3Q2013 Houston Land Market Report
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3Q2013 Houston Land Market Report

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Update on market conditions for the Houston land market, 3Q2103

Update on market conditions for the Houston land market, 3Q2103

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  • Blue line is population. Currently we have about 6M. In 2040 we will have over 9M. We add over 100,000 residents each year.
  • Nationally, Gen Y represents a “pig in the python” – number of 22 year olds nationally peaked last year so, that should represent the beginning of peak apartment demand, and we would would expect the peak to hit in about three years for single family demand as they start to hit age 25.
  • Gen Y shows an inclination to prefer city living
  • In fact, 2010 census data indicates that people between 20 and 29 years old were less inclined to live in more urban and walkable neighborhoods than their predecessors. In 2000, 19 percent of people aged 20 to 29 lived in the core municipalities of major metropolitan areas, where transit service and walkable neighborhoods are concentrated. Only 13 percent of the increase in 20 to 29-year-old population between 2000 and 2010 was in the core municipalities. By contrast, the share of the age 20 to 29 living  in the suburbs of major metropolitan areas was 45 percent, higher than the 36 percent living there in 2000
  • Joel Kotkin - The entrepreneurial drive in Houston is clearly not a response to economic disaster – the city has a culture that encourages striking out on your own, and low costs and lighter regulation make it easier. Indeed over the past decade, the Texas powerhouse also led the nation in the growth of its 1099 economy, which expanded by a remarkable 51%.

3Q2013 Houston Land Market Report 3Q2013 Houston Land Market Report Presentation Transcript

