South Central REDnews October 2020 Magazine by RE Journals

REDnews 2020 WOMEN IN COMMERCIAL REAL ESTATE PAGE 25

THE TEXAS COMMERCIAL REAL ESTATE NEWS SOURCE | OCTOBER 2020

FOR MORE INFORMATION, SEE PAGE 13

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LMEDC’S COVID-19 RESPONSE

$974,000 REINVESTED INTO LA MARQUE BIZ. La Marque Economic Development Corporation stepped up and worked fast to help La Marque business owners stay afloat after statewide closures due to Coronavirus. Just two weeks after the Governor’s March 18 order, the Emergency Business Retention Program launched. LMEDC provided nearly $550,000 in business grants to 64 La Marque business owners. The fırst-round checks were issued on April 15, less than a month after the fırst businesses were forced to close.

ALEX GETTY, EXECUTIVE DIRECTOR La Marque Economic Development Corporation agetty@lmedc.com 409-938-9258 LMEDC.com

On Thursday, May 21, 2020, the LMEDC Board of Directors approved Round Two of the COVID Emergency Grants, and the committee awarded an additional $426,500 to 61 businesses. That’s a total of $974,000 reinvested into La Marque businesses.

Small city, big on business.

IN THIS ISSUE 14 Features Houston healthcare has hiccups, but outlook remains hale and hearty The healthcare market in Houston was firing on all cylinders heading into this year. But COVID-19 has brought unexpected expenses and lost revenue. What’s the prognosis for the market now?

CRE superheroes (who happen to be women): Texas pros share their tales of challenges met, successes won and ceilings busted Commercial real estate has a boys’ club perception, one that can keep women from even exploring CRE as a career path. But the trailblazers profiled in this piece show that this industry’s glass ceiling is far from impenetrable.

OCTOBER 2020

Two Texas markets prove to be elite when it comes to industrial real estate The industrial sector has proven to be exceptionally resilient to the economic forces of the COVID-19 pandemic. That’s good news for the Houston and DFW markets, two “elite” regions that are reaping these benefits.

Industrial & innovation: Dallasbased 42Real Estate digs in to new projects Texas is known for doing things big. It’s with that mindset that the developer behind the large east Dallas arts and entertainment neighborhood, Deep Ellum, has also gone in big on spec and build-to-suit industrial megaprojects.

Now’s the time to invest in Texas This year has been a rollercoaster, there’s no doubt about that. There’s been one sector outproducing all the others: industrial. Many experts believe that markets all throughout the Lone Star state are in excellent position to capitalize on this new activity.

Getting Kenect’ed: How this multifamily concept ushered in evolution The home has expanded its role during the pandemic—it’s now the office, the gym and the school. The key to moving ahead during this new normal? Flexibility.

REDnews’ DFW Industrial Summit Several commercial real estate experts sounded off on what to expect within the Dallas-Fort Worth industrial market in the quarters ahead. Will the good times last?

REDnews’ Texas Capital Markets Virtual Summit COVID-19 has ushered in a fair amount of uncertainty. How will the capital markets respond? Will investors look for sweetheart deals as owners look to offload properties? What sectors are the most attractive?

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Letter from the Editor THE TEXAS COMMERCIAL REAL ESTATE NEWS SOURCE

As of this writing, baseball is winding down and football is just starting up. It’s almost enough to make this seem like a normal year. (Of course, also as of this writing, the NHL and NBA playoffs are underway—months later than normal. Even sports won’t allow one to escape from the craziness of 2020.) Normalcy is likely a far way off, but in the meantime, the markets are still finding ways to make deals happen. Take the healthcare market, which was particularly strong in Houston at the beginning of the year. COVID has brought unexpected costs to the industry and many elective procedures, which bring in steady revenue, have been deferred. That said, activity abounds. Some capital projects are still underway, leases are being inked and investors are acquiring assets. Throughout this crisis, the one shining sector has been industrial, as e-commerce has exploded upward from its already dizzying heights. A new report categorizes the Houston and Dallas-Fort Worth metros along with nine others as the “Elite 11” in the country. Looking at rent acceleration, space absorption, pace of development and other factors, its clear that these two Texas metros are helping to lead the way for the rest of the country. For these reasons and others, that is why investors are targeting primary, secondary and tertiary markets in Texas. 2020 has indeed been a rollercoaster for real estate investors, but the Lone Star State is providing some level of stability that these investors can’t find elsewhere. While this year has brought disruption to so many aspects of the economy and society, one fact remains the same: CRE is a male-dominated industry. Women make up half the population but only a little more than a third of the commercial real estate workforce. Progress on this front has been slow, but it is coming. We profile eight female leaders who are proving that there is a career path for women in this industry. Thanks for reading and I welcome your feedback!

NATIONAL PUBLISHER Mark Menzies menzies@rejournals.com

MANAGING EDITOR Matt Baker mbaker@rejournals.com

STAFF WRITERS Ray Hankamer rhankamer@gmail.com Brandi Smith info@REDnews.com

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OCTOBER 2020

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Houston healthcare has hiccups, but outlook remains hale and hearty BY MATT BAKER

It’s a familiar tale in 2020—a sector or market’s meteoric trajectory at the start of the year has been recalibrated due to the COVID-19 pandemic. For Houston’s healthcare real estate sector, however, attaining those projected heights may still be within reach. Medical office building (MOB) investment sales have dwindled since the end of the first quarter all around the country and Houston was no exception. According to Colliers International data, there were nine MOB sales during the first half of the year, with only two of those occurring in the second quarter. The sector has taken an economic hit due to, for example, unexpected costs associated with combatting COVID-19 and lost revenue from deferred elective surgeries. Even so, most investors see this as a momentary slowdown and remain bullish on healthcare real estate’s long-term prospects. “Medical office has increasingly become an attractive asset class,” said Coy Davidson, senior vice president in the Houston office of Colliers International. “These assets are considered attractive even for investors that haven’t traditionally been in the medical office space.” Among the MOB investment deals during H1 2020 were the sale of the 208,000-square-foot M.D. Anderson Cancer Center in The Woodlands. Chicago-based Harrison Street Realty Capital acquired the asset for $115 million in March from The Howard Hughes Corp. Other notable transactions include INVESCO’s acquisition of the 126,000-square-foot Physician Specialty Center at 1900 North Loop West and MB Real Estate’s purchase of the 99,768-square-foot Foundation Medical Tower in Bellaire. Additionally, Altera Development Company acquired Kimberly Lane Medical Center, a 63,848-square-foot MOB in West Houston. Though some of the more ambitious capital projects 8

OCTOBER 2020

Testa Rossa Properties’ Museo Plaza Medical Office Building, 5115 Fannin Street in Houston.

that were dreamed up prior to COVID-19 have hit the pause button as health systems address their operating margins, other projects that were in preconstruction prior to the pandemic are still moving forward. There are currently 13 MOBs under construction in the Houston Metro, according to Colliers research, totaling more than 706,000 square feet.

Leading into 2020, many health systems had been rapidly expanding into the suburbs as part of the larger retailization trend within healthcare real estate. With the uncertainty brought about by the pandemic, providers have opted to renew leases in current locations rather than explore new options or branch out.

For example, Testa Rossa Properties is advancing their 10-story, 160,000-square-foot Museo Plaza Medical Office Building project in the Museum District. Designed by PJMD Architects, the $77 million project will define the first phase of a larger expansion and be anchored by The Mann Eye Institute.

As the overall retail sector has been hammered by pandemic countermeasures such as stay-athome orders, some are hoping that healthcare retailization can help cover those losses. Davidson believes that once there is stability in the markets, healthcare retailization will resume with its prior intensity. But it won’t be the savior of the retail sector.

Nearby, Healthpeak Properties is developing a fivestory, 116,500-square-foot medical office building at 7500 Fannin Street. In Nassau Bay, Houston Methodist is building a 150,000-square-foot MOB at its Clear Lake Hospital Campus.

“They're viewing healthcare as an attractive tenant, but they're not going to fill up all the vacancy we're going to see,” Davidson said. “In these suburban retail properties, healthcare tends to take 5,000, 10,000 maybe even 20,000

square feet. But all of these big boxes are going to remain empty. They can't backfill all that with just healthcare.”

“Medical office has increasingly become an attractive asset class. These assets are considered attractive even for investors that haven’t traditionally been in the medical office space.”

The largest lease of H1 2020 was Harris Health System’s 305,000-square-foot transaction at 4800 Fournace Place in Bellaire. The deal allows the organization to consolidate its nonclinical administrative functions—as well as its school of diagnostic imaging and outpatient physical therapy program—from five locations to just one. Houston Methodist Hospital inked two deals, taking 7,711 square feet at 505 S. Friendswood Drive in Friendswood and an additional 6,920 square feet at 9090 Katy Freeway in West Houston. This expands their presence in the Spring Valley location to more than 26,000 square feet. Among the renewals, Houston Women Care Associates reupped its 22,984-square-foot

Texas Medical Center lease and Texas Eye Institute opted to remain in its 16,001-squarefoot space at 7710 Beechnut in Southwest Houston. Colliers research reports that sentiment among healthcare leasing agents indicates that leasing activity has begun to accelerate as we enter the third quarter. Despite the current uncertainty, Davidson

LEASE OPPORTUNITY

believes that optimism is well placed. And not just for the local healthcare sector, but for the Houston metro as a whole. “The economy in Houston seems to be faring a little bit better through the pandemic than many of the other major cities around the country,” said Davidson. “Remember, people are moving here in droves. Houston's going to be fine.”

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CRE superheroes (who happen to be women): Texas pros share their tales of challenges met, successes won and ceilings busted BY BRANDI SMITH

Susan Arledge ESRP Real Estate

Brooke Armstrong JLL

From the Metroplex to the bayous to Hill Country, women have used their experience, knowledge, insight and intuition to help shape Texas commercial real estate. This issue is a celebration of their collective achievements, as well as an opportunity to recognize their continued fight for equal footing in what has been a male-dominated industry for decades. Even today, women only account for roughly 37 percent of all professionals in CRE, according to a 2020 report by CREW.

Melanie Edmundson, P.G. Phase Engineering

Edna Meyer-Nelson The Richland Companies

REDNews connected with CRE pros from all over the state to learn their keys to success that will, hopefully, unlock doors for more women in the future. The Location Leader Susan Arledge, Dallas ESRP - Executive Managing Director, Site Selection “How do you stay in the business? You just have to live with the belief that it’s going to get easier and more profitable the longer you’re in,” laughed Arledge. It’s something she says she had to believe wholeheartedly when she started in commercial real estate in the late ‘70s. Arledge had just left a job at an oil and gas company and landed a spot at Henry S. Miller, where she only knew of one other woman on the staff. She quickly learned her success would be dictated by how much she invested in it.

OCTOBER 2020

Amie Henry Ladera Capital Partners

Yesenia Marili, Transwestern

“You have to find that unique combination of someone who has drive, good self-esteem, self-discipline, someone who can take rejection over and over and over again without taking it personally,” Arledge said.

“Women don't see this as a career path,” says Susan Arledge, ESRP’s executive managing director of site selection. “They need to know this is a gender-blind industry. By that, I mean your career is driven by how much effort you want to put into it.”

