Moving Toward a Greener Texas
AUSTIN, TX—Mention the word “Texas” and
what might come to mind are cowboys, wide-open spaces, dry heat...and oil derricks.
Texas is known for bringing oil up from the
ground—but experts point out that Texas
also has a focus on sustainability initiatives
and, to an extent, alternative fuels.
Austin is at the forefront of a sustainable
vision for the Lone Star State; in 2007, the
city’s controversial mayor Will Wynn oversaw passage of a resolution dubbed the
Energy Conservation and Disclosure
Ordinance. This outlined sustainability
mandates for everything from homebuild-ing to energy use in commercial real estate
to use of alternative fuels. The goal is a 35%
use of renewable energy by 2020.
John Sutton, BOMA Austin’s Energy
Sustainability Committee chairman, says
that even before these issues were formal-
ized through a municipal ordinance, conser-
vation was on everyone’s mind. “Before it
became popular, we had groups intent on
protecting the Edwards Aquifer,” he says.
Sunbelt Land Trends: Mixed Signals, Infill Hot
Hints of growing confidence in the US economy offer hopeful
signs across many real estate segments, including land. Even so,
restoring balance to the oversupply of development-ready land
will require smart development decisions, as well as time.
Land transactions have gained momentum, especially across
the major metro areas of the Sunbelt. Some
properties in play are distressed; many are
not. Underlying demand is driving long-term
landholders, who have
been waiting for a positive turn in the market,
to put their land in play—especially throughout Texas, Tennessee, Georgia and the
Carolinas. Furthermore, infill tracts are the
hottest land category.
The strong preference for infill development stems from multiple factors, one of which is current available capital. Financial
partners and investors want results from projects as soon as possible, and infill land provides those results as it is, more often than
not, infrastructure ready. As an asset class, land is generally out of
favor with most large, federally-regulated banks as the FDIC seems
to be pressuring them to push land off their books. Still, specialty
land lenders, such as Stratford Land for larger deal financing and
community banks for smaller parcels, are more likely to be receptive to business plans for infill development.
The most powerful determinants driving large-scale land utilization are housing demand supported by job creation and consumer
confidence. Though employment numbers and resulting consumer
sentiment suggest slight improvement, housing signals are mixed.
Fourth-quarter 2011 GDP growth was revised upward as con-
By David Moore
sumer confidence increased to its highest level during the year,
according to ULI’s Real Estate Business Barometer. In the single-family industry, both permits and starts reached a 20-month high.
More recently, reports point to stronger employment and growing consumer confidence, suggesting that the housing market
might be coming to life.
Despite this, the number of first-time home buyers continues
to lag behind the six-million-per-month level many economists
consider to be normal, due at least partially to more stringent
qualifying requirements for mortgages. Consensus about housing market momentum is further blurred by reports that new
home sales actually dropped 1.6% in February, a decrease of
nearly 7% since December, as published by the US Department
of Commerce in March 2012. Clearly, the housing market has
not yet stabilized nor recovered, though there are modest hints
of coming improvement.
Because of these mixed signals on the housing side, widespread stabilization of land development on the commercial side
(as well as the residential side) will require years. Land usage is
the most basic component of any development cycle, but the
seeming simplicity of investing in land is deceptive, particularly
facing such contradictory fundamentals. More than ever, the
future for land investors and developers relies heavily on the quality of their acquired assets, the strength of their specific markets
and the amount of leverage used, as well as their creativity,
patience and staying power.
David Moore is director of investments for Georgia, Tennessee and the
Carolinas at Stratford Land, based in Dallas. He may be contacted at
firstname.lastname@example.org. The views expressed here are the author’s own.
Vital Signs... Tucson’s multifamily occupancy for February was 91%; effective rent was $593, up 2.5% over 2011.—ALN Apartment Data
14 REAL ESTATE FORUM APRIL 2012