As part of our commitment to the Texas arts community, our office is currently exhibiting a selection of paintings by legendary Texas Artist, Ralph Ernest White, Jr. We invite you to join our team for an art viewing and open house on Thursday, May 17th from 5:30pm - 7:30pm.
Whether stopping by after work or joining us before dinner, the event will offer an evening of art, fantastic hors d'oevres and drinks.
Over the last year, we have enjoyed working with TexasModernArt to help advance the awareness, examination and appreciation of 20th Century Texas Modernist Art. Through the relationship, we continue to learn more about Texas Modernism that includes the great works of Ralph White.
White was named “Texas State Artist, Two Dimensional Category” by the State of Texas 78th Legislature in 2003 and inductee of the Austin Arts Hall of Fame. White was a professor in the Department of Art and Art History at The University of Texas from 1946 until he retired in 1982. White founded the graphic design and communication arts area of the department, which later became known as the Visual Communications program, served as the acting chairman of the department from July 1970 to August 1974, and established an ongoing faculty enrichment program.
White’s creative body of work reflected his passion for painting and drawing in a diverse portfolio of realistic watercolor paintings to colorful abstractions. He had an inexhaustible supply of creativity which he applied to every endeavor in his live, producing an impressive array of works that have been exhibited internationally in both group and one-man shows. His works are in numerous private collections and twenty-five public collections throughout the U.S. and Europe.
Similar to what we saw in the Q1 Austin Office Market Report, the Austin Industrial Market continues a similar trend – vacancy levels declining and rental rates increasing.
For the fifth consecutive quarter Austin’s Industrial market has experienced significant positive direct absorption. A total of 337,659 square feet (sf) was absorbed during the first quarter of 2012. The submarkets that reflected the largest amount of absorption were the North East and North West submarkets. The positive absorption that occurred in the North East can largely be attributed to Ecotality and Beehive Specialty $8.00 which together absorbed 54,400 sf at Walnut Creek 9. Expect absorption to remain positive next quarter as leasing activity is still on the rise in the industrial market.
The triple net “asking” rental rates for the industrial market have risen due to increased leasing activity and diminishing vacancies. R&D/flex, warehouse/distribution, and manufacturing reflected average asking net rental rates of $8.04 per square foot (psf), $5.64 psf, and $6.36 psf respectively. The submarkets that reflected the highest average rental rates were South Central and Round Rock. As leasing activity is expected to rise, the industrial rental rates are expected to increase significantly throughout 2012.
Overall vacancy rates for Austin Industrial market continue to decline. For the eighth consecutive quarter vacancy levels for the Austin Industrial market have noticeably diminished. Overall vacancy rates dropped from 15.5% in 2011 to 14% in the first quarter of 2012. For the fourth consecutive quarter the South Central submarket showed the lowest overall vacancy of the Austin Industrial submarket recording at 4.82% while the Northeast submarket showed the highest vacancy rate at 18.7%.The overall vacancy rate for the manufacturing product stands at 14% while the R&D/flex and warehouse/distribution product stand at 13.4% and 16.7% respectfully.
The Austin Office Market is on fire from what we see in the Q1 numbers that our team researched and documented. We're not the only ones that are noticing, Shonda Novak, Statesman staff, titled a recent article reviewing the quarter results, “Job growth helping Austin’s office market heat up”.
Our research team reviewed the quarter results for the Austin Office Market and uncovered the following.
Economic Overview
Austin is a great place to be this year according to The Street, a financial news website that named Austin among the top 10 cities “poised for greatness” in 2012. The Street, a financial news website, named its top ten cities for 2012 based on financial forecasts, large events and new initiatives. Austin is also among 13 of the top 100 largest labor markets to have regained all of the jobs that were lost during the recession. According to the U.S. Bureau of Labor Statistics the capital city is ranked the third most prosperous metro between 2006 and 2011 because it added 37,900 private-sector jobs.
Market Overview
Vacancy fell in the Austin office market again for the fifth straight quarter, dating back to the first quarter of 2011. Large expansions in the Austin office market by Office Depot and Texas Windstorm, among others, attributed to the decline in overall vacancy this quarter. The overall vacancy for the Austin office market stands at 15.9%, 1.4 percentage points less than the fourth quarter of 2011. The overall vacancy rate in Austin has been trending down since 2009. Expect vacancy to continue this trend in 2012 as leasing activity remains active in the Austin office market.
Market Outlook
Austin remains in the spotlight as several large lease commencements in the market should have a significant positive impact on absorption and job growth in 2012. The amount of space in the Austin office market has steadily decreased and become more valuable as absorption has remained positive. Expect these trends to continue in 2012.