Helena Finley, Houston The Morgan Group

Rhonda J. Sands, Houston Veritex Community Bank

That mix of traits helped her find her way from industrial to office to what was then the pioneering idea of tenant representation. Arledge made a name for herself as a specialist in securing optimal locations for clients all over the globe.

“It's an opportunity for women because it's all about personal drive and personal self-discipline,” she said. “No one can take that away from you.” Now executive managing director of site selection at ESRP in Dallas, Arledge said the company is committed to bringing more women into the industry. She wants to make sure they know there are opportunities in commercial real estate when they graduate from college. “It’s all about awareness,” said Arledge. “We're trying to make people aware that there's a career path here with so much opportunity.” The Tenant Tamer Brooke Armstrong, Dallas JLL - Managing Director “In our business, it’s not if you get knocked down, but when,” said Brooke Armstrong. “The key is to get back up and brush yourself off every time.” After 17 years in CRE, the leader of JLL’s Dallas Office Tenant Representation group knows that well. Armstrong attributes her longevity to her tenacity and a number of mentors who guided her throughout her career.

“The future is definitely brighter for women in this field than it was even ten years ago. We see many more women on site these days, not just in managerial or clerical roles, but in the trades as well.” “Where do I begin? Roger Staubach, John Gates, Brad Selner, Elysia Ragusa, Carl Ewert, Steve Thelen, my dad,” she said. “I am incredibly blessed with people who have mentored me over the years.” Though she doesn’t recall many obstacles in her professional life, Armstrong admits she’s often the only woman in the room. “I consider that an opportunity rather than an obstacle,” she said. “I have the opportunity to make a difference.” Armstrong acknowledges how much more diverse the industry has become over the years, but she points out there is a long way to go. To address the gender and racial imbalance in CRE, she suggests experienced veterans—women and men— need to engage in mentorship, sponsorship and advocacy. “This is going to take a lot of intentional work from CRE leaders. We can’t just look at the resumes that land on our desks, which tend to be from ‘friends and family,’” she said. “We have to seek out top talent of diverse backgrounds, hire them and advocate for them.” The Environmental Entrepreneur Melanie Edmundson, P.G. Phase Engineering - Principal “The longer you’re in this business, the more you realize things just keep changing and evolving. You have to be constantly aware,” said Melanie Edmundson, principal and co-owner at Phase Engineering. Edmundson, a Texas-licensed professional geoscientist, was the rare 1990s college graduate who went down the road of environmental consulting in CRE. Her first professional opportunity after college came from a Houston company whose president, a woman, wanted to provide opportunities for other women in her business. She gave Edmundson a job as a project manager at her environmental consulting firm.

Listening is key, she stressed, for learning and for interacting with her clients. “You need to hear their needs and be available to solve their issues when they really need you,” said Edmundson. “Let them know you’re going to be there for them to help get their deal done and make it happen.” Edmundson is grateful to all the women mentors along the way who offered advice and support, especially those who had to work even harder to break many barriers in the CRE business market before her. It’s also important for those who are just starting out in the industry to listen, she encouraged, but they also need to be comfortable speaking up with their own creative ideas to help better the future for everyone. “The majority of people in CRE are helpful and like to give advice if you just ask. Don't be shy,” Edmundson said. “Ask as many questions as you can because that's how you learn.” The Construction Chief Helena Finley, Houston The Morgan Group - Senior Vice President of Construction Operations Immense stamina. Mental toughness. Good decision making. Perfect strategy. Tremendous teamwork. Desire to be the best. Those qualities are needed for a winning adventure racing team, according to Helena Finley, an avid competitor who serves as senior vice president of construction operations for The Morgan Group. Those qualities are also assets for a successful CRE team. “The nature of adventure racing means you never know what is coming next and need to be able to think very fast while moving quickly through tough terrain,” Finley said. She tapped into her competitive spirit as a member of the South African national swim team. Recruited to swim for the University of Houston, Finley found a new place to call home, as well as a close group of friends in her teammates.

“She said, ‘Look, you’re smart, but there were nine other people who were smart too,’” recalled Edmundson.

After college, she stumbled into the construction industry when she applied for an organizational position.

She parlayed that opportunity, as well as those that followed, into learning experiences, a practice that hasn’t stopped even though she has had her own business for more than 27 years.

“I got hooked and love the industry,” Finley said.

“I feel like I am learning every day,” Edmundson said.

More than 20 years into her career, she has watched as construction technology has rapidly changed, especially in the past five years. What has not changed as quickly is how few women are in the industry and how often they are underpaid

OCTOBER 2020

or overlooked for positions, but Finley said this is changing. “The future is definitely brighter for women in this field than it was even ten years ago. We see many more women on site these days, not just in managerial or clerical roles, but in the trades as well,” said Finley. “The team I work with today at Morgan is a diverse group of men and women who all work really well together and support each other.” The Money Maven Amie Henry, Austin Ladera Capital Partners - Chief Operating Officer Success for Amie Henry is built not unlike one of the multifamily assets in which her firm, Ladera Capital Partners, invests. The foundation was laid in her first job with a Goldman Sachs company in Dallas, where she started as an analyst in multifamily asset management.

“Within my network, I have developed close friendships with a group of successful women who are also some of my strongest proponents,” Henry said. “These women often provide that needed nudge and added support to step out of my comfort zone.” Henry felt she really thrived in her career when she was working at firms that encouraged diversity and where women held leadership roles. “It is exciting to now be in a position to shape the culture of Ladera Capital to match these ideals that have been proven to result in better performance and returns,” she said. “We have created a team that is diverse in a number of aspects, including race, gender, age and nationality.” Henry encourages women considering a CRE career to research options and reach out to established professionals to benefit from their experience and knowledge about the industry to find a role that fits.

“Having that foundation early on enabled me to continually refine that knowledge working towards a greater level of expertise during each phase of my career,” said Ladera’s Chief Operating Officer.

“CRE offers many avenues from which to choose a career path whether you are great at finance, marketing, sales, design, research,” she said, adding, “This is such a fun and diverse industry.”

The support structure came in the form of an invaluable network of industry colleagues to whom she could turn for advice and information.

The Social Media Maestro Yesenia Marili, San Antonio Transwestern - Vice President, Marketing & Research

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“When I first worked in CRE, there was no social media being used in the industry,” said Yesenia Marili. “I got my first taste of social media during college through MySpace.” These days, those social networks are an important part of how Marili, vice president of marketing and research for Transwestern San Antonio, helps her colleagues. It starts with two simple questions: Have you Googled yourself lately? What do you want those search results to say?

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“This gets them thinking about what should pop up when you Google yourself and also what people, clients, coworkers, colleagues and the competition see,” Marili said. “They want to control what comes up.” That’s where she comes in. Marili simplifies the process of leveraging existing platforms (company websites, blogs, written articles) for personal branding and success. “LinkedIn is the platform that I push the hardest because it’s an individual opportunity to carve out territory online by creating exposure, connecting and engaging with potential clients and showing that we are experts by pushing and publishing thought leadership,” she said. “The internet is anyone’s game.”

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She encourages joining a different kind of network for personal and professional growth, such as CREW. She joined CREW San Antonio in 2012 and now serves as the 2020 Chapter President. Continued on Page 24>

OCTOBER 2020

MIDHORIZON DR +/- 7.057 Acres SAN ANTONIO, TEXAS 78229 Zoned MF-33 Ideal for 232 Unit Multifamily Development

+/- 7.057 acres along Midhorizon Dr. in San Antonio, TX. Adjacent to San Antonio Medical Center and surrounded by High Density Residential Developments and a NISD Elementary School. • Zoned MF 33 and capacity for 232 Units • 6” waterline at Horizon Hill Dr. and Midhorizon Intersection • No On-Site Detention Required • Sanitary Sewer is to the site, grey water easement crossing the site and can serve the site • Impeccable access to major thoroughfares, San Antonio Med Center, and grocers/retail • CONTACT BROKERS FOR PRICING

CONTACT: KRISTEN MCDADE Senior Director T: +1 713 469 4509 kristen.mcdade@berkadia.com

MATT DAVIS Associate Director T: +1 713 974 2407 matt.davis@berkadia.com

2229 San Felipe Street; Suite 1600 Houston, TX 77019

Disclosure: ©2020, All rights reserved. Commercial mortgage loan banking and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. Investment sales/real estate brokerage business is conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Tax credit syndication business is conducted exclusively by Berkadia Affordable Tax Credit Solutions. In California, Berkadia Commercial Mortgage LLC conducts business under CA Finance Lender & Broker Lic. #988-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116, and Berkadia Real Estate Advisors Inc. under CA Real Estate Broker Lic. #01931050. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx ©2019 Berkadia Commercial Mortgage LLC. Berkadia® is a registered trademark of Berkadia Proprietary Holding LLC.”

Two Texas markets prove to be elite when it comes to industrial real estate BY MATT BAKER

Fisher59’s 205,000-square-foot corporate headquarters and beverage distribution center in Denton, Texas.

There’s been a lot of talk that the industrial market— particularly that segment serving e-commerce companies—is proving to be resilient to the economic damage wrought by COVID-19. Two Texas markets are helping lead the way as the country forges a path forward during the pandemic. New research by Transwestern suggest that there remained strong demand for large scale industrial space across the country during the first half of the year. This demand is revving the engines of development, investment and leasing activity. Transwestern indexes the health of the national industrial market by tracking deal velocity and construction activity in 11 growth regions. Dubbed the “Elite 11,” these markets are perennial targets for both global investors as well as the most soughtafter locations for big-box distribution users, lastmile logistics, e-commerce and manufacturing companies. 14

OCTOBER 2020

Two Texas markets, Dallas-Fort Worth and Houston, make Transwestern’s Elite 11, along with Atlanta, Chicago, Lehigh Valley (PA), New Jersey, Northern California, Seattle, South Florida, Southern California and Washington/Baltimore. These core markets are proving that this is one asset class that can’t be beaten by the pandemic. “Many sectors of the real estate market have been put on pause since March—but not the industrial real estate sector, which continues to flourish,” said Transwestern’s Matt Dolly, director of research. “Prior to the pandemic, the core markets led investment activity, and this movement has only intensified in recent months.” Digging into indicators such as rent acceleration, space absorption and pace of development (relative to the size of each market), Transwestern identified several trends. Seven of the 11 markets—including Dallas and Houston—saw annualized rent growth

larger than the national average of 3.9 percent. In fact, Dallas had an incredible 14.4 percent year-overyear increase in rent. No other market even made it to double digits. The Metroplex also led the Elite 11 when it came to year-over-year net absorption, with 2.9 percent. Houston’s 1.8 percent absorption was good for third place, right behind Atlanta’s 2.2 percent. Houston, on the other hand, was the only market to expand by more than 4.0 percent during the past 12 months. With its inventory growing by 4.1 percent, it outpaced all other markets, just ahead of Dallas’ 3.7 percent inventory growth. With more than 900 million square feet, Dallas also ranks third in raw total inventory, behind Southern California and Chicago. One recent delivery to the DFW metro was a buildto-suit corporate headquarters and beverage

Fisher59’s 205,000-square-foot corporate headquarters and beverage distribution center in Denton, Texas.

distribution center for Fisher59 in Denton, Texas. HDA Architects designed the 205,000-square-foot facility which also includes a 21,000-square-foot, two-story office space.

middle of the pack of the Elite 11. Dallas-Fort Worth, on the other hand, has around 28 million square feet of new product underway, second-most behind Southern California.

