News
It's Getting Better
May 17, 2011
| Dallas has emerged as a city of choice among foreign investors and sovereign wealth funds, according to the top CRE experts at theBisnow DFW Second Annual Real Estate Summit yesterday at the Westin Galleria where a whopping crowd of 650 heard "Getting Better" sung by a quartet of foreigners. | |||
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HFF executive managing director Mark Gibson says the banks are aggressively looking for lending opportunities but remain disciplined and rational. There's plenty of debt available for stabilized core assets and even non-stabilized, in certain circumstances. Banks need to make money in 2011 and have a definite desire to extend more credit to the CRE industry. For the first time in his recollection, Mark says, most economists agree that Texas is the No. 1 economy from a state perspective. "In the past, if you're speaking to large domestic or foreign investors, you're generally defending Texas from the oversupply issues from the '80s and '90s. Today, Texas is viewed very attractively from a fiscal policy standpoint," he says. For example, he says there were three sovereign wealth funds interested in a building HFF is selling. | |||
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| Mark says transaction volume is growing across the US; as a result, he estimates the potential transaction volume for investment sales for the CRE industry could reach $300B, up significantly from the approximately $130B completed in 2010, however, he did stress potential. That's getting closer to the $550B done in 2007 and is great news for CRE (especially compared to the woeful $55B in 2009 and $130B last year), he says. Mark says he expects the financial institutions to be the largest sellers of CRE in 2010 and gave credit to those institutions for handling of assets through this crisis. | |||
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| L&B Realty chairman/CEO Andy Smith agrees with Mark that Texas has historically been considered less than desirable, but that opinion has widely turned. ?People like to hear that you're here because it is an entrepreneurial state on the national playing field,? he says. Additionally, he says pension fund CIOs are focused on risk management from credit risks to political concerns. They want liquidity and more cash, but they want a model that's looking around the next corner. He says retail isn't a dirty word either, and even unleased retail space is drawing more of a premium on a sale than leased space in select markets. April consumer spending is up 6% over last year, keeping retail on the radar. | |||
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| Thinking outside the box and operating on the fringe, Champion Partners founder/CEO Jeff Swope says he's doing what the other guys aren't when it comes to CRE investing. ?If they're vacant, it means a low price. If it's quality, we believe we can lease it up. You're got to step back and take a big picture look,? Jeff says of his MO. In the past, he says that money only came in grudgingly and when the cycle was heated up. Now, Texas (the combined DFW, Houston, Austin, and San Antonio markets) is one of the top five US investment markets behind New York, DC, San Francisco, and the coastal markets. | |||
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| A year ago, the market was focused almost solely on high-quality core assets on the right street corners without a lot of near-term leasing risks, and properties could be bought with good fundamentals, says Invesco senior director Greg Kraus. By Q3 and Q4, though, the economy started clarifying itself a bit and so did the appetite for more value-add opportunities because capital has been aggressively chasing the core on the coastal markets. Last year, Greg says, the focus was on DC and New York, but he thinks the central part of the country—on a market by market basis—is going to be attractive. Invesco acquired a large Denver CBD office building with a 200 bps spread with very stable income returns comparable to what he'd get in DC. | |||
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| Bill Kramer, executive chairman of one of our fabulous event sponsors—Republic Title—served as moderator, with topics ranging into calling the Mavs-Thunder series. Jeff's prediction: Mavs in six. Jeff also threw down his call to Congress to stop manipulating things and let business come back and reinvigorate the economy again on its own. He's bullish on the market and made another prediction: Those who know what they're doing will have three or four great years coming up. | |||
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| We chatted with Kevin Santaularia, right, prez/CEO of our awesome event sponsor, Bradford Commercial Real Estate Services, here with P. Wiegard & Sons? Herb Krumsick, who stopped by from Wichita, Kan. Kevin tells us Bradford has completed 230 leases and sales in the DFW area through April 30, including the 48k SF deal for US Courier & Logistics as it expanded its warehouse space at Regal Business Center Building 7 in Dallas. He says his SVP Brian Pafford represented the landlord in the expansion lease and CBRE's Dave Easterling repped the tenant. | |||
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| Richardson economic development VP Sue Walker and Catalyst Commercial's Brandon Wilhite talked development. Brandon?s working with the City of Arlington to help revitalize its downtown(yeah, they have one, really). He's hoping to bring in retail. Sue says interior renovations have started on the Fossil relocation into the old Blue Cross/Blue Shield building. Additionally, she says VCE?s cloud computing move into Richardson will bring 400 new hires of high-level engineers. | |||
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| ServCorp?s Sandra Colic, Ashley Maines, and Julienne Turner are smiling for a good reason. Not only were they smart enough to serve as event sponsors (again, thank you!) but they've inked five new clients in the past two weeks. ServCorp, the world's second largest provider of executive suites and virtual offices, launched in the US from its native Australia in the past year. | |||
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| We found another incredible repeat event sponsor, CyrusOne and its wonderful reps, Ximena Cole and Alex Para (right) networking with TMBP-Click?s Jacob Click post-event. Ximena tells us CyrusOne provides high-availability, high-density data center services, offering colocation and implementation services. With 600k SF of data center space in Texas, Cincinnati and Chicago, CyrusOne is the fifth largest provider in the US. The wholly owned subsidiary of Cincinnati Bell just made its segue into the European market with a new colocation data center in London. The 10k SF facility will expand the company's international customer base and serve existing CyrusOne customers that have international data center requirements. CyrusOne has first rights of refusal on an additional 10k SF to be taken upon request. | |||
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| We brought the coffee around to help wake up Granite?s Will Hendrickson and CMA's Randy Stringer. While we couldn't pull Will back from the networking, we stole five minutes of Randy?s time to learn he's chasing some restaurant projects as many are working to rebrand their products. Don't forget your virtual eye-opener with theBisnow email tomorrow for Day 2 coverage (sorry, coffee aroma not included) of the second panel featuring Mohr Partners chairman/CEO Bob Mohr, Crescent Real Estate Equities managing director John Zogg, JLL regional director Steve Everbach, Transwestern central region prez Jack Eimer, Holt Lunsford Commercial managing principal Kevin Brands, and Holmes Firm principal Ron Holmes. |
