totaling $553M in deals. They’re also marketing another 2.4M SF valued at $183M: “This is a pretty good barometer for capital markets in Texas, and things are dramatically different than they were just a year ago.” What things? Institutional and private capital have a renewed interest in real estate investing because of reliable yields that aren’t subject to the daily variations of the stock market. In the past year, the debt market has dramatically improved, with lower interest rates and greater availability of debt capital, he tells us. Jack says CBRE financing guru Greg Greene partners with the investment sales team and works with various lenders to get customized loan structures for each property.

Lakes on Post Oak

Texas is leading the way thanks to job growth, increasing population, and no hangover from the single family housing crisis, Jack says, because the Texas never got overbuilt. Corporations are relocating here, too. Real estate fundamentals (leasing velocity, absorption, and rental rate growth) are favorable compared to other parts of the country, too. “There’s no new supply of speculative product being added in Texas and across the nation, so basic economics tell you that some level of constant tenant demand combined with zero increase in supply creates a very favorable backdrop,” Jack explains. It paid off in the number of deals closed in 2010 in Houston, including the 1.2M SF Lakes on Post Oak (pictured), Igloo Corporate HQ (914k SF), 6300 and 6330 W. Loop South (437k SF total), and 919 Milam (543k SF).

Houston Club Building

Jack tells us this recovery will stabilize, though spec projects will remain non-existent for a couple of more years, and investment sales volume will gradually return to the levels we saw in ’05, ’06 and ’07. Another driver is the aging population. 80M baby boomers (the largest demographic segment of our population) want reliable returns on their investments, which means pouring money into real estate, he says. Office properties, especially in the CBD in Houston, are especially popular, he says, followed by suburban office properties. What’s in store for 2011? CBRE has Exel La Porte Logistics Center (313k SF) and 1900 N. Loop West (121k SF) in escrow with a scheduled closing by next month. The team is also marketing the 348k SF Houston Club Building (pictured).


Bisnow
PERSISTENCE PAYS OFF
 
Todd Jurek and John Meador

After two years of negotiations and numerous hurdles, TMJ Property Services and Pinnacle Alliance Fund (above, TMJ prez Todd Jurek and Pinnacle partner John Meador) purchased a 5.5-acre parcel with 56k SF of retail in the Missouri City Shopping Center and signed new tenant Star Cinema Grill. The cinema will fill 40k SF and contain nine screens with 1,300 seats and a full restaurant and bar. It also fills the anchor position that’s been vacant since 2009. Todd tells us one of the biggest challenges was getting around restrictions—AutoZone’s lease prevents a theater from moving in adjacent to its space, and the center had a master restriction against them. They were able to convince the other three owners in the center to allow the theater, but AutoZone wouldn’t budge.

Missouri City Shopping Center

TMJ and Pinnacle replatted their property and parceled out a .75 acre pad site to build a separate 7,370 SF building for AutoZone but had to get all owners to allow it since a previous agreement said the center was at maximum SF. To convince everyone a new building was suitable, TMJ constructed a full-size mockup of the proposed building. And that wasn’t all: Financing to buy the site was nearly impossible to find. They approached 30 to 40 lenders, but everyone was wary of CRE loans, and even banks who liked the deal couldn’t get around new federal regs. They finally got financing through Community Bank of Texas because of John’s prior relationship with the lender's Stan Grisham.

 
Star Cinema Grill

Above, the lobby of a Star Cinema Grill in Webster. Todd tells us this deal couldn’t have happened in a peak market. They got the site at a substantial discount, and were able to lock-in the large space for SCG because smaller tenants wanted out. AutoZone’s new home was designed in-house and will be built by A1 Construction Services—look for a groundbreaking on civil work next week. Wulfe & Co’s Kristen Barker repped SCG, and Todd and Frankel Development Group’s Bruce Frankel represented the landlord. The parcel is 92% leased, and Bruce is marketing the former AutoZone space. (By the way, if you want to hear about more Fort Bend deals, make sure to hit up Bisnow’s Future of Fort Bend County event January 27!)

 

OFF THE CLOCK
 
Robert Bain at orphanage
While we were pigging out on Christmas candies, some of you spent the holidays making a difference. Coldwell Banker United Commercial’s Robert Bain (green and white cap in the back row) took his eighth mission trip in two years to the Casa Hogar orphanage in Mier, Mexico. He makes his trip through the Masters Plan World Outreach Group that sponsors the orphanage (he’s the project coordinator for the mission), and Coldwell provides funding. Because the cartels are still active in the area, the group of six Texans left their car in McAllen and crossed the International Bridge at Reynosa on foot. They grilled hamburgers for 18 orphans and returned to Houston (that’s a 13 hour round trip). Cutest moment: three-year old Julio introducing himself as July.
 
 
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