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Atlanta Office Market Report – Second Quarter 2020

ECONOMIC OVERVIEW

The COVID-19 pandemic has officially pushed our economy into recession. The record-breaking decade-long streak of 113 months of consecutive job growth in the United States came to an abrupt end in March and worsened in April with job losses in excess of 22 million resulting in an unemployment rate of 14.7%, far eclipsing the peak of 10.0% in the Great Recession.

Fiscal stimulus in the form of direct payments and supplemental jobless benefits along with swift and thorough monetary policy enacted by the Federal Reserve have helped millions of American families endure the economic fallout. These aggressive actions bought us time to better understand the underlying health crisis and begin charting a path to recovery.

The Georgia economy began reopening in a phased approach following the expiration of the state-wide stay-at-home order on April 30. Businesses and consumers are understandably eager to return to broader economic activity. Indeed, initial economic indicators show that a nascent recovery is underway – after shedding a total 318.6 thousand jobs in March and April, Atlanta added 35.2 thousand jobs in May. Given the overwhelming concentration of job losses in the service sector, it is encouraging to see data from the restaurant reservation service Open Table show a steady increase in traffic across the country now back up to 57% of demand year-over-year. The next challenge is to ensure the recovery is sustainable. Though there is not a statewide mandate in place, many cities including Atlanta are introducing ordinances requiring face masks to be worn in public to slow the spread of the virus and allow continued economic recovery.

It is also encouraging to see optimistic signals coming from The CFO Survey, a joint collaboration between Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. Confidence is improving among financial decision makers across firms of all sizes in the second quarter compared to the first with the optimism rating for their own companies rebounding to be in line with the average for the past three years. However, the increased difficulty of gauging demand in the climate of mandated closures and gradual reopening means that firms will be cautious about returning to pre-COVID employment levels quickly.

[Click here to download the full report]

Dallas-Fort Worth Office Market Report – Second Quarter 2020

ECONOMIC OVERVIEW

The COVID-19 pandemic has officially pushed our economy into recession. The record-breaking decade-long streak of 113 months of consecutive job growth in the United States came to an abrupt end in March and worsened in April with job losses in excess of 22 million resulting in an unemployment rate of 14.7%, far eclipsing the peak of 10.0% in the Great Recession.

Fiscal stimulus in the form of direct payments and supplemental jobless benefits along with swift and thorough monetary policy enacted by the Federal Reserve have helped millions of American families endure the economic fallout. These aggressive actions bought us time to better understand the underlying health crisis and begin charting a path to recovery.

The Texas economy began reopening in a phased approach following the expiration of the state-wide stay-at-home order on April 30. Businesses and consumers are understandably eager to return to broader economic activity. Indeed, initial economic indicators show that a nascent recovery is underway – after shedding a total 1.4 million jobs in March and April, Texas added 238 thousand jobs in May. Given the overwhelming concentration of job losses in the service sector, it is encouraging to see data from the restaurant reservation service Open Table show a steady increase in traffic across the country now back up to 57% of demand year-over-year. The next challenge is to ensure the recovery is sustainable. Texas has already chosen to scale back reopening efforts as new cases manifest through community spread.

It is also encouraging to see demand for petroleum recover following a devastating April that briefly saw negative oil prices when storage capacity was strained by the collapse in U.S. petroleum consumption to the tune of 5.7 million fewer barrels a day, a 28% year-over-year decline. Oil prices have nearly doubled since the close of 2020 Q1, but at just under $40 a barrel, most oil companies are well below their break-even price to operate existing wells let alone consider drilling new ones especially with oil prices forecasted to remain flat into 2021.

[Click here to download the full report]

Houston Office Market Report – Second Quarter 2020

ECONOMIC OVERVIEW

The COVID-19 pandemic has officially pushed our economy into recession. The record-breaking decade-long streak of 113 months of consecutive job growth in the United States came to an abrupt end in March and worsened in April with job losses in excess of 22 million resulting in an unemployment rate of 14.7%, far eclipsing the peak of 10.0% in the Great Recession.

Fiscal stimulus in the form of direct payments and supplemental jobless benefits along with swift and thorough monetary policy enacted by the Federal Reserve have helped millions of American families endure the economic fallout. These aggressive actions bought us time to better understand the underlying health crisis and begin charting a path to recovery.

The Texas economy began reopening in a phased approach following the expiration of the state-wide stay-at-home order on April 30. Businesses and consumers are understandably eager to return to broader economic activity. Indeed, initial economic indicators show that a nascent recovery is underway – after shedding a total 1.4 million jobs in March and April, Texas added 238 thousand jobs in May. Given the overwhelming concentration of job losses in the service sector, it is encouraging to see data from the restaurant reservation service Open Table show a steady increase in traffic across the country now back up to 57% of demand year-over-year. The next challenge is to ensure the recovery is sustainable. Texas has already chosen to scale back reopening efforts as new cases manifest through community spread.

