The land market is blowin’ and goin’ these days. CBRE SVP Josh Cameron (here with his wife) and Carter Breed delved into what’s leading the activity.
1) Continued Strong Interest in Multifamily
Carter and Josh say multifamily investors aren’t deterred by a full pipeline; their multifamily listings continue to generate remarkable interest. Despite historically high numbers of units in the development pipeline, both in center city and suburban submarkets, demand for land for new development remains high. The Austin metro is particularly hot—Carter tells us they recently put a site on I-35 in Buda under contract (it received four offers), negotiated a site on 290 just east of Dripping Springs (that's under construction now), and are now marketing a tract in a large master-planned community in Hutto that's garnering lots of attention.
2) Flow of Capital from Mexico and Oil
Texas, particularly desirable areas of San Antonio, is benefiting from a large supply of money seeking land assets. Josh says investment is coming from two major sources: Mexican nationals looking to move money out of their uncertain economy, and a vast amount of new capital generated from drilling in the Eagle Ford Shale. That’s driving interest in asset classes ranging from high-end retail space to large ranch/recreational properties throughout South Texas and the Hill Country. Carter and Josh say rate of return considerations are still important, but they’re joined with a perception of safety and security. That’s spurring rapid land sales and market premiums.
3) Single-family Active but Cautious
Builders continue to experience strong single-family residential sales, particularly in the more desirable submarkets like Southwest and Northwest Austin and Northwest San Antonio. Carter—here with his daughter this summer in the Mediterranean in the South of France—says very few desirable lots remain, so builders are willing to do whatever it takes to secure positions in prime areas. That said, recent activity indicates they're now more cautious in committing to additional purchases in second-tier submarkets. That’s translating to an increased reluctance from builders to buy raw land or undeveloped “paper” lots, she says.
