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2018 MARKET OUTLOOK
Houston Commercial
Real Estate
CONTACT
2925 Richmond Avenue, 14th Floor
Houston, Texas 77098
713.850.7766
Visit boyarmiller.com
TABLE OF CONTENTS
03	 :	 The Breakfast Forum Snapshot
04	 :	 Houston Commercial Real Estate At-a-Glance
05	 :	 Expert Insights 		
Houston Real Estate Overview 		
Office Market and Mixed-Used Development 		
Industrial Real Estate
08	 :	Attorney Insights
Houston — A Tale of Two Cities: Through the
Looking Glass of Residents and Outside Investors
10	 :	 BoyarMiller Real Estate Practice Leaders
12	 :	 BoyarMiller Real Estate Attorneys
Friends,
We’ve been hosting the annual BoyarMiller Real Estate Forum for a long time bringing
together market experts who share their insights and knowledge about the industry.
Throughout the years, there have been up cycles and downturns affecting this important
sector of our economy. Admittedly, it was much more exciting to hear an optimistic
panel reveal several 2018 positive trends in commercial and industrial real estate.
The goal of our breakfast forums and this eBook is to share information and knowledge
because we believe continuous learning is one of the keys to success in life, no matter
what you do. It is one way we spotlight the trends that impact the Houston business
landscape and may affect your business directly.
This edition of our eBook summarizes the 2018 market outlook for Houston’s commercial
real estate industry as presented by Jimmy Hinton with HFF, Jonathan Brinsden with
Midway Companies, and John Nicholson of AVERA Companies. We thank them for
sharing their wisdom as we all breathe a collective sigh of relief that the forecast
for Houston’s commercial real estate market is excellent.
Feel free to forward this eBook to others who may find the information of value.
And let us know how we can help you reach your goals for this year and beyond.
My best,
CHRIS HANSLIK
Firm Chairman
LEARN MORE ABOUT THE FORUM
The Breakfast Forum
Snapshot
PAGE 03
As 2018 began, institutional
investors are focused on
Houston again, while the
industrial and multifamily
markets still have room
to run.
MICHELLE LEIGH SMITH
RealtyNewsReport
http://realtynewsreport.com/
2018/01/18/out-of-the-deep-freeze-
houston-real-estate-is-heating-up-in-2018/
In 2018, ‘there’s so much
capital earmarked for real
estate’ in Houston.
CARA SMITH
Houston Business Journal
http://bizj.us/1pgv0w
If there was anything
good that came out of the
financial crisis, it was lower
leverage, more equity, says
Jonathan Brinsden
@MidwayCompanies
#CRE forum @boyarmiller
KATHERINE FESER
Houston Chronicle
https://twitter.com/kfeser
PAGE 04
$150 billion
15 percent
only
3 percent
8,000 FOR RENT
Capital in the U.S.
ready to be deployed
for office investment
TAKEAWAY:
there is so much capital earmarked for real-estate
Growth in container
shipping from the
Port of Houston
TAKEAWAY:
and will continue to increase over next couple of years
as more petrochem plants come online
Amount of all retail
spending done
online in U.S.
TAKEAWAY:
brick and mortar still has a place in retail!
Number of available
multifamily units
in Houston
TAKEAWAY:
but we still need 15,000 units a year to meet Houston’s
expected rental growth to 2030
Houston Commercial
Real Estate At-a-Glance
PAGE 05
Expert Insights
ABOUT JIMMY
Jimmy Hinton serves as Managing Director of HFF
and is responsible for the firm’s research efforts.
He works with the executive management team
to assist in investor relations and to inform both
HFF staff and firm clients with in-depth analysis of
economic, property and capital market trends.
He also provides extensive market reports, pre-
sentations and deal-specific analysis for debt
placement and investment sales assignments.
“There is
tremendous
opportunity
in Houston.
We are quite
bullish for 2018.”
Houston Real
Estate Overview
JIMMY HINTON
Managing Director, Research, HFF
•	 When you step back, you can see our market more
clearly. There is a lot of capital earmarked for commer-
cial investment in Houston.
•	 Pure play online retail is the hockey stick in terms of
growth. It accounts for three percent of retail spending,
which is not very much. There is a long way to go
before brick and mortar retail is exposed fully.
•	 We are seeing obvious signs of retail weakness in some
regional malls. However, experiential retail outperforms
the industry. The average return from an online pur-
chase to a retail store results in 140 percent of the
spend. That is creating top-line revenue growth.
•	 There is a larger market for residential growth
among baby boomers as they consider high-end
multifamily property.
