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Travis County to Buy $63M Austin Office Tower
Austin Business Journal
January 27, 2010
Travis County moved closer Tuesday to what's likely its largest purchase ever, a 15-story, 315,000-square-foot downtown office tower. Commissioners Court officials said Tuesday the seller, Travis Realty Corp., accepted a $61,250,000 offer, plus closing and fees. The property located at 700 Lavaca Street includes a 675-car parking garage and is about a block from another government complex. The release said the Lavaca building is, "well-positioned to become the new county seat." The document said the agreed price allows the county to use other savings for renovations and building improvements. The court voted unanimously Jan. 19 to purchase the building after about a year of planning sessions and a strategic analysis led by consultancy Broaddus and Associates. The county's faces a current 31 percent space shortage, according to the report, which would increase to 53 percent by 2015 if nothing is done. Also, the county civil courthouse needs to free up space for justice complex expansions.
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Urban Land Institute Ranks Austin as a Top 5 Market for Development in 2010
Commercial real estate industry investors and professionals remain decidedly negative, colored by distress over prospects for an extended period of anemic demand and costly de-leveraging, according to respondents of the Emerging Trends in Real Estate® 2010 report, released today by PricewaterhouseCoopers LLP and the Urban Land Institute (ULI). "Our report participants find that a sense of nervous euphoria is growing among liquid investors who can make all-cash purchases," said ULI Senior Resident Fellow for Real Estate Finance Stephen Blank. "Those that are patient, daring and selective could score generational bargains on premium properties from both distressed sellers and banks that are clearing out unwanted bad loan and real estate owned portfolios. However, once the property market recovery begins and gains traction--likely before 2012--any rebound could be restrained by a lackluster economy and rising interest rates."
A snapshot of the top five markets:
- Washington D.C. scores the highest marks during a recession. While hard-pressed lenders pull back in most cities, major insurers and big banks have taken a long term view and are actually providing financing for new deals. Bethesda, home to the National Institutes of Health, should benefit from increased bio-medical spending and Virginia markets, inside the Beltway, are expected to suffer only modest erosion relative to past downturns. Survey respondents expect suburban vacancies to advance well into the high teens further out.
- San Francisco: Despite its formidable barrier to entry attributes, this 24-hour gateway will take investors on a ride of volatile pricing, occupancies, and rents. An expanding regional tech industry, fed by nearby Silicon Valley, should help. The report ranks this city one of the top buys for apartments, warehouse, office and hotels.
- Austin, Texas: A growth bastion, Austin's low state taxes and a pro business environment are expected to contribute to future growth and continuing corporate relocations. Austin fits the "brainpower" model with its state capital, large state university, and offshoot tech and software businesses.
- Boston is a solid market as compelling economic drivers-premier educational institutions, life science companies, and high tech business-reinforce investors' long-term conviction. Downtown apartment vacancies remain well under 10 percent and condo/house pricing "remains stiff."
- New York offers savvy investors opportunity and more affordable costs over the long term. Midtown availability rates are predicted to skyrocket from mid single digits into the mid-teens as office rents plummet 40 percent or more. Co-op pricing is expected to sink 25 percent and a shakeout continues among condo developers who built million dollar plus apartments in fringe districts- sales of those units likely won't close without substantial markdowns. The pace of market recovery depends on the hammered banking industry, the report cites.
