Mid-Summer 2015 Report: Industrial Real Estate Market in Houston & A Surprise!Posted
The description of “The Market” in Houston is about as different as the opinion of whomever you are talking to. Right now, there are those who predict a serious downturn in commercial industrial real estate activity in Houston, and there are just as many of those who are more optimistic. My read is this: The industrial real estate market is safe right now. There is a good velocity of prospects looking for space to lease or buildings/land to buy. There seems to be many “large” industrial real estate transactions working at this time. Still, lots of institutional money is chasing limited opportunities for buying quality industrial properties. I have not heard from the project developers lately about much in the way of industrial property rental concessions made to attract tenants. Asking rental rates and sale prices seem to be holding reasonably well. My personal business has not suffered from current happenings in in the oil service industries and I believe this is because my clients are coming from other business endeavors right now. Other major Houston industries, other than oil drilling and production, seem to be doing well. Natural gas is the feedstock for the petrochemical industry on the ship channel and when gas is cheap, their profits get better. The medical center continues to expand and build more facilities. The expansion of the Panama Canal is predicted to have major positive impact on the Port of Houston. It also appears that we are going to rejuvenate the NASA/Clear Lake area with the new Orion Spacecraft initiatives going on there. The restaurants in Houston are really busy and traffic has not let up at all!
So, things seem to be OK for now, but who knows what the future will bring. More to come as it happens!
Industrial Real Estate: The Surprise
The “surprise” comes from a conversation I had the other night with a really good residential real estate broker friend of mine who was reflecting on what is going on in their business, and more specifically, how they are now pricing their residential properties for sale. Now, I have been selling commercial real estate for a long time and what I was told is TOTALLY the opposite of what I have always learned. This agent told me, when listing a property for sale, she recommends “under-pricing” the property, waiting on offers, turning DOWN those which are at (or under) the asking price and negotiating for a price ABOVE the published asking price till the Buyer’s “pain threshold” is reached. Wow! I have always followed the procedure of determining what the property should really sell for and start out asking a premium price over that and when offers come in, negotiate from there. The thought being that I surely don’t want to ask too little for the property in case I happen to find just the right prospect who might pay a little more than the “true market value” agreed upon by both parties. If I get offers at the asking price, I consider myself lucky and generally recommend we proceed with the transaction, unless there is a compelling reason not to. I guess there is more than one way to do this business but this is the first time I have heard it done as outlined by my residential broker friend described above.
Please stay tuned as I report “from the street” what the industrial real estate market is doing when there is something new to say! Thanks for signing on ………… !
Michael Hill Properties offers more than 40 years of experience in brokering commercial industrial properties, such as distribution warehousing and manufacturing, for sale and lease in the Greater Houston Area as well as outside of Houston. For more information on Michael Hill Properties, visit mhprop.com or call (713) 960-6060.