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2020 SYMPOSIUM
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2020 SYMPOSIUM
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2020 SYMPOSIUM
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Company Stats LAST 3 YEARS STNL
Multi-Tenant
Totals
Year
# of Trans
Total Value
# of Trans
Total Value
# of Trans
Value
2017
42
$112,651,327
21
$184,605,892
63
$297,257,219
2018
41
$101,240,201
21
$74,439,500
62
$175,679,701
2019
48
$136,757,996
31
$106,672,000
79
$243,429,996
25
$97,008,899
Under Contract/In Negotiation
16 More Transactions, $50 Million Less More Transactions, Smaller Dollar Amount
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STNL Transactions - 2019 IN TEXAS
498 Criteria: • Single-Tenant Retail in Texas • Sale Date: 1/1/2019-12/31/2019 • Investment Properties • In 2018 there were 522 trades
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Transactions Per Region STNL
DFW 194 (38.96%)
WEST TEXAS 38 (7.63%)
CENTRAL 27 (5.42%)
EAST TEXAS 27 (5.42%)
AUSTIN 2018
2019
DFW
166
194
Houston
138
100
Austin
41
32
San Antonio
54
46
VALLEY
East
31
27
34 (6.83%)
West
48
38
Central
19
27
Valley
25
34
32 (6.43%)
SA 46 (9.24%)
HOUSTON 100 (20.08%)
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Buyers’ Location STNL WA 9 (1.78%)
NY 12 (2.37%)
PA
IL
NV 9 (1.78%)
CA 129 (26.04%)
CO
MO
3 (0.59%)
NM 3 (0.59%)
9 (1.78%)
3 (0.59%)
OK
3 (0.59%)
OH 3 (0.59%)
NJ 6 (1.18%)
MD 3 (0.59%)
TN 6 (1.18%)
6 (1.18%)
TX 267 (53.85%)
IN
3 (0.59%)
LA 3 (0.59%)
FL 21 (4.14%)
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MT Transactions - 2019 IN TEXAS
312 Criteria: • Multi-Tenant Retail in Texas • Sale Date: 1/1/2019-12/31/2019 • Size: 5,000+ sq ft • Sale Price: $400,000+ • Exclude Bulk Portfolio Sales • In 2018 there were 298 trades
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Transactions Per Region MULTI-TENANT
DFW 111 (35.58%)
WEST TEXAS 18 (5.77%)
CENTRAL 9 (2.88%)
EAST TEXAS EAST TEXAS 19 (5.19%) 9 (2.88%)
AUSTIN 33 (10.58%)
SA 28 (8.97%)
VALLEY 18 (5.77%)
HOUSTON 86 (27.56%)
2018
2019
DFW
105
111
Houston
92
86
Austin
22
33
San Antonio
19
28
East
12
9
West
21
18
Central
12
9
Valley
15
18
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Buyers’ Location MULTI-TENANT WA 1 (0.32%)
MT ID
1 (0.32%)
NY
MI
1 (0.32%)
2 (0.64%)
2 (0.64%)
MO
CA
IL
OH
7 (2.24%)
2 (0.64%)
2 (0.64%)
MD 3 (0.96%)
2 (0.64%)
30 (9.62%)
RI
AZ 2 (0.64%)
TX 248 (79.49%)
AL
GA
7 (2.24%)
2 (0.64%)
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Multi-Tenant Type TRANSACTIONS IN HOUSTON
2018
2019
DELTA
92
86
(6)
$5,553,571
$6,732,432
$1,178,861
Ave Cap Rate
7.62%
7.61%
(0.01%)
Ave Cap Rate at List
7.16%
6.82%
(0.34%)
Delta (List to Sell)
0.46%
0.79%
Ave PSF
$221.40
$231.81
$10.41
Ave Rent PSF
$18.81
$21.23
$2.42
Occupancy
89.07%
92.15%
3.08%
No. of Transactions Ave Price
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STNL Type TRANSACTIONS IN HOUSTON
2018
2019
DELTA
138
100
(37)
$2,961,502
$3,508,209
$546,707
Ave Cap Rate
6.27%
6.32%
(0.05%)
Ave Cap Rate at List
5.90%
6.01%
0.11%
Delta (List to Sell)
0.37%
0.31%
Ave PSF
$488.82
$479.80
($9.02)
Ave Rent PSF
$30.32
$31.31
$0.99
No. of Transactions Ave Price
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Multi-Tenant Type TRANSACTIONS IN AUSTIN/SAN ANTONIO
2018
2019
DELTA
41
61
20
$5,675,573
$8,211,432
$2,535,859
Ave Cap Rate
6.82%
7.04%
0.22%
Ave Cap Rate at List
6.56%
6.58%
0.02%
Delta (List to Sell)
0.26%
0.46%
Ave PSF
$278.85
$263.43
($15.42)
Ave Rent PSF
$24.41
$23.43
($0.98)
Occupancy
93.45%
95.86%
2.41%
No. of Transactions Ave Price
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STNL Type TRANSACTIONS IN AUSTIN/SAN ANTONIO
2018
2019
DELTA
95
78
(17)
$2,756,202
