August 12, 2010

Today we talked about

1. Adaptive Reuse

2. Transportation

3. Future of Office Space

We were discussing how telecommunications could change where people would be working from. In other words, being able to work from your home instead of a corporate office could be a game changer. One aspect to look into would be the less of a necessity for an office building to employ your workers. If constant surveillance is not a top priority for your business to operate successfully then there really is no need for a home base if each person can access a database and email to be able to be in contact with the company's resources and personnel. If major telecommunication companies ever got to this point, major compounds and facilities would become vacant and there would be no need for new infrastructure to be built. If the facilities go then you would have to agree that any community that was centered around it would go as well. If someone is only living where they are because of distance to work then there is nothing to keep them where they are currently at. It is not like I see this happening in the next five or ten years but it would an interesting phenomenon to see play out. It would not be a great time for commercial real estate players by any means.

We also discussed transportation and its effect on development. In San Francisco, their trolly lines are the most popular form of transportation for residents and tourists. The one thing that I get from this is that no one wants to ride a bus if they don't have to. I do not know when or how the stigma came about but for as long as I can remember, which isn't that long, it has been around. Missouri is actually thinking about implementing a trolly line in St. Louis due the amount of success San Francisco has had. One big aspect of creating a trolly line and thus trolly stops is the major development that will come with it. If trollies become a major hit many investors would want to build things around these newly created hot spots. Another kind of transportation we discussed are speed rails. Like a trolly line major development would be centered around each hub. One thing a speed rail would bring that a trolly line couldn't is allowing people to live farther away from work due to such an easy way of commuting back and forth. Also the amount saved on gas or a car payment could be substantial.

Adaptive Reuse has been talked about numerous times throughout this course but we hit on it again tonight. Many cities are trying to make their once popular attraction become popular again but due to being used in a different way. This can be seen from an old brewery or warehouse being turned into luxury condos or apartments or mix income housing. The building I am currently typing this in (my classroom) was once a garage shop and then a farmers market and now a small campus, the UTA Fort Worth center. If you have a creative side in real estate and have the financing for such a project this is a great way to make some money. Yes there are risks, such as if the adaptive use concept really doesn't work or actually finding the resources. In contrary, every project is going to have its risks when its real estate whether commercial or residential.

July 29, 2010

Today we visited the Fort Worth Trinity Vision Center. This office's goal is to create a new river environment that would encompass 88 miles of the Trinity River and its greenbelts and tributaries throughout the Fort Worth Area. The most well known project is to create an urban waterfront community to the north of downtown Fort Worth. The community would consist of residential homes and apartments that would not compete with the entertainment value that the current downtown brings. This project would connect downtown to the Cultural District and the Stockyards. It would combine recreational opportunities with flood control and environmental enhancements to greatly improve the public utilization of the river. This new infrastructure would offer twelve miles of active urban waterfront and a 33 acre lake just north of downtown, which would make the entire area attractive for private development and mixed income housing.

Trinity uptown will provide increased access to the rives and its numerous trails in Fort Worth. An added 1.5 mile bypass channel will change the current flood control measures and eliminate the need for five miles of levees that have blocked the river access in the downtown area. Along with the river front access and new community this will take Fort Worth to a whole new level that it deserves. The infrastructure needed for the the flood control and transportation will bring a once aging industrial area back to life. There will be 800 acres of underdeveloped land accessible for private development that would double the size of the current Downtown. The new zoning and guidelines would create high density waterfront community with 10,000 mixed housing units and three million square feet of office, retail, and restaurant space. This in turn equals housing for 40,000 residents and provides 16,000 new jobs.

Another major project is to enhance Gateway Park to be one of the nation's largest urban programmed parks. This development would connect the East and Southeast neighborhoods of Fort Worth to the Trinity River corridor. The park would consist of a new soccer and baseball/softball fields, disc golf course, mountain biking course, expanded trail, and an amphitheater to name a few. The park would also aid in ecosystem restoration such as 80,000 new trees, lake and wetland creation in the old drying riverbeds, and clean up and return water to the historic Riverside Oxbow.

Currently, two-thirds of the land needed for the project has already been acquired. This is actually quite impressive due to the fact that the land is owned by private persons of companies. Part of the office's responsibility is to help relocate each business to a place that is suitable for their business such as where they were before the move. Most of the acquisitions have been smooth with many of the companies coming to the office ready to sell and with a potential spot to relocate their business already chosen. For those companies that were not as forth coming to sell and relocate had smooth transitions once they understood the project, its goals, and the services it would be providing to help them relocate.

Having made Fort Worth my new home I am very excited to start to see progress on this program. Even though this will take over a decade to complete, once this is done Fort Worth will be on the map not just Dallas. From the looks of how successful the San Antonio River walk is, if the project comes out like it is suppose to there will be nothing but goods things to come.