•	 Co-working space is a trend that affects all asset
classes. A lot more people work for themselves or in
small businesses and want nimbleness and flexibility.
Commercial real estate needs to adapt to operate
assets that accommodate this big trend.
ABOUT JONATHAN
Jonathan Brinsden is CEO of Midway
Companies and guides its overall business
strategy and operations.
He is member of the Urban Land Institute
Board of Directors, Board of Trustees and the
Governance Committee, and past Chair of
ULI Houston. He is also a board member of
NAIOP and an active member of International
Council of Shopping Centers.
“A lot of positive
things are
happening as
we look forward.”
Office Market
and Mixed-Used
Development
JONATHAN BRINSDEN
CEO, Midway Companies
•	 Hurricane Harvey did not have a long-term impact on
commercial real estate with most ground-level damage
repaired by the end of 2017.
•	 The office market will be better than last year. There is
still a lot of sublease space in the market, although it is
dwindling or being absorbed as direct space.
•	 In the past, mixed-use was looked at as risky, so capital
was skeptical. Now, those with capital understand the
trends of what an office or multifamily tenant wants.
We’ll see more people willing to engage and invest
in mixed-use.
•	 The multifamily market has weathered the oil and gas
downturn and is improving as units are absorbed. Devel-
opers have managed the number of units so the sector
does not have a black eye to investors.
•	 By 2030, Houston is expected to have 3.8 million more
renters, which means we need 15,000 more units a
year to accommodate growth. Starting new multifamily
development today with a delivery window of 2-3 years
is attractive.
•	 Urban residential was being built for millennials but the
average age in these upscale units is much higher than
expected. It has transitioned from renting by necessity
to renting by choice.
PAGE 06
Expert Insights
PAGE 07
Expert Insights
ABOUT JOHN
John Nicholson serves as Executive Vice Presi-
dent of Development at AVERA Companies.
Over the last 16 years, he has negotiated
more than 700 transactions providing in
excess of $750 million in transaction value.
“2017 was a
great year for
absorption in
the industrial
market.”
Industrial
Real Estate
JOHN NICHOLSON
Executive Vice President, AVERA Companies
•	 Vacancies in Houston’s industrial market hover around
six percent, which is great. We will continue to see
positive lease activity for both petrochemicals and
consumer products.
•	 The big story now is the trend for more warehouse
amenities. Tenants are requesting larger truck ports,
higher ceilings and more office area. Some of the
buildings that were built in the 1980s are not satisfying
those demands. So many of them will be redeveloped
going forward.
•	 Industrial market expansion continues in 2018
because shippers have changed their routes with
the expansion of the Panama Canal. One example:
Best Buy announced a large transaction and those
type of big-box retailers will continue to come
through Houston.
•	 In 2018, it’s a race among industrial developers to
identify developable sites.
•	 Petrochemical exports out of the Port of Houston
is still in its early stages and will only get stronger
as more plastic resin plants come on line.
“If you change the way you look
at things, the things you look at
change.” –Wayne Dyer
With everything that has occurred in Houston over
the past few years, it can be difficult for its residents
to understand the opportunities that are seen by those
viewing the city from the outside. Houston can be char-
acterized as the tale of two cities: the city seen from the
perspective of its residents versus the city seen from the
perspective of outside investors. For those of us living in
Houston, many experienced first-hand the effects of the
energy downturn and Hurricane Harvey, which resulted
in vacant office buildings, retail and multi-family in the
Energy Corridor and flooded residential homes. As a
result, it is understandable that some Houstonians have
a pessimistic view of our current situation, a World Series
championship notwithstanding.
However, for those outside of the city, Houston is an
attractive investment opportunity and investors are
speaking with their dollars. For them, Houston is a good
value-add proposition for many types of real estate¬,
including industrial and multi-family, while the office
and retail segments are adapting to new challenges.
INDUSTRIAL
The industrial market is currently Houston’s most dynamic
market segment, with explosive growth in development
over the past five years. Developments that, in the past,
might have gone to Dallas, Los Angeles, Chicago or
Atlanta have come to Houston. The developments are
also getting larger; where the average square footage
of projects was approximately 35,000 sq. ft. just a few
years ago, the average size has essentially doubled to
approximately 70,000 sq. ft. in recent years.
The explosion in the industrial market is driven by a
number of factors: the expansion of e-commerce, new
housing development and redevelopment in the Greater
Houston area, the expansion of the Panama Canal, and
new petrochemical plants and refineries coming online.
