Final Night Of Class-- =(

In a bittersweet ending, we area all being sent off into Summer break with a lot of Real Estate Trends & Issues to think about. I don't think I'll have a problem having dreams about me drowning in a pool of distressed CMBS loans with a Shiner at hand....ahhh summer has arrived.

Lets knock it out, so here are a few of the articles that highlighted the conversations for tonight....


Texas Rail Plan Article

Makes pretty interesting point that when building massive highway systems, traffic “magically” appears, and without these concrete jungles, it is dispersed and essentially non-existent. TxDot has joined the National Rail Association along with 32 other states, but has missed out on recent Stimulus funds to gain ground on pushing more rail lines out.

Nation’s first High-Speed Rail Line breaks ground in San Francisco

San Francisco has begun groundbreaking on the nation’s first high speed rail, The Transbay Transit Center Project, a $4.2 billion project. After 40 years of planning, the project has begun and is slated to create 48,000+ jobs in the process. The innovative 5-story center will set the benchmark for the rest of our nation’s cities to follow.

IFMA Foundation & FMLink Website
Both website mentioned above have a plethora of information in regards to Sustainability and the savings it can create from a facilities management perspective.

Overall, this class has been a pleasant deviation from the normal MSRE program, and I would recommend it to anyone in the program.

Have fun in Germany/Ireland Dr. Forgey!!!

Class 9--August 5th--Resi/MF,Construction/Development & Trends

Resi/MF Article

Our discussion tonight was initiated by diving right into the residential market in the DFW area. We have shielded ourselves of the national depression for the most part, and are actually slated to have 12,000 units delivered by years end. Absorbtion has been steady and construction is still taking place in the area. Much of the current construction is just project that have been at a standstill and are finishing out to gain income potential, but there are a few new construction projects in the works (primarily MOB’s). Due to a decline in consumer confidence, renting will stimulate the MF development/acquisition sector of the industry. People are going to rent more until they feel comfortable that house values will not continue to plummet, along with the fact that most aren’t getting loans with realistic terms. With current single-family inventory slowly being absorbed, if the construction lending rebounds slower than the demands of the marketplace, it will pose a problem for those particular builders. Since the expiration of the government created tax credits that artificially stimulated sales, homebuilders have been seeing less activity.

IPad Article



On a techno-note, construction companies more and more now are utilizing the IPad since it’s inception. The device allows Project Managers to have easy access to drawings and schematics, and to incur far less costs than printing. The flexibility and ease of use allows for a very efficient and cost minimizing practice amongst those involved in the development process.

REIT Article

Multifamily REITS have seen an uptick in investment, as there is confidence that that sector will yield relatively better profits than any other. Many of them are scooping up MF portfolios at deep bargains (arguable), and hoping that operational efficiency under new management can yield a higher value at reversion. It will be interesting to see how much they will be invested in, as they were the ones that picked the confidence up in the early 90’s after the S&L collapse.

Florida Property Values Article

As BP faces all kinds of penalties, amounting to $billions, the Governor of Florida has another request and bill for them: “Pay the difference in the readjusted property values after the spill occurred.” Essentially, the Governor wants the whole state (all counties) to reappraise all residential and commercial property after the oil spill, and wants to take the loss bill to BP. It will be interesting to see how this once pans out.

What did I take away from the article on Economist opinions on where the housing market is going?
NOTHING.

July 29th-Trinity River Vision Authority Ft. Worth, TX

"Strollin' west down the Trinity..." A week has passed since our visit to the Trinity Trust in Dallas, and the topic of the Trinity will stay in discussion circles for at least another week as we are visiting the Ft. Worth version tonight. We took a "stroll" down the street from the campus and visited the Trinity River Vision's info office. Right off the bat, it seemed like there was a lot more cohesion amongst parties involved with the Trinity River Vision compared to it's Dallas counterpart. The walk in appeal really drew interest amongst us all.