$3,109,763
$353,561
Ave Cap Rate
6.50%
6.46%
0.04%
Ave Cap Rate at List
6.04%
6.01%
(0.03%)
Delta (List to Sell)
0.46%
0.45%
Ave PSF
$499.43
$478.55
($20.88)
Ave Rent PSF
$29.30
$30.22
$0.92
No. of Transactions Ave Price
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Multi-Tenant Type TRANSACTIONS IN DFW
2018
2019
DELTA
105
111
6
$6,903,393
$8,226,248
$1,322,855
Ave Cap Rate
7.48%
7.24%
(0.24%)
Ave Cap Rate at List
6.93%
6.84%
(0.09%)
Delta (List to Sell)
0.55%
0.40%
Ave PSF
$262.17
$309.18
$47.01
Ave Rent PSF
$18.46
$22.67
$4.21
Occupancy
93.54%
94.00%
0.46%
No. of Transactions Ave Price
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STNL Type TRANSACTIONS IN DFW
2018
2019
DELTA
166
194
28
$3,173,413
$3,610,840
$437,427
Ave Cap Rate
6.09%
6.12%
0.03%
Ave Cap Rate at List
5.86%
5.87%
0.01%
Delta (List to Sell)
0.23%
0.25%
Ave PSF
$558.61
$582.43
$23.82
Ave Rent PSF
$32.12
$32.93
$0.81
No. of Transactions Ave Price
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• • • •
STNL Type TRANSACTIONS IN TEXAS STNL Type Auto Parts
Banks
Dollar Stores
Drug Stores
Fast Food
Restaurants
Year
Location Term Guarantor Fundamentals CAP
2017
6.15%
2018
6.50%
2019
6.19%
2017
5.58%
2018
5.57%
2019
6.08%
2017
6.95%
2018
7.07%
2019
7.21%
2017
6.60%
2018
5.76%
2019
6.36%
2017
5.74%
2018
5.95%
2019
5.81%
2017
6.33%
2018
6.50%
2019
6.42%
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US High Rental Rates RENT PER SQUARE FOOT $3,000
$1,200 $700 $550 $300
$289
$250
$240 $125
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US Average Rental Rates RENT PER SQUARE FOOT
$42.35
$41.98 $36.92 $33.32 $28.86 $24.25 $20.02
$19.88
$18.93
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MSA Population 20,320,876
13,291,486 9,472,676 7,539,711 6,249,950
6,198,782
6,096,372
4,875,390
4,729,484
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Square Miles in MSA 10,856 9,286
6,137 5,564 5,118
4,850
4,585
4,500 2,474
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MSA Population PER SQUARE MILE
4,432
2,741 1,912 1,191
1,123
1,083
1,010
873
812
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DFW Population Per Square Mile 10,000,000 PEOPLE (2030) 4,432
2,741
1,912 1,191
1,123
1,083
1,077
1,010 873
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Primary City AVERAGE RENTAL RATES
4,432
$42.35 2,741
$33.32
1,912 1,191
$41.98 $19.88
1,123
$28.86
1,083
$24.25
1,077
$20.02
1,010 873
$36.92
$18.93
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Disposable Income MEDIAN HOUSEHOLD INCOME
$120,470
$85,203 $78,478 $71,834
$69,445
$69,300 $57,238 $46,116 $41,818
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Tourism NUMBER OF TOURISTS PER YEAR (2018)
65,200,000 57,600,000 50,000,000 49,000,000 43,300,000
25,800,000 23,800,000 23,000,000
22,000,000
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Rental Rate Growth FROM 2006-TODAY
$36.92
$41.98
$42.35
$33.10
$25.25
$34.49 $20.02
$33.32 $28.86 $27.21 $24.43
$16.06
$24.25 $20.93
$19.88
$18.13 Miami (46.22%)
San Francisco (26.83%)
Dallas (24.66%)
New York (22.79%)
Los Angeles (22.45%)
Washington D.C. (18.13%)
Boston (15.86%)
Philadelphia (9.65%)
$18.93 $19.71
Chicago (-3.96%)
2020 SYMPOSIUM
Not to be a success, but to be of Value — Albert Einstein
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2020 SYMPOSIUM
Mark Dotzour
2020 SYMPOSIUM
Good Fishing Ahead, but Keep an Eye on the Clouds Dr. Mark G. Dotzour
Longest U.S. Economic Expansions Current expansion began in June 2009 • Mar 1991 to Mar 2001 • Feb 1961 to Dec 1969 • Nov 1982 to Jul 1990 • Jun 1938 to Feb 1945 • Nov 2001 to Dec 2007
120 months 106 months 92 months 80 months 73 months
Current expansion as of January 2020 is 128 months
HOW LONG CAN IT LAST?