An unlikely foe, Harvey, has resulted in major retailers
such as Home Depot and Lowes opening new distribution
centers to serve the need for increased housing materi-
als. One of the biggest changes in the industrial market
is the expansion of requested amenities, ranging from
higher ceilings to wider column spacing. In addition to
the new development, Houston can expect to see rede-
velopment of older buildings to meet tenants’ demands.
With all of the growth in the industrial market, sites
are becoming harder to find in rail-served areas such
as Baytown, LaPorte and Deer Park. Whereas industrial
was once the highest and best use of land in those areas,
there is now competition for multi-family and single-family
residential developments. In response to the scarcity of
PAGE 08
Attorney Insights
Houston — A Tale of
Two Cities: Through
the Looking Glass
of Residents and
Outside Investors
LYNDSAY FINCHER
Associate, Business Group
BLAKE ROYAL
Shareholder, Business Group
From an investment standpoint of a small business owner, a
10-year lease may seem too risky, but a shorter lease, or even
a month-to-month lease, may be an easier commitment. At
the extreme end of this shift is the rise of flexible collaborative
office space providers, such as WeWork and Spaces. With all
of these perceived challenges, however, Houston is seeing
an increased investment in its office market from institutional
investors, which speaks to the confidence that those outside
of Houston have in the region.
RETAIL
The story in retail continues to be impacted by e-com-
merce. There continues to be a vast sales gap between
e-commerce and brick-and-mortar stores, but it is a shrink-
ing one, and savvy retailers (and retail developers) are
making adjustments to account for this growing challenge.
Consumers who enjoy the experience of high-end shopping
will continue to go to the stores they enjoy, but those retail-
ers are making adjustments to ensure that their customers
continue to enjoy shopping in an interactive way.
For day-to-day items like diapers and dog food, however,
consumers are increasingly turning to online, automatic
delivery options. In response, retailers are integrating auto-
mated and online interfaces with their physical locations,
such as grocery stores providing internet ordering and curb-
side pick-up, and soft goods retailers providing for more
easily accessible in-store returns for items purchased online.
The rise in online purchases will also have other effects,
such as smaller footprints for “big box” retailers, and the
rise of “lifestyle” centers that provide experiences rather
than mere shopping.
CONCLUSION
Houston is overcoming its perception as a city whose eco-
nomic health is solely tied to the price of oil. Despite all of
the recent travails our city has dealt with – and continues
to deal with – there are many reasons to be optimistic
about the Houston real estate markets and to see our-
selves as others see us – a great real estate opportunity.
land, developers are looking beyond traditional, rail-
served industrial areas to Katy and Brookshire, which are
further from downtown, the Port of Houston and railyards.
MULTI-FAMILY
It may come as a surprise that Houston may actually be
on the precipice of an undersupply of multi-family units
in light of the numerous new developments that have
been delivered in the past few years. As the number of
new projects has slowed, the excess units have been
absorbed and the market is stabilizing. With fewer new
units slated to come into the market over the next few
years and the high projected growth of Houston’s popula-
tion, the existing multi-family units will quickly be absorbed.
Interestingly, while many of the new multi-family projects
included higher-end amenities targeted towards millenni-
als, these developments are in fact attracting older gen-
erations who enjoy the amenities and, in mixed-use
developments, the ability to walk to restaurants, stores,
and other destinations right outside of their front door.
OFFICE
The Houston office market continues to face challenges,
but while some are unique to Houston, many are the
same challenges being addressed in markets worldwide.
A challenge that is particular to Houston is the oversupply
of sublease space, which is a remnant of the drop in oil
prices that left a glut of unused office space. While the
sublease market may be healthy, subleases do not
impact the overall net absorption of office space.
Now that oil prices are stabilizing – hopefully, for the long
run – we are seeing a secondary effect on the office mar-
ket. This effect is being seen on a national and worldwide
level: companies are changing the way they are structured,
which is changing the use of their offices. Business owners,
especially small business owners, are hesitant to commit
to long-term or large-scale leases because their use will
fluctuate. In addition, companies are utilizing more con-
tract labor than before, which allows their workforce to
constrict and expand to meet their needs. The net result is
that leases are for smaller spaces and shorter timelines.
ATTORNEY INSIGHTS : PAGE 09
PAGE 10
Real Estate
Practice Leaders
BILL BOYAR
Founding Shareholder, Business Group
Bill’s practice focuses on representing parties involved in
the acquisition, disposition, capitalization and financing
of assets and businesses on a national and international
level. He has served as lead counsel on numerous com-
plex, multi-party acquisitions and project financings,
with significant experience in corporate finance, private
equity, mergers and acquisitions, real estate and hospitality.
