Texas Real Estate Business

FEB 2018

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

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www.REBusinessOnline.com February 2018 • Volume 13, Issue 12 LAST-MILE LOCATIONS TOP INDUSTRIAL WISH LISTS As more retailers develop and expand their online shopping platforms, the need for proximity to final users becomes the focal point of distribution. By Camren Skelton see INDUSTRIAL Page 30 Which CRE Sectors in Austin Enter 2018 With The Most Momentum? pages 14-17 pages 20-24 Special Section: 2018 Lender Insights INSIDE THIS ISSUE Seniors Housing Finance Q&A: Do Dallas and Houston Have Overbuilding Con cerns? T here's no question that the rise of e-commerce has raised uncer- tainty in the world of brick-and- mortar retail. But for industrial de- velopers, its growing presence means greater demand for space. Demand for faster delivery is prompting distributors and other in- dustrial users to locate in metros with growing populations and proximity to high-income households — and Texas is home to many such metros. Developers are finding success with projects located in "last mile" areas between warehouses and consumers. "Last-mile delivery is about getting product from the building to the front door," says David Welch, president of Atlanta-based development firm Rob- inson Weeks. The internet continues to shape the way business is done, and develop- ers are responding with projects that fit the needs of today's consumer. Though they vary in size, the proj- ects highlighted in this piece share the common thread of operating out of locations with convenient access to pages 18-19 Enterprise Industrial Park, about 20 miles outside of San Antonio, offers quick access to Interstate 35. This corridor is heightening the Alamo City's role in last-mile distribution. THREE CAUSES FOR MORTGAGE BANKERS' OPTIMISM Favorable market conditions, a sweeping tax reform package and disciplined lending practices combine to buoy intermediaries' confidence. By Joe Gose H eading into 2018, the commer- cial real estate lending market looks a lot like a NASCAR race: Drivers can only get so much juice from their engines before restrictor plates kick in to control speed. By all accounts, debt capital inun- dates the market, but most lenders are controlling originations by capping loan-to-value ratios at 75 percent and ensuring that cash flows can hold up under stress. That's a far cry from the last cycle, when commercial mortgage-backed securities (CMBS) lenders shoveled out highly leveraged and lightly under- written loans. Combined with other factors — low interest rates, signs that annual GDP growth may surpass 3 percent, and an occasionally erratic but business- friendly administration that is slashing taxes and regulations — the disciplined lending is fostering expectations that 2018 will be another busy year. "From the most left wing to the most right wing, every developer and owner I talk to is very bullish," declares Tuck- er Knight, a senior managing director in the Houston office of Berkadia. "One of my clients from the West Coast — he's not a giant [Donald] Trump supporter, I can tell you — he is super pumped about this new tax re- form." Provisions in the recently enacted Berkadia recently arranged $41 million in refinancing for Mansions at Timberland, a 381- unit community in Fort Worth. The deal featured a loan-to-value (LTV) ratio of 75 percent. see MORTGAGE Page 26

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