Not all is quite so promising, however. There is concern that, as new deliveries are on a recordsetting pace in some markets, there is the potentional for overbuilding. Houston currently has approximately 15 million square feet of industrial space under construction, which places it at the

The result is that in the short term there is likely to be a decline in speculative projects breaking ground. Will that be enough from tipping certain markets in oversupplied territory? That remains to be seen, though the voracious demand by e-commerce companies throughout the pandemic may indicate

real estate

auctions

“Core markets offer three primary benefits: large population centers, established infrastructure and historical performance,” said Walter Byrd, executive managing director – industrial services at Transwestern. “Many investors have capital they are eagerly waiting to deploy in prime assets, which can be tough to come by in the Elite 11 markets.”

Schlumberger Surplus Properties Auction October 19 - 21 Open Public Inspections 11-2pm Fri Sept 25

Corpus Christi

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that any new space in these markets is unlikely to sit vacant for too long.

Kingsville

CORPUS CHRISTI, TX • 6441 IH-37 Industrial/warehouse building with 23,000+/- sf situated on 4.07+/- ac. Frontage on I-37 Access Rd. Auctions: 12pm, Wed Oct 21

KINGSVILLE, TX • W FM 772 & W CR 2134 SELLS WITHOUT RESERVE Industrial/warehouse facility containing 18,872+/- sf built in 1999 on 4.94+/- ac. Auctions: 10am, Wed Oct 21

PERRYTON, TX • 702 East Brillhart Avenue SELLS WITHOUT RESERVE 21,000+/- sf industrial/warehouse facility on 2.8+/- ac. Auctions: 10am, Tue Oct 20

KENEDY, TX • 4530 Highway 181 Lot 2A Industrial/warehouse building containing 19,038+/- sf on a 10.25+/- acre parcel. Auctions: 2:30pm, Wed Oct 21

MARSHALL, TX • 5605 Medco Drive Industrial/warehouse site containing two buildings totaling 31,500+/- sf on 14.84+/- ac. Auctions: 11:15am, Mon Oct 19

TYLER, TX • 3243 West Gentry Parkway SELLS WITHOUT RESERVE 9,000+/- sf industrial/warehouse facility on a 1.68+/- ac site. Auctions: 9am, Mon Oct 19

MONAHANS, TX • Loop 464 & CR 310 - Removed from Auction due to a Pre-Auction Offer Marshall

Perryton

View All Schlumberger Surplus Properties at:

williamsauction.com/SLB • 800.801.8003 TX JEFFREY MICHAEL ASHBY RE LIC 550021; THOMAS E. BARNES III AUC LIC 6457. BRUCE ELDON BROOKS AUC LIC 16997. 5% BUYER’S PREMIUM.

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OCTOBER 2020

Now’s the time to invest in Texas BY BRANDI SMITH

4958 Stout Drive, a 102,000-square-foot industrial space just east of downtown San Antonio.

of the city,” said Kevin Cosgrove, vice president of Stream Realty Partners.

“I love Texas right now.” Alfredo Gutierrez, founder of SparrowHawk Real Estate Strategists, didn’t mince words. His firm specializes in the industrial market and the Lone Star State, he thinks, is the place to be. “With everything that’s happening with e-commerce right now, it’s ready to go,” Gutierrez said.

“With everything that’s happening with e-commerce right now, it’s ready to go.”

Look to Central Texas for proof. When the pandemic hit, online retail quickly became an essential part of everyday life. “We have seen major e-commerce tenants and last mile distributors scramble to secure quality infill warehouse space and expand into developing parts 16

OCTOBER 2020

“Many companies have decided to outsource their distribution/final mile operations to 3PL providers in the near term.”

“I call them near-collar workers. They’re not blue-collar or white-collar, they’re somewhere in between. With the oil industry cutting back, you have educated people who are in a position to make a move to industrial.” He also expected an influx of auto-related distribution and light manufacturing requirements in San Antonio in the next few months after Tesla announced it would open its Gigafactory in Austin, what Cosgrove called “a huge win for the region.” Today’s market may have been what CRE insiders hoped for, but few could have predicted the rollercoaster that was the first half of 2020. “We experienced record positive absorption in 2019 and steady rent growth in our core submarkets, but understood that we could be facing a downturn after a decade of economic growth,” Cosgrove said, explaining why Stream was cautiously optimistic heading into this year. Just in the past month, he listed 4958 Stout Drive, a 102,000-square-foot industrial space just east of downtown San Antonio. In addition to its prime location near the I-10 and Loop 410 interchange, the building is 100 percent climate controlled and offers tenants the ability to utilize an adjacent 2.5-acre fenced yard.

That variety is part of the reason Gutierrez is all in on Texas. He says Dallas has an advantage as a regional hub, while Houston is well-suited to attract a qualified industrial workforce. “I call them near-collar workers. They’re not blue-collar or white-collar, they’re somewhere in between,” Gutierrez explained. “With the oil industry cutting back, you have educated people who are in a position to make a move to industrial.” He also pointed to border cities, such as Laredo, as nearshoring intensifies. “There's just so much going on here,” said Gutierrez. “That’s why I think now's the time to invest in Texas.”

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The industrial market is slightly cooler in Houston, according to Robert Wheless, Logistics Property Company’s (LPC) senior vice president for the south region. “Corporate tenant prospects have extended their timelines for committing to leases,” he said. “These prospects are not cancelling their property searches or evaluations, just extending the date for making a commitment to lease. LPC is charging forward and can boast tenant prospects for all of the approximately 900,000 square feet of industrial space it plans to deliver to the Houston market. The projects are underway in two industrial parks, CityPark Logistics Center and HITC Logistics Park, located in the Southwest and North submarkets, respectively. The lone challenge Wheless said he’s observed is an abundance of 650,000-square-foot facilities. By his count, there are seven in the market. “These buildings were constructed to attract e-commerce users,” said Wheless. “Thus far, only a few e-commerce-related users have appeared in the market. Amazon is by far the largest, with five buildings of various sizes.” While distribution for e-commerce, such as Amazon, is certainly a driving force in the industrial market at the moment, Wheless said healthcare, residential building products and commodities are as well.

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Reshaping South Texas Commercial Real Estate

OCTOBER 2020

Ray's Buzz

REDnews’ DFW Industrial Summit BY RAY HANKAMER

Emerging Trends in Logistics and Commercial Real Estate

Panelists: Alfredo Gutierrez, Sparrowhawk; Barret Bufkin, ESRP; Conrad Madsen, CBRE • As multifamily, retail and office “feel the pain,” industrial is holding up well, and accelerating, as e-commerce continues expansion; investors are transferring their attention to industrial from these other sectors • Companies are bringing back manufacturing from Asia to U.S. and to Mexico, which is much closer to DFW; companies are coming here from California; labor costs in Mexico now approximate those in China, as China’s economy has strengthened

“DFW is strategically located in the middle of the country, is in the central time zone, is one day’s drive from Mexico and Port of Houston, and it is “the” hottest industrial market in the country, and some say “the world;” DFW has a super freeway network and good general accessibility” • Distribution and heavy manufacturers seem strong, but some light manufacturers are seeing stress •

DFW is strategically located in the middle of the country, is in the central time zone, is one day’s drive from Mexico and Port of Houston, and it is 18

OCTOBER 2020

“the” hottest industrial market in the country, and some say “the world;” DFW has a super freeway network and good general accessibility • Manufacturers wanting to “near-shore” from China to Mexico are hampered from difficulty of business travel to MX during COVID •

After a pause with the onset of COVID, investment deals are do-able and cap rates are back to where they were at the start of the year

• Loans are available at an average of 60 percent LTV, with lenders requiring ample debt service coverage—however, low leverage requires more expensive equity and mezzanine money • Construction costs are escalating, driven far more by rising land prices than rising material and construction labor costs •

DFW Airport is most sought-after sub-market in the Metroplex, but land is in shorter supply, requiring “farther out” sites, which creates need for extending infrastructure; also tenants don’t like to expand to sites too far out because their labor force often rebels against longer commutes

• The “Amazon effect” is driving expansion of distribution warehouse construction to be close to population density for “last mile” deliveries • E-commerce has expanded from 11 percent before COVID to 16 percent and continues to grow; now WalMart with its vast consumer base is rising up to compete with Amazon •

Logistics companies contemplating big distribution facility investments need lots of data analysis as they plan seven to 10 years out, not just for the “big box” but for the robotics, office build out, and other costly expenditures within the building; whether administrative employees will work on-site or from home is another planning consideration

•

Retention/attraction of quality labor is a huge factor in site selection

• Best submarkets in DFW area are Ft. Worth-Alliance; Grand Prairie; Arlington; Garland; Mesquite; S. Dallas; Midlothian; Waxahatchie • Robotics are coming, and are necessary for moving pallets up and down and around in vast 30-foot-high warehouses, but tenants are moving with caution on them due to expense; warehouses are getting larger and larger and are overpowering mere humans to operate them; more tech in warehouses calls for more sophisticated/educated employee base •

E-commerce is predicted to double in next five years, so boom is ongoing; as big box brick and mortar stores close-in to dense population shut

Continued on Page 20>

I N

M E M O R I A M

Gerald D. Hines

PHOTO: ANNIE LEIBOVITZ

1 9 2 5 â&#x20AC;&#x201C; 2 0 2 0

On behalf of the 4,800 employees around the world, we salute our founder, Gerald D. Hines, for his commitment to excellence, creating a culture of peerless integrity, and his enduring legacy and contributions to quality in the built environment.

“Question: can industrial keep up with this boom? DFW is keeping up-it has no topological barriers to expansion, which can go on forever outward from the core cities; land is abundant.” down, the boxes are being repurposed for e-commerce merchandise return centers, mini-distribution centers, and even for “ghost kitchens” for justin-time uber food delivery…“ghost kitchen” is the term for restaurants with kitchens and chefs and no on-site dining or customer parking; new containers are being developed to keep delivered food hot; some “ghost restaurants” man their own delivery fleets to reduce payments to gig

We are Better Together Come Help Guide the Future of Fort Worth

economy drivers; one DFW big box alone will soon have 28 ghost kitchens; uber eats is moving into the business of owning its own ghost kitchens to retain its role in meal delivery • 30 million SF nationally of warehouse/distribution is under development nationwide for Amazon alone •

Question: can industrial keep up with this boom? DFW is keeping up-it has no topological barriers to expansion, which can go on forever outward from the core cities; land is abundant

•

Nationwide retail tenants are up to 40 percent of all warehouse occupancy; the pandemic will supercharge this e-commerce growth

• DFW overall is attracting corporations from California, New Jersey and other states with high taxes and slow development processes; projects in Texas can be approved in weeks or a few months can take years in other states •

There is some movement to tertiary markets such as Tyler, where industrial development tends to attract light manufacturing tenants

The State of Industrial Development

Panelists: Tom Fishman, Hillwood; Art Barkley, Prologis; Bill de la Chapelle, Rubiconv •

Forty percent of current industrial demand is tied to Amazon; close-in sites are vital for last mile delivery; much of Amazon development is built to suit; conversion of old close-in buildings is necessary to get close to consumers

•

Escalating land prices drive costs more than construction labor or materials

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• Buildout costs/ T.I. are up from $45/SF to $75/SF in just few years, due to more sophisticated needs inside the big box, including expanded office space, robotics, etc.; planning is difficult with COVID’s uncertainties

With over 400 members, the Real Estate Council of Greater Fort Worth is THE unified voice for the commercial real estate industry in Tarrant County.