LEE COLLINS
Shareholder, Litigation Group
The goal of Lee Collins’ practice is to provide innovative
and value-driven solutions to the litigation-related problems
facing the client. This objective has been successfully
achieved through his direct and open communication
with the client, an early and immediate assessment of the
issues, strategic evaluation of the problem and its solution,
and aggressive representation.
BLAKE ROYAL
Shareholder, Business Group
Blake’s practice includes acquisitions and dispositions of
equity and assets, including recapitalization transactions
with venture capital and private equity funds; entity and
capital formation, including private placements, in domes-
tic and international jurisdictions; and general contractual
drafting and negotiation.
PRACTICE LEADERS : PAGE 11
HILARY TYSON
Shareholder, Business Group
Hilary Tyson’s practice focuses on commercial real estate
and business transactions. She joined the firm and returned
to Houston in June 2015 after practicing in the Dallas area
for more than 11 years. She represents developers, home-
builders and equity investors in a wide range of real estate
related transactions including land acquisition and disposi-
tions, residential subdivision development, financing, entity
formation, and office development and leasing.
CASSIE STINSON
Senior Counsel, Business Group
Cassie Stinson’s practice is focused on commercial real
estate and finance, public/private projects, business
transactions and public law, with a particular emphasis
on complex projects and multi-party transactions. She
handles real estate acquisitions and dispositions; leasing;
project structuring, development, design and construc-
tion; formation of business and non-profit entities, corpo-
rate governance, and business contracts; and foreign
investment in US real estate and businesses.
ROBERT ARTHUR
Associate, Litigation Group
Robert Arthur clerked with BoyarMiller during law school
and then joined the firm in 2014. He has represented clients
in a wide variety of business and commercial disputes. Rob-
ert has represented developers of commercial properties in
disputes against contractors or breach of contract.
PAGE 10
Real Estate
Attorneys
KASI CHADWICK
Associate, Litigation Group
Kasi Chadwick’s practice spans the full gamut of
commercial and business litigation and includes
business torts, contracts, trade secrets, non-compete
agreements and other employment-related disputes.
Licensed in Texas, Kasi practices in both state and federal
courts pursing everything from emergency injunctive relief
to the finalization of suits through post-judgment and appel-
late matters. She also pursues her client’s litigation goals
through alternative dispute resolution vehicles such as
mediations and arbitrations.
CYRUS CHIN
Associate, Business Group
Cyrus Chin has been with the firm for five years. His practice
consists of representing clients in a broad range of corpo-
rate matters, including complex merger and acquisition
transactions, corporate formation and restructuring, corpo-
rate governance, real estate transactions, contract negoti-
ation and other general business matters.
REAL ESTATE ATTORNEYS : PAGE 12
CALEB DUNSON
Associate, Business Group
Since joining BoyarMiller in 2017 after participating in the
Summer Associate Program, Caleb Dunson has been
involved in a wide range of corporate and real estate mat-
ters. His practice includes representing foreign and domes-
tic clients in general business matters, corporate formation
and restructuring, complex mergers and acquisitions, leas-
ing and land acquisition, disposition and development.
LYNDSAY FINCHER
Associate, Business Group
Lyndsay Fincher has been with BoyarMiller since 2013. Her
practice is primarily devoted to representing companies
and individuals in a wide range of corporate and real
estate matters including private securities, complex merg-
ers and acquisitions, corporate formation and restructuring,
leasing and land acquisition, disposition and development.
MOLLY HUST
Associate, Litigation Group
Molly Hust joined BoyarMiller’s Litigation Group in August
2015 after participating in the firm’s Summer Associate
Program. Molly’s practice is primarily focused on serving
clients in a wide range of complex commercial and
employment law disputes. Molly successfully represented
a mixed-use real estate developer in claims for breach
of contract, breach of warranty and construction defect
against its former general contractor involving substantial
water infiltration in two luxury apartment buildings.
TAYLOR LAMB
Associate, Business Group
Taylor Lamb joined BoyarMiller in 2016. Her practice consists
of various corporate and real estate matters including
entity formation, corporate governance, acquisitions and
leasing. She has represented various landlords and real
estate developers in office and retail lease negotiations
with national chains and local tenants.
REAL ESTATE ATTORNEYS : PAGE 12
CORINNE SULLINS
Associate, Business Group
Corinne Sullins joined BoyarMiller in 2016 after participating
in the firm’s Summer Associate program the previous year.
Her practice consists of representing clients in a broad
range of corporate matters, mergers and acquisitions, cor-
porate formation and restructuring, corporate governance,
real estate transactions, contract negotiation and other
general business matters.