It is also encouraging to see demand for petroleum recover following a devastating April that briefly saw negative oil prices when storage capacity was strained by the collapse in U.S. petroleum consumption to the tune of 5.7 million fewer barrels a day, a 28% year-over-year decline. Oil prices have nearly doubled since the close of 2020 Q1, but at just under $40 a barrel, most oil companies are well below their break-even price to operate existing wells let alone consider drilling new ones especially with oil prices forecasted to remain flat into 2021.

[Click here to download full report]

TheTravis-Main

Madison Marquette Opens The Travis in Houston

The 30-story Luxury Apartment Building Begins Welcoming Residents

HOUSTON, TX — July 8, 2020 — Madison Marquette, a leading private full-service real estate provider, investment manager, developer and operator, announced today the opening of the Travis in the Midtown neighborhood of downtown Houston. The Travis is a 375,775 sq. ft. 30- story luxury apartment building featuring one, two and three bedroom apartments and two story penthouses. The apartments sit atop 14,000 Sq. ft. of luxury retail including a restaurant scheduled to open Q1-2021.

Interior features of the Travis apartments include floor-to-ceiling windows in every unit, separate shower and soaking tubs, vanities with custom dressers and walk-in closets, hardwood floors, 10-12 ft. ceilings, and quartz and granite fixtures throughout. The building’s community amenities include an aqua lounge with conference room, heated salt water pool, private cabanas with Bluetooth, fire pits, a grand lawn and 24-hour fitness center. The lobby combines a conference center and 24-hour coffee bar with concierge services, bike storage, package locker service, and on-site valet dry cleaning. A seven-story parking garage with reserved parking is also available for residents.

“We are delighted to introduce The Travis to the Midtown neighborhood of Houston,” said Madison Marquette Principal Rick Kirk. “Our new residences offer Houstonians a best-in-class combination of luxury amenities and design excellence while offering convenient access to local public transit.”

Located in the Midtown neighborhood of downtown Houston, near the six-acre Midtown Park, the Travis features Metro-Rail access with a five minute Northbound access to Downtown and a 10 minute Southbound access to the Texas Medical Center.

For additional information on The Travis, or to schedule a tour, visit www.thetravishouston.com.

About Madison Marquette

Madison Marquette is a leading private full-service real estate provider, investment manager, developer and operator headquartered in Washington, D.C. The company delivers integrated investment, development, leasing and management services to a diverse portfolio of 330 assets in 20 states and manages an investment portfolio valued at over $6 billion. The company partners with global, institutional and private investors to provide industry-leading investment and advisory services across asset classes — including mixed-use, retail, office, medical, industrial, senior living and multi-family. Following its 2019 merger with the Boston-based Roseview Group, Madison Marquette added capital markets, investment banking and corporate advisory services to its integrated capabilities. Founded in 1992, the company built its reputation on the successful development, repositioning and redevelopment of landmark mixed-use assets, and now leverages that performance legacy to provide clients with exceptional asset services and investment advice. Madison Marquette has a strategic bench of professionals providing nationwide service from 14 regional markets and is a member of the Capital Guidance group of companies. For additional information, visit www.madisonmarquette.com.

JohnDavidFranklin

Madison Marquette Veteran Honored by ICSC

John-david Franklin Receives Trustees Distinguished Service Award

Washington, D.C. — June 19 2020 — Madison Marquette, a leading private full-service real estate provider, investment manager, developer and operator, announced today that John-david Franklin, Senior Vice President – Retail Solutions, has received the prestigious Trustees Distinguished Service Award from the International Conference of Shopping Centers (ICSC).

“I am pleased to have been named a recipient of this award by ICSC,” stated John-david Franklin. “At Madison Marquette, we have long been dedicated to the creation of special places and to the strengthening of neighborhoods – something that is important to ICSC and that is reflected in the work done by this year’s and past recipients of the Trustees Distinguished Service Award,” Mr. Franklin added.

The Trustees Distinguished Service Award recognizes ICSC members who have also made significant contributions to the industry and have established themselves as leaders within the organization. It is symbolically a lifetime achievement award bestowed only upon longtime ICSC members and volunteers. The award honors members for their important role in helping ICSC achieve key milestones.

John-david Franklin has been a member of ICSC since 1981 and has held a variety of leadership positions with the organizations. At Madison Marquette, Mr. Franklin has been associated with the success of such iconic projects as Asbury Park Boardwalk and Montgomery Promenade among many others. Mr. Franklin has been a senior leasing executive with Madison Marquette since 2004.

