I had asked real estate expert
Giselle Bundchen to guest write this week’s CRE Cliffnotes, but for some reason
the language in her email didn’t make it through most of your the
firewalls. She did have some choice words about Natural Gas demand.
“Oil prices can’t do it all!” she noted. Giselle was referring to the
fact that many gas exploration and production companies could have trouble
keeping their credit ratings with natural gas prices so low. Not a
problem for oil E&P companies – yesterday oil hit an eight-month high above
$121 due to Iran supply worries. I hope you don’t mind me writing in her
stead.
As always, I hope you find the following articles value added to read or send to friends/clients:
NYT:
Bullish on Houston
ü Short Overview: You
know your city is in a bull market when the establishment of the New York Times
writes a optimistic piece about you. This article highlights that while
most cities in the U.S. are in recovery (at best), Houston is full steam ahead
and in expansion mode. Silicon Valley is to technology as Houston is to Energy,
in that Houston has an infrastructure of talent and the coupling of synergistic
companies which create a pulling effect for other energy companies to relocate
or start in the city.
ü Shorter Takeaway:
I would read the NYT more if Jim Arket was quoted more and in the article he rightly calls oil
prices and shale exploration the “force multiplier” of the overall
Houston boom. The question is, how long will this force multiplier
last? It is the wise real estate professional to know that we are in a
limited window of heightened demand that will eventually subside – best to act
accordingly.
Rollover Risk:
ü Short Overview: I
had to temper the overly optimistic previous article with a little cautiousness
(it’s good for us blindly optimistic folk). Let’s face it, nationally
there are quite a few five-year leases signed at historically high 2007
fundamentals that are coming up on renewal this year which will create some
varying problems for landlords.
ü
Shorter Takeaway: Many office owners around the U.S. that have large
rollovers signed in 2007 might find it challenging to renew leases at rent
levels signed prior to the downturn, but I would temper this by saying in
Houston fundamentals are quickly approaching 2006 and 2007 figures (not there
yet, but approaching).
CBRE
12 Trends for ‘12
ü Short Overview : CBRE Economic Advisors has a new report coming out that details
the 12 trends of 2012 and this helpful overview has some good takeaways.
The “FUD” (Fear, Uncertainty, and Doubt) factor of the European debt saga is
the backdrop of caution to what are predominately optimistic trends such as:
Class A industrial properties cap rates getting too low of yields for many
buyers, and finance jobs recovering as housing slightly improves.
ü Shorter Takeaway:
We have seen a suburban office market fundamental renaissance here in Houston,
and an interesting trend noted is a national recovery in suburban office
fundamentals.
Too
much Supply of Texas Tea?
ü Short Overview : With Iran causing trouble, the oil markets have been in a
frenzy as brent crude rose to an 8 month high of $121 yesterday. Domestically
however, supply is mitigating the price because of our friends in West
Texas: Due to their production, West Texas intermediate crude
prices are at a record discount to Brent.
ü Two Takeaway:
Very interesting to keep our eye on if the rise of oil shale fracking will have
a similar impact on the supply side fundamentals of oil market that gas
fracking has had on the natural gas market.
The
Next Office
ü Short Overview : Executives and business leaders are all faced with ever
increasing challenge: Balancing global competition for customers/talent
and the driving need to innovate with cost pressures. Amazing how much
corporate decisions for office space have to do with each of these
challenges. The building and office design a leader chooses for his/her
company directly impacts how employees share information, collaborate, and
innovate. In the end it all ties to the lower right hand corner of the
balance sheet.
ü Shorter Takeaway:
Office real estate structure and design helps organizations recruit, retain,
create, innovate and drive growth – and the savviest of corporations are
realizing the power of well-designed space. This is a great
article.
Stats
for the Water Cooler:
Houston CRE News:
·
Sidley Austin
law firm: Opens Houston Office (temporarily operates at JPMorgan
Chase Tower, will be moving to permanent space this year (link)
As always, thank you for reading
and hope you have a great week.
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