ALEX PARKER
Associate, Business Group
Alex Parker joined BoyarMiller last year. Her practice is pri-
marily devoted to representing clients in a broad range of
corporate and real estate transactions including complex
mergers and acquisitions, corporate formation and restruc-
turing, corporate governance, leasing and land acquisition.
CRAIG LAUCHNER
Associate, Litigation Group
Craig joined BoyarMiller’s Business Group in September 2016
after participating in the firm’s Summer Associate program.
His practice consists of representing clients in a wide range
of business, commercial, and employment disputes.

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BoyarMiller Breakfast Forum: The Houston Commercial Real Estate Markets – What’s Ahead for 2018

  • 1. 2018 MARKET OUTLOOK Houston Commercial Real Estate
  • 2. CONTACT 2925 Richmond Avenue, 14th Floor Houston, Texas 77098 713.850.7766 Visit boyarmiller.com TABLE OF CONTENTS 03 : The Breakfast Forum Snapshot 04 : Houston Commercial Real Estate At-a-Glance 05 : Expert Insights Houston Real Estate Overview Office Market and Mixed-Used Development Industrial Real Estate 08 : Attorney Insights Houston — A Tale of Two Cities: Through the Looking Glass of Residents and Outside Investors 10 : BoyarMiller Real Estate Practice Leaders 12 : BoyarMiller Real Estate Attorneys Friends, We’ve been hosting the annual BoyarMiller Real Estate Forum for a long time bringing together market experts who share their insights and knowledge about the industry. Throughout the years, there have been up cycles and downturns affecting this important sector of our economy. Admittedly, it was much more exciting to hear an optimistic panel reveal several 2018 positive trends in commercial and industrial real estate. The goal of our breakfast forums and this eBook is to share information and knowledge because we believe continuous learning is one of the keys to success in life, no matter what you do. It is one way we spotlight the trends that impact the Houston business landscape and may affect your business directly. This edition of our eBook summarizes the 2018 market outlook for Houston’s commercial real estate industry as presented by Jimmy Hinton with HFF, Jonathan Brinsden with Midway Companies, and John Nicholson of AVERA Companies. We thank them for sharing their wisdom as we all breathe a collective sigh of relief that the forecast for Houston’s commercial real estate market is excellent. Feel free to forward this eBook to others who may find the information of value. And let us know how we can help you reach your goals for this year and beyond. My best, CHRIS HANSLIK Firm Chairman LEARN MORE ABOUT THE FORUM
  • 3. The Breakfast Forum Snapshot PAGE 03 As 2018 began, institutional investors are focused on Houston again, while the industrial and multifamily markets still have room to run. MICHELLE LEIGH SMITH RealtyNewsReport http://realtynewsreport.com/ 2018/01/18/out-of-the-deep-freeze- houston-real-estate-is-heating-up-in-2018/ In 2018, ‘there’s so much capital earmarked for real estate’ in Houston. CARA SMITH Houston Business Journal http://bizj.us/1pgv0w If there was anything good that came out of the financial crisis, it was lower leverage, more equity, says Jonathan Brinsden @MidwayCompanies #CRE forum @boyarmiller KATHERINE FESER Houston Chronicle https://twitter.com/kfeser
  • 4. PAGE 04 $150 billion 15 percent only 3 percent 8,000 FOR RENT Capital in the U.S. ready to be deployed for office investment TAKEAWAY: there is so much capital earmarked for real-estate Growth in container shipping from the Port of Houston TAKEAWAY: and will continue to increase over next couple of years as more petrochem plants come online Amount of all retail spending done online in U.S. TAKEAWAY: brick and mortar still has a place in retail! Number of available multifamily units in Houston TAKEAWAY: but we still need 15,000 units a year to meet Houston’s expected rental growth to 2030 Houston Commercial Real Estate At-a-Glance
  • 5. PAGE 05 Expert Insights ABOUT JIMMY Jimmy Hinton serves as Managing Director of HFF and is responsible for the firm’s research efforts. He works with the executive management team to assist in investor relations and to inform both HFF staff and firm clients with in-depth analysis of economic, property and capital market trends. He also provides extensive market reports, pre- sentations and deal-specific analysis for debt placement and investment sales assignments. “There is tremendous opportunity in Houston. We are quite bullish for 2018.” Houston Real Estate Overview JIMMY HINTON Managing Director, Research, HFF • When you step back, you can see our market more clearly. There is a lot of capital earmarked for commer- cial investment in Houston. • Pure play online retail is the hockey stick in terms of growth. It accounts for three percent of retail spending, which is not very much. There is a long way to go before brick and mortar retail is exposed fully. • We are seeing obvious signs of retail weakness in some regional malls. However, experiential retail outperforms the industry. The average return from an online pur- chase to a retail store results in 140 percent of the spend. That is creating top-line revenue growth. • There is a larger market for residential growth among baby boomers as they consider high-end multifamily property. • Co-working space is a trend that affects all asset classes. A lot more people work for themselves or in small businesses and want nimbleness and flexibility. Commercial real estate needs to adapt to operate assets that accommodate this big trend.