We were greeted by one of the Planners, as she was so kind to set up a private information session with a great power point presentation and Q/A session.

The natural progression of the Trinity as it flows through Ft. Worth is a lot more appealing for development compared to it's straight line presence in Dallas. The Vision's project encompasses two primary portions, The Trinity Uptown area and the Central City project.

The Uptown area is going to encompass 1000 acres of land, and will be driven by a lot of private capital. It's ideal shape allows for very easy envisioning of how the dilapidated light industrial area will be revitalized. Zoning will be form based MU. The River makes a natural U-shaped land mass, which will be the center of the phase. I really like how the visionaries behind the project have taken into consideration the allocation of office space vs. residential/retail space, clearly to avoid any competition with its neighboring CBD area. 2/3 of the land will be residential/retail, and the current resident's of Ft. Worth seem to support the ideas fully (polling). Citizens really stressed how they wanted water front activities, and the involvement by the US Army Corps of Engineers will truly allow for this idea to sprout. They have already started construction of a world-class levee system that will ensure a catastrophic incident (like the one in 1949) will not occur again. Drainage problems have been a consistent issue for residents and the city since the 1960's, as the levee system created then did not account for the population levels of today.

The Central City portion of the project will be concentrating on the public/private infrastructure required for flood protection. With 12 miles of water related improvements slated, the total jobs created will amount to 16,000! In doing their research of similar waterfront projects from around North America, they found their ideal example in Grandville Island, Canada (Vancouver area). As the currents will be running downhill towards new developments, the Vision would have to distinguish the east side as the side to build a bypass channel (and where developments will be), as the west side will be used for recreational activities.

Overall, the build-out timeframe is going to be 12 years, and the total project cost will be upwards of $1B. 2011 will mark the beginning of the project, as the first of 3 bridges will be built. Along with the planting of 80,000+ trees, an ampitheatre for live performances and events will also complement all of the mixed use developments.
On a realistic note, the Ft. Worth project seems to be a lot more organized as 60% of the costs will be coming from Federal funds that have already been secured, and 40% will come from the City of Ft. Worth and the Water District.

A true vision has checkpoints and measurable attributes. This project fits that definition and is surely something special, as it will stimulate tourism and and immense private sector investment to help Ft. Worth grow even faster.

July 22nd-The Trinity Project Dallas (Hosted by the Trinity River Trust)

Having class on a birthday is never a fun thing, but with my luck, class was held at an event highlighting the Trinity Project in Dallas, hosted by The Trinity Trust. The Urban Land Institute aligned with the Trust to allow the pubic to gain insight into progressions of the overall project.

We engaged in conversations complemented by drinks and Hor d'oeuvres to kick off the event, and shifted into the presentation thereafter.

An urban planner affiliated with the Trust named Don Raines initiated interaction, and jumped right into details of the proposed plan. A crash course of the history of the Trinity River clearly emphasized it's importance to the city and it's upbringing over the years. An interesting point he made was that due to immense flooding through the 1900's, all of the bedrock limestone was removed from the base of the river. The Margaret Hunt Bridge has kicked off the major development for the project, and the Trust is pushing the importance of "selling the water, to sell the land." Since the land values are projected to increase from their dismal levels currently, water based activities are being stressed. The public private involvement is going to be very important, as funding right now is almost non-existent. On that token, it seems that even the City of Dallas can't put too much into the project just yet with its current budget shortfall and dropping property values (no revenue coming in!=no fun new projects=duh).

The project in whole encompasses 10,000 acres, and includes an Ampitheatre (lily pad shaped concept), miles of hiking/biking trails, water activities, sporting complexes, and live/work/play developments along the banks of the river. With a project and vision of this caliber, it will be many years until everything comes to fruition. Currently there is a model that is displayed at the location, but according to Mr. Raines 30% of the drawings were accurately in place. Rumors have it that a sky tram carrying people from different areas is also being proposed.