  • 3Q2013 Land Forecast Report Scott Davis CASE Commercial Real Estate Partners October 4, 2013
  • 3Q Sales Activity Remains Steady $0 $50 $100 $150 $200 $250 $300 $350 $400 2005-… 2005-… 2005-… 2005-… 2006-… 2006-… 2006-… 2006-… 2007-… 2007-… 2007-… 2007-… 2008-… 2008-… 2008-… 2008-… 2009-… 2009-… 2009-… 2009-… 2010-… 2010-… 2010-… 2010-… 2011-… 2011-… 2011-… 2011-… 2012-… 2012-… 2012-… 2012-… 2013-… 2013-… 2013-… Millions Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 3Q2013
  • 3Q13 – 4,500 Acres Sold – Activity Remains Strong 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2005-… 2005-… 2005-… 2005-… 2006-… 2006-… 2006-… 2006-… 2007-… 2007-… 2007-… 2007-… 2008-… 2008-… 2008-… 2008-… 2009-… 2009-… 2009-… 2009-… 2010-… 2010-… 2010-… 2010-… 2011-… 2011-… 2011-… 2011-… 2012-… 2012-… 2012-… 2012-… 2013-… 2013-… 2013-… Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 3Q2013
  • 3Q: Almost 99% of acreage sold outside Beltway 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2009 - Q1 2009 - Q2 2009 - Q3 2009 - Q4 2010 - Q1 2010 - Q2 2010 - Q3 2010 - Q4 2011 - Q1 2011 - Q2 2011 - Q3 2011 - Q4 2012 - Q1 2012 - Q2 2012 - Q3 2012 - Q4 2013 - Q1 2013 - Q2 Total Outside 610 Outside Beltway Inside Beltway Inside 610 Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 3Q2013
  • Inner Loop Land Sales Off Peak, But Double from LQ 0 5 10 15 20 25 30 35 40 45 50 2009 - Q1 2009 - Q2 2009 - Q3 2009 - Q4 2010 - Q1 2010 - Q2 2010 - Q3 2010 - Q4 2011 - Q1 2011 - Q2 2011 - Q3 2011 - Q4 2012 - Q1 2012 - Q2 2012 - Q3 2012 - Q4 2013 - Q1 2013 - Q2 2013 - Q3 Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 3Q2013
  • Sales to List Spread Doubles, Returns to Historical Avg Source: CoStar, CASE Commercial, 3Q2013 -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 2007-Q2 2007-Q3 2007-Q4 2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3
  • Median Days on Market Decreased in Q3/13 Source: CoStar, CASE Commercial - 100 200 300 400 500 600 700 800 2005-Q1 2005-Q2 2005-Q3 2005-Q4 2006-Q1 2006-Q2 2006-Q3 2006-Q4 2007-Q1 2007-Q2 2007-Q3 2007-Q4 2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 Source: CoStar, CASE Commercial, 3Q2013
  • What Does the Future Hold?
  • 2.2 3.1 3.7 4.7 5.9 7.0 8.1 9.2 0.9 1.6 1.8 2.3 2.6 3.2 3.7 4.1 1970 1980 1990 2000 2010 2020 2030 2040 People Jobs Region will grow by 3.3 Million Source: HGAC Demographic Model In Millions
  • Gen Y: Millions of 22YO By Year 3,400,000 3,500,000 3,600,000 3,700,000 3,800,000 3,900,000 4,000,000 4,100,000 4,200,000 Age 22 Age 25 Peak Rental Demand Peak Owner Demand Source: US Centers for Disease Control and Prevention
  • Houston #2 Destination For Millennials Rank Metro Area Wage Change for Gen Y Median Pay for Gen Y Commute Time for Gen Y % Gen Y Gen Y Metro Score 1 Seattle 4.4% $ 44,000 24.3 0.22 1.61 2 Houston 4.3% $ 44,000 24.8 0.22 1.52 3 Minneapolis 3.3% $ 42,800 20.4 0.23 1.46 4 Washington, DC 3.2% $ 49,500 30 0.26 1.25 5 Boston 3.3% $ 46,200 29.9 0.25 1.16 6 Dallas 2.9% $ 41,200 20.6 0.21 1.11 7 New York 2.9% $ 46,900 30.6 0.26 1.04 8 Tampa 2.7% $ 36,600 20.7 0.19 0.83 9 - Tie Philadelphia 2.6% $ 42,000 28.7 0.23 0.81 9 - Tie San Francisco 2.2% $ 51,300 29.3 0.22 0.81 Source: Best Cities for Gen Y, www.payscale.com, 2012
  • Where People Want to Live, by Generation 14% 15% 14% 18% 31% 39% 38% 38% 47% 42% 46% 47% 47% 34% 25% 0% 20% 40% 60% 80% 100% 60+ (Silent + GI) 50-59 (Boomer) 40-49 (Boomer & Gen X) 30-39 (Gen X & Gen Y) 18-29 (Gen Y) City Suburban Small Town Source: 2011 National Community Preference Survey, NAR, March 2011
  • Where Do They Actually Live? 0% 10% 20% 30% 40% 50% Core Municipalities Suburbs Outside Major Metropolitan Areas 2000% of Age 20-29 2010% of Age 20-29 Source: Wendell Cox, www.newgeography.com
  • Gen Y Still Want Single Family Fall 2007 “Home Type Likely to Choose” Summer 2010 “Anticipated Housing in 2015” March 2011 “Home Type Preference” Apartment/Condo 12% 25% 15% Rowhouse/Townhouse 12% 6% 6% Single-Family 70% 64% 74% Other 5% 5% n/a Source: RCLCO Survey, 207, ULI/Lachman Survey 2010, NAR Consumer Preference Study 2011
  • Gen X & Gen Y Favor Lifestyle Factors – Close to Work, Shopping 71% 55% 52% 42% 51% 62% 46% 43% 49% 47% 0% 20% 40% 60% 80% Small Lot, Walk to Work Small Lot, Walk to Shop Less than Ideal Home, Close to Shop Less than Ideal Home, Close to Work Urban Setting Gen Y Gen X 15 Source: Robert Charles Lesser Co.
  • 16 Job Growth in Suburban Centers Market 2013 2020 Growth Inside Loop Bellaire 34,438 38,320 11.3% Greenway 63,143 68,148 7.9% CBD 148,117 153,970 4.0% TMC 107,344 116,272 8.3% Galleria 134,162 136,999 2.1% Inside Beltway Greenspoint 91,343 100,042 9.5% Brookhollow 25,526 26,271 2.9% Northwest Crossing 53,149 56,065 5.5% Sharpstown 39,327 40,360 2.6% Westchase 96,223 100,183 4.1% Outside Beltway Clear lake 48,897 50,628 3.5% Katy 18,707 21,591 15.4% The Woodlands 48,805 55,398 13.5% West Houston 102,795 108,760 5.8% Sugar Land 86,934 101,129 16.3% Total Market 2,959,033 3,275,509 10.7% Source: HGAC, 2035 Regional Transportation Plan
  • Houston #1 in Self-Employment Growth Rank Region Growth in Self-employed, 2008-2011 1 Houston-Sugar Land-Baytown, TX 12.20% 2 Riverside-San Bernardino-Ontario, CA 11.80% 3 Phoenix-Mesa-Glendale, AZ 11.50% 4 Seattle-Tacoma-Bellevue, WA 10.00% 5 Baltimore-Towson, MD 8.60% 6 San Antonio-New Braunfels, TX 8.10% 7 Tampa-St. Petersburg-Clearwater, FL 6.50% 8 Dallas-Fort Worth-Arlington, TX 6.30% 9 Boston-Cambridge-Quincy, MA-NH 5.60% 10 Miami-Fort Lauderdale-Pompano Beach, FL 4.90%
  • Land Growth Trends • Houston will grow dramatically over the next two decades • Gen Y will drive some inner-city interest but still has overwhelming suburban preference • Real preference by Gen X and Gen Y is for a shorter commute and close to shopping • Most job growth will be in the suburbs