Clay & Company » A Texas Commercial Real Estate Blog

Timothy K. Clay, President, Clay & Co

Specialty: Triple net investments and land

Clay is the founder and president of Clay & Co., which celebrated its 20th year in 2011. Last year, he assisted clients in forming a fund with the purpose of purchasing over $25 million of triple-net investment properties. The fund closed on its first property in October, a Baytown retail space with a 20-year lease to Academy Sports and Outdoors.

Who’s a competitor whom you admire in Houston? Larry Indermuehle, CEO and founder of Larry Indermuehle & Co.

Where’s the weirdest place you’ve closed a real estate deal? On the side of the road

What do today’s tenants get the most excited about on a tour? Amenities

What job did you receive your first paycheck for? Discount Tire store on U.S. Highway 6

When trying to sell Houston as a city, what’s your favorite thing to brag about? Job growth

See full list of Houston’s 2012 Heavy Hitters of commercial real estate here.

Did you know we do business all over the state of Texas? Our most recent transaction is from Austin.

West End Lumber Company signed a 7-year lease for a 37,700-square-foot industrial building and an adjacent one-acre tract at 3601 Silver Dollar Circle. Kevin Dalrymple of Clay & Company represented the tenant.

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OFFICE-WAREHOUSE: Athena Gun Club of Houston has purchased a 53,770-square-foot office-warehouse at 10814 Old Katy Road on the Katy Freeway feeder road east of Brittmore. Tim Clay with Clay & Co. represented the seller, Katy Freeway Associates. (Houston Chronicle, 2/27/2012 and Real Estate Bisnow, 2/22/2012)

APARTMENTS: STYN has purchased a 53,599-square-foot apartment complex at 909 Birnham Woods in Pasadena. Amy Silvey with Clay & Co. represented the seller, Worldnet Telecom Services. (Houston Chronicle, 1/14/2012 and Real Estate Bisnow, 1/17/2012)

LAND: Emerson Process Management Valve Automation has purchased 6.8 acres at North Eldridge Parkway and Crossridge Drive. Phillip Arnett with Paine/Wetzel Associates represented the buyer. Tim Clay and Amy Silvey with Clay & Co. represented the seller, Clay Venture Fund #3. (Houston Chronicle, 12/24/2011)

LAND: Stripes has purchased 2.7 acres at North Gessner and Philippine. Clay & Co. represented the seller, Gessner/Philippine 2.72. Gulf Coast Commercial Group and Wile Interests assisted in the transaction. (Houston Chronicle, 12/24/2011)

And Houston lands #1 by a healthy margin. More than 100,000 new jobs were created in Houston since the recession, making it the most prosperous city in the country according to a recent Business Journals study.

On Numbers used preliminary U.S. Bureau of Labor Statistics data to estimate 2011 private-sector employment levels for all 100 markets. Those estimates were then compared against the official figures for 2006, the last full year before the recession’s onset. Houston was the most prosperous metro over that five-year span with 4 of the top 5 in Texas.

1. Houston (+109,700 jobs)
2. New Orleans (+39,400)
3. Austin (+37,900)
4. Dallas-Fort Worth (+36,000)
5. San Antonio (+25,200)

Source

Today Houston Business Journal’s Commercial Real Estate Outlook was published:

Houston’s outlook continues to offer more options than the rest of the country in regards to businesses and job seekers alike, say local economic and development experts.

Most parts of the city have seen continued growth throughout 2011, and that momentum is not expected to slow down. The Houston metropolitan statistical area will add about 84,600 jobs this year, up from about 80,000 jobs added in 2011, according to the Greater Houston Partnership.

The Houston Business Journal has identified six Houston submarkets that experts expect to be active in 2012 — Downtown, The Woodlands, East End, Uptown, North and the Energy Corridor. Below is an excerpt about each area. Click on the submarket name for more thorough information.

North Houston
With many large corporations, including ExxonMobil moving or expanding to North Houston, we should expect to see land sales and spec construction increase this year. The corridor is appealing because it offers more available shovel-ready land, nearby residential, a strong labor pool, amenities and transportation. This aerial photo shows the new Exxon Mobil campus site under construction at I-45 North and the Hardy Toll Road. Photo Source: Brian Kennedy, www.birdseyehouston.com.

The Woodlands
The Woodlands continues to be a boon for energy companies drawn by Exxon Mobil’s planned corporate campus near the master-planned community. The demand for office space in the submarket — and the desire to be near Exxon — puts further pressure on the Class A office market. This growth should also positively affect the retail market.

Energy Corridor
Despite the exodus of energy companies flocking to The Woodlands, the Energy Corridor is still appealing to firms of its namesake. Dallas-based Trammell Crow Co’s purchase of 18.8 acres from the Texas General Land Office at the southwest corner of Interstate 10 and Eldridge for future development proves continued interest. Sources told HBJ last year that Trammell Crow anticipates doing a multiphase office campus, with construction starting in 2012. Besides office construction, growth in the multifamily industry in the corridor is focused on lifestyle and creating walkable communities.

Uptown
This link on the HBJ website was not working so we will update it when it become available.

East End
The Houston Dynamo’s opening game and the debut of the new BBVA Compass Stadium will occur on May 12, and with it comes an expected surge of people to the east side of the city. The 22,000-seat, open-air stadium will be a boost to growth and development on the east side of Interstate 59 downtown. Also promising for the area is the “Building a Better Houston” campaign, established between the Dynamo and BBVA Compass, which will focus on revitalizing Houston’s East End, among other initiatives. Rendering of the new Dynamo Stadium. Photo Source.