Overall, the experience was great, and the networking opportunity was even better. I feel a lot more educated about what is going on with the area now, and will be staying in tune with projects as they start sprouting up over the years.

Now its time to celebrate, as if I didn't have enough beers at the event. Cheers!

July 15th, 2010--Where is the $$$ at!?!

Our discussion today was based on the Capital Markets, Emerging Markets, and essentially where the real estate finance world is headed. These articles described below are pretty interesting, but have a lot of negativity (unless you're Brookfield Asset Management), so reader beware!

“Home Sellers Slashing Prices, While Banks Mow the Lawn”
Since the First Time Homebuyer Tax Credit has expired, the newest problem that has transpired is that people are over the “one time high” that it created. Banks are now faced with high foreclosure proceedings and will be liable for asset management responsibilities as they hold these properties on their books. Ouch! Cities like Los Angeles are fining banks that let properties fall into disrepair in order to incline them to sell the properties for a discount and “mark to market.” Please stop the “pretend and extend” people!!!

“Non-Public REITS”
Private REIT helped get us out of the S&L crisis as they scooped up a high percentage of the distressed assets created by that era. For those that have the net worth enough to invest in these types of investment vehicles, it is a very interesting to set your timing correct. At point of investment, distressed properties could not be producing any profit for an X amount of periods, but then may realize the upswing after the properties have been realigned and create cash flow from operations and high reversion prices.

“Two Addison Circle Article”

Toronto based Brookfield Asset Mngmnt is set to acquire the LEED Silver office building, sitting vacant at 15725 N Dallas Pkwy in Addison. The building has 200,000 sq ft of Class A space, and the firm is picking it up at $80sf, compared to the close to $250sf spent on the building to build. This shows how much of a discount the investors are getting on this property, meaning they can inherently set rents much lower than the general submarket office buildings around it. Logically, situations like these create a horrible domino effect driving down rents all the way through, and creating more foreclosures in buildings that lose the tenants that are garnered by buildings like this one (low basis cost going in=ability to set rents low). Also, it is very interesting to see how much tax base revenue is going to be lost on the school district, city and state levels. Ouch!

“Colony Capital JV deal wins $1.85B FDIC portfolio”

New York-based Colony Capital has acquired its second $1B+ portfolio this year, clearing properties off of the FDIC’s hands originated from 22 failed banks. The firm is obviously well capitalized and had foresight to plan for deals of this size, but is it the right time to strike just yet? A lot of the value that will be created will be by those that wait it out long enough to buy at extremely low prices, prices that are closer to the true value of these income-producing (or NOT producing) properties. Hmmm?

July 8th, 2010--Hospitality, Housing Trends, the Chinese & the Latin Americans!

Our discussion began shortly after I strolled in late from taking my Lease Analysis midterm that I missed last week...Ouch!

The topics for today were particularly interesting due to their broad nature and indirect connection to real estate. Below are some of the synopsis' from articles we went over through the discussion.

“Travel trends & predictions” Article
-Potential move away from air travel due to the rise in energy prices, directly implemented to the price per ticket…local travel and regional travel through driving and train can take advantage of this and attempt to modify peoples behavior if these options are made more attractive (beyond reduced cost)
- Why do people have a negative stigma about riding public bus systems, and what can be done to activate more interest in doing so?
- On the Australia Winter Study Tour, Dr. Forgey found the railroad system connecting the Sydney CBD and their Airport. Upon revealing the plans, a private group of investor/developers bought a large tract right in the way of the line’s proposed crossing. They developed the mixed-use project/train station on top of dirt-cheap brown field land that had no worth before this project’s announcing. Point in case, a system like this can revitalize areas of a city that are dilapidated and can create opportunity for a public/private partnership, or symbiotic relationship.

