1Q2014 Land Forecast Report
Scott Davis
CASE Commercial Real Estate Partners
May 14, 2014
1Q Sales Activity Double Last Year
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 1Q2014
1Q13 – 5,795 Acres Sold – Sales Activity Increasing
2005
- Q1
2005
- Q3
2006
- Q1
2006
- Q3
2007
- Q1
2007
- Q3
2008
- Q1
2008
- Q3
2009
- Q1
2009
- Q3
2010
- Q1
2010
- Q3
2011
- Q1
2011
- Q3
2012
- Q1
2012
- Q3
2013
- Q1
2013
- Q3
2014
- Q1
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 1Q2014
1Q: More than 94% of acreage sold outside Beltway
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
2013
- Q4
2014
- Q1
0
2,000
4,000
6,000
8,000
10,000
12,000
Total Outside 610 Outside BeltwayInside Beltway Inside 610
Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 1Q2014
Inner Loop Land Sales Slow, but Remain Strong
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
2013
- Q4
2014
- Q1
0
20
40
60
80
100
120
140
160
180
200
Source: CoStar, CASE CommercialSource: CoStar, CASE Commercial, 1Q2014
Sales to List Spread Widens
Source: CoStar, CASE Commercial, 1Q2014
2007
- Q2
2007
- Q4
2008
- Q2
2008
- Q4
2009
- Q2
2009
- Q4
2010
- Q2
2010
- Q4
2011
- Q2
2011
- Q4
2012
- Q2
2012
- Q4
2013
- Q2
2013
- Q4
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
Median Days on Market Increases Again in 1Q14
Source: CoStar, CASE Commercial
2005
- Q1
2005
- Q3
2006
- Q1
2006
- Q3
2007
- Q1
2007
- Q3
2008
- Q1
2008
- Q3
2009
- Q1
2009
- Q3
2010
- Q1
2010
- Q3
2011
- Q1
2011
- Q3
2012
- Q1
2012
- Q3
2013
- Q1
2013
- Q3
2014
- Q2
-
100
200
300
400
500
600
700
800
Source: CoStar, CASE Commercial, 1Q2014
What Does the Future Hold?
What Does the Future Hold?
• Houston will continue to grow dramatically because of jobs
• Our demographic makeup is changing significantly
• Buyers want urban and suburban home options
• It needs to come from the market: declining support for urban land use policies
Houston is expected to lead the state and nation in population and employment growth between ’12 and ’40
2012 2015 2020 2025 2030 2035 20400
2
4
6
8
10
12
6.26.6
7.27.9
8.69.4
10.2
2.8 3 3.3 3.6 3.9 4.2 4.4
Population Employment
World Cities8-10m Pop:
• Rio De Janeiro• Moscow• Shanghai• Karachi• Paris• Istanbul• Nagoya• Beijing• Chicago• London
Source: Greater Houston Partnership, 2014
40% of population in 10 states wants to move within 12 months
Source: Gallup, December 2013
Houston47.7%
Dallas22.9%
Austin13.7%
San An-tonio8.1%
OKC3.2%
New Orleans2.1%
Nashville1.8%
Salt Lake0.4%
Only 9 MSAs (of largest 60) have created net new middle
class jobs since 2007. 48% were in Houston.
Business Analysis
Architectural Design
Electrical Engineering
Civil Engineering
Legal Services
Be Prepared for a More Diverse Workforce and Customer Base
1970 1980 1990 2000 2010 2020 2030 2040
72% 65% 58%48% 39% 36% 32% 30%
9% 14% 20%29% 36% 39% 42% 44%
19% 18% 18% 17% 17% 17% 17% 17%
3% 3%7% 7% 8% 9% 10%
White Hispanic Black OtherSource: HGAC Demographic Model
Mill
ions
Source: HAR.COM, April 2014
Source: Zillow, May 2014
Zip Codes with YOY List Price increases over 20%
How much higher can home prices go?
1975 Q11978 Q21981 Q31984 Q41988 Q11991 Q21994 Q31997 Q42001 Q12004 Q22007 Q32010 Q40
50
100
150
200
250
300
Nominal HPI
Real HPI
Real HPI Peak:3Q77 – 278.7
Current HPI:4Q13 – 206.9
Source: Quarterly House Price Index – Purchase Only, Federal Housing Finance Administration, 1Q14
Real home pricesStill 34% below 1977
peak
Almost 75% of suburban residents want to stay in suburbs
1999 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
51.0% 51.5%49.2%
53.7%
61.2% 59.7%56.7%
61.8%
50.5%
57.2%
63.1% 63.3%
71.2%
Source: Kinder Houston Area Survey, 2014
Over half of city residents want to stay in city
2011 2012 201345%
46%
47%
48%
49%
50%
51%
52%
53%
54%
55%
48.6%
54.5%54.2%
Source: Kinder Houston Area Survey, 2014
Increasing Numbers Want Small Urban Home Options
Single family home, drive Smaller urban home, walking0%
10%
20%
30%
40%
50%
60%
70%
59.1%
36.1%
57.9%
39.2%
47.4%51.0%
2005 2007 2008 2010 2012
Source: Kinder Houston Area Survey, 2014
Declining Support for Land Use Regulations
Better land use planning Free to build wherever0%
10%
20%
30%
40%
50%
60%
70%
80%72.0%
22.2%
68.8%
23.0%
64.9%
28.2%
64.0%
32.8%
2005 2007 2008 2010 2012
Source: Kinder Houston Area Survey, 2014
“
”
We are not a Houston whose provincial understanding of the world at large is manifested in clumsy, token ways; we are a Houston of effortless inclusiveness. We are a city of weavers. We are a city of builders and big ideas …
-Katherine Shilcutt