December 19, 2014
Oil the 'Big Unknown' for 2015 Texas Housing Market
COLLEGE STATION (Real Estate Center) – The Texas housing market is poised to start 2015 off strong, says a housing market expert with the Real Estate Center at Texas A&M University. However, one key variable will impact the market in the second half of the year: oil.
“Oil prices are the number one issue facing the Texas housing market next year,” said Center Research Economist Dr. Jim Gaines on this week's Real Estate Red Zone podcast. “It’s the big unknown. In the last six months the price for West Texas intermediate crude has gone down almost 50 percent, from about $107 per barrel to around $53 per barrel. The question remains: what does that mean for Texas?”
Gaines said he expects low oil prices will begin taking their toll on the state economy and housing during the second quarter.
“The first half of the year I doubt we’ll see layoffs or much job loss,” he said. “What we do expect to see in the second half are cutbacks in drilling activity and capital budgets on upstream operations (exploration and drilling) and a decline in the rate of new jobs being created.”
Gaines said the cutback in drilling on the exploration and production side will be partially offset by capital construction in downstream operations (refining and processing), particularly in petrochemicals and other industries that benefit from low energy prices, as well as growth in the overall national economy.
“So one end of the spectrum gets hurt by low prices, and the other end gets helped,” he said. “Nobody knows how that’s going to balance out at this point. It’s unclear to almost every economist that we talk to or follow. First of all, we don’t know how low oil prices are going to go. There’s a very real possibility that prices will continue to fall for the next few months. We don’t know how far. We also don’t know how long they’ll stay down. That’ll make a big difference.
“In general, the national economy is helped by lower oil and gasoline prices. And Texas gets buoyed up by a better national economy. So there are a lot of things going on here that we’re going to have to keep our eye on.”
On the whole, though, Gaines said he expects the state’s housing market will be fine in 2015, but subject to a new category of unknowns.
“I don’t think it’ll collapse or anything,” he said, “but it might start to trail off during the second half of the year. If we do as well next year as we did this year, it will be a great year. But even if it declines, hopefully it won’t be more than a small percentage.”
To review November 2014 Texas MLS housing market data, visit the Center's website.
Bill With Mortgage Deductions Passes Senate, House
WASHINGTON, D.C. (DSNews) – The U.S. Senate passed a bill Tuesday retroactively extending 55 tax provisions. Among them is a provision allowing deductions for mortgage insurance premium interest and tax relief on forgiven mortgage debt.
The tax provisions covered by H.B. 5771 ("Tax Increase Prevention Act of 2014") expired Dec. 31 of last year. The bill provides for a retroactive one-year extension that expires Dec. 30 of this year and would be effective for those filing 2014 returns next year.
H.B. 5771 was passed by the House Dec. 3 and is expected to be signed by President Obama.
The National Association of Home Builders provides a breakdown of housing policies included in the bill. Click here to view.
172,000-SF Houston Office Building Will be Simply 'Grand'
HOUSTON (RealtyNewsReport.com) – Trammell Crow Co. and Prudential Real Estate are developing One Grand Crossing, a speculative three-story, 172,000-sf office building on eight acres in the mixed-use Grand Crossing development.
Construction has already begun on the property at I-10 and Grand Pkwy.
The development team is seeking LEED Silver Certification. Cadence Bank provided construction financing, Rosenberger Construction is the general contractor, and Powers Brown Architecture designed the property. CBRE will handle leasing.
Parkway Properties Filling Houston Office Portfolio
HOUSTON (Houston Business Journal) – Bristow Group Inc. and Nabors Industries Ltd. have leased a total of 213,000 sf of office space in properties owned by Parkway Properties Inc.
Bristow Group signed a 115,000-sf lease at CityWestPlace. The lease will back-fill known move-outs of approximately 39,000 sf of 2014 expirations and about 76,000 sf of 2017 expirations.