  • 6. ABOUT JONATHAN Jonathan Brinsden is CEO of Midway Companies and guides its overall business strategy and operations. He is member of the Urban Land Institute Board of Directors, Board of Trustees and the Governance Committee, and past Chair of ULI Houston. He is also a board member of NAIOP and an active member of International Council of Shopping Centers. “A lot of positive things are happening as we look forward.” Office Market and Mixed-Used Development JONATHAN BRINSDEN CEO, Midway Companies • Hurricane Harvey did not have a long-term impact on commercial real estate with most ground-level damage repaired by the end of 2017. • The office market will be better than last year. There is still a lot of sublease space in the market, although it is dwindling or being absorbed as direct space. • In the past, mixed-use was looked at as risky, so capital was skeptical. Now, those with capital understand the trends of what an office or multifamily tenant wants. We’ll see more people willing to engage and invest in mixed-use. • The multifamily market has weathered the oil and gas downturn and is improving as units are absorbed. Devel- opers have managed the number of units so the sector does not have a black eye to investors. • By 2030, Houston is expected to have 3.8 million more renters, which means we need 15,000 more units a year to accommodate growth. Starting new multifamily development today with a delivery window of 2-3 years is attractive. • Urban residential was being built for millennials but the average age in these upscale units is much higher than expected. It has transitioned from renting by necessity to renting by choice. PAGE 06 Expert Insights
  • 7. PAGE 07 Expert Insights ABOUT JOHN John Nicholson serves as Executive Vice Presi- dent of Development at AVERA Companies. Over the last 16 years, he has negotiated more than 700 transactions providing in excess of $750 million in transaction value. “2017 was a great year for absorption in the industrial market.” Industrial Real Estate JOHN NICHOLSON Executive Vice President, AVERA Companies • Vacancies in Houston’s industrial market hover around six percent, which is great. We will continue to see positive lease activity for both petrochemicals and consumer products. • The big story now is the trend for more warehouse amenities. Tenants are requesting larger truck ports, higher ceilings and more office area. Some of the buildings that were built in the 1980s are not satisfying those demands. So many of them will be redeveloped going forward. • Industrial market expansion continues in 2018 because shippers have changed their routes with the expansion of the Panama Canal. One example: Best Buy announced a large transaction and those type of big-box retailers will continue to come through Houston. • In 2018, it’s a race among industrial developers to identify developable sites. • Petrochemical exports out of the Port of Houston is still in its early stages and will only get stronger as more plastic resin plants come on line.
  • 8. “If you change the way you look at things, the things you look at change.” –Wayne Dyer With everything that has occurred in Houston over the past few years, it can be difficult for its residents to understand the opportunities that are seen by those viewing the city from the outside. Houston can be char- acterized as the tale of two cities: the city seen from the perspective of its residents versus the city seen from the perspective of outside investors. For those of us living in Houston, many experienced first-hand the effects of the energy downturn and Hurricane Harvey, which resulted in vacant office buildings, retail and multi-family in the Energy Corridor and flooded residential homes. As a result, it is understandable that some Houstonians have a pessimistic view of our current situation, a World Series championship notwithstanding. However, for those outside of the city, Houston is an attractive investment opportunity and investors are speaking with their dollars. For them, Houston is a good value-add proposition for many types of real estate¬, including industrial and multi-family, while the office and retail segments are adapting to new challenges. INDUSTRIAL The industrial market is currently Houston’s most dynamic market segment, with explosive growth in development over the past five years. Developments that, in the past, might have gone to Dallas, Los Angeles, Chicago or Atlanta have come to Houston. The developments are also getting larger; where the average square footage of projects was approximately 35,000 sq. ft. just a few years ago, the average size has essentially doubled to approximately 70,000 sq. ft. in recent years. The explosion in the industrial market is driven by a number of factors: the expansion of e-commerce, new housing development and redevelopment in the Greater Houston area, the expansion of the Panama Canal, and new petrochemical plants and refineries coming online. An unlikely foe, Harvey, has resulted in major retailers such as Home Depot and Lowes opening new distribution centers to serve the need for increased housing materi- als. One of the biggest changes in the industrial market is the expansion of requested amenities, ranging from higher ceilings to wider column spacing. In addition to the new development, Houston can expect to see rede- velopment of older buildings to meet tenants’ demands. With all of the growth in the industrial market, sites are becoming harder to find in rail-served areas such as Baytown, LaPorte and Deer Park. Whereas industrial was once the highest and best use of land in those areas, there is now competition for multi-family and single-family residential developments. In response to the scarcity of PAGE 08 Attorney Insights Houston — A Tale of Two Cities: Through the Looking Glass of Residents and Outside Investors LYNDSAY FINCHER Associate, Business Group BLAKE ROYAL Shareholder, Business Group