• Contractors who were building in the office and retail sectors are now competing for industrial contracts, keeping prices down •

Working from home and traveling less are trending under COVID; investors who “banked land” before the e-commerce boom are sitting pretty, although land banking can be a risky business; if you own the raw land now for good industrial sites, developers are “coming to you;” site costs have doubled or tripled in some cases

•

North Ft. Worth, formerly referred to laughingly as “out of state” by Dallas developers, is now a hot market

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• Some corporations are moving their headquarters into their big box warehouse; this increases build-out and T.I. costs with cafeterias, break rooms and other employee amenities; also parking requirements can increase

OCTOBER 2020

“DFW market anticipates a strong third and fourth quarter for distribution, as Christmas nears; long-term trends here will smooth out any “bumps in the road” in the meantime, such as election uncertainty; economic and population growth will carry us into the future.” • Interest rates are low and industrial yields are low for now, but better than other yields, and they should improve with future rounds of rent increases; investors and lenders are especially desirous of credit tenants as they acquire industrial for their long-term portfolios; cap rates are at historic lows, as falling cost of capital drives them down; cost of borrowing is as low as it has ever been • Some other markets around the country are showing some softness in industrial, and we are seeing some mild landlord concessions •

•

Suburban cities in the Metroplex seek clean industrial logistics facilities to enhance their tax base; Arlington has seen its budget hurt from overreliance on stadiums and theme park tax revenues, which have been shut down during COVID; in addition clean big boxes do not have big requirements for city services, and smart cities/counties recognize this Lease terms are longer as custom build-out costs increase

• DFW market anticipates a strong third and fourth quarter for distribution, as Christmas nears; long-term trends here will smooth out any “bumps in the road” in the meantime, such as election uncertainty; economic and population growth will carry us into the future

Working with Local Governments to Build Lasting Products

Panelists: Scott Rohrman, 42 Real Estate, LLC; Michael Talley, Denton County; George Curry, JLL; David Witcher, City of Mesquite 22

OCTOBER 2020

• Cities have costs associated with industrial growth, such as extending services to the sites: water, sewer, gas, roads • Cities and counties have incentives to give, but have to balance these against their cost of delivering needed infrastructure • Cities like the jobs that industrial creates, and the expanded tax base, especially if it involves bringing back onshore manufacturing • The strong labor force in the DFW area is a powerful draw to companies looking to relocate; cities and counties sometimes sponsor job fairs • Special amenities supervised by cities and counties include Foreign Trade Zones, TIRZs, Opportunity Zones, tax abatement, and even cash incentives; all of this in anticipation of higher eventual tax base and job creation; property tax cap—where they exist—are attractive to out of state corporations; each city and county has a slightly different “bag of goodies” to entice developers and their tenants • The county economic development officer/council works with the various cities in the counties to ascertain which ones are seeking industrial development, and then that development is facilitated by the county, whose officials often have specialized skills not available in the smaller city governments • Sometimes there is NIMBY opposition to industrial developments, especially if the big box is to house noisy heavy manufacturing with emissions, and may be too close to residential areas; this selective locating of the various kinds of industrial is managed by counties and cities working together with developers and tenants • Ratio of building coverage to land can range from 18 to 40 percent depending on many factors, including number and size of trucking rigs and admin employees on site • Availability of accessible, quality work force also determines where and if industrial development takes place • If an overabundance of spec space comes online all at once, this is considered to be a plus because it offers immediate move-in to companies needing to immediately expand, companies who can’t absorb an 18-month development phase required for ground-up build to suit • County and city development offices strive to streamline the development process, and they compete for good industrial projects; this is a complicated process, involving coordinating many elements, including drainage, road access, utilities, contractors and end users • Industrial growth should remain strong in the DFW area for at least the next five to 10 years

Industrial & innovation: Dallas-based 42 Real Estate digs in to new projects BY BRANDI SMITH

“In the past 20 years, we’ve built about $1 billion worth of industrial. And we’ve developed projects in 26 states, plus Canada.” Scott Rohrman

As an interviewer, it’s tough to talk to 42 Real Estate founder Scott Rohrman and not ask about Deep Ellum, what is now the arts and entertainment neighborhood in east Dallas, but he graciously talked about Deep Ellum, so long as we could discuss his other love: industrial real estate. “Deep Ellum was just a complete departure from what we’d done before,” said Rohrman, adding, “Although urban revitalization is now also part of our DNA.” Though his company’s name is inextricably linked to the reinvigoration of what had been a largely industrial and neglected area into a successful restaurant, bar and venue scene, 42 Real Estate’s foundation is industrial built-to-suit projects. “In the past 20 years, we’ve built about $1 billion worth of industrial,” Rohrman said, “And we’ve developed projects in 26 states, plus Canada.” Before forming 42 Real Estate, Rohrman served as a partner in two separate commercial real estate development companies. He also logged time at brokerage firms The Stratford Group and Fischer & Company after working as a broker at Grubb & Ellis / Henry S. Miller Company, where he started his career. You’re no doubt wondering about the company name. Why 42? Rohrman likes to play coy with the answer. 42RealEstate.com has an entire page dedicated to the explanation of the name, or possible lack thereof. The verdict, really, is yours. Another unique feature of the firm is its approach. Its team is divided into development management, construction management and property management because, you see, the firm does it all. Rohrman says that over the years, people have suggested hiring a construction manager and/or a property manager for his projects as that may be more efficient. Maybe so, he acknowledges, but it would also be less personal. “We walk the streets and we talk to tenants, and we get to know them, their business and what is going on in their lives,” said Rohrman. “For most other property managers, it’s not part of their business model to build relationships with tenants like that, but that’s what we do.”

Because it handles so many of the details, 42 Real Estate clients can focus on its primary business instead of allowing issues such as potential construction overruns, schedules and convoluted entitlements to consume their time and energy. The company’s now using its multifaceted toolbox in a new arena: speculative industrial development. It just purchased 216 acres of industrial property next to the airport in Mesquite, Texas. Accustomed to build-to-suit projects in far-flung cities, Rohrman is looking forward to this new challenge and being able to do it in his hometown is exciting. “Not very many people in DFW realize the extent of our industrial development experience because we have tried to stay under the radar for 20+ years, so much so that we did not even have a website until six months ago. However, now we are adding another chapter to the story of our company,” Rohrman said. “We’re taking our build-to-suit profits and reinvesting into future projects, which will allow us to do both speculative and build-to-suit work.” Continued on Page 41>

OCTOBER 2020

The Houston native chose banking until the Texas industry got deregulated in 1992, which brought in a wave of corporate buyouts. That’s when she decided to jump into real estate.

“Make the most of every interaction. Be present, be intentional and be your authentic self.”

“Women do so well in real estate because women are detailed,” Meyer-Nelson said. “Men think of the big picture, but women are detail oriented, and they get details done. That helps a lot.” Starting The Richland Companies in 1993, she had a leg up on some of her competition: the knowledge of how banking works and what loan officers were looking for in order to approve a proposal.

CRE Superheroes < Continued from Page 12

In real life or the digital world, she stresses authenticity is key. “From kindergarten, to high school, to college, to networking in college and professionally—every interaction, every person you come across in any meeting or networking event will potentially impact your career,” said Marili, who is the first of her family to graduate from high school and college. “Make the most of every interaction. Be present, be intentional and be your authentic self.” The Ceiling Crusher Edna Meyer-Nelson, Houston The Richland Companies - Founder, President & Chief Executive Officer “My grandfather gave me three choices. He said, ‘Either you go into real estate or you go into banking or you become a schoolteacher,’” recalled Edna MeyerNelson.

“I knew how to get money,” said Meyer-Nelson. “I’d been a banker. I wasn't scared of bankers because I knew this: bankers don't make money unless they loan money.” She credits part of her success to that know-how, but also stresses the value of listening to clients. “When you’re talking to someone, they’ll let you know if they prefer free rent, if they want a lower rental rate or if they need more money to do their build-out,” Meyer-Nelson explained. “Take that information and put it in your proposal to them. If you do, you’ll always stay leased up.” Continued on Page 40>

REAL ESTATE AUCTIONS Texas Auctions Oct 7 & 22 All Sell Without Reserve

Pampa Property Open: 11-2pm Friday Sept 25 & Oct 9 PAMPA, TX • 8590 County Road 12 1/2 Industrial site containing 5 Structures with a total of 37,532+/sf on 41.66+/- ac. Auctions: 10am, Thu Oct 22

Pampa, TX

ODESSA, TX • 5348 Interstate 20 0.18+/- ac vacant land Auctions: 1pm, Wed Oct 7 SONORA, TX • 1522 North Service Road Industrial/warehouse w/multiple buildings on 10+/- ac Auctions: 9am, Wed Oct 7

Sonora

Brownfield - 1278 FM 2066

BROWNFIELD, TX • 1278 FM 2066 Industrial on 100+/- ac • 1212 Jeter Street 0.998+/- ac vacant land • 1301 West Webb Industrial on 4.358+/- ac • 6010 Brownfield Hwy 3.27+/- ac vacant land Above properties auction: 4pm, Wed Oct 7 at 1278 FM 2066, Brownfield, TX

Also Auctioning Halliburton Properties in EDMONTON, AB • 5708 54th St NW BROUSSARD, LA • 1016 North Cruse Avenue HAYNESVILLE, LA • On Hudson Street SANDERSVILLE, MS • 181 Claiborne Road BELFIELD, ND • 2927 Highway 85 SW ARTESIA, NM • 15 East Compress Road FARMINGTON, NM • 3250 Southside River Rd

williamsauction.com/halliburton • 800.801.8003 TX JEFFREY MICHAEL ASHBY RE LIC 550021; THOMAS E. BARNES III AUC LIC 6457. 5% BUYER’S PREMIUM.

OCTOBER 2020

2020 Texas Women in Commercial Real Estate

Butler-Cohen Design + Build

New Business and Marketing Manager

Pre-Construction Manager

Jennifer Garaghty (Grewal) P: 714.552.8666 jennifer@butlercohen.com 3200 Southwest Freeway Suite 1575 Houston, TX 77027 www.butlercohen.com

Abigail Soto

P: 713.534.1800 abigail@butlercohen.com 3200 Southwest Freeway Suite 1575 Houston, TX 77027 www.linkedin.com/in/abigail-soto-14926271

I’m a people person, goal orientated, and extremely funny door opener who can walk and talk with the best of them. I humanize our company through marketing and I thrive at connecting the dots to reach decision makers. I went to school for fashion design yet hard hats won out.

Pre-Construction Manager experienced in collaborating with designers, construction management teams, and subcontractors in evaluating all documentation associated with the designbuild process including commercial, justice, and educational projects. My attention to detail is reflected in my thorough cost estimates. I enjoy performing calculations and research to develop cost-reducing methods, managing the bidding process, and forming strong relationships with all parties involved.

Leaders in full-service construction serving the educational, industrial, commercial and justice markets. When you partner with Butler-Cohen, you’ll experience design and construction the way it’s meant to be.