August 5th, 2010

Today we had a variety of discussion that hit on things that we talked about before.


Apartments have seen an increase in occupancy while the market has soured in the housing sector. Why have apartments been able to reduce vacancies? One reason could be directly related to the housing market. Many people have been watching house values decline to the point where it does not seem to be a great investment as it used to be. Many people have relied on the proceeds from selling their house to be a large portion of their retirement nest egg and have are now in dire situations. Why make such a huge investment when so much of the risks involved in buying a house can be mitigated by renting. Besides the investment side, maintaining a house can be extremely costly from simple things such as lawn care. The price will only trend upward from such items as replacing an A/C unit or buying a new washer and dryer set. If you rent your landlord is responsible for most of the items. Another reason is that due to the current economic climate many people cannot afford a house. Many people were laid off and still cannot find work or found work but their income level is substantial lower. Another reason could be that many people bought a house when they really couldn't afford and now are being foreclosed on. Their only option at this is to rent. The apartment complex that I live in has increased its occupancy quite a bit over the last year. There are easily twice as many people on my floor alone from when I moved in. Even though I am not sure of the exact reason as to why there was an increase at my complex as well as others but I am pretty sure that the market has almost everything to do with it.

Along with this topic we discussed future trends of the housing market, and of course they are bleak. From now through 2015 there will be a slow economic expansion that will bring slow growth in jobs and wages. The pace should allow for new households to form but will not be fast enough for members of those households to afford their own homes. Another point was made about the stringent laws that are being put in place when comes to home loans. Yes they are supposed to be there so that we do not have another Great Recession but one side effect of this is that it will become increasingly harder for younger households to get mortgages.


Another topic we discussed was multi family residence. In D.C. Atlanta based Post Properties has announced to begin construction on a 344 unit luxury apartment building as a second phase to its already built Carlyle Square apartments. The project is estimated to cost $95 million and the first units would be available in 2012. One thing to consider is that Post is one of few developers that has the numbers working in their favor. Construction financing is available for concrete slabs over five stories, Texas donuts, and garden style apartments that are stick built due to being more cost effective but not so much for normal garden style or high rises where the cost per square foot is substantially higher. Also, when the land was last sold or traded is something to worry about. If you have purchased land after 2006 then you have paid too much due to condo out sales and underwriting. Analyst say you might have to hold on to that land for another five years before underwriting and project costs meet and acceptable level. Real estate investment company J.I. Kislak Inc. has announced to acquire $200 million worth of multifamily properties with 150 or more units in Arizona, Florida, Texas and across the Sunbelt states. The company believes that the apartment market is beginning to stabilize and that it is an opportune time to increase their presence by adding these complexes. If you have the cash on hand right now it is the absolute opportune time to buy real estate in general. As discussed in a prior post, if you are able to buy a building at lower costs you will be able to rent or lease out the space at a lower price. If your price is lower than your competitor and have equally nice facilities then you are going to take away customers if they don't match your price. Just like the stock market you just have to make sure your are buying at the low. You don't want to think that things are getting better then find out that the market is not near any stabalization.

July 15, 2010

Today we talked about a variety of topics that pertain to the money aspect of real estate. They were

1. Lending

2. Foreclosures

3. Workouts

The current economic position of commercial real estate is not good, not good at all. A study showed that 2/3 of commercial real estate that is financed is underwater. Underwater is the term used when the value of the property is worth less than the debt that was used to finance it. What some banks are doing right now to combat these lending issues is to push back the maturity date. Obviously there are two sides to whether this is good for the economy. The banks believe that by pushing back the maturity date and thus not foreclosing on the property, the person being leant the money will be able to pay back the amount sometime in the future. Also, the banks see no sense in foreclosing on the property when the market is already saturated with properties exactly as theirs. From a financial statement perspective, by pushing back the maturity date they can classify the loan as operating still. By doing this they will not have to send more cash to their reserve in case the loan defaults. As your reading this you are probably thinking the same thing as I am; that the banks are only delaying the inevitable where the property will be foreclosed and the bank will be in a worse position. This is a very probable conclusion. Looking at these set of facts it is as if none of these players have taken notice to what caused our recession, toxic assets. The term that is being placed on this is called "extending and pretending", which we can all see where the name gets itself. I am not of any expertise to say that what the banks are doing is wrong. For all I know the market could strengthen and the loans will be paid back. The thing is, is that this looks very similar and it is quite frightening to think that a relapse is around the corner.