  • 9. From an investment standpoint of a small business owner, a 10-year lease may seem too risky, but a shorter lease, or even a month-to-month lease, may be an easier commitment. At the extreme end of this shift is the rise of flexible collaborative office space providers, such as WeWork and Spaces. With all of these perceived challenges, however, Houston is seeing an increased investment in its office market from institutional investors, which speaks to the confidence that those outside of Houston have in the region. RETAIL The story in retail continues to be impacted by e-com- merce. There continues to be a vast sales gap between e-commerce and brick-and-mortar stores, but it is a shrink- ing one, and savvy retailers (and retail developers) are making adjustments to account for this growing challenge. Consumers who enjoy the experience of high-end shopping will continue to go to the stores they enjoy, but those retail- ers are making adjustments to ensure that their customers continue to enjoy shopping in an interactive way. For day-to-day items like diapers and dog food, however, consumers are increasingly turning to online, automatic delivery options. In response, retailers are integrating auto- mated and online interfaces with their physical locations, such as grocery stores providing internet ordering and curb- side pick-up, and soft goods retailers providing for more easily accessible in-store returns for items purchased online. The rise in online purchases will also have other effects, such as smaller footprints for “big box” retailers, and the rise of “lifestyle” centers that provide experiences rather than mere shopping. CONCLUSION Houston is overcoming its perception as a city whose eco- nomic health is solely tied to the price of oil. Despite all of the recent travails our city has dealt with – and continues to deal with – there are many reasons to be optimistic about the Houston real estate markets and to see our- selves as others see us – a great real estate opportunity. land, developers are looking beyond traditional, rail- served industrial areas to Katy and Brookshire, which are further from downtown, the Port of Houston and railyards. MULTI-FAMILY It may come as a surprise that Houston may actually be on the precipice of an undersupply of multi-family units in light of the numerous new developments that have been delivered in the past few years. As the number of new projects has slowed, the excess units have been absorbed and the market is stabilizing. With fewer new units slated to come into the market over the next few years and the high projected growth of Houston’s popula- tion, the existing multi-family units will quickly be absorbed. Interestingly, while many of the new multi-family projects included higher-end amenities targeted towards millenni- als, these developments are in fact attracting older gen- erations who enjoy the amenities and, in mixed-use developments, the ability to walk to restaurants, stores, and other destinations right outside of their front door. OFFICE The Houston office market continues to face challenges, but while some are unique to Houston, many are the same challenges being addressed in markets worldwide. A challenge that is particular to Houston is the oversupply of sublease space, which is a remnant of the drop in oil prices that left a glut of unused office space. While the sublease market may be healthy, subleases do not impact the overall net absorption of office space. Now that oil prices are stabilizing – hopefully, for the long run – we are seeing a secondary effect on the office mar- ket. This effect is being seen on a national and worldwide level: companies are changing the way they are structured, which is changing the use of their offices. Business owners, especially small business owners, are hesitant to commit to long-term or large-scale leases because their use will fluctuate. In addition, companies are utilizing more con- tract labor than before, which allows their workforce to constrict and expand to meet their needs. The net result is that leases are for smaller spaces and shorter timelines. ATTORNEY INSIGHTS : PAGE 09
  • 10. PAGE 10 Real Estate Practice Leaders BILL BOYAR Founding Shareholder, Business Group Bill’s practice focuses on representing parties involved in the acquisition, disposition, capitalization and financing of assets and businesses on a national and international level. He has served as lead counsel on numerous com- plex, multi-party acquisitions and project financings, with significant experience in corporate finance, private equity, mergers and acquisitions, real estate and hospitality. LEE COLLINS Shareholder, Litigation Group The goal of Lee Collins’ practice is to provide innovative and value-driven solutions to the litigation-related problems facing the client. This objective has been successfully achieved through his direct and open communication with the client, an early and immediate assessment of the issues, strategic evaluation of the problem and its solution, and aggressive representation. BLAKE ROYAL Shareholder, Business Group Blake’s practice includes acquisitions and dispositions of equity and assets, including recapitalization transactions with venture capital and private equity funds; entity and capital formation, including private placements, in domes- tic and international jurisdictions; and general contractual drafting and negotiation.