First Focus: The Good Fishing
Why 2020 Will Be Slower • Auto industry appears to have peaked • Trucking and shipping industry has peaked • Low oil and gas prices will pressure energy sector • Trade negotiations with China cause uncertainty • Businesses not using tax benefits to expand • Congress won’t be interested in growth • Federal budget deficits can’t get too much higher • Presidential election uncertainty
Monthly Increase in Jobs 2005 to present
300K
266,000 in November
Source: Bureau of Labor Statistics
Rate of Wage Growth 1960 to present
4%
Source: Federal Reserve Bank of St. Louis
Job Openings in America Looking for Workers
Source: Bureau of Labor Statistics
Texas Employment Since 1940
13.6 million in Nov 19
Source: Bureau of Labor Statistics
Household Net Worth since 1952
Now exceeds $113 trillion
Source: Federal Reserve Bank of St. Louis
Household Owners Equity in Real Estate $18 trillion
Source: Federal Reserve Bank of St. Louis
150 140 130 120 110 100 90 80 70 60 50 40 30 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19
Consumer Confidence Index 2006 to present
Source: The Conference Board
Household Debt Service Payments as a Percent of Disposable Personal Income
Lots of fuel left!
1980
Source: Federal Reserve Bank of St. Louis
40 35 30 25 20 15 10 5 0
Source: National Federation of Independent Business Nov-19
Aug-19
May-19
Feb-19
Nov-18
Aug-18
May-18
Feb-18
Nov-17
Aug-17
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Aug-15
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Small Business Confidence: “Now is a Good Time to Expand” Percent of Respondents
0
Source: National Federation of Independent Business Nov-19
Aug-19
May-19
Feb-19
Nov-18
Aug-18
May-18
Feb-18
Nov-17
Aug-17
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Aug-15
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Small Business Confidence:
“Hiring Plans in the Next Three Months” Net Percent of Respondents
30
25
20
15
10
5
New Single-Family Houses Sold Since 1963
Source: Federal Reserve Bank of St. Louis
New Single-Family Housing Starts Since 1959
1 million units
1965 Population: 194 million
Source: Federal Reserve Bank of St. Louis
Leading Index of Economic Indicators 1982 to present
Source: Federal Reserve Bank of St. Louis
Texas Leading Index
Source: Federal Reserve Bank of Dallas
Houston Business-Cycle Index
Source: Federal Reserve Bank of Dallas
Looking For Signals of Change
Corporate Profits
After Tax
Before Tax
Source: Federal Reserve Bank of St. Louis
Large Corporate Hiring Plans: Next 6 Months
Q3-19 Q2-19 Q1-19 Q4-18 More Jobs
43%
41%
48%
56%
Less Jobs
20%
16%
16%
14%
Source: Business Roundtable
Corporate Bond Spread BB Corporate – 10 Year Treasury
Source: Federal Reserve Bank of St. Louis
The Future of Interest Rates
Inflation Moves the 10-Yr Treasury Rate (unless the Fed intervenes)
10-Year Treasury rate
Inflation rate
Source: Federal Reserve Bank of St. Louis
Inflation Rate since 2000
2%
Source: Federal Reserve Bank of St. Louis
Economists Have Overestimated Inflation Since 2007 Predicted Inflation
Actual Inflation
Source: University of Michigan and Federal Reserve Bank of St. Louis
Effective Fed Funds Rate 1954 to Present
19.00
13.00 9.25
10.00 6.50 5.25 2.50
Source: Federal Reserve Bank of St. Louis
10-Year Government Bond Rates January 9, 2020
United States 1.851% Canada 1.593% UK 0.812% Germany - 0.225% France 0.062% Italy 1.393% Japan
- 0.005% Source: CNBC.com
Treasury has Refinanced the Federal Debt Average Interest Rate on:
March 1, 2000
Total Debt 6.555%
T-Bonds 8.505%
March 1, 2007
5.055%
7.551%
March 1, 2018
2.347%
4.162%
Source: U.S. Treasury
If rates went up 2%, interest expense would Increase by $440 billion.
2018
Just the increase of 2% would consume 13% of all federal income. Source: Congressional Budge Office
If rates went up 2%, interest expense would increase by $440 billion.
2018
Source: Congressional Budge Office
Just the increase of 2% would consume 75% of all Medicare payments, or 45% of Soc Sec payments.
CRE Trajectories: Sales Volume CoStar reported sales volume in 12 months ended November 2019 was 3.7% higher than a year earlier.
CoStar reported that sales that include secondary and tertiary markets were up 5.7% in the same period.
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
Earliest Warning Sign: Big Decline in Transaction Volume
Source: CNBC.com 1/3/2020
CRE Trajectories: Absorption CoStar reported aggregate absorption of CRE space in 3Q2019 was much lower than previous years: Million square feet
2016 3Q
575.7
2017 3Q
261.1
2018 3Q
270.9
2019 3Q
55.9
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
CRE Prices Continue to Escalate
CRE Trajectories: Prices RCA reported Nov prices 8.7% higher YOY. Green Street Advisors Index up 2.5% YOY.
Industrial up 13.6% Apartments up 9.3% CBD Office up 5% Retail up 3.4%
Sources: CoStar release 12/26/2019; NREI Online; Green Street Advisors Release 1/7/2020
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Thank you!