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DALLAS-Today’s “borrower’s market” makes multifamily the proverbial pot of gold for commercial real estate as institutional investors renew their interest in Texas. But this time around in the real estate cycle, Houston is the shining star followed by Dallas-Ft. Worth. Only the confident and strong willed are looking at Austin these days, say executives at the 14th annual M/PF Research Inc.’s Texas Apartment Markets Conference 2001.

About 200 brokers, developers, investors and banking representatives attended yesterday’s session at the Wyndham Anatole in Dallas. Houston industry execs walked around smiling for the first time in practically four years.

“It’s good to be back in a market that’s moving ahead,” said Craig LaFollette of CB Richard Ellis in Houston. Urban or suburban, the Houston market is sizzling. In the past two weeks, LaSalle and AEW were shopping the suburban market. For AEW, it’s the first time in 10 years that it’s gone looking in Houston. New York City’s JP Morgan is ahead of the game by already being at the talking table. Urban complexes are drawing 10 to 12 offers while suburban properties commonly have seven or eight bidders. Class B and C products are attracting 12 to 15 offers.

Houston’s multifamily market is as hot and steamy as its weather. Deals are closing in less than seven months, based on data collation for January through September. Last year for the same time period, it took an average of 8.7 months to close. LaFollette said the time is starting to lengthen again because buyers are shopping the lending market. Still, it’s not stalling sales, particularly in the Inner Loop–a pocket only for the well-heeled who are willing to pay close to the high-ticket asking prices for the usually tony properties.

Dallas-Ft. Worth’s Brian O’Boyle of O’Boyle Properties said he’s never seen an about-face by institutional investors as he did this year. “A year ago, you couldn’t get an institutional investor to come to Dallas,” he said. That changed in January and has advanced to the point that there are now 20 actively scouring for buys in the “Big D.” A 1991 complex in North Dallas baited 32 offers in just four business days. Another 1991 property in the suburban market of Westgrove brought $97,000 per unit. That went to a first-time Dallas buyer from out of state, Boyle said as the crowd roared. Twelve to 15 bids per offering have become routine in the DFW region as have $50,000 plus per unit prices on vintage product, he says.

The product to buy and the location are as individual as the deals flowing from one end of the state to the other. Alan George of Equity Residential Properties Trust says it’s one of those confident buyers eyeing up Austin. Bob Aisner of Amli Residential says it’s selling and not buying in the capital city. TVO Realty Partners’ Dan Gumbiner, who represents a coffer of private money, says it will buy where its investors want to be. Houston, he adds, presents a problem for the value-add buyer because its prices are going up for older product. But, he does have some partners who say they want Houston deeds and suburban ones at that.

Greystar Properties is planning two projects for nearly 750 units in Houston’s Inner Loop and eyeing Southwest Austin for another project. Trammell Crow Residential will break ground around Thanksgiving on a 216-unit complex in Houston’s CBD as it works on loft plans for an east side manufacturing building. In Austin, Trammell Crow Residential has a 500-unit project coming out of the ground at Stassney Lane and wanted to float a project in the northwest submarket. But, said Ken Valach, “we had the equity lined up and we can’t get a construction loan.” In Dallas, Camden Residential is looking at a 2002 start for a loft project in the Farmers Market area of Downtown. It too has plans for Houston: an 88-acre Midtown project.

“The negative part of Houston,” says Camden’s Ric Campo, “is its volatility. You get hammered some years and windfalls other years.” But for now and into 2002, it’s a windfall in Houston and Dallas alike.

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