  • 11. PRACTICE LEADERS : PAGE 11 HILARY TYSON Shareholder, Business Group Hilary Tyson’s practice focuses on commercial real estate and business transactions. She joined the firm and returned to Houston in June 2015 after practicing in the Dallas area for more than 11 years. She represents developers, home- builders and equity investors in a wide range of real estate related transactions including land acquisition and disposi- tions, residential subdivision development, financing, entity formation, and office development and leasing. CASSIE STINSON Senior Counsel, Business Group Cassie Stinson’s practice is focused on commercial real estate and finance, public/private projects, business transactions and public law, with a particular emphasis on complex projects and multi-party transactions. She handles real estate acquisitions and dispositions; leasing; project structuring, development, design and construc- tion; formation of business and non-profit entities, corpo- rate governance, and business contracts; and foreign investment in US real estate and businesses.
  • 12. ROBERT ARTHUR Associate, Litigation Group Robert Arthur clerked with BoyarMiller during law school and then joined the firm in 2014. He has represented clients in a wide variety of business and commercial disputes. Rob- ert has represented developers of commercial properties in disputes against contractors or breach of contract. PAGE 10 Real Estate Attorneys KASI CHADWICK Associate, Litigation Group Kasi Chadwick’s practice spans the full gamut of commercial and business litigation and includes business torts, contracts, trade secrets, non-compete agreements and other employment-related disputes. Licensed in Texas, Kasi practices in both state and federal courts pursing everything from emergency injunctive relief to the finalization of suits through post-judgment and appel- late matters. She also pursues her client’s litigation goals through alternative dispute resolution vehicles such as mediations and arbitrations. CYRUS CHIN Associate, Business Group Cyrus Chin has been with the firm for five years. His practice consists of representing clients in a broad range of corpo- rate matters, including complex merger and acquisition transactions, corporate formation and restructuring, corpo- rate governance, real estate transactions, contract negoti- ation and other general business matters.
  • 13. REAL ESTATE ATTORNEYS : PAGE 12 CALEB DUNSON Associate, Business Group Since joining BoyarMiller in 2017 after participating in the Summer Associate Program, Caleb Dunson has been involved in a wide range of corporate and real estate mat- ters. His practice includes representing foreign and domes- tic clients in general business matters, corporate formation and restructuring, complex mergers and acquisitions, leas- ing and land acquisition, disposition and development. LYNDSAY FINCHER Associate, Business Group Lyndsay Fincher has been with BoyarMiller since 2013. Her practice is primarily devoted to representing companies and individuals in a wide range of corporate and real estate matters including private securities, complex merg- ers and acquisitions, corporate formation and restructuring, leasing and land acquisition, disposition and development. MOLLY HUST Associate, Litigation Group Molly Hust joined BoyarMiller’s Litigation Group in August 2015 after participating in the firm’s Summer Associate Program. Molly’s practice is primarily focused on serving clients in a wide range of complex commercial and employment law disputes. Molly successfully represented a mixed-use real estate developer in claims for breach of contract, breach of warranty and construction defect against its former general contractor involving substantial water infiltration in two luxury apartment buildings. TAYLOR LAMB Associate, Business Group Taylor Lamb joined BoyarMiller in 2016. Her practice consists of various corporate and real estate matters including entity formation, corporate governance, acquisitions and leasing. She has represented various landlords and real estate developers in office and retail lease negotiations with national chains and local tenants.
  • 14. REAL ESTATE ATTORNEYS : PAGE 12 CORINNE SULLINS Associate, Business Group Corinne Sullins joined BoyarMiller in 2016 after participating in the firm’s Summer Associate program the previous year. Her practice consists of representing clients in a broad range of corporate matters, mergers and acquisitions, cor- porate formation and restructuring, corporate governance, real estate transactions, contract negotiation and other general business matters. ALEX PARKER Associate, Business Group Alex Parker joined BoyarMiller last year. Her practice is pri- marily devoted to representing clients in a broad range of corporate and real estate transactions including complex mergers and acquisitions, corporate formation and restruc- turing, corporate governance, leasing and land acquisition. CRAIG LAUCHNER Associate, Litigation Group Craig joined BoyarMiller’s Business Group in September 2016 after participating in the firm’s Summer Associate program. His practice consists of representing clients in a wide range of business, commercial, and employment disputes.