What advice would you give to your younger self?

Do you have a favorite quote or saying/What advice would you give to your younger self?

If you do something, do it well. No matter what I’m working on or who I am meeting with, I give every situation the best of me. I don’t want my name associated with something that is less than stellar.

Name a charity or cause that you are passionate about:

My cousin was adopted from an orphanage in Panama called Hogar Malambo. It’s been a special place to go back and visit throughout the years. https://www.hogarmalambo.org

Name a charity or cause that you are passionate about:

Supporting the Gulf Coast Regional Blood Center is a selfless way to give back to our community. Feel free to visit www.giveblood.org to find out how you can help.

CenterPoint – Houston Regional Office

Drake Commercial Group

Senior Vice President, Asset Management

Founder

Danielle Radtke

P: 832.431.3097 dradtke@centerpoint.com 800 Town and Country Blvd., Suite 500 Houston, TX 77024 www.centerpoint.com Danielle is a 21-year veteran at CenterPoint. She is responsible for managing CenterPoint’s asset portfolio and executing the Company’s investment strategy in the Central Region. She oversees and manages a team of fourteen people that handle the property operations for 192+ properties. She also oversees leasing for 23 Million SF of industrial assets. CenterPoint is an industrial real estate company made up of dedicated thinkers, innovators and leaders with the creativity and know-how to tackle the industry’s toughest challenges. We’re proud that nearly 50% of all CenterPoint Properties’ employees are women and take great pride in promoting equality, leadership and personal growth for everyone.

Do you have a favorite quote or saying?

“Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.” - Johann Wolfgang von Goethe

Name a charity or cause that you are passionate about:

Young Life (www.younglife.org) Young Life is a non-profit Christian ministry that reaches out to middle school, high school and college aged kids in all 50 states of the U.S. as well as 90 countries around the world. They are funded through donations from individuals, foundations as well as businesses.

“Know what you don’t know”. Ask questions, leaders have the confidence to ask questions and don’t let what they don’t know keep them from going forward successfully.

OCTOBER 2020

Deborah Bauer

P: 210.402.6363 | F: 210.402.6767 deborah@drakecommercial.com 4630 N Loop 1604 W Suite 510 San Antonio, TX 78249 www.drakecommercial.com Founded Drake Commercial Group in 1992 as one of a few women in a male dominated world of Commercial Real Estate large land transactions. Deborah has taken the business to one of the most respected commercial companies representing some of the largest land, retail and multi-family sites. She is the recipient of numerous awards including the Crew National Impact AwardEntrepreneurial Spirit. Drake Commercial Group represents investors and developers for retail, office, multi-family and large master planned developments. Deborah has won several awards including Best in Commercial Real Estate, Best Land Deal and Best Office Lease.

What advice would you give to your younger self?

My mother was my role model for how to be a lady in everything you do. She treated everyone with compassion and respect. I strive everyday to be like her. She taught me the love of family and putting God first in your life.

Name a charity or cause that you are passionate about:

As one of the founders, Women Give Back is a non-profit donating 100% of funds to charity. Through fundraising campaigns, WGB has reinvested thousands of dollars back into San Antonio. https://womengiveback.com/

Emersons Commercial Real Estate

Hartman Income REIT

Managing Partner

Regional Director of Property Management - San Antonio

Karen Simon

P: 817.832.4646 ksimon@emersoscre.com 4200 S. Hulen Street. Suite 412 Fort Worth, TX 76109 www.emersonscre.com Karen L. Simon is the Managing Partner of the Emersons Commercial Real Estate office located in Fort Worth, Texas. Karen specializes in office, retail industrial and land sectors in both leasing and sales and is responsible for marketing activities west of Dallas County. Ms. Simon has completed over 900+ transactions encompassing thousands of acres of land and 6,000,000 square feet of building area. Karen with over 30 years of brokerage experience was the first woman in Tarrant County to practice industrial real estate and the first female broker to be named the highest industrial producer in the Dallas/Fort Worth area during her years with Henry S. Miller. Emersons Commercial Real Estate Co. manages and or leases over 7M square feet in DFW. Its partners bring a combined 100 years of experience to the management of our client portfolio. Through our ownership in 1045, we are active throughout the country and manage more than 100 million square feet. Our proactive approach to management seeks to maximize NOI through operating efficiencies, and to preserve and enhance asset value, while maintaining strong tenant relations on behalf of our clients.

What advice would you give to your younger self?

Always make an effort to research and be familiar with the properties and area that you are focusing on. Knowledge is power. Be prepared and be courteous.

Name a charity or cause that you are passionate about:

Amy R. Garcia

P: 210.714.5220 agarcia@hi-reit.com 613 NW Loop 410, Suite 560 San Antonio, TX 78216 www.hi-reit.com I am an experienced Regional Director with a demonstrated history of working in the commercial real estate industry. Skilled in Commercial Leasing, Working with Landlords, Construction Management, Tenant Retention, and Property Management. For more than 35 years, Hartman has delivered commercial space for lease with an unparalleled customer experience and a personal touch in the three largest markets in Texas: Houston, Dallas and San Antonio.

Do you have a favorite quote or saying?

The only way to do GREAT work is to LOVE what you do!

Name a charity or cause that you are passionate about: Ronald McDonald House Charities - San Antonio www.rmhcsanantonio.org

I am a big supporter of the Jewel Charity Ball whose primary function is to raise money for Cooks children’s hospital. No child will be untreated because of the lack of money to pay - Uncompensated care is key.

Hartman Income REIT

Vice President of Leasing- Houston/San Antonio

Chief Operating Officer

Kacie Skeen-Kinnamon P: 832.655.1196 kskeen@hi-reit.com 2909 Hillcroft Suite 420 Houston, TX 77057 www.hi-reit.com

Kimberly Strickland P: 713.467.2222 kstrickland@hi-reit.com 2909 Hillcroft Suite 420 Houston, TX 77057 www.hi-reit.com

Kacie Skeen-Kinnamon, graduated from University of HoustonDowntown Magna Cum Laude. She began her real estate career in property management managing over 1 million square feet. She then transitioned into Leasing and has consistently been a Top Producer since 2016. She worked her way up to Vice President and currently leases a portfolio of over 1.2 million square feet in Houston and San Antonio while managing her sales team.

Kimberly Strickland serves Hartman as Chief Operations Officer. Mrs. Strickland’s responsibilities include oversight of property management, marketing, office services and human resources encompassing over 100 employees, more than 60 commercial properties, and eight million square feet.

For more than 35 years, Hartman has delivered commercial space for lease with an unparalleled customer experience and a personal touch in the three largest markets in Texas: Houston, Dallas and San Antonio.

What advice would you give to your younger self / Do you have a favorite quote or saying? “If you set your goals ridiculously high and it’s a failure, you will fail above eyeryone else’s success.” -James Cameron. Aim high and do whatever it takes.

Name a charity or cause that you are passionate about:

Ever since 2015 when her mother survived a massive heart attack, Kacie has been an advocate, volunteer, and donor for The Heart Foundation, theheartfoundation.org. She also is involved and passionate about her church RPC, riverpointe.org.

Do you have a favorite quote or saying?

“Do not let kindness and truth leave you; Bind them around your neck, Write them on the tablet of your heart.” - Proverbs 3:3

Name a charity or cause that you are passionate about:

I have a passion for helping animals and finding them the best homes. Houston Friends 4 Life https://friends4life.org/

OCTOBER 2020

Hartman Income REIT

Lane Property Tax Advocates

Regional Director of Property Management Dallas

Vice President - Consulting Services

Lisa Tomich

P: 713.467.2222 ltomich@hi-reit.com 2909 Hillcroft Suite 420 Houston, TX 77057 www.hi-reit.com Lisa Tomich serves as the Regional Director of Property Management for Hartman Income REIT’s Dallas portfolio. Overseeing the management operations of 17 office, retail and flex buildings totaling over 2.6 million square feet, she has been with the Company for 5 years. She leads a high performing team of 40+ Property Management professionals throughout Dallas, Arlington and Irving. For more than 35 years, Hartman has delivered commercial space for lease with an unparalleled customer experience and a personal touch in the three largest markets in Texas: Houston, Dallas and San Antonio.

What advice would you give to your younger self ?

Your life will be composed of many chapters. Learn from each of them, take away the positives and be ok with starting a new one.

Name a charity or cause that you are passionate about:

The Salvation Army - https://www.salvationarmyusa.org Treasured Friends Animal Rescue - http://www.treasuredfriendsrescue.org

P: 832.358.2000 | F: 832.358.2055 rhonda@lanepropertytax.com 8990 Hempstead Highway, Suite 100 Houston, TX 77008 https://lanepropertytax.com/ Rhonda Jones is a licensed Realtor, holds a Property Tax Consultant license and leads business development efforts for Lane Property Tax Advocates. In her 20+ years in the real estate industry, she has experience with property tax protest, property management, renovations and being a Realtor. Lane Property Tax Advocates specializes in helping commercial property owners reduce their tax burden. Our experienced team understands clients’ needs, develops plans and delivers tailored services to achieve maximum property tax savings.

Do you have a favorite quote or saying?

“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” -Maya Angelou

Name a charity or cause that you are passionate about:

Treasured Vessels Foundation - treasuredvesselsfoundation.org The after care and dedication Alicia Bush puts into the healing and mental health of these girls who were exploited in sex trafficking is truly a gift from God.

Method Architecture

Netco Investments, Inc.

Associate Principal

Real Estate Manager

P: 713.842.7500 jrye@methodarchitecture.com 2118 Lamar Street, Suite 200 Houston, TX 78216 www.methodarchitecture.com

P: 972.867.1100 Ext 25 anna@netcoinvestments.com 1800 Preston Park Blvd. Suite 104 Plano, TX 75093 www.netcoinvestments.com

Jackie Rye, AIA

Jackie Rye is an Associate Principal at Method Architecture. She oversees one of Method’s ground-up buildings teams and manages some of the firm’s largest and most complex projects. From office and industrial to retail and hospitality, Jackie manages a breadth of project types from start to finish. Method Architecture is an ego-free architecture firm specializing in ground-up and tenant interiors projects for industrial, office, retail, hospitality, breweries and distilleries, and public clients. Method has offices in Houston, Austin, Dallas, and San Antonio.

Do you have a favorite quote or saying?

My favorite quote is “If at first you don’t succeed, fix your ponytail, and try again.”

Name a charity or cause that you are passionate about:

Big Brothers Big Sisters https://www.bbbs.org makes meaningful, monitored matches between adult volunteers and children in order to develop positive relationships that will help children realize their potential and strengthen their community.

Rhonda Reynolds Jones

OCTOBER 2020

Anna Rodriguez

Anna began her career Anna began her 20 year career in Commercial Real Estate with companies such as Bradford Commercial, Fobare Commercial, Dalfen Corporation, Hudson Peters Commercial and Tekin & Associates. Her 10 year tenure at Bradford Commercial included Lease Administration providing support for the Industrial Brokerage team, Property Management of several Industrial portfolios, Marketing and Leasing of several property listings. Her transactions include a 15,000 sq.ft. lease of industrial warehouse to Xtreme Wheel & Tires and is working on a CPM designation through IREM. Established in 2002, NetCo Investments, Inc. is a privately held commercial real estate investment company focused on acquiring, redeveloping and repositioning shopping centers and vacant retail buildings. Whether the asset is in need of aggressive leasing, better management or redevelopment, NetCo Investments is experienced in each of these areas. Our hands-on management style ensures the quality, value, and a firm commitment to each investor, lender, tenant, and community in which we invest.