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Texas Could See Early Exit from the Recession, Economist Says
By Sc huyler Dixon, AP
January 18, 2010
Texas will be "last in, first out" among states battling the recession, although a recovery that has already started will require patience, a leading economist says. The Lone Star State proved resilient because of advantages such as weather, stable home prices and a political climate favorable for companies seeking new places to do business, said Ray Perryman, head of the Perryman Group and a longtime Texas economist. Still, Perryman said Texas has seen its share of difficulty since the state got caught up in the national economic downturn in the summer of 2008. Job losses mounted last year, and the outlook remains bleak for commercial real estate. "The long-term story when people look back at it will be one of last in, first out. It's also a story of us doing a little better than the rest of the country," Perryman said. "Nonetheless, there's going to be a legacy of pain. Three hundred thousand people did lose their jobs, and no one really escaped this." As a measure of Texas faring better than most states, Perryman pointed to the 300,000 job losses, which, although a large number, represented about 4 percent of the losses nationally in a state that accounts for about 8 percent of the U.S. economy, he said. Using that formula, Texas had about half the job losses that might be expected. One of the strongest signs of a recovering economy, Perryman said, is Texas enjoying job gains the past two months and three of the past six. He and other economists say that trend will continue, but at a modest rate. Analysts say the same thing about other sectors of the Texas economy.
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Austin Ranked Best City to Invest in Commercial Real Estate
Austin Business Journal
January 4, 2010
Austin has the best prospects for commercial real estate investment this year, a Grubb and Ellis Co. forecast reported today. The Santa Ana, Calif-based real estate services and investment firm said it expects commercial real estate will continue to falter this year, but at a slower rate, according to the 2010 forecast. Most property types will reach bottom pricing near the end of 2010 with a slow recovery beginning in 2011, officials said. In a ranking of the top 10 markets for long-term office, industrial, retail and multi-housing investment potential, Austin was listed No. 1. Houston was the only other Texas city to make the list, taking the sixth spot. "Because commercial real estate lags the labor market, it still has a ways to go before reaching its own low point," said Bob Bach, Grubb & Ellis senior vice president and chief economist. "The good news is that the freefall we saw in 2009 is over and the future is more certain, giving owners and users of real estate the confidence to begin making decisions again." The investment market will see a slight rebound in 2010, according to the forecast, with at least some assets entering the market in 2010. Officials said the shift should prompt increased sales volume of 20 to 30 percent. The report said record-high office vacancy rates will likely continue, reaching as high as 19 percent by the year's close. |
Texas' Now-Strong Banks Hold Lessons for Rest of U.S.
Paul Wiseman, USA Today
December 28, 2009
When the financial system collapsed last year, a short-handed Federal Deposit Insurance Corp. went looking for people schooled in the grim art of cleaning up failed banks. At least the FDIC knew just where to find the grizzled veterans: right here in the heart of Texas, where a banking cataclysm two decades ago wiped out more than 650 Texas banks and savings and loans. The FDIC has brought 44 of its own veterans out of retirement in Dallas alone - far more retirees than it has reinstated from any other city - to deal with an outbreak of bank failures across the country. "We've been there and done that, and have the scars and bullet holes to prove it," says Steve Scurlock, a state bank regulator in the '80s and now executive vice president of the Independent Bankers Association of Texas. "I still wake up in cold sweats" thinking about the bad old days. But there's a twist: These days, the FDIC needs expertise from Texas, but not necessarily in Texas. Despite - perhaps because of - the financial wreckage in its past, Texas has escaped the worst of the current economic and financial maelstrom that has devastated states such as California, Nevada, and Florida. "The recession's here, but it's nothing like it is in the rest of the country," says Texas Banking Commissioner Charles Cooper.
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Signs of Life Emerge in Commercial Real Estate Lending Market
December 7, 2009
David Lynn, PhD
Several positive developments appear to be emerging in the real estate capital markets, providing a glimpse of optimism as investor sentiment begins to rebound. Case in point: Simon Property Group, an A-rated blue chip real estate investment trust (REIT) with a strong balance sheet, issued $650 million of 10-year unsecured debt at 10.8% in March. In May, Simon issued $600 million of 5-year notes at 7%. The nation's largest shopping center owner issued another $500 million of 5-year notes at 5.5% in August. Several other public REITs also were able to raise large amounts of both secured and unsecured debt financing. Meanwhile, the commercial mortgage-backed securities (CMBS) market has shown signs of life and spreads have narrowed. Commercial mortgage rates have tightened up. We believe these signs are pointing to a thawing in the real estate capital markets.
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