No Reason to Stop Building
While panelists at yesterday’s Bisnow New Construction & Development Summit aren’t quite subscribing to Robert Earl Keen’s idea of the road going on forever and the party never ending, they do think we’ll have this construction boom for years. (Our parents went out of town and they won't be back all weekend.)
475 attendees joined us for our annual peek into new development trends.
TIAA-CREF director of US acquisitions Duane Hale (left, with Transwestern’s David Baker and Steve Ash) predicts Houston has two or three years left in this cycle. TIAA-CREF’s development of BHP Billiton’s new tower proves its optimism—Duane says it’s the only development project this fund has ever done. (It’s really geared to core office and industrial acquisitions.) He says lenders nationwide want 50% or higher preleasing and at least 30% equity to do an office construction loan, but once you hit that, there are lots of lenders interested. The wildest thing Duane’s ever done happened just last week, when he went parasailing for the first time.
Howard Hughes EVP Paul Layne says his craziest choice was having six kids in 10 years (enough for a basketball team). Four are in Houston commercial real estate, and three were on hand to cheer on dad—we snapped Paul with Cassidy Turley’s Lizzie Layne, Avison Young’s Kevin Layne, and HFF’s Kelly Layne. Paul relies on Kelly’s financing acumen to plot out his developments—based on projected interest rates over the next 18 months, Paul also foresees a few good years of building left. Besides our often-mentioned growth farther out I-10, he predicts we’ll leapfrog Conroe and keep expanding north through Montgomery County.
Bruce Merwin, who just joined Thompson & Knight as a partner, predicts Houston will start to look more like NYC—he’s got lots of high-rise condos in his pipeline, and he’s seeing proposals for vertical mixed-use with residential over hotel over retail. (He thinks those’ll pop up in the Galleria and Downtown soon.) Bruce’s craziest activity was organizing a tour of four Grateful Dead concerts along the East Coast. It started off with 28 Deadheads and dwindled down to four, one of which later became Bruce’s wife.
Our sponsor McCord Development director of development Ignacio Correa and VP John Flournoy tell us the firm's one of the top two largest landowners in Harris County, and John’s seen dramatic deal flow (spanning hotel, multifamily, office, and industrial) in Generation Park since FMC’s groundbreaking two months ago. And it's close to inking a deal that’ll be larger than FMC. Ignacio has something extra keeping him abuzz—the native Argentinian is loving the World Cup. (Argentina plays the Netherlands in the semi-finals today.)
Our sponsor WLS Lighting’s Ken Bronstad tells us his company has installing energy-efficient lighting in new construction and retrofits for 40 years. That includes HID and LED lights—Ken says LED fixtures (for interior and exterior) can save 40% to 80% energy depending on the application.
We found Cherry’s Joe Rizzo chatting with our sponsor Cadence McShane’s Dave Tague. Cadence McShane just finished Fallbrook II for Liberty Property Trust and First Northwest Commerce Center for First Industrial. Soon, it’s kicking off construction of CES Sports in The Woodlands. That’ll include a 40k SF pre-engineered building and five acres of site development.
We’ve got more event coverage tomorrow, including the biggest challenges to development in today’s market.