Do you have a favorite quote or saying? I can do all things through Christ who strengthens me!

Name a charity or cause that you are passionate about:

Brighter Tomorrow’s Women’s Shetler and any organization that helps battered women.

Prologis

Rastegar Property Company

Real Estate and Customer Experience, Regional VP

Chief Operations Officer

Kate Rutherford

P: 847.420.8321 krutherf@prologis.com 2021 McKinney Ave, Suite 1050 Dallas, TX 75201 Kate Rutherford is Real Estate and Customer Experience, Regional VP in the Dallas office for Prologis. In this capacity, she is responsible for the property and customer account management in the Dallas, Houston, San Antonio, Austin and Nashville markets. Previously, Kate was Leasing Manager and Senior Property Manager in the Chicago office for Prologis. Prior to joining Prologis, Kate worked for Colliers International and Trammell Crow Company, specializing in asset and property management. Kate is an active member of CREW, IWIRE and the National Association of Industrial and Office Properties (NAIOP). She holds a Bachelor of Science degree from Towson University and is currently pursuing the CCIM designation.

Kim Langers

P: 512.729.7777 connect@rastegarproperty.com 1705 S. Capital of Texas Hwy, Suite 400 Austin, TX 78746 rastegarproperty.com As Chief Operations Officer of Rastegar Property Company, Kim oversees and coordinates the activities of the asset management and development team, marketing, technology, business strategy, and operations. She is instrumental in fostering the growth of the company and building a team that takes it to the next level. Rastegar Property Company is a technology-enabled private real estate investment firm focused on value-add and development in all asset classes throughout Austin and the southwest United States.

Do you have a favorite quote or saying?

“It’s better to do nothing with your money than something you don’t understand.” - Suze Orman

Name a charity or cause that you are passionate about:

Mothers Against Drunk Driving (MADD) is one of my favorite charities because it has been effective in changing laws and given a powerful voice to the victims.

Rastegar Property Company

Sandspoint Property, Ltd.

Kellie Rastegar

Alicia Church

P: 512.729.7777 connect@rastegarproperty.com 1705 S. Capital of Texas Hwy, Suite 400 Austin, TX 78746 rastegarproperty.com

P: 713.219.1301 abchurch@swcontrols.com

Co-founder & Creative Director

As Co-founder & Creative Director of Rastegar Property Company, Kellie specializes in luxury, residential, commercial, and new development of real estate. Her passions include philanthropy and arts & design, and her customer service, communications & hospitality background helps Rastegar deliver top services to clients, ensuring every detail runs smoothly, every time. Rastegar Property Company is a technology-enabled private real estate investment firm focused on value-add and development in all asset classes throughout Austin and the southwest United States.

Do you have a favorite quote or saying?

“Everything you can imagine is real.” - Pablo Picasso

Name a charity or cause that you are passionate about:

The Ocean Cleanup Project is something that I am very passionate about because of my strong commitment to environmental consciousness and best practices in conservation. The Ocean Cleanup is on a mission to developing advanced technologies to rid the world’s oceans from plastic pollution. www.theoceancleanup.com

Property Manager

6720 Sands Point Dr. Suite 204 Houston, TX 77074 LoopNet - https://listingmanager.costar.com/ listing/4022187 I’ve been in Property Management business for 20 years maintaining Office, Retail and Warehouse spaces with family members who have their Real Estate Broker’s license. I work hand in hand with Contractors, Roofer and Architects on our remodelings. We are a family run business. In our Office building we are owner users with long term Tenants. Our business is diversified with Office, Retail and Warehouse spaces in Houston and Dallas. Our properties are renovated and remodeled to maintain a quality of good standard.

What advice would you give to your younger self/Do you have a favorite quote or saying?

All Tenants want something different! Be Flexible. “The shoe that fits one person pinches another; there is no recipe for living that suits all cases.” by Carl Jung

Name a charity or cause that you are passionate about:

Houston SPCA, NPR-Nat’l Public Radio, Wounded Warriors, World Wild Life Fund Disable Veterans, Meals on Wheels

OCTOBER 2020

Strongtower Commercial Group

Osenbaugh and Associates

Principal, MBA

Owner

Dawn J. Brewer

Lynny Osenbaugh, MAI,CCIM

P: 281.733.4077 dawn@strongtowercommercial.com 7717 Louetta Rd Ste. 12041 Spring, TX 77391 strongtowercommercial.com Accomplished Professional with 15+ years of experience in Commercial & Residential Real Estate. Focused individual, proficient in Client Relationship Management, Competitive Analysis, and Contract Negotiation in competitive markets. High level of integrity and dedication to company objectives. Strongtower Commercial Group, the Premier Real Estate Investment, Brokerage and Management firm in Texas. We specialize in creating structured transactions, and establishing relationships that last by building trust. We work diligently to understand the needs of our clients, in order to achieve the results they desire.

What advice would you give to your younger self?

Confess your Trust; Command your Soul - Remain focused on the promises of God, always Trust in The Lord.

P: 713.682.0695 F: 713.682.0698 losenbaugh@gmail.com P.O. Box 55769 Houston, TX 77055 www.osenbaughandassociates.com Ms. Osenbaugh is a TX real estate broker, real estate appraiser and qualified expert witness who has testified in condemnation cases involving right of ways, pipelines easements, bankruptcy, taxes, partial interests, construction defects, environmental, and inverse condemnation. Osenbaugh and Associates is a Texas based real estate company specializing in appraisal, brokerage, consulting and litigation support. Our team is well qualified to assist clients in all property types including office, industrial, retail, multi-family, tax credit housing, land, billboards, energy/transportation/pipeline corridors, salt domes, as well as unique asset classes.

Do you have a favorite quote or saying?

Do what you love and you will never work a day in your life.

Name a charity or cause that you are passionate about: CREW Foundation

Name a charity or cause that you are passionate about: B’s Girls Foundation https://bgirlfoundation.com/

SVN Dunn Commercial

Transwestern

Vice President

Courtney Dunn, CCIM P: 972.998.2361 Courtney.dunn@svn.com 1202 Corporate Drive West Arlington, TX 76006 www.dunncommercial.com Courtney Dunn, CCIM serves as the Vice President of SVN Dunn Commercial where she facilitates the acquisition, disposition, and leasing of industrial & office properties in DFW. Courtney currently serves on the board of the North Texas CCIM Chapter and is an active member of the Dallas Junior League. SVN Dunn Commercial, is a full service commercial real estate brokerage firm. We provide commercial real estate services to large corporations, middle market businesses and individual entrepreneurial investors.

Do you have a favorite quote or saying?

“The secret of change is to focus all of your energy not on the old, but on building the new.” Socrates

Name a charity or cause that you are passionate about:

Junior League of Dallas https://www.jld.net/ The Junior League of Dallas is an organization of women committed to promoting voluntarism, developing the potential of women and improving the community through the effective action and leadership of trained volunteers.

Stephanie Swanson P: 713.468.4928 stephanie.swanson@transwestern.com 820 Gessner, Suite 200 Houston, TX 77024 www.transwestern.com Stephanie oversees an office tower portfolio in the greater Houston area and directs property management operations for the Office Management Group. She is experienced in all aspects of real estate management, including property management, fiscal management and construction supervision of commercial high-rise, retail and industrial portfolios for institutional and private equity clients. Stephanie has served as the 2018 IREM Houston Chapter President, is a member of CREW and BOMA. She is currently serving on the Education and Products Committee for 2020 IREM National. Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Asset Services, Occupier Solutions, Capital Markets and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 33 U.S. offices and assists clients from more than 219 offices in 37 countries through strategic alliances with France-based BNP Paribas Real Estate and Canada-based Devencore. Experience Extraordinary at transwestern. com and @Transwestern.

What advice would you give to your younger self?

The advice I would give my younger self would be to relax and take time for yourself. Do not become self absorbed within your position, but control the position by doing your best and allow yourself to let go when it is time to go home. Focus on work-life balance.

Name a charity or cause that you are passionate about:

Dress for Success Houston is a charity that I support and find very important for women that need assistance. www.dfshouston.org “One woman, one suit, one job can change the world!” - quote from Dress For Success

OCTOBER 2020

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Worth & Associates

President of Operations and Property Management

Vice President of Property Management

Jordan Worth Arriaga

P: 210.822.5220 | F: 210.822.5224 jordana@worthsa.com 7373 Broadway, Suite 201 San Antonio, TX 78209 www.worthsa.com Jordan Worth Arriaga serves as the President of Operations and Property Management for Worth & Associates. With a strong background in commercial real estate investment banking, she is responsible for originating commercial loans for Worth & Associates and its affiliates in excess of $400 million. She is also responsible for overseeing a property management staff that manages over 3 million square feet of commercial property in and around San Antonio. Worth & Associates is a locally owned San Antonio commercial real estate development, investment and brokerage firm that operates a stable portfolio of more than 3 million square feet of commercial real estate properties owned and managed internally.

Do you have a favorite quote or saying?

“Without dreams and goals there is no living, only merely existing, and that is not why we are here.” – Mark Twain

Name a charity or cause that you are passionate about:

Make-A-Wish Foundation (www.wish.org.) The Make-A-Wish foundation makes dreams a reality and gives children the spark to believe that anything is possible and the strength to fight harder against their illness.

Worth & Associates

Elisabeth Rose Property Manager

P: 210.822.5220 | F: 210.822.5224 elisabethr@worthsa.com 2722 W. Bitters Road San Antonio, TX 78248 www.worthsa.com Elisabeth is a Property Manager for Worth & Associates Property Management. She manages a portfolio of 340,000 square feet of Class A Office and Flex Space in San Antonio, and leverages her experience in budget preparation, financial reporting and operations oversight to maximize profits for her Owners and deliver fantastic customer service to her Tenants. Worth & Associates is a locally owned San Antonio commercial real estate development, investment and brokerage firm that operates a stable portfolio of more than 3 million square feet of commercial real estate properties owned and managed internally.

Do you have a favorite quote or saying?

“Never let success get to your head and never let failure get to your heart.” - Ziad K. Abdelnour

Name a charity or cause that you are passionate about:

Sandra Wilson

P: 210.377.0996 | F: 210.822.5224 sandraw@worthsa.com 10101 Reunion Place, Suite 170 San Antonio, TX 78216 www.worthsa.com Sandra Wilson, Vice President Property Management for Worth & Associates Property Management, is responsible for providing leadership and motivation to promote a positive, growth-oriented environment for all property management staff as well as managing commercial properties in and around San Antonio and the south Texas region. Worth & Associates is a locally owned San Antonio commercial real estate development, investment and brokerage firm that operates a stable portfolio of more than 3 million square feet of commercial real estate properties owned and managed internally.

Do you have a favorite quote or saying?

“I am no more, I am no less, I am enough.” By Phileena Heuertz

Name a charity or cause that you are passionate about:

St Jude Children’s Research Hospital (stjude.org) Children and their families are never turned away but they are always given the gift of hope at no monetary cost.

