RECON for May 12, 2023RECON for May 12, 20232023-05-12T05:00:00Z2023-05-12T05:00:00Z

RECON Texas Real Estate Research Center
TEXAS QUARTERLY COMMERCIAL REPORT summarizes key economic indicators helping discern commercial real estate trends in Austin, Dallas-Fort Worth, Houston, and San Antonio. Read the latest here.
May 12, 2023

Wage-home price gap could start closing, TRERC economist predicts

MONTGOMERY, Ala. (CNHI News) – The gap between wages and housing prices grew during the pandemic, but Texas Real Estate Research Center Research Economist Dr. Adam Perdue predicts that will start to reverse this year.

“What we expected is a small drop (in prices) this year and just relatively flat for the next few years until everybody's wages catch back up and adjust over time to a level that can sustain these prices,” Perdue told CNHI News. “Then we'll see the normal price increase path after that.”

At the beginning of the pandemic, the Federal Reserve lowered interest rates to encourage spending. This flooded the housing market with buyers eager to take advantage of the low rates. However, the limited housing supply could not keep up with the sudden increase in demand, causing housing prices to go up.

“Housing prices have been going up faster than the price of everything else, in general,” Perdue said. “And then they have also been going up faster than wages.”

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Tesla breaks ground on $375M South Texas refinery

ROBSTOWN (San Antonio Express-News) – Tesla has broken ground on its $375 million lithium hydroxide refinery.

Completion is slated for next year, with full production expected in 2025 at a capacity of enough lithium to produce one million electric vehicle batteries.

Tesla CEO Elon Musk said the Robstown refinery “would produce more battery-grade lithium than the rest of North American refinery capacity combined.” 

Five such plants are operating in the U.S. now, and more are being developed, but most of the world’s production is outside the U.S.

Hutto to be home to multibillion-dollar, 3.9M-sf data center

HUTTO (Austin Business Journal) – Skybox Datacenters LLC and Prologis Inc. have secured city council to move forward with PowerCampus Austin.

The 600-megwatt campus will be on about 159 acres at the southeast corner of US 79 and CR 132.

A concept plan indicated six buildings totaling 3.9 million sf could rise. Four of those would have 750,000 sf, and the other two would have 467,000 sf.

The campus, which will be built on spec, will be developed in phases, with the first phase delivering as early as the last quarter of 2024.

Williamson County Judge Bill Gravell said the project will mean $4 billion to $5 billion in capital investment in the county.

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348-acre Adelton master-planned community underway in Bastrop

BASTROP (REBUSINESS) – West Bastrop Village Ltd. has unveiled plans for Adelton, a 348-acre master-planned community.

The community will have 1,200 residential units, 125,000 sf of commercial space, four miles of trails, and 50 acres of parks, greenbelts, and other communal outdoor spaces at buildout.

Amenities will include a pool, beer garden-style outdoor pavilion, playground, and sports court.

Phase one includes the construction of two-, three-, and four-bedroom homes ranging from 1,400 to 2,800 sf.

First move-ins begin this summer.

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Dallas leads hotel construction growth

Dallas (GlobeSt.com) – Dallas led the top 25 U.S. markets in hotel construction with a record high 184 projects (21,810 rooms) built year over year. 

Los Angeles, Phoenix, and Nashville followed in that order. Dallas also has the most projects scheduled to start in the next 12 months. 

Kate Pittman, vice president of strategic partnerships for Premier, told GlobeSt.com, “In the Dallas-Fort Worth area, business travel has now returned to pre-pandemic norms, thanks to the market’s diversification in business sector offerings.” 

Premier, in a joint venture with Blueprint Hospitality, is currently developing Le Méridien Fort Worth, a redevelopment of the 13-story historic building formerly known as the Hotel Texas Annex. The 188-room hotel in downtown Fort Worth is scheduled to open in first quarter 2024.

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CBRE: Austin industrial still strong after record year

AUSTIN ( CBRE) – Following a record-breaking 2022, demand for industrial product continued to drive local market fundamentals in first quarter 2023, reports CBRE in its latest market update.

CBRE tracked over one million sf of positive net absorption in the first three months of the year, roughly keeping pace with positive net absorption during first quarter 2022. 

Developers added 1.7 million sf of new product to the market in 1Q2023. Concessions remained minimal as occupiers head to industrial submarkets on the northern and southern ends of the city.

Consumer goods, ecommerce, and manufacturing related to the opening of Tesla’s ten million-sf gigafactory continue to drive demand.

Other highlights from the report:

  • Industrial asking rents were down 3 percent from 4Q2022 to a market average of $11.21 triple net.
  • As of 1Q2023, owner-occupied properties are now included in CBRE’s tracked inventory for Austin industrial to better reflect the entire market. This, coupled with strong leasing activity, caused the vacancy and availability rate to decrease quarter over quarter.
  • Local developers have responded to supply chain realignment that has driven industrial demand across the country with 16 million sf slated for delivery by year-end.

CBRE: SA office market fundamentals soften

SAN ANTONIO (CBRE) – The local office market had negative net absorption of over 86,000 sf and a quarterly vacancy increase of 140 basis points to 18.5 percent in first quarter 2023, according to CBRE's latest market survey.

"The overall slowdown in the office market is largely attributed to USAA's downtown departure at Bank of America Plaza and One Riverwalk," the report said, "where over half a million sf was vacated and nearly 500 employees returned to its corporate headquarters on the northwest side."

The central business district continued to take a hit, but the activity in the northern submarkets remained robust.

Most activity occurred north and northwest of downtown, where WellMed took occupancy at the new North Rim Corporate Campus and Jefferson Bank moved to its new HQ on Broadway near the Pearl.

New construction flattened, with only five buildings totaling 286,265 sf underway.

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