Cushman & Wakefield Sonnenblick Goldman (CWSG) released their latest Capital Markets Update. Chris Moyer, Associate Director CWSG, sent commentary on the information.
• CMBS spreads have continued to tighten over the past couple of weeks, with benchmark super-seniors now pricing at swaps + 220. Investor appetite for 7- and 10-year bonds has been relatively strong, with the result that 5-year conduit quotes are essentially on top of 10-year quotes in terms of all-in pricing.
• Life insurance companies are showing an increasing willingness to quote loan terms greater than 10 years. We are now seeing active LC interest in 15, 20 and even 30 year maturities, with pricing starting at 4.25% for 15/15 deals and running up to 5.20% for 30/30 deals.
• Trepp reported that CRE debt maturing in 2012 totals $360B while the five-year total for the period 2012-2016 is nearly $1.73T. Previously, many analysts had focused on the 2012-2014 maturities as presenting the most challenging refinancing need in the market. Trepp’s analysts are now looking hard at 2016, and the unusually high LTV’s in many of those securities.
• According to statistics providing by RCA and C&W Capital Markets, global CRE transaction volume reached $808B in 2011, with Asia Pacific comprising nearly 50% of that total volume, Europe recovering to 2006 transaction levels and the U.S. at $200B, comparable to 2004 levels. In keeping with that trend, eight of the top-twenty most active investors were Asian. Four U.S. investors made the top-twenty list with Blackstone grabbing the #1 spot with $9B of acquisitions. New York and London were at the top of the list in terms of metro trading activity, at $35B and $29B, respectively. LA and D.C. finished in the top five most active markets with $17B each of transactions.
Click for the full Capital Markets Update
Cushman & Wakefield Sonnenblick Goldman is the industry’s leading independent real estate investment banking firm. The firm was founded as Sonnenblick Goldman in 1893 and it merged with Cushman & Wakefield in 2007. Cushman & Wakefield Sonnenblick Goldman provides a full range of real estate financial services, including debt and equity placements, joint ventures, hospitality investment sales and workout advisory services, and it collaborates world-wide with other divisions of Cushman & Wakefield. Further information can be found at the firm’s website at www.cushwake.com/sonngold.
Austin Business Journal by Cody Lyon, Staff writer
Date: Wednesday, October 26, 2011, 12:33pm CDT - Last Modified: Wednesday, October 26, 2011, 1:24pm CDT
- Cody Lyon
- Staff writer - Austin Business Journal
- Email
Austin snuck into the top five markets to watch next year, according to annual Emerging Trends in Real Estate report from PricewaterhouseCoopers LLP and the Urban Land Institute.
The Capital City was ranked No. 2 on the list following Washington D.C. San Francisco, New York City and Boston rounded out the top five.
Although Austin is one step removed from global pathways, it registers significant interest on investor radar screens and has all the ingredients needed to deal successfully with the nation’s 21st century realities, the report said. It also gave Austin a one up on its Texas neighbors because unlike Dallas and Houston, the city also develops a 24-hour core, featuring pedestrian-friendly, in-town apartment neighborhoods with plenty of nightlife attractions.
Austin’s size limits investor opportunity but the diversity of educational, medical, and government jobs, backed by high tech, insulates the market from boom/bust scenarios, according to the report.
PwC and ULI paint a less than rosy picture for commercial real estate nationwide, implicating next year’s recovery will be slow for most cities.
“Businesses have learned they can increase profits with less space – while people can’t afford bigger living spaces. And, while the nation’s lackluster employment outlook delays filling office space, the related drag in consumer spending compromises growth in retail and industrial occupancies and rents,” the report said.
Those predictions follow a period of mostly sporadic growth last year that was confined primarily to a few real estate markets that offer the primary 24-hour gateways along the coasts, according to the report. Survey participants believe capital will search for yields beyond the overbought gateways, like New York City, and take on considerably more risk.
And you can help!
2011 Light The Night Honored Hero
Caleb Nyberg, Acute Lymphocytic Leukemia
Please Help Find A Cure For Caleb!
Thanks to The Leukemia & Lymphoma Society, children & adults with blood cancers have more hope than ever of surviving cancer. But despite the advances, every 10 minutes a child or adult is expected to die from blood cancer. And leukemia remains the leading cause of death among children.
Please help our Oxford Commercial Walk Team reach our $2,000 goal to help fight cancer!
Make a donation now…
http://pages.lightthenight.org/sctx/AustinL11/OxfordCommercial
Team Fundraising Total to Date: $975
Will you help with a donation of $5, $10, or even $25?