Getting Kenect’ed: How this multifamily concept ushered in evolution BY BRANDI SMITH

Americans are spending more time at home than they ever have before as it becomes the hub for work, school and most social activities during the COVID-19 pandemic. “If households need to think about working from home and caring for kids, how would shared space be repurposed?” wondered Dr. Victor Calanog, Moody’s Analytics head of CRE economics. “Should individual storage units now be offered as a perk in apartment communities?” Those questions for the multifamily sector, posed in March, are part of a discussion of the pandemic’s long-term effects and how the industry will evolve. Some parts of it were already starting that process, however. For the minds behind Kenect, that live/work experience was an obvious next step. “We saw businesses shifting toward a more flexible/remote work schedule and designed our properties to include a coworking space for our residents as well as our Kenect members,” said Rajen Shastri, founder and CEO of Akara Partners, the development firm behind the Kenect concept. “The flexibility of

OCTOBER 2020

“If households need to think about working from home and caring for kids, how would shared space be repurposed?” working from home is great, but people still like having a place to go outside the home where they can connect with like-minded people.” Flexibility is key in all of this, Kenect properties offer a social club with coworking space, pools and gyms, as well as restaurants, bars and shops with residences above. Members can live on site or pay a membership fee to

“An additional benefit to our coworking space is the amenities that a membership will provide. For a competitive cost to a traditional coworking space, our members receive access to our pool, gym social spaces and Kenect Exclusive Experiences (KEE).” access the coworking space, which includes desks, conference rooms, high-speed technology and more, as well as enjoy the gym, pool and curated events.

feet of common and dedicated workspace. Located between Vanderbilt University and Music Row, it offers city dwellers a cost-effective option for a live/work space.

“An additional benefit to our coworking space is the amenities that a membership will provide,” Shastri said. “For a competitive cost to a traditional coworking space, our members receive access to our pool, gym social spaces and Kenect Exclusive Experiences (KEE).”

“This is something that has always been a part of our ethos, but is even more important now considering how the pandemic has impacted the workforce,” said Shastri.

One of its newest locations, Kenect Nashville boasts a 20-story, 21,000-square-foot apartment platform with 420 residential units, as well as more than 16,000 square 36

OCTOBER 2020

Let’s rewind to early March when the multifamily sector was booming. Most markets were eating up supply, keeping the overall vacancy rate below the longterm average of 5.1 percent, according to CBRE.

“As a part of the development business, we track new supply and how that impacts new projects from absorption rate to rent growth,” Shastri said. “From 2017 to 2019, we had a lot of supply in most markets, which resulted in flat rent growth due to apartments giving concessions in order to move product. However, at the end of 2019 leading into the beginning of 2020, we began to see supply decrease and rent growth increase, which leads to a healthier multifamily market.”

created experiences for our residents and members on site, but the pandemic pushed us to create a community online and I have been excited to see how our property teams have adapted.”

Then the pandemic hit and the economy hit pause. As jobless numbers surged, worries about delinquencies and defaults rose along with them.

“We have continued to provide these free virtual experiences on our social media pages as a precursor of what’s to come as it pertains to our KEE, which will be available to both Kenect members and residents around the country,” Shastri said.

“There have been higher delinquency rates in certain areas, but I think we have been surprised by how resilient the multifamily industry has been since the pandemic started and I think that resiliency is a testament to how well the industry has responded,” Shastri said. Part of that response revolves around how properties engaged with residents and potential residents. The virus and CDC recommendations meant that companies needed to find workaround measures for traditional leasing activities, such as in-person tours. At the time, Akara was pre-leasing its Kenect Nashville and Kenect Phoenix properties. “We had to think through what that looks like virtually. We created more engagement and opportunities to connect with initiatives such as Alive at 5, virtual tours and Q&As with our teams,” said Shastri. “In the past, we have

In doing so, Kenect provided new opportunities for residents and members to engage virtually, but also for musicians, mixologists, dance studios and chefs in each market to reach a whole new audience.

In a way, Kenect is the connection between the traditional multifamily approach and what lies ahead. Though the pandemic ushered in a quick response, Shastri said he expects some of those changes to stick around, bolstering the multifamily sector. “I think individuals will continue to embrace the flexibility of renting, creating strong demand for multifamily real estate,” said Shastri. “Additionally, this resiliency will lead to people continuing to invest in multifamily real estate, so that we can keep up with the demand and continue to develop properties that push the boundaries and focus on the lifestyles of our residents and members.”

City Management OCTOBER 2020

Ray's Buzz

REDNews’ Texas Capital Markets Virtual Summit BY RAY HANKAMER

Emerging Trends in Logistics and Commercial Real Estate

Moderator: Reid Wilson, Wilson Cribbs, Goren Panelists: Lillian Fahr, Wells Fargo; Rhonda Sands, Veritex Bank; Rob LaRue, Grandbridge •

•

Medical office is attractive to lenders in this market

•

Permanent loans are now advertised online by conventional/traditional lenders, and by non-conventional ones; life companies are sometimes requiring 6-month debt service escrow reserves up front at closing; 60 to 65 percent LTV permanent loans with non-recourse are still being made, at 2.5 to 4 percent interest rates, provided the sponsorship is very strong; financing is shifting back to normal after the initial first shock of the pandemic in the early spring; there is a lot of capital out there seeking yield, now that lenders are seeing a lot fewer delinquencies than originally anticipated

We can’t be angry about the COVID pandemic and its interruptions of our business lives, and we have to accept where we are and move forward; some sectors are down, some are flat, and some are way up

• The multifamily and industrial sectors for example are way up, and are very attractive to lenders, although underwriting is more careful and conservative than before; some trophy office buildings are able to secure financing as well; lower LTVs, some non-recourse loans still, but also loans with initial recourse that burns off as the project reaches stabilization; some lenders prefer Texas loans •

that are under heavy stress; debt service coverage ratios are ranging from 1.25 to 1.30

There are lenders in the market still willing to look at all property types, and now that many have worked through their forbearance requests from earlier in the year, they are looking to put out money through new builds and acquisitions and refinancing…although much more conservatively than pre-COVID; new development loans tend to favor multifamily; some of the big national banks have dropped out of the construction loan market Loans in the retail sector tend to favor grocer-anchored centers, although LTV may be 50 to 65 percent, down from pre-COVID 70 percent range; lenders favor entertaining loan requests from established borrowercustomers

• Local and regional community banks are looking for openings to move in to capture borrowers for whom big banks’ requirements are now too restrictive; community bank loans are sometimes closed to pre-payment in first two years, or pre-payable with a penalty • Specialized new build projects such as over-55, high-end multifamily and workforce housing for mid-income tenants are being financed • These are unprecedented times BUT, development has not stalled like it did in ’08-’09, although it has slowed a bit • Interest rates start in the low 3 percent range, with 3-5-7 year terms preferred by some banks, i.e. shorter loans; banks are really digging down on borrowers’ portfolios when they contain properties in sectors 38

OCTOBER 2020

• Debt funds are considered by many as lenders of last resort, but there is still demand for their deals, although they can charge up to double-digit rates with 1 to 3 points on the front end; the pandemic has weeded out a lot of debt funds, however; “loan to own” is a term sometimes applied to this lender category • Credit unions are doing deals, often non-recourse and similar to life companies in their loan structures • Some hospitality loans are being done, but property and borrower must have an exceptional story • CMBS lenders are still active, although some borrowers avoid them because of the difficulty of any loan modification once these loans are in place; the CMBS servicer has a first fiduciary duty to the investor and not the borrower; but CMBS lenders are the only ones who would consider an interest only loan or 30 year amortization at 75 percent LTV; “love to hate” CMBS: attractive pricing with inflexibility; CMBS lending pools are shrinking and many lenders in this sector have left the market • The Federal Reserve’s position on keeping interest rates low for a long time in the future is definitely good for commercial real estate!

Commercial Real Estate Equity Investor Requirements & Investment Deal Flow

Moderator: Ed Nwokedi Panelists: Ari Rastegar, Rastegar Property Company; Dalton Skach, GoldGate; Jonathan Paine, Walker & Dunlop •

Churchill was quoted: “Never let a good crisis go to waste”…

• In multifamily, rent collections remain high: 92 to 99 percent; Fed financing smoothed over the initial shock of the pandemic, and now employment is returning • “This is the greatest buying opportunity since 1986;” in Manhattan vacant apartments have gone from 4,200 to 15,000 almost overnight; people—and investors—are rapidly moving from high-tax states to lowtax states, such as California to Texas and New York to Florida, although when the dust settles from COVID, many may go back; people are more price/value conscious than ever • Austin has become the tenth-largest city in the U.S., and has recently surpassed San Jose in size • Capital markets are still wary and cautious, but all categories of lenders are getting back into the game • Unique/classic properties are starting to be available for purchase, offand on-market, but not necessarily at distressed prices

• Block chain/crypto currency is beginning to offer an alternative to conventional financing, while conventional equity capital providers are coming more aggressively back into the market; various crypto currency products offer fractional ownership in commercial real estate, and the possibility to trade fractional shares in and out of various real estate deals as if they were stock—the investor does not have to wait years down the road to get out of his equity investment as in conventional cash equity + loan financing, and investor can receive dividends in crypto currency which he can covert to cash; this new vehicle appeals to young investors who do not like to be locked in for long investment periods; crypto is gaining a place in the capital stack • In Houston there has been some disruption and it may continue in certain areas, but overall our low regulatory structure is attractive to investors, who are looking mid- and long-term down the road at rental and occupancy growth; markets such as Nashville, Raleigh, Atlanta and Denver are immediately more attractive right now than Houston, Continued on Page 42>

OCTOBER 2020

Jordan Wade is the Youngest Member of Transwestern’s Board of Directors

SCOOP 2

Transwestern Real Estate Services (TRS) has promoted Jordan Wade to senior vice president for the occupier solutions team based in Dallas. Wade provides leasing and tenant advisory services to owners and tenants across the Unites States. “Jordan has established a passion in cultivating trusted relationships with his clients and colleagues around the country,” said Paul Wittorf, executive managing director and market leader for Transwestern’s North Texas operations. “He puts the needs of his clients first and is constantly developing his acumen to better serve their needs. His future is bright at Transwestern.” At age 30, Wade is the youngest member of Transwestern’s board of directors. Since joining the firm in 2014, he has been a servant leader for the Dallas chapter of the Transwestern Young Professionals group and has been recognized as one of the top producers for the Dallas office. In his expanded role, Wade will continue to help elevate the occupier solutions group while leveraging the resources of the firm to serve local and national clients.

“I’m humbled for this new position and excited to continue working with the incredible people in our office,” said Wade. “I’ve been fortunate to be surrounded by extremely smart and passionate people here at Transwestern, and the deep knowledge I’ve learned has been invaluable to me and my clients.”

What a great time speed networking for BOMA Fort Worth's real estate & Allied members at Petroleum Club of Fort Worth.

YPF Q3 NTCAR Zoom Event - Prospecting and Managing Relationships During COVID-19.

IREM Houston FutureLeaderFriday shining bright on Raven Livingston, Real Estate Service Administrator, with CBRE.

Women of Houston BOMA had a blast at Paint 'n Pour, our virtual paint class with Pinot's Palette!