Foreclosures was another topic we discussed and it too has a doom and gloom feel to it but there are upsides. In the Fort Worth/Dallas area in the month of June alone there were 256 foreclosures added to the list. This is not a good sign for those that in this industry if you are holding one of those properties but if your not this is the time to buy. When foreclosures become more frequent investors are on the lookout for those properties that are substantially below their cost or replacement cost. By being able to buy a piece of property at such a low price you are able to lower your own price to customers due to the lower amount of cost you have to cover. This is where things can become interesting, it is almost a game changer. By being able to reduce your price to customers you are causing other buildings around you to have follow suit are lose out on their market share. If the company can't lower its price due to their high cost to cover than their building might be foreclosed too. It is almost a natural cycle. Even though foreclosures equal bad news their are some upsides to them if you happen to be in a more sound financial position.

Workouts are pretty much when you refinance a loan. In our class discussion workouts usually come about when the lender does not want to take over the rights of the property even though the person who was lent the money cannot make their payments. Workouts are process where you are down on your luck for now but in the future will be able to repay the money back. Do not think that workouts come at a cheap price. Usually the lender will ask for a percentage of the money that you will receive when the property sells. On the other hand the lender is not out to get you, they have an understanding of the situation and are trying to make both sides work. Though they may not be trying to find the best possible way for the person who owes the money but rather try to "work out" something that is mutually beneficial.

July 8, 2010

Today we talked about numerous topics but a few that I found interest were

1. International Commercial Markets

2. Sustainability vs. Saving Cost - Which one is the company really trying to do?

3. Resort Resident Ownership

International markets are becoming a little more appealing now that the economy has become a little less volatile, i said a little. The focal point of international real estate is centered around China. Right now they are having a boom in the industry in which some say is a bubble, others not. Both sides have strong points to base their opinion. Some statistics that side with the market on the cusp of busting are that in 2009 there was a 12.6% GDP growth, in which was the strongest growth since the 1990's. Further, the housing sector is the main role player for that growth. The only way that China can keep the bubble from bursting is having liquidity and available financing. Time will tell if they actually have both. Those that think the market is showing growth within its own limits believe China's real estate growth will not turn turmoil like we have seen before. Many say that the bubble will not burst due to China's government regulation and their lower debt compared to its western counterparts.

Iraq is another country that is showing signs of growth in both residential and commercial real estate. Recently the largest construction project has broken ground in post Saddam Iraq. The project will cost $238 million and will house 3500 residential apartments, a five star hotel, an office tower, and an upscale shopping mall. Iraq is in major need of new housing for its citizens and has been for some time. The government has spoken out about them backing investors to create these new complexes but have not put their words into action. They have stated that in the next 5 years as oil royalties increase substantially they will be able to fund many more programs and thus increase investors interest in Iraq.

Another topic of discussion was whether companies that are trying to become more sustainable or green are really environmentally friendly or are they just trying to cut cost. I have a real life example to explain. There was a hotel that decided to put a meter in each room that measured the energy used. To go along with this they would offer guest who had the least amount of energy used for a week a couple nights free stay. Because of this program the hotel saved tons of money on utility and energy bills each month. Well, a few months later the hotel took off the meter because it was not compatible with their video on demand. When asked why the change they answered saying that they were making more money off the video on demand than the amount of money saved on the utility and energy bills. After I heard this story it was hard for me to believe that many of the major corporations and even small businesses are really green thinkers. In my opinion sustainability is just a way to improve their public relations while cutting costs. They could care less about the Ozone layer for the time being.

The last topic that I will talk about is how certain hotel/resort companies are allowing people to buy property that is located within the resort. 4 seasons allow people to either be actually owners or apart of their resort club. 4 seasons has multiple locations across the world where you can pretty much buy your own hotel room that you can visit or allow others to at your consent. The other option is to become a part of their club and have access to certain resorts around the world and stay their for months at a time. They are kind of like time shares but they last much longer than a week or two. It is possible to live in 3 or 4 different parts of the world in a year if you live style permits so. At Disney Land they are selling actually houses that you can buy that are located in its own community near the park. I would have never thought that a amusement park would sell houses. I believe they start at around a million so they are targeted for the wealthy that have kids of a younger age.

The whole idea of hotels and amusement park selling property is the start of a new market. As the economy becomes stronger I can only imagine other resorts or highly distinguished theme parks will try to enter this market. It would be very unlikely that the competitors of 4 Seasons and Disney Land would let them be the only ones pursuing this new and savvy idea.