Forward this email to everyone you know to make an even bigger impact!
Join us for the Light The Night Walk on Saturday, October 22nd!
On behalf of all the families who are hoping for a cure, thanks very much for your generosity.
Rachel Coulter has joined Oxford Commercial as senior vice president.
As a well-respected deal-maker and past president of CLBA, Rachel needs no introduction to the commercial real estate community.
With transaction volume totaling 2.2 million square feet over the past decade, Rachel brings a high degree of both energy and market knowledge to her new role with Oxford. She will focus on growing Oxford's landlord and tenant representation business.
"Austin is becoming more attractive to institutional and global investors," Rachel notes. "Oxford's platform offers the perfect hybrid of local ownership with international reach."
Mark Greiner, partner and co-founder, says: "Rachel brings a unique blend of youth, integrity, solid relationships and industry achievement. We're thrilled she joined Oxford and look forward to her role in propelling our team to even greater heights."
Save Rachel's new contact information by clicking on the link below:
Cushman & Wakefield Sonnenblick Goldman just released their latest Capital Markets Update. Commentary provided by Chris Moyer, an associate with CWSG in New York, is included below.
• It’s getting harder for banks to hold syndicates together on big loans ($200M+), particularly where syndicates include offshore banks, as participant banks feel internal and external pressure to maintain liquidity.
• The nervous, risk-averse nature of the buyers of super-senior CMBS has become abundantly clear in the past 4-5 months. After tightening steadily for nearly 18 months, pricing for AAA bonds in the secondary market began to get choppy as early as late March of this year. Since reaching a post-2008 low of swaps + 175 in March, spreads bounced around and then started to climb in June, settling at swaps + 320 last week.
• How liquid are the healthiest U.S. banks? The fact that J.P Morgan and Wells have each stepped up in the past few weeks to take down billion dollar pools of performing CRE loans (Anglo and Bank of Ireland) at close to par, or even above par, suggests that these banks are frustrated with how long it takes to put money to work in the CRE arena and view buying high-grade loans as a quick-n-easy way to push dollars out the door.
• Trepp reported this week that CMBS delinquencies for loans 30+ days in default dropped to 9.52% in August. This is the third decline in the past four months and is a welcome piece of news for the beleaguered CMBS market, particularly after July’s 50bp spike in delinquency. Retail continues to lead the way among the major CRE asset classes, with delinquency dropping 47bps to 7.38%. Office was flat month-over-month, lodging declined to 13.8% and industrial actually lost ground, inching up to 11.24%.
Click for the full Capital Markets Update
Cushman & Wakefield Sonnenblick Goldman is the industry’s leading independent real estate investment banking firm. The firm was founded as Sonnenblick Goldman in 1893 and it merged with Cushman & Wakefield in 2007. Cushman & Wakefield Sonnenblick Goldman provides a full range of real estate financial services, including debt and equity placements, joint ventures, hospitality investment sales and workout advisory services, and it collaborates world-wide with other divisions of Cushman & Wakefield. Further information can be found at the firm’s website at www.cushwake.com/sonngold.
Recently, our Research Director, Garrett Meeker, was interviewed by the Community Impact (a great publication, by the way) for their article below noting the uptick of activity we're seeing in the Northwest suburban market. It’s good news for the market in general, but especially so for some of our landlord clients in Northwest Austin - Four Points Centre, Oak Creek Plaza, and HighFlex.
Read the Community Impact article below:
Vacancies have dropped 4 percent in two years, but Far Northwest Austin still lags behind rest of city
By Amy Deis, Community Impact
Commercial real estate insiders are noting signs of a stronger market as occupancy rates climb and companies sign leases for larger blocks of office space.
“We’ve seen more activity in Northwest Austin than any other submarket due to so much vacancy,” said Richard Paddock, an office specialist with Austin-based HPI Real Estate Services and Investments.
Office Depot is in negotiations to move into the Amber Oaks office park on the corner of RM 620 and Parmer Lane; The Advisory Board Company will be relocating to the Riata Corporate Park from a smaller office on Great Hills Trail; and video game publisher Electronic Arts is taking over a portion of the former Freescale Semiconductor building at Parmer Lane and Anderson Mill Road.
For the past 18 months, the Far Northwest Austin region, defined by Austin-based real estate firm Oxford Commercial as the area between Capital of Texas Hwy., Burnet Road, the Round Rock city limits and Lake Austin, has held the highest commercial real estate vacancy rate in the Austin area, peaking at 27 percent two years ago compared with Austin’s overall vacancy rate of 21 percent.
