Precarious footing in Europe and Asia is causing currents throughout the international community. Adding in the Brexit kerfuffle, and the uncertainty that always accompanies US elections, gives an air of unrest in the global markets. In our back yard, a topsy-turvy stock market earlier this year and the will they/won't they uncertainty of interest rates, along with oil-related woes are having an impact on US commercial real estate. The implications touch most of the sectors, with the office vacancy rate declining from the second to the third quarter in all major regions of the country, says Cushman & Wakefield. There were large increases in vacancy during the quarter in Tulsa (+130 bps) and Houston (+110 bps) as the softness of the oil sector continued to weigh on energy-centric markets, according to the C&W report. In industrial, the news of Hanjin Shipping Company filing for bankruptcy last month set off shockwaves. Overcapacity in the shipping industry has been a looming concern as shippers have been introducing larger post-Panama ships to fleets. Retail and multifamily seem to be the only sectors that have strong footing due to continued demand, however, what comes up, must come down?—Lisa Brown

BY THE NUMBERS

HOUSTON—CBRE released the third quarter 2016 Retail MarketView with a few highlights, including absorption and retail sales. With the strongest absorption levels since 2000, retailers absorbed 810,000 square feet in third quarter 2016, bringing the annual absorption total to 2.8 million square feet. It is likely Houston will reach 3 million square feet of net absorption by the end of 2016, making it the strongest year for retail expansion in more than 15 years.

Consumers pulled back on big-ticket items but retail sales are stable. Auto sales declined 13.8% in August from the peak in October 2015 yet cannot compare with the 39% drop off in vehicle sales in 2009. Business spending in oil and gas, manufacturing, and business services is down, retail sales in general merchandise along with food and beverage are up 3.5% and 1.9% respectively.

HOUSTON—JLL released its third quarter office insight and statistics, along with some key findings. Regarding rents, 77.3% of sublease space on the market is class A, creating downward pressure on class A rental rates. The spread between A&B direct asking rents has decreased by 778 points since second quarter 2015. CBD leasing activity is up 303% from second quarter 2016. Sublease space is pushing net absorption deeper into the red. The only submarket not characterized as a “falling” market in the report is Greenway Plaza, which has remained relatively insulated from the downturn.

NEWS AND NOTABLES

HOUSTON—NAI Partners hires experienced real estate broker H. Alex Taghi as vice president of office tenant representation. Taghi comes to NAI Partners from commercial real estate services firm Cushman & Wakefield where he was an associate director. He represents clients in all commercial real estate needs, specializing particularly in the acquisition and disposition of office space with a focus on new leases, renewals, expansions, contractions/terminations, subleases, lease restructures, purchase/sale assignments and related requirements.

HOUSTON—Bubba Harkins joins JLL's agency leasing team as senior vice president. Harkins will assume immediate responsibility for a 4.2 million-square-foot portfolio that includes Allen Center and 1600 Smith in downtown Houston. Harkins has more than 16 years of experience representing corporate, institutional and private sector clients in commercial lease transactions. During the course of his career, Harkins has been responsible for marketing and leasing some of Houston's most identifiable office buildings, including a 5.6 million-square-foot class-A portfolio consisting of 10 buildings at Greenway Plaza and three buildings at Post Oak Central in the Galleria submarket.

DEAL TRACKER

LAKEWOOD, CO—Gelt Inc., a Los Angeles-based real estate investment and asset management firm, has acquired Westhills, a 400-unit apartment property for $66 million. The property is located at 453 Van Gordon St. in a submarket of Denver. Westhills is a garden-style apartment community in Lakewood, which provides a variety of local economic drivers, a strong number of retail options and quality of life. Local employers include The Denver Federal Center, St. Anthony's Medical Center, Lakewood Technology Center, Red Rocks Community College and the Colorado Mills Mall. Additionally, the property is in walking distance to the Federal Center Light Rail Station which allows for a convenient commute to downtown Denver.

DENVER—Holliday Fenoglio Fowler LP has closed the $25.25 million sale of MOTO, a core class-A mixed-use residential and retail property in Denver's Capitol Hill neighborhood. HFF marketed the property exclusively on behalf of Elevation Development Group LLC. Denver MOTO LLC purchased the asset free and clear of existing debt. Completed in 2015, MOTO consists of 64 luxury apartment homes and approximately 3,000 square feet of ground-floor retail. The property has units featuring spacious floor plans, plank flooring, stainless steel appliances, pebble or quartz countertops and in-unit washers and dryers. Common area amenities include a second-floor pool deck and lounge, rooftop kitchen and grilling station, communal work space in the lobby, bike share program, bike maintenance station and reserved parking in the controlled-access garage. In addition, the pedestrian-friendly property is surrounded by retail amenities on all sides, including Whole Foods, Trader Joe's, King Sooper and Safeway.

HOUSTON—NorthMarq Capital's Denver office arranged acquisition financing of $17.6 million for Maxey Village Apartments, located at 666 Maxey Rd. Constructed in 1974, the property consists of 409 units contained in 10 two-story buildings. The one- and two-bedroom floor plans range from 580 to 986 square feet. Mark Jeffries, vice president, arranged the financing for the borrower, Angelus Capital, a private equity firm headquartered in Austin.

FORT WORTH—Maynard & Roberts LLC sold a 38,000-square-foot industrial building at 112 and 120 S. Sylvania Ave. to 220 Sylvania Partners LLC. Principals Jeff Givens, Todd Hawpe, Jack Huff and Kyle Poulson with Transwestern negotiated the transaction.

OKLAHOMA CITY—SEF Energy leased 10,414 square feet of office space at The Oil Center, 2601 Northwest Expressway. Ben Knotts, Vicki Knotts and Mark Beffort of Newmark Grubb Levy Strange Beffort represented the landlord and Tre Dupuy with Price Edwards & Co. represented the tenant.

FAYETTEVILLE, AR—An investment group paid $3.2 million for 13 condominiums in the Legacy Building at 401 W. Watson St. The Legacy Investors Group LLC, led by Mitchell Massey and Todd Ross, bought the property from Legacy BDF III LLC, a subsidiary of the private investment firm Broe Group of Denver. Broe purchased the seven-story building for slightly less than $4.3 million in 2012 from a group of banks that had reclaimed the property from Brandon Barber in an $11.2 foreclosure sale in 2008. Chambers Bank of Danville assisted the purchase with a loan of $2.72 million.

LAFAYETTE, LA—El Pollo Loco Holdings Inc. has signed a franchise development deal with Listo Way Group LLC to enter the Louisiana market. Franchise operator Jason Trotter plans to open two restaurants in Lafayette by 2018. It costs between $900,000 and $1.8 million, excluding real estate, to open a location.

BUILDING BLOCKS

HOUSTON—Surge Homes opens its new sales office on the construction site of its Parc at Midtown community, located at 2401 Crawford St. tomorrow. As the delivery dates of its first Inner Loop homes quickly approach, this on-site office is where prospective home buyers can purchase high-demand condominiums or townhomes at Parc at Midtown (69% sold), as well as townhomes and single-family homes at Upper Richton (55% sold) in Upper Kirby. The deliveries of newly built homes at these two communities are expected to begin in February 2017. The on-site sales office is temporary and will be replaced by a long-term presentation center in spring 2017, as construction progresses.

Instant Insights /

Middle Market Digest: This Week in the South and Mountain Regions

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