Texas commercial real estate market is heating up “like nowhere else in the country”
The nation’s largest commercial real estate convention resumed in Las Vegas this week for the first time since the start of the pandemic, and Texas’ sizzling real estate market was on full display.
Over 30,000 people – representing retailers, developers and owners – attended the last regular conference of the International Council of Shopping Centers in May 2019. This year’s event has been reduced to around 10,000 registered, and all had to show proof of vaccination.
“It’s great to be back. It’s definitely something to appreciate because in-person facetime is better than a video or Zoom for doing business, ”said Joseph Ash, an investment broker at New York-based Kassin Sabbagh Realty.
Commercial real estate sales fell during the height of the pandemic, but not as bad as expected, and they have rebounded significantly.
According to data firm Real Capital Analytics, the third quarter of 2021 was actually the largest on record for commercial real estate sales nationwide – driven by apartment buildings, science labs, life and industrial properties.
Ash recently negotiated a $ 27 million industrial warehouse deal in El Paso.
“There are 10 times more logistics properties under construction today than there were when the financial crisis emerged,” said Justin Boyar, director of market analysis for the Houston office of commercial real estate information firm CoStar. . “We have seen very, very large portfolio transactions, especially international investors, come to Texas to buy.”
Houston recorded the highest volume of commercial real estate transactions of any city in the country in the last quarter. Dallas came in at No.3.
“Nowhere else in the country does you see retail construction and retail demand as rampant as Houston and Dallas. When you have that much growth on single family home roofs and we have a lot of land to build new homes, retail is going to follow, ”he said.
Several local economic development agencies have traveled to Las Vegas to court retailers.
“Companies have had time to think about what to do. Maybe they need to increase production. They may need to move their warehouse or distribution center. Maybe they need to go somewhere where the supply chain is working a little better, where people move, where people shop, ”said Kelley Mattlage, communications manager for the County Improvement District. from East Montgomery.
His county in northeast Houston has seen massive growth in recent years.
“Our student body has grown by approximately 30% over the past five years. Usually it is around 3 to 5%. So it’s amazing how many people are moving here.
Lynn Spencer, director of economic development for the city of Forney, said her community 20 miles east of Dallas is looking to make sure residents have stores nearby to buy the things they need.
“We have a big gap considering that we are (Forney) the fastest growing city and the third fastest growing county in Texas. And we have a great need with a number of homes coming into our market that have over 100,000 people in our shopping area not to have a retail business for people to go shopping with all these new homes. coming up, ”Spencer said.
Texas’ growth hasn’t come without growing challenges for cities across the state, including rapid gentrification and pricing for inner-city residents.
In Austin, the city has positioned itself as an alternative for technology companies. The last year alone saw the expansion of Apple and the relocation of Tesla and Oracle.
“Technology has just been such an amazing pilot in Austin, but the cost of living has just skyrocketed. The median price of single-family homes exceeds $ 500,000, which is a lot in Texas. In Houston and Dallas, it’s closer to $ 300,000, ”Boyer said. “So I’ve heard stories of houses getting a dozen offers and selling at 30% year over year increase and things like that in some areas. “
Boyar said San Antonio, which is heavily dependent on tourism, was hit hard during the height of the pandemic but was also one of the fastest cities to bounce back in the tourism sector.
Otherwise, growth has been stable in the city of Alamo.
“You have a strong military presence, some banking and financial services, and there is a strong push in the cybersecurity industry,” he said. “I think we’re going to start to see a lot more growth in San Antonio, pushing up to the area between San Antonio and Austin. “
Boyar said Texas border communities – which are home to some of the country’s busiest trading ports – are also being targeted by investors as the United States increases its trade with Mexico and COVID restrictions at the border. have been lifted.
He added that he believed Texas was starting to take center stage in the world of commercial real estate.
“Everyone is always talking about New York and California, but I think Texas will be the place to be,” said Joseph Ash of Kassin Sabbagh Realty. “The workforce moves there, the businesses move there. For me it is the best state in the country.