Currently, Wade handles a real estate portfolio for clients that includes more than 150 domestic and international locations. In one of his most notable transactions this year, Wade led the 160,000-square-foot relocation of Heritage Auctions’ global headquarters. In development for more than a year, the move was the most significant expansion in the company’s history. Wade’s outstanding work ethic and superior results have earned him recognition both internally and externally. He has been honored with the Matt Didyk Legendary Spirit Award for Transwestern’s Central region, and he received both the national and regional Rising Star awards. OCTOBER 2020

CRE Superheroes < Continued from Page 24

Recognizing how far women have come since she started in the industry, she said she prioritizes reaching out to young women who are interested in a CRE career. “I speak at the University of Houston and Rice University on various occasions, but mentoring is important,” said Meyer-Nelson, who also has at least one student work in her office during the year. “I think that being able to mentor younger people has made a big difference in my life and the company’s innovative ideas for the future.” The Banking Boss Rhonda J. Sands, Houston Veritex Community Bank - Executive Vice President

leaders,” Sands said. “What has changed is the ability for women to influence policies and procedures even if they don’t have the title. I think that is a good thing.” She suggested women interested in CRE develop skills that allow their suggestions and opinions to be heard, which may include knowing which battles to pick. “If you don’t know the answer, don’t fake it,” said Sands. “It is much better to give the right answer than a fast one.” That taps into one of the qualities she said is most important to have a successful career in CRE: integrity. “That is one thing that someone cannot take away. You don’t lose integrity, you give it away,” Sands said, adding that humility and relatability are also assets.

“When I started, some deals were structured on the back of a cocktail napkin,” said Rhonda Sands, executive vice president of Veritex Community Bank. “Now formal term sheets can be up to 100 pages based on the complexity of a deal.”

“Remember that no one is successful by themselves. I have been successful in building long-term relationships with all levels of staffing at prospects, clients and center of influences which leads to a broad and deep network.”

That’s not the only thing that she has watched evolve in the more than 30 years since she started working in commercial real estate.

A network is one you should start building early, she encouraged, along with an education about the market and each client or project.

“There are more women in the industry, however there are still few women

Fort Bend County - Spur 10 / Hwy 90 / Hwy 59 / I-69 / Hwy 36 Industrial / Warehouse / Distribution / Commercial / Development Sites 1. 94 or 188 Acres - The Corner of Randon School & Daily Road. Great for industrial user or developer. Close to Hwy 59 & Spur 10. $18,000 per acre

2 1 3

2. 80 Acres - Randon Dyer Road. Well located @ Spur 10 & Hwy 90, great access, across from CNG station. Other activity in the area. $2,999,999 $2,880,000 3. 4.3 Acres - 3715 Southwest Freeway. Major Hwy Frontage on 59! Truck stop, hotel, strip center, quick service restaurant. Excellent development opportunity. $1,823,200 4. 30 Acres - Highway 36 hard corner! Hot spot for investors & near future development. Well located for many uses. Needville area. $1,399,999

4 Seth Showalter, Broker

call / text 713-269-4908

Seth@FirstWarrantyRealty.com 42

OCTOBER 2020

5. 37.5 Acres - 8639 FM 2759. Growing area near FM 762 & Crabb River Road (99). Excellent investment/development opportunity near Greatwood & Royal Lakes. $1,299,999 $999,999 6. 1.3 Acres - Hard Corner Hwy 59 & Reading Road. Brazos Town Center Ground Lease. • Owner Financing • Motivated Sellers

42 Real Estate < Continued from Page 23

42 Real Estate has worked with the City of Mesquite previously, having built a 350,000-square-foot facility there for FedEx on the old Big Town Mall site. “The city is very proactive and has a really great staff. The Mayor, the City Manager and the City Council are focused on growing for the future, and Mesquite has a workforce of highly educated, highly motivated people with a great work ethic,” said Rohrman. “The community has a lot of services, retail and restaurants as well.” 42 Real Estate is looking for other industrial property to scoop up. A little more perspective: the FedEx facility sits on about 65 acres of land. 42 Real Estate’s new spec development site is 216 acres. Rohrman also noted that 42 Real Estate is working on four other industrial development sites in the DFW Metroplex that are not ready to be announced. They range in size from 50 acres to 400 acres and most are what Rohrman calls “close in.” The total industrial acreage 42 Real Estate will possibly control approaches 800 acres in the DFW area, and the company is negotiating on 100+ acres in Columbus, Ohio, as well as acreage in several other cities. Big projects have never scared Rohrman off. Deep Ellum is a perfect example. Though he’d focused on industrial development for years, in 2011, the dilapidated neighborhood caught his eye. Sure, it had an industrial base, but that wasn’t what appealed to Rohrman. “We really felt like that area of town needed some tender love and care,” he said. “Yes, it was a way to make money, but it was also a way to give back to the city.”

“A city is rarely as good when it is masterplanned by one group, as when it is organically grown by many people with differing views. ”

It was a down market at the time and, thanks to its loyal investors, 42 Real Estate had enough in the coffers to scoop up a number of properties. “We just felt like it was something that would work, like the timing of the market was good,” said Rohrman. His firm wasn’t alone in seeing the potential of Deep Ellum and he credits a number of other developers who have helped reinvent the area. However, it’s worth noting that Rohrman assembled more than 55 parcels and saved a number of 100-yearold buildings. He’s sold some of those properties in the years since but has also purchased additional properties in Deep Ellum. It’s a project that, acknowledges Rohrman, will never be “complete.” “One of my favorite books is The Death and Life of Great American Cities by Jane Jacobs. One of her main points is that cities are organic and chaotic. When you embrace that concept, you can actually get the benefit of many, many minds working together to make something better,” he explained. “A city is rarely as good when it is master-planned by one group, as when it is organically grown by many people with differing views. Cities take a lot of people with different ideas, all coming together and interjecting those ideas to build the fabric in a way that it couldn't be built with just one person.”

That’s why, Rohrman added, he’s had the attitude of working with adjacent properties instead of trying to compete with them, even going so far as to refer tenants to another owner’s building because that tenant in his competitor’s building would be a better fit for the community. “Sometimes, we said ‘No’ to tenants. We could have had at least six different pizza joints and 35 bars, but we didn’t,” said Rohrman. “We really focused on the tenant mix and what was going to make this neighborhood work long-term.” While Deep Ellum tends to get most of the attention, 42 Real Estate is also actively working in The Cedars, the oldest neighborhood in Dallas where it owns multiple properties, and in East Downtown, where it owns almost two dozen parcels. “We work with cities, counties, states and other agencies to target any incentives or assistance that will both generate a healthy return and allow us ﬂexibility to do what is right by the community,” Rohrman said. That applies to 42 Real Estate’s industrial projects as well, including the 216-acre site in Mesquite, where Rohrman sees so much potential. “Mesquite is just a really great place, like Hometown America in a big city,” he said. For more information, contact Scott Rohrman via 42 Real Estate’s website: 42RealEstate.com. OCTOBER 2020

CAPITAL MARKETS < Continued from Page 37

which is slowly recovering from a six-year slide in oil and gas; jet fuel and gasoline demand will return with vaccine and so will Houston; rent collection here has held up surprisingly well

• 1031 buyers are looking for value-add properties and also for passive deals, where not too much effort will be needed, and they are looking in low tax states; 1031 buyers often seek to leave California •

March to June 1031s slowed down, but last two months have seen return to busy activity

• As a basic rule, if a property in any sector has cash flow, it can find financing; much of the inventory of potential value-add multifamily has been picked over in Houston; and although expensive, bridge financing can be obtained to close deals in these uncertain times

• Panelists feel strongly offensive on CRE’s future in the state: “the bulls are running” and we will ride out this crisis, this “Black Swan” and business will be better than ever; predictions are that by EOY 2021 we will be back to where we were pre-COVID

•

• The Fed has done an incredible job during this crisis and by mid-year 2021 we should be back to 5 percent unemployment, almost where it was pre-COVID; workers are ready to go back to the office and collaborate, attend events and resume business travel; there is a lot of liquidity in this market as high-end net worth individuals swing into commercial real estate, seeking the good tax benefits in the industry; this was a weird year but buying opportunities are robust and Houston and Texas are good places to be

Capital markets are good if developer can find good value-add deals, and has a talented team in place to do meaningful, higher rent-commanding upgrades

Biggest Missed Opportunities with 1031s and Other Transactions

Moderator: Todd Phillips, REDNews Panelists: Cindy Pham, Asset Preservation, Inc.; Duane Lund, NAI Legacy; David Wheeler, Hartman REIT •

The industrial sector is now far stronger than pre-COVID

• CMBS financing is happening in hotel, office and some retail, as lenders wait to see how borrowers’ overall multi-sector portfolios shake out after the shock earlier in 2020; it is a challenge for lenders to underwrite right now • 1031 exchanges and reverse exchanges are as popular as ever, and probably will stay with us, even if/when there is a change in Washington, since the exchange tax deferrals are popular with Democrat and Republican investors alike; there is much flexibility in the 1031 law, and leases, oil and gas interests, and fractional ownerships can all qualify for like-kind exchange; 1031s have been around for over 100 years, and they generate lots of revenue for title companies, brokers and mortgage brokers, lawyers, advisers, surveyors, etc. • The “Delaware Statutory Trust” or “DST” is a non-1031 tax deferral program that is not as well-known, but under it exchanges can be made in beneficial interests in trusts, which can be classified as real property and therefore qualify; DST is a $7 billion industry and is becoming increasingly popular, with currently 30 to 40 DST sponsors active in the market; currently multifamily dominates the DST sector, but all CRE sectors are eligible; DST gives investment opportunities to nonmanagement active investors in smaller increments, as low as $25,000, and these increments are sold as securities in public DST offerings; DST can be used in family succession planning, from a retiring patriarch down to heirs, and DST involves tax deferment; DST offers an alternative to 1031 for someone who does not want to own and manage an actual asset; cost segregation of the elements in a building can give further first year write-offs

• “2021 to ‘22 may see in Houston the hottest real estate market on the planet”…

advertiser index ABCO................................................................................................................ 9,31 Anna EDC......................................................................................................... 37 Berkadia.......................................................................................................... 13 City Management, LLC................................................................................. 35 City of Seabrook............................................................................................ 5 CRG Texas........................................................................................................ 2 Don Quick & Associates............................................................................... 33 First Warranty Realty................................................................................... 40 Haliburton....................................................................................................... 24 Hines Interests............................................................................................... 19 Kagan Realty Investors................................................................................ 21 La Marque EDC............................................................................................... 3 Lincoln Property Company.......................................................................... 12 National Environmental Services, LLC...................................................... 43 Phase Engineering......................................................................................... 38 Schlumberger................................................................................................. 15 STCAR............................................................................................................... 17 The Real Estate Council - Greater Ft. Worth........................................... 20 Veritex Community Bank............................................................................ 32 Zann Commercial.......................................................................................... 7

OCTOBER 2020

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South Central REDnews October 2020 Magazine

Articles inside

Industrial & innovation: Dallasbased 42Real Estate digs in to new projects Texas is known for

Getting Kenect’ed: How this multifamily concept ushered in evolution The home has expanded

14

CRE superheroes (who happen to be women): Texas pros share their tales of challenges met

Two Texas markets prove to be elite when it comes to industrial real estate The industrial sector

REDnews’ DFW Industrial Summit Several commercial real estate experts sounded off on what to