RECON

Real Estate Center Online News

May 22, 2015


United Supermarkets Creating 190 Lubbock Jobs

LUBBOCK (LEDA) – The Lubbock Economic Development Alliance (LEDA) announced Wednesday that locally based retail grocer United Supermarkets will add 190 new jobs here over the next few years.

These jobs, ranging from back office and IT support to warehouse and transportation staff, will result in $7.2 million in annual salaries. In addition, 200,000 sf will be added to United's distribution site, a $33.7 million capital investment.

"The expansion of this local company, and the jobs they are set to create, will have tremendous impact on Lubbock's economy," said John Osborne, CEO of LEDA and Market Lubbock.

The indirect and induced employment impact of this change is estimated to be 311 jobs and new salaries of $11.9 million annually. The expanded facility will have a total impact of $22.6 million per year once fully operational.

United Supermarkets, a subsidiary of Albertsons LLC, has 66 stores across Texas and New Mexico.

New Chapter for Old Dallas Library

DALLAS (Dallas Morning News) – The former Dallas Central Library at Commerce and Harwood Streets will be turned into an office building by Centurion Development Group, the same company renovating the Statler-Hilton Hotel next door.

Centurion has hired Venture Commercial to seek out tenants for the 120,000-sf, four-story, 60-year-old building.

The stone and glass library, designed in the 1950s by local architect George Dahl to house 800,000 books, has been untouched for decades.

"There is retail possibility on the ground floor of the library, but most likely it will be all office," said Venture's Scott Lake.

Alamo City Industrial Market's Strong First Quarter

SAN ANTONIO (REOC San Antonio) – The local industrial market's 2014 momentum carried over into the first quarter of this year, according to the REOC San Antonio's survey of more than 34.3 million sf of industrial lease space. New leases and expansions inked in the first three months of the year translated into 376,707 sf of positive net absorption.

"Thankfully, the slowdown in Eagle Ford Shale activity south of San Antonio has not had a significant impact, to date, on leasing velocity or demand for industrial space in the metro area," said REOC San Antonio Senior Vice President John Greg Turcotte. He said impact will be felt in the fourth quarter if oil prices do not recover past $60/barrel by the third quarter.

The citywide vacancy rate ticked up slightly to 8.2 percent compared with 7.2 percent last quarter and 6.7 percent recorded in the same quarter a year ago. In direct correlation, the citywide average asking rental rate took a $0.12 step backward compared with last quarter to $7.64 per sf per year on a triple net basis. Still, the average rent is up $0.06 compared with a year ago.

Distribution warehouse properties closed the first quarter with a 7.3 percent vacancy rate. The service center/flex market closed the quarter with a vacancy rate of 11.6 percent, unchanged from last quarter and slightly improved compared with 12.5 percent recorded in the same quarter a year ago.

The cost of renting distribution warehouse space currently stands at an average of $5.38, marking a modest 1.9 percent increase compared with average rents recorded a year ago. The average cost of renting service center/flex space increased $0.09 compared with last year at this time to reach $9.35, marking an annual increase of roughly 1 percent.

Nearly 600,000 sf of industrial space is currently under construction led by distribution warehouse projects in the northeast sector.

Neglected No More: Shabby Texas Buildings Renovated

HOUSTON (Dallas Morning News) – At last week's Urban Land Institute conference in Houston, developers talked about how many older office buildings across the country are being upgraded into the 21st century, including some in Dallas and Houston.

In downtown Dallas, office towers like the 72-story Bank of America Plaza, 55-story Chase Tower, 50-story Thanksgiving Tower and others have been remodeled, costing their owners tens of millions of dollars to keep these 1980s skyscrapers relevant.

"It’s estimated that there are over 500 million sf of underperforming commercial property in the U.S. right now," said Patricia Hauserman, senior vice president of Tishman Construction Corp.

John Mooz, an executive developer with Hines, helped remodel a relatively unchanged 1960s office tower in Houston that had no parking. After $15 million in improvements, Hines almost doubled its money when the property was sold.

Upgrades such as these can be costly. "Fortunately," said Hauserman, "the return on investment is such it makes it very attractive."

Rosenberg Retail Outlet Officially Coming

ROSENBERG (Houston Business Journal) – The city and the local development corporation came to an agreement with Paragon Outlet Partners to build an outlet mall about ten miles southwest of Sugar Land near the intersection of I-69 and Reading Rd.

An initial agreement for Paragon Outlets Houston was signed in September, but the deal was finalized with a new performance agreement that calls for a minimum of 250,000 sf of leasable retail space. However, the city announced that the project will include at least 400,000 sf of retail space.

Paragon also agrees to invest at least $54.8 million, and the city and development company will contribute up to $15 million.

The mall is expected to break ground late this summer and open in November 2016. It is predicted to generate 400 construction jobs and 1,000 permanent jobs as well as $75 million in property value and $160 million in taxable sales annually.

Robert Brvenik, Paragon Outlets Principal, said the mall will have over 100 designer and name brands.

SA Office Vacancy's 'Fairly Dramatic' First-Quarter Improvement

SAN ANTONIO (REOC San Antonio) – The first three months of 2015 marked one of the strongest first-quarter starts on record for the city, reports REOC San Antonio in its latest market survey. Gross leasing activity translated into 371,200 sf of positive net absorption for the first quarter.

Positive activity and strong absorption yielded a "fairly dramatic" improvement in the citywide vacancy rate, which dropped from 18.3 percent at the end of 2014 to 17.5 percent at the close of the first quarter. Vacancy is also down from the 19.5 percent recorded in the same quarter last year.

Vacancy within the Class-A subset of top-tier properties remains below 10 percent. That submarket closed the quarter with a citywide vacancy rate of 9.5 percent, down from 9.9 percent last quarter and 10.2 percent a year ago.

Improved occupancy continues to support increased rental rates. Compared with last year at this time, the citywide average quoted rental rate for all classes increased by $0.30 to $20.07 per sf per year, an annual increase of 1.5 percent. The average rent for Class-A space climbed 2.6 percent with the quoted average currently standing at $25.93.

Roughly 818,000 sf of spec office space is currently under construction with the vast majority scheduled to come online before the end of the year. There were no new construction starts in the first quarter, but smaller projects are expected to be announced during the year.

Construction activity is primarily concentrated in the North West and Far North Central sectors.

"To date, reported preleasing activity puts projects currently under construction at roughly 31 percent occupied, which means vacancy rates could potentially take a hit later this year if more leases aren’t inked before these buildings come online," said Kim Gatley, REOC San Antonio's senior vice president and director of research. "The new wave of office space is not expected to remain vacant long. In a stable, growing market, tenants tend to follow a predictable pattern of flight to quality."

Midland Shopping Center Under New Ownership

MIDLAND (Marcus & Millichap) – Western Park Plaza, the 91,353-sf retail property at 1012-1028 Andrews Hwy., has been sold.

The 34-year-old center is fully occupied, and all leases are triple net. Major tenants include Miss Cayce’s Christmas Store, Day by Day, EnerVest, Family Dollar, Mobility Unlimited, Yates Carpets, BootCamp, Calvary Christian Fellowship Church and Garza Crossfit.

It is shadow anchored by Albertsons grocery store and Ace Hardware.

Marcus & Millichap marketed the property on behalf of the seller, a private investor, and represented the buyer.

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