-“China’s housing market: Boom or bubble?”
-As land values are increasing, they are driving the overall value of improved properties (where construction costs are usually not as volatile)
-5% of residential values are created by debt mortgages…a very interesting point when looking at the culture of the Chinese, and many Asian countries. Debt is existent and creates increased growth and activity amongst more and more participants, but it is NOT relied upon nearly as close to the use of SAVINGS and equity. Owing money has a more negative aura about it there than in the USA, and therefore safeguards them from the volatility of the credit markets.

-“Real Estate Transparency: Latin America Weak”
-Jones Lang LaSalle has ranked the growing property markets in Latin America as being weak with transparency and transactional information. A large part of the issue stems from a lack clarity from the regulatory arms of these countries. Australia ranked #1, with the USA coming in at #6.

-“Economic stirrings in Iraq w/ new multi-million dollar building scheme”
-Private Jordanian & Iraqi developers are building a massive 3500 acre mixed us development worth upwards of $300 million in which up until recent times, was one of the most dangerous areas within the war zone. Personally, as much of an opportunity this under served market may have, the stigma that goes along with building in what is the center of a CURRENT war is just enormously negative. Maybe I'm just the odd ball out and I missed something along the line here?

July 1st, 2010--> Low Income Housing, Taxation, & Governments

Low Income Housing Articles:

City of Dallas is being scrutinized for their lack of inspecting developments that are HUD funded in some aspect, and requires a 51% affordable housing allocation. The developers for the project at 1600 Pacific have clearly overlooked that rule, and have essentially no tenants that meet those criteria. Major cities are allocated millions of dollars a year by HUD in forms of CDBG’s, and in the case of Dallas, $35 million was granted to be dispersed through multiple programs just last year. The responsibility of occupancy verifications falls in the hand of the City, and they are seeing a great deal of outrage from the general public along with HUD.

Taxation Article:

Democrats in Congress are currently trying to push legislations that would increase the capital gains tax from 15% to 25%-45% over a the next few years, inherently making real estate a level headed investment when paired next to any other common investment vehicle. Over the past however many years, real estate has been seen and used as a favorable asset due to limited taxation. Theoretically, if this legislation is passed in any form, investment dollars will shift from real estate to other more liquid investment vehicles. The negative stigma attached to real estate securitization and investment managers behind the current downfall has worked as a catalyst for those lobbying for higher taxation on the “carried interest.”

Commercial Rent Tax in California…?

City of San Francisco is proposing to implement a “commercial rent tax” on commercial tenants, apart from the property tax that is already levied on the property owners. The idea is fascinating to anyone that is pro-taxation and/or a government in a deficit like San Francisco, but the unfathomable affect on small business is going to be interesting to witness. It is counterintuitive to drive any sort of business out of your city due to a new form of taxation, essentially driving growth, sales tax revenue, and occupancy revenues down for yourself.

June 24th, 2010 Class 3-->Retail Markets,Technology, Social Networking,Software Trends and Issues

We initiated our discussion on the topic of Commercial Retail Markets. Today we are seeing more and more restaurants & bars opening due to the fact that traditional retail shops are dwindling due to various reasons such as the popularity and development of high density malls,lifestyle centers, and the internet. From a Landlord’s perspective, it is a larger cash outflow for TI in restaurants, along with the increased risk that comes with high restaurant/bar industry turnover rates.

Internet Marketing 2010 Trends

Data warehousing facilities are creating a wave of demand for high tech space from companies that need secure locations for servers with the vital information that runs all facets of our country. A prime example of the shift by local governments can be presented here recently with Dallas experiencing a horrendous basement flood that wiped a lot of information out at the Record's Building. Just a few months ago the building's water mane broke, essentially disabling all county computers for 3 days. For as computer and information intensive local, state, and the federal governments are, one would imagine that the servers that hold the power to operate them would be housed in the Langely-monitored warehouses. Nonetheless, it seems that incidents like this one are the ones that will drive more demand for high-tech rental space for data warehousing.