“We appreciate ICSC’s recognition of John-david’s significant contributions to ICSC leadership and to the innovative evolution of the retail environment in the United States,” said Tom Gilmore, Chief Strategy Officer – Retail Solutions. “Madison Marquette has long supported the critical work being done by ICSC to anticipate and meet the changing needs of American retail investors, stakeholders and consumers,” Vince Costantini, CEO, added.

ABOUT MADISON MARQUETTE

Madison Marquette is a leading private full-service real estate provider, investment manager, developer and operator headquartered in Washington, D.C. The company delivers integrated investment, development, leasing and management services to a diverse portfolio of 330 assets in 20 states and manages an investment portfolio valued at over $6 billion. The company partners with global, institutional and private investors to provide industry-leading investment and advisory services across asset classes — including mixed-use, retail, office, medical, industrial, senior living and multi-family. Following its 2019 merger with the Boston-based Roseview Group, Madison Marquette added capital markets, investment banking and corporate advisory services to its integrated capabilities. Founded in 1992, the company built its reputation on the successful development, repositioning and redevelopment of landmark mixed-use assets, and now leverages that performance legacy to provide clients with exceptional asset services and investment advice. Madison Marquette has a strategic bench of professionals providing nationwide service from 14 regional markets and is a member of the Capital Guidance group of companies. For additional information, visit www.madisonmarquette.com.

Amer_Hammour

Real Estate Value Creation, Placemaking are Based on Integrated Systems

By: Amer Hammour, Executive Chairman, Madison Marquette
The CEO Forum, CEO Insight

I believe that the best way to produce high value for customers is to design our businesses and our projects as fully integrated systems, to directly control every component of these systems and focus on their effective integration, how they work together and build on each other. In real estate businesses and in large real estate projects, such as the Asbury Park Boardwalk in New Jersey, or The Wharf in Washington D.C., it is not individual components but the whole that creates excitement, value and success.

Our company, Madison Marquette, which I managed as CEO from 2001 to 2012, and where I am currently the Executive Chairman, invests in and manages over 350 properties, from 14 offices nationally. Our primary client is the investor who partners with us and the owner who entrusts us to manage and enhance their property. The focus of our services is to produce better returns and additional value for our clients, going beyond the returns they get from simply selecting and holding assets.

We differentiate ourselves from simple asset managers or pure service providers by offering a full array of integrated services: investment, asset management, development, construction, property management, leasing, marketing, and consulting. We create full teams with local leadership for every project, collaborating to implement a complete value-add plan to lease-up the property, to manage it more efficiently, to repurpose it and reposition it for different users, to add density, and to activate it. We believe that by having the full array of skills in house, and by forming fully integrated teams that utilize these skills, we can maximize value and produce “Alpha” returns for our clients.

A hallmark of Madison Marquette is our ability to deliver customized expertise in a variety of asset classes, including retail, office, residential and medical projects, and to integrate them within urban mixed-use environments. In recent years, across the U.S., people with disposable income have been moving back to urban areas. This trend is especially evident among empty-nesters and millennials who prefer to live in apartments and to be close to the vibe, the energy, the workplace hum and the restaurant and entertainment options of a dynamic city.

Many of our industry colleagues focus on placemaking. For us, the physical place is just a stage. It is important that we program the activity on that stage, to establish the uses that promote this activity — the food halls, the markets, the medical services, the shops, the hotels, concert halls, and restaurants. All of these bring great excitement to a residential and office area, and similarly, an active office and residential population will support these businesses. The more integrated the activities, the more feedback between them, the more exciting and valuable are the projects, and the more thriving are the cities they anchor.

When we came to Asbury Park, the historic beach town on the Jersey shore in 2008, it was still in ruins. The boardwalk area was boarded up, decrepit and deserted. With hopes of bringing the crowds back, we restored many key buildings and pavilions, but no tenants would dare lease space because of the negative reputation of the town. To prove that the city could work again, we created activity: We opened and directly operated restaurants, music clubs, after-hours venues, and we provided security.

For one year, we maintained a substantial operating staff, and we still manage five different music venues, including the world-famous Stone Pony. As people came back to the Asbury shore, we then signed leases across the project. The activity we started has built on itself. We invited artists to create street art on our walls, programmed music and film festivals, built great apartments and hotels. Today, the city is thriving, edgy, gritty, authentic, artistic, and fun. The liveliest town on the Jersey shore.