One of the main contributors to the area’s high vacancy rate are new buildings, such as the 205,000-square-foot Aspen Lake office building at Lake Creek Parkway and US 183, that have remained vacant since being constructed.
But now the area is seeing an uptick in rental rates, one sign that vacancy is on the decline, said Garrett Meeker, research director for Oxford Commercial.
In times of high vacancy, Meeker said rental rates plummet because of lack of demand. When rates start increasing, it indicates that landlords and property owners have noticed demand is on the rise.
“Maybe landlords are getting deals we’re not seeing,” he said. “They feel their product is worth more.”
Ebb and flow
Northwest Austin’s vacancy woes began when the market was flooded with nearly 2 million square feet of new office space from late 2007 to early 2009 in the Far Northwest Austin region. When the market tanked, Meeker said almost all new office buildings remained vacant.
Many of these buildings are in the 78726 and 78750 ZIP codes near the RM 620 and US 183 corridors. Those ZIP codes still saw vacancy rates in the second quarter of about 26 percent and 40 percent, respectively. The vacancy rate in the Far Northwest Austin territory dropped below 23 percent, compared with Austin’s overall rate of 19 percent.
Nate Stricklen, vice president with commercial real estate firm CB Richard Ellis, said office buildings with larger square footage are more attractive to technology companies and those relocating from the West Coast.
Vacancy rates peaked in 2009 and into 2010, but in the first six months of 2011, about 262,000 square feet of office space was filled in the Far Northwest territory. About 77,000 square feet of that was at Ladera Bend, a mixed-use development at 7700 FM 2222 completed in 2007.
HPI bought the commercial portion of Ladera Bend from Wells Fargo in December 2010 and began leasing shortly after. Three technology companies moved in: All Web Leads, Spiceworks and Samsung Austin Research Center. Paddock, who oversees leasing at Ladera Bend, attributes the new leases to the tech-heavy corridor of Capital of Texas Hwy. and FM 2222.
As more companies, especially from California, relocate and expand in Austin, Paddock said Northwest Austin would continue to draw commercial leases, in part because it is a more economical solution compared with rental rates in the Central Business District and Southwest Austin.
“The largest blocks of space are available in the northwest part. For large users, for sure it’s going to be the continued option,” Paddock said.
While the Far Northwest region has had roller coaster–like vacancy rates, those in the North Central territory, which Oxford defines as bounded by I-35, Burnet Road and 45th Street, has had minimal change in occupancy because of its stronger industrial presence and smaller offices, Meeker said. The Northwest territory of Capital of Texas Hwy., US 183, Burnet Road and 35th Street has also had a more stable vacancy rate in the upper teens.
Tracking market progress
Meeker said market data is a constantly changing puzzle. Oxford starts compiling information for quarterly reports during the last month of each quarter. Staff call every listing agent for commercial real estate buildings—not including retail or medical facilities—that are multitenant and have more than 10,000 square feet of space to see how much space is available and what is the going rental rate per square foot. Owner-occupied buildings are not included.
Cushman & Wakefield has released its yearly report on retail property rental performance: Main Streets Across the World 2011. The report has received broad global coverage in major news outlets throughout all regions of the world. Overall, the news is positive for the retail market. The links below are a sampling of the headlines across the globe. Additionally, we have included a few of the summarizing takeaways. You can download the entire report here.
New Bond Street gives way to Parisian chic—The Times UK
Manhattan boasts 4 of Top 10 retail strips-Crain’s New York Business
Asia-Pacific Retail Rents Lead Gains; New York Fifth Avenue Keeps Top Spot—Bloomberg Asia
Retail rents in Sydney's Pitt St Mall are higher than luxury shopping strips—The Australian
As U.S. retailers go, so go Main Street rents in Canada—Globe and Mail Canada
The Most Expensive Shopping Streets In The World—Business Insider
- Although the economic recovery is fragile, prime rents
rebounded globally. After a very rocky 2009/2010, the numbers of cities seeing rental growth is far greater than those seeing rental declines.
- Asia Pacific saw the highest increase in rental growth, attributed partially to added international demand for space in China and India.
- The Americas continued to have accelerated rental growth, increasing 7.4% from a year ago. The sustained growth is helped by "better credit accessibility and more robust labor markets in South America."
- Europe, the Middle East and Africa continued to come back from the disastrous decline in the previous two years, albeit very slowly. Their rental growth was much slower.
- The outlook for the retail sector over the next 12 months is expected to continue in a similar trend - those sectors that have had high-paced growth will continue to do so, while those with slow but steady growth will keep trudging along. The encouraging news is that rental property growth is expected to continue on its path of recovery.