Nabors signed a 98,000-sf lease at On Commerce Green, which will be vacated by Southwestern Energy Co. during first quarter 2015.
Both leases expire in 2025.
JV Buys Sam Houston Crossing I Office Property
HOUSTON (Houston Chronicle) – SH Crossing I LP, a joint venture between Fuller Realty Partners and Independencia, bought the three-story Sam Houston Crossing I office building at 10343 Sam Houston Park Dr.
The 159,175-sf property is fully leased to six tenants.
HFF marketed the property on behalf of the sellers, Duke Realty Corp. and Chambers Street Properties.
More Senior Living for Dripping Springs
DRIPPING SPRINGS (Civitas Senior Living) – Civitas Senior Living LLC is building Ledgestone Senior Living, a senior lifestyle apartment community.
Construction is expected to start in June 2015 with plans for 120 independent-living apartments, approximately 60 assisted-living studio suites and one-bedroom units, and ten private and semiprivate memory-care units.
Civitas will manage the new community, the seventh property in its portfolio. Trepex Construction Inc. is the builder.
Private Investor Digs Garden Park Apartments
ARLINGTON (REBusiness Online) – The 252-unit Garden Park Apartments have been purchased.
Built in 1968, Garden Park is on 11 acres at 1609 Sherry Ln.
Marcus & Millichap marketed the property and represented the private investor buyer.
Laredo's Tight Industrial Market Just Got Tighter
LAREDO (CBRE) – Three logistics company leases totaling 336,665 sf were completed here recently.
Two tenants will house distribution operations in Majestic Realty's 240,837-sf facility at 301 Vallecillo Rd. and an 88,828-sf property at 8402 West Bob Bullock Loop. A third undisclosed tenant will use a 7,000-square-foot location at 13512 Mercury Drive for truck maintenance and leasing.
“Laredo’s industrial market is about 1 percent vacant, leaving companies looking for space very few options,” said Josh Aguilar with CBRE, which represented the tenants in site selection and lease negotiations.
Gramercy Multifamily Property Under New Ownership
DALLAS (CBRE) – A fund sponsored by CBRE Global Investors has acquired Gramercy on the Park, the Class-A, 535-unit midrise apartment community at 4755 Gramercy Oaks Dr.
The 94 percent occupied property was sold by Billingsley Company.
440,000-Plus-SF Galleria-Area Office Building Sold
HOUSTON (HFF) – FG Asset Management has purchased 3000 Post Oak, a 441,523-sf Class-A office building in the Galleria submarket.
The seller was a joint venture between an affiliate of Five Mile Capital Partners LLC and Crocker Partners.
3000 Post Oak is within the Lakes on Post Oak office complex next to the Galleria and Loop 610. The 19-story building is fully leased to engineering and construction firm Bechtel.
HFF represented the seller and arranged acquisition financing.
Austin's Expo Business Park Growing
AUSTIN (Austin Business Journal) – A new phase is underway at the Expo Business Park.
Trammell Crow and Clarion Partners are building Expo 10 and 11 on the 15.5-acre park at 6231 E. Stassney Ln. The 239,205-sf warehouse, flex and manufacturing space should be complete by May 2015.
Tribble & Stephens Ltd. is the general contractor, and Studio 8 is the architect. CBRE will lease the properties.
Prop 1 Funding Distribution Announced
AUSTIN (Texas Government Insider) – The Legislative Budget Board and the Governor's Office yesterday approved a plan for distributing the $1.7 billion in additional transportation funding resulting from Proposition 1. Here's the breakdown:
- 40 percent (about $700 million) will be distributed among metropolitan planning organizations statewide;
- 30 percent (around $522 million) will be allocated to TxDOT districts to improve connectivity;
- 15 percent (about $261 million) will go to TxDOT districts for maintenance needs; and
- 15 percent (another $261 million) will be used to address road problems in areas affected by increased traffic from growth in oil and gas exploration in some areas of the state.