For each project, we think of the greatest need that the ultimate users have, and then build the project around that need. In Washington D.C., there is very little waterfront that is not a federal park or public land. People in the D.C. area needed a place where they could gather and fully enjoy the waterfront. So, we designed The Wharf around one spine, a 60-foot-wide, mile long promenade that edges the riverfront. Four piers jut out into the channel from the promenade allowing residents and visitors to view and utilize the water, to live on it and to experience its unique beauty. The Wharf offers office buildings and apartment residences that take full advantage and celebrate the Potomac and thrive on the diverse amenities. We integrated a historic fish market and added a wide variety of restaurants, hotels and music clubs as well as a 6,000-seat concert hall. All of this now fronts an active marina with over 400 boat slips.

It is not any one element of the project that makes it successful, but the full integrated system which creates excitement and repeat visits and maximizes values for our investors, clients and end users. This approach is effective in real estate and for many other businesses as well.

Amer Hammour is Executive Chairman of Madison Marquette, and heads all real estate operations and investments for its parent company Capital Guidance in the U.S. and internationally. As founder of Madison Marquette, he is responsible for setting the company’s investment strategy and leads its growth and capital relationships. Over the past 38 years, Mr. Hammour has completed — on behalf of Madison Marquette, Capital Guidance and its subsidiaries — over 200 real estate investments in retail, office, land, and industrial projects and developments valued at over $8 billion.

Mr. Hammour holds a BS in Industrial and Systems Engineering from the Georgia Institute of Technology and an MS in Business Administration from the Sloan School of Management at MIT.

Click here to view original article.

 

Atlanta Office Market Report – First Quarter 2020

The Atlanta economy started 2020 on track for a year of moderate economic growth and employment gains. Local economists had been projecting job gains in line with historical averages in the range of 38,000 to 51,000 new jobs, down from the pace of 69,100 jobs added in 2019. Since these forecasts were made, the global economy has experienced two shocks that will pull us away from those baseline projections (1) the onset and spread of COVID-19, and (2) a nearly 70% drop in oil prices since the beginning of the year from $61.14 to $19.27 at the intraday low reached Monday March 30th. When adjusted for inflation, this price is below lows reached during the oil crash of the 1980s.

As this quarter closes, there is still great uncertainty about the ultimate scope and severity of the human and economic toll that the coronavirus pandemic will inflict. Difficult policy choices like stay-at-home orders and travel restrictions are beginning to curb the rate of infection in the jurisdictions that have implemented them. Unfortunately, social distancing measures leave many retail-oriented contact-intensive service jobs like food service workers, hairstylists, and salespersons at the highest-risk of disruption. Headlines of record unemployment claims are certainly jarring to see, but the best medicine for our national economy is to prioritize the health of our population.

With respect to office occupiers, all companies will likely experience stress in the coming months but small and midsize companies, who more often rent in Class B and C properties, may feel the impact more acutely. These firms often do not have substantial cash reserves or enjoy the same access to credit markets as larger companies. Landlords are already fielding numerous requests from existing tenants for rent forbearance and other concessions as companies try to keep afloat into the second quarter. The coworking market, with short-term leases and open environments not conducive to social distancing, is likely to face significant challenges in the short run. We will have to wait and see if this initial shock ultimately pushes tenants to seek more agile workspace in the future. The ability to work productively from a traditional office environment and shed excess capacity may become crucial to weathering the current crisis.

[Click here to download the full report]

DFW Office Market Report – First Quarter 2020

The Dallas-Fort Worth economy started 2020 strong and on track for a year of continued economic growth after leading the nation in job growth with 115,200 new jobs added in 2019. At the beginning of the year, Moody’s Analytics was forecasting job gains in line with historical averages at 72,200 new jobs. Since their forecast was made, the global economy has experienced two shocks that will pull us away from those baseline projections (1) the onset and spread of COVID-19, and (2) a nearly 70% drop in oil prices since the beginning of the year from $61.14 to $19.27 at the intraday low reached Monday March 30th. When adjusted for inflation, this price is below lows reached during the oil crash of the 1980s.

As this quarter closes, there is still great uncertainty about the ultimate scope and severity of the human and economic toll that the coronavirus pandemic will inflict. Difficult policy choices like stay-at-home orders and travel restrictions are beginning to curb the rate of infection in the jurisdictions that have implemented them. Unfortunately, social distancing measures leave many retail-oriented contact-intensive service jobs like food service workers, hairstylists, and salespersons at the highest-risk of disruption. Headlines of record unemployment claims are certainly jarring to see, but the best medicine for our national economy is to prioritize the health of our population.

