February 8, 2018
The Connect Houston conference offered two takeaways. First, the Houston economy is just emerging from the trough, and is on the way up. And second, industrial seems to be leading the way. Commercial Real Estate professionals attending the event, which took place Feb. 7 at Station 3, determined that, despite the fact that the Houston metro has been impacted by “low oil” and a major hurricane, things are definitely looking up.
In “Gauging the Climate: Capital Looking to Houston,” panelists focused on investors’ views concerning asset classes in and around the Bayou City. Building owners are reluctant to sell their office buildings, while industrial development and investments are doing quite well. Multifamily is still an attractive asset class as well, with Kevin Westra from Northwestern Mutual Real Estate suggesting that “the fact we’re interested in Houston is a big deal. We’re usually the last ones to a market. Houston is a strong market, with good yield. We’re definitely interested in finding a partner here.”
“At the Intersection of Retail & Industrial” focused on Houston’s healthy industrial sector, and its impact on retail. The panelists lauded the fact that Amazon finally came to Houston – and that the boom in resin production has been a positive for the Port of Houston’s activity and trade with China. Furthermore, industrial developers are ready to back their interest in Houston with some cold, hard cash. Said JLL’s John Talhelm: “The development community is ready to put its money where its mouth is . . . developers are committing funds to go out and get the land they need.” While “spec industrial” is still some ways away, “the volume of activity is driving interest from around the country,” Talhelm observed.
The final session, “Taking the Temperature of Houston: New Development or Asset Absorption Across Property Types,” saw cautiously optimistic panelists discussing all asset classes. Tony Talamas with Hunt Mortgage Group acknowledged that, on the multifamily side, Fannie Mae and Freddie Mac were trying to figure out how to underwrite apartments following Hurricane Harvey. And, David Luther with Marcus & Millichap added that the market between buyers and sellers seems to be balanced, “for the first time in a long time.” Buyers are interested in locking in interest rates before they increase. Sellers, in the meantime, “understand they should sell to maximize value,” Luther said. “I’m seeing strong interest on both sides, and it’s exciting.”
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