July 1, 2010

Tonight we talked about various topics but I would like to focus on two main points

1. Low Income Housing

2. Taxes

Low Income Housing has become a hot topic due to local governments' push to move this kind of housing to areas that are more upper class than not. Those against the idea bring up the bad connotation that comes along with it. When you talk about LIH many peoples' first thoughts are that it will increase crime and cause poverty stricken people to "infest" their community. In some cases this can hold true but not under most circumstances. They do not stop to think that many of these families or individuals moving in are human beings with just as much moral fiber. Also, many of these people that take in a low amount of income have important jobs that we take for granted, i.e. janitors, cashiers, waste management. One of the ideas behind low income housing is allowing those that have these jobs to live close to where they work, such as downtown. From a more liberal mind set, it is wrong that they have to be bused in from the outer parts of the city where it is the only affordable place for them to live. Another hot topic on lower income housing is when the complex or property is bought by an investor who is going to make turn the area into luxury apartments and kick out the prior residence. When this happen there are not many funded programs that have the resources to be able to relocate these individuals. Who does the responsibility lie on, the public or the government?

Those that are against the idea of lower income housing are usually of an elite or wealthy status. They pay big money to have their big, lavish houses and since they are paying this kind of money they feel they have the right to say they don't want this by their neighborhood. They only want their nice houses with well respected individuals of community in their smaller community. But is this really a great idea? Is having one non-diversified community the best way to live or grow up. Our teacher talked about Los Almos, New Mexico where the Atom bomb was created. This was a little community full of multiple PHD's per house, only the smartest and the brightest lived here. This sounds like a very stimulating environment for someone to grow up, right? Actually the high school within the community had the highest suicide rate in the country. Many kids felt the pressure to be the smartest and the brightest that when they failed they did want to accept the "repercussion" of being less smart. The funny thing is that the less smart kid in this community is probably the brightest kid in any of the other surrounding high schools if not the country.

Taxes, Taxes, Taxes. More so than not people hate taxes. The only time someone ever says taxes with a smile is when taxes is followed by credit or cut. Taxes have become a big issue in recent months now that we a health care reform that will increase taxes considerably. I am not going talk about my position on this topic but rather the good things that taxes can do. For one, they finance the services that the public market did not create themselves. This can be seen from police and firemen to water treatment. Taxes also influence the general public in certain ways, mostly good but sometimes you are going to not like the direction the government is pushing towards. The most recent influencing is the first home buyers' credit for $8,000. Others include deductions for being more green or rebuilding a historical building. Regardless, taxes are always going to be there, sometime low, sometimes high. Just one word of advice, pay them.

June 24, 2010

fToday we talked about

1. Retail Market

2. Technology

3. WWW

Do note topics obviously intertwine which each other due to that the internet is one our frontiers for technology.

Todays' retail market is definitely in a transition. With internet shopping and the recession changing the average consumers' spending habits retail space has vacancy. Internet shopping has flooded the market from buying clothes to ordering your food. There are countless online markets, primary and secondary, that allow people to not go anywhere to do their shopping. Because of this many retailers are changing their business model to incorporate online shopping and gain back some the market share that they lost to Ebay, Amazon, etc. The main change has been how stores are incorporated their website into their stores. Many department stores have added new registers that connect to the internet. This helps out in two ways. One being that if a customer cannot find their size or style in the store a representative can order it for them right then and there. This stops the customer from going home and possibly buying the product from another website. The other perk is that it will help with inventory logs and thus reduce the cost of storing products that are overstocked or to notify the store that they need more of a product and thus not lose out on a sale.

We also discussed the trend of more restaurants/bars being built compared to actual retail stores. If you are familiar with the fort worth area go down to West 7th street and notice the amount of restaurants/bars there are compared to the latter, it is at minimum 3 t0 1 ratio. If you go down to magnolia there is nothing but new restaurants being built. But why is this happening? Todays' social setting has changed dramatically over the past couple of decades. Churches, charitable functions, social groups, etc. were how many people came together and would meet. Now-a-days the restaurant/bar scene is were almost all professional no matter their age are meeting up. There is just something that is very appealing to going to these kinds of places whether it be the atmosphere, the location, or simply taken the edge off with an alcoholic beverage. Being a guy, I love this new trend. I love to eat and drink not shop, so keep on keeping on.

We also discussed how the internet has changed the way people look for new homes or commercial real estate. Over the past decade the internet is 80 t0 90% of the time is the place where the search starts. Printing aids in newspapers and magazines are a way of the past. Many realtors or agents have become very technologically savvy with how they market themselves and their listings. This can be seen from blogs, video blogs, tweeter, etc. Because of the technological advances in the marketing of real estate, those looking for new homes or facilities can find all the information they need on the website. People can look up the amenities the community provides, which school district it resides in, and the taxes that correspond to living in a particular area. The agents that do not keep up to pace are going to miss out on tons of potential clients and thus revenues for their firms. As technology becomes more advance I can only wonder what the marketing environment will be like but I'm positive it is going to be very user friendly to the customer which will make it easier for the agent.