With respect to office occupiers, all companies will likely experience stress in the coming months but small and midsize companies, who more often rent in Class B and C properties, may feel the impact more acutely. These firms often do not have substantial cash reserves or enjoy the same access to credit markets as larger companies. Landlords are already fielding numerous requests from existing tenants for rent forbearance and other concessions as companies try to keep afloat into the second quarter. The coworking market, with short-term leases and open environments not conducive to social distancing, is likely to face significant challenges in the short run. We will have to wait and see if this initial shock ultimately pushes tenants to seek more agile workspace in the future. The ability to work productively from a traditional office environment and shed excess capacity may become crucial to weathering the current crisis.

[Click here to download the full report]

Houston Office Market Report – First Quarter 2020

The Houston economy started 2020 on track for a year of moderate economic growth and employment gains. Local economists were projecting job gains in line with historical averages in the range of 42,300 to 60,900 new jobs. Since these forecasts were made, the global economy has experienced two shocks that will pull us away from those baseline projections (1) the onset and spread of COVID-19, the coronavirus disease caused by the SARS-CoV-2 virus and (2) a nearly 70% drop in oil prices since the beginning of the year from $61.14 to $19.27 at the intraday low reached Monday March 30th. A price which, when adjusted for inflation, is below lows reached during the oil crash of the 1980s.

As this quarter closes, there is still great uncertainty about the ultimate scope and severity of the human and economic toll that the coronavirus pandemic will inflict. Difficult policy choices like stay-at-home orders and travel restrictions are beginning to curb the rate of infection in the jurisdictions that have implemented them. Unfortunately, social distancing measures leave many retail-oriented contact-intensive service jobs like food service workers, hairstylists, and salespersons at the highest-risk of disruption. Headlines of record unemployment claims are certainly jarring to see, but the best medicine for our economy is to prioritize the health of our population.

With respect to office occupiers, all companies will experience stress in the coming months but small and midsize companies, who more often rent in Class B and C properties, will feel the impact more acutely. These firms often do not have substantial cash reserves or enjoy the same access to credit markets as larger companies. Landlords are already fielding numerous requests from existing tenants for rent forbearance and other concessions as companies try to keep afloat into the second quarter. The coworking market, with short term leases and open environments not conducive to social distancing, is likely to be hit hard in the short run. Strangely, this shock may push tenants to seek more agile workspace in the future as the ability to work away from a traditional office environment and shed excess capacity is crucial to weathering the current crisis.

[Click here to download the full report]

rosen_group_development

Rosen Group expands north Houston offices

By Katherine Feser (as appearing in Houston Chronicle)
Published 7:00 am CDT, Friday, March 20, 2020
The Rosen Group leased space in the Gateway I and II office buildings near Bush Intercontinental Airport.

Oprona, a subsidiary of the Rosen Group, expanded in the Gateway I & II office complex in north Houston to meet the growing demand for its business.

The company, which leased 31,804 square feet, provides automated inspection systems, flowmeters, cleaning tools, coatings and instruments to the oil and gas industry.

The location near JFK Boulevard and Bush Intercontinental Airport factored into the expansion decision, according to Michael Evans, manager of brokerage services at MHW Brokerage Services, which represented Oprona.

The company will grow from about half a floor in one of the buildings to 22,754 square feet in 3663 N. Sam Houston Parkway East (Gateway I) and an additional 9,050 square feet in 15333 JFK Blvd. (Gateway II). Rosen Group also has nearby offices at 14120 Interdrive East.

Jeff Williams and Mitchell Oxman of MHW Brokerage Services represented the tenant in the lease. Marci Phillips, Livy White, Wade Bowlin and Angelina Stone of Madison Marquette represented the landlord, Gateway Houston Partners.

The deal is a score for the North Houston/Greenspoint area, which has struggled since companies such as Exxon Mobil, Noble Energy, Southwestern Energy, FMC Technologies and Insperity departed to new office campuses elsewhere over the last decade.

The North Belt/IAH submarket has the highest office vacancy rate in the Houston region at 49.2 percent, according to Madison Marquette. That’s down from a peak of 50.2 percent at mid-year 2019.

The market seems to have turned a corner, registering three positive quarters of leasing gains after occupancy losses for six consecutive years, according to Madison Marquette.

The Oprona deal is one of nine new leases, expansions and renewals totaling 76,343 in the Gateway I & II portfolio over the past 18 months, according to Madison Marquette. Occupancy of the 268,760-square-foot complex rose to a current 60.7 percent, up from 51.6 percent 18 months ago.

The leases at the complex account for 7 percent of the leasing activity in the North Belt/IAH submarket over the past 18 months, according to Madison Marquette. The submarket’s uptick in activity over the past 18 months consisted mostly of leases under 10,000 square feet.

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