Institutional-Grade Commercial Property

The Investors

Since many of us are individual retail investors, it may be that we really don’t need to know about institutional-grade property since it’s usual investors are managers investing other people’s money on a large scale, like insurance companies, pension funds, endowments, foundations, investment banks, investment managers, hedge funds and real-estate investment trusts. Institutional investors trade securities in large quantities and receive preferential treatment and lower fees.

Non-institutional investors are individuals managing their own money for their own goals.  Because of their smaller purchasing power, retail investors usually have to pay higher fees on their trades as well as higher marketing fees, and commissions (Investopedia).

The Property

The property itself is as large as the investment dollars involved. An institutional-grade property is generally a property that is of sufficient stature to attract attention from large national and international investors. According to irei.com, core investments typically include office, retail, industrial, and apartments. Specialty investments include hotels, healthcare facilities, senior housing, student housing, self-storage facilities, and mixed-use properties.

Institutional-grade properties are usually Class A properties, containing state-of-the-art mechanical, electrical, life safety, elevator, and communications systems. Their finishes are of the highest standards and they often provide the occupants with an exceptional mix of amenities in variety and quality (bike storage, workout areas, on-site restaurant, etc).

The Communities

Institutional-grade properties may be located in secondary metropolitan statistical areas (MSAs) with a very stable tenant base. Secondary MSAs are categorized as MSAs with employment between one and two million, based on the raw number of individuals employed as reported by the Bureau of Labor Statistics’ Metropolitan Area Employment and Unemployment report (Dylan Wall).

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Interestingly, the Trepp 2018 study pointed out that the top three performing secondary MSAs in 2018 were Austin-Round Rock, Orlando-Kissimmee-Sanford, and Nashville-Davidson-Murfreesboro-Franklin. Wall’s summary reports that diverse economies, growing population, an educated work force, entertainments, a modern vibe, and warm climates make some metropolitan areas more attractive to investors because these characteristics lead produce low delinquencies, high rental incomes, and low vacancies.

The Trepp report also pointed out that the three poorest performing MSAs in 2018 were Kansas City, St. Louis, and Cincinnati based on high delinquencies, stagnant population growth, and vacant properties.

Big or Small

Large institutional-grade investments are usually high-quality assets in major markets and at price points beyond the reach of individual investors and small partnerships.

Nevertheless, it is still interesting to note that when scoping out a location for a commercial property investment, income, jobs, entertainment, tourism, cultural amenities, and an educated workforce keep a population vibrant, vacancies and delinquencies low, making the location more attractive for investment whether the dollar amount and physical size of the asset is big or small.

REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options for real estate investores.

Please give me a call when you find that perfect real estate investment and know how much money you need.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash  C

Houston Adds 114,400 Jobs

Good New for Houston Jobs Up 3.7%

 According to the U. S. Bureau of Labor Statistics, Houston-The Woodlands-Sugar Land was one of the nation’s largest metropolitan statistical areas showing an increase in the rate of job growth between November 2017 and November 2018.

In November, 54 metropolitan areas had over-the-year increases in nonfarm payroll employment and 334 were essentially unchanged.

The largest over-the-year employment increases occurred in Houston-The Woodlands-Sugar Land, TX (+114,400), New York-Newark-Jersey City, NY-NJ-PA (+113,000), and Dallas-Fort Worth-Arlington, TX (+94,700).

Good News for Reno, Midland, and Colorado Springs

Nationally, the largest over-the-year percentage gains in employment occurred in

Reno, NV (+5.9 percent),

Midland, TX (+5.7 percent), and

Colorado Springs, CO (+5.0 percent).

Good News for Texas

In Texas, the 10 cities with the largest over the year percentage gain in employment occurred in

Austin, up 35.2 or 3.3%

Beaumont-Port Arthur up 35.2, or 3.3%

Dallas-Fort Worth, Arlington up 94.7 or 2.6%

Houston, The Woodlands, Sugar Land up 114.4 or 3.7%

Killeen-Temple up 3.3 or 2.3%

Lubbock up 3.9 or 2.6%

Midland up 5.6 or 5.7%  ——Highlight Midland: According to Trulia, the average listing for a home in Midland is 342,280. There are 567 home for sale and the median rent is $2.500 per month. 

San Antonio, New Braunfels up 14.3 or 1.4%

Sherman-Denison up 1.8 or 3.8%

Tyler up 4.3, or 4.1%

Texas overall up 360.0, or 2.9%

 

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

References

https://www.bls.gov/

https://www.trulia.com/real_estate/Midland-Texas/

Happy New Year Workers!

Happy New Year to all you workers. We value your labor and wish you well in 2019.

According to the Bureau of Labor Statistics News Release on January 4, 2019.

Earnings

In December, average hourly earnings for all employees on private nonfarm payrolls rose 11 cents to $27.48. Over the year, average hourly earnings have increased by 84 cents, or 3.2 percent.

Employment

Total nonfarm payroll employment increased by 312,000 in December 2018. Job gains occurred in health care, food services and drinking places, construction, manufacturing, and retail trade.

Health Care

Employment in health care rose by 50,000 in December. 346,000 jobs were added in 2018, more than the gain of 284,000 jobs in 2017.

  • Ambulatory health care services (+38,000)
  • Hospitals (+7,000).

Food and Drink

Employment in food services and drinking places increased by 41,000 in December 2018 Over the year, the industry added 235,000 jobs, similar to the increase in 2017 (+261,000).

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Construction

Construction employment rose by 38,000 in December 2018. 280,000 jobs were added in 2018, compared with 250,000 in 2017.

  • Heavy and civil engineering construction (+16,000)
  • Nonresidential specialty trade construction (+16,000).

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Manufacturing

Manufacturing added 32,000 jobs in December. Most of the gain occurred in the durable goods component (+19,000), with job growth in fabricated metal products (+7,000) and in computer and electronic products (+4,000). Manufacturing employment increased by 284,000 over the year, with about three-fourths of the gain in durable goods industries. Manufacturing had added 207,000 jobs in 2017.

Retail

Employment in retail trade rose by 24,000. Retail trade employment increased by 92,000 in 2018, after little net change in 2017 (-29,000).

  • General merchandise stores (+15,000)
  • Automobile dealers (+6,000).
  • Losses in sporting goods, hobby, book, and music stores (-9,000).

Professional and Business

Employment in professional and business services continued to trend up in December 2018:(+43,000). The industry added 583,000 jobs in 2018, outpacing the 458,000 jobs added

in 2017.

The Unchanged

Employment in other major industries, including mining, wholesale trade, transportation and warehousing, information, financial activities, and government, showed little change over the month of December 2018.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

References

US Bureau of Labor Statistics website

Photo credit: breadandbeer.lt [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D, via Wikimedia Commons

What is $358.00?

Answer: Price per square foot for a luxury home in TX.

It is true that you can put a price tag on anything, well maybe not everything, but you certainly can put one on a luxury home. According to the 2018 Texas Luxury Home Sales Report by the Texas Association of Realtors (TAR), the median price for a Texas luxury home  remains unchanged at $1.35 million.

Houses priced over $1 million dollars are considered “luxury” and 5,123 of them sold across the state of Texas from October 2017 to November 2018, up 11.5% from the previous year. The average price per square foot for a luxury home was $358.00. This is up 2.5% from the first ten months of 2017. A median house in Texas carried an average price tag of $128.00 per square foot.

From January to October 2018 the average time a luxury home spent on the market in Texas was 94 days, a decrease of four days from the same timeframe in 2017. It makes sense that the bigger price would lead to a longer time on the market because there are few buyers who can afford the higher price and it takes longer to get a big loan.

For comparison, here are some statistics courtesy of Realtor.com.

Austin-Round Rock, TX, Median Price $350,000. Days on the Market, 65.

Dallas-Fort Worth – Arlignton, TX Median price $335,000. Days on the Market, 58

Houston-The Woodlands-Sugar Land, TZ – Median Price $350,000. Days on the Market, 65.

Killeen-Temple, TX, Median Price $200,000. Days on the Market, 68

San Antonio-New Braunfels, TX – Median Price $285,000. Days on the Market, 66.

For more on luxury houses, read “Livin’ Large: Texas’ Robust Luxury Home Market,” a Tierra Grande article by Real Estate Center Senior Data Analyst Joshua Roberson. https://www.recenter.tamu.edu/news/newstalk-texas/?Item=21652.Read more at Texas Association of REALTORS

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

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