Downtown
Vacancy rates are expected to drop into the single digits this year due to rapid demand in the heart of the city, sending rental rates soaring. Last year saw the entrance of two new office buildings, Hess Tower and BG Group Place, (about 1.9 million square feet combined) and they sit at . 100 percent occupancy and 70 percent occupancy, respectively. Several new buildings have also designed, but are on hold until tenants can be secured. There are no large retail projects planned to date and any hotel projects are at the beginning stages. The addition of a free bus service on a 2.5 mile loop around downtown also will contribute to changes downtown. The contemporary-designed shuttle will connect workers, hotel guests and residents to the George R. Brown Convention Center, shopping and other amenities in the area. The Greenlink Circular Transit is set to start its first route in May.

By Michael Reed from yourhoustonnews.com

With Houston’s third loop, the Grand Parkway, expected to become a reality in 2016 and a boon to the job market soon afterward, it’s easy to wonder just how far from the heart of the city is too far to be a viable urban alternative.

Well, it wasn’t that long ago concerns along those lines were voiced over another major roadway project.

“I remember when they were wearing snake boots to do surveys of where the toll booths would go,” said Janet Wagner, president of the Harris County Historical Commission, referring to southern sections of Beltway 8 in the mid-1990s. “That was all vacant or farmland then.”

While that region on either side of state Highway 288 may have been among the least developed along the Beltway’s route, it was not alone in gaining both population and new businesses. And, according to statistics from the Houston-Galveston Area Council, it’s still growing.

Within two miles of either side of the entirety of Beltway 8, the population was 646,130 in 1990, about the time the final segment opened. It now stands at 952,634, but is expected to increase to 1,175,262 in 2025 and 1,322,042 in 2035.

The H-GAC data also shows the number of people working in the same proximity has grown from 217,218 in 1990 to a current level of 482,831. It is expected to reach 587,911 in 2025 and 676,576 in 2035.

That would be a projected increase increase of about 40 percent in both population and employment over the next 25 years.

Growth inevitable

“It’s a really large area, so it’s difficult to say how much this (growth) can be attributed directly to it (the roadways),” said Chris Van Slyke, a traffic program manager at H-GAC.

In many ways, the growth was inevitable and to large extent had already occurred by the time Beltway 8 was conceived, let alone became a functioning roadway, according to Billy Burge, president of the Grand Parkway Association Board.

“I can remember years of delay to building the first one, and how Bellaire didn’t want it,” he said, referring to Houston’s original loop – Interstate 610. “That came well after everyone was all clustered up.”

Burge said the Grand Parkway, hopefully, will allow for a more orderly distribution of growth ahead of major population increases that are forecast.

“It’s not so much a shift (in population) as it is getting ahead of growth this time, so people can do things like drive straight to the airport,” he said. “It’s a more orderly way of life with less congestion.”

As the outer loop, The Grand Parkway, obviously, will be bigger than the Beltway 8 – 177 miles vs. 88 miles in length. And, where the latter lies entirely in Harris County, the new roadway will also pass through Fort Bend, Montgomery, Chambers, Galveston and Brazoria counties.

H-GAC statistics show that within 2.5 miles of the Grand Parkway the population grew from 192,666 in 1990 to its current 455,116, and is expected reach 736,651 in 2025 and 972,473 in 2035. Jobs along the route – 50,184 in 1990 – doubled to 110,942 currently, and should climb to 164,041 in 2025 and 211,075 in 2035.

‘Unique and pretty’

Those increases of 114 percent in population and 91 percent in jobs are considerably larger than expected for the Beltway 8 corridor area between now and 2035.

Realtor Pattie Huey, who keeps close tabs on regional growth as HAR liaison to the Houston Builders Association, thinks she knows part of the reason.

“If you look at that land, it’s just waiting. People have been buying it up for years,” she said, specifically of areas to the north of Houston. “The population is always drawn to unique and pretty.”

She said increased access and better direct traffic routes will make the commutes much more manageable for many who will be working in Houston, but wouldn’t have considered living so far out with only the current roads to depend on.

“It’s not like we haven’t been living in outlying areas for very long time,” she said. “Do we refer to Cinco Ranch as being too far out now? I can remember when Memorial was too far out.”

Huey said she anticipates increased development around The Woodlands and predicted Magnolia’s population will grow considerably.

Well, if north of the Grand Parkway isn’t too far to be part of metropolitan area, what is? Could a fourth belt be in Houston’s future?

“From a loop standpoint, this is probably the last loop, and it is truly needed,” Burge said, adding that another loop would be built outside regional transportation authority, anyway.

See article here.

The below article is reprinted from Texas REALTOR® magazine

How will new laws affect you? Several changes to state laws that affect real estate professionals, property owners, and tenants go into effect Jan. 1, 2012. Here’s what you need to know.

Do you remember what happened during the 82nd Texas Legislature earlier this year? If you’re like most people, you can barely remember what you ate for breakfast today let alone what state legislators did in May. The Texas Legislature changed and added many laws, but some specific to real estate don’t take effect until Jan. 1, 2012. Here’s a summary of the changes to come and what they mean for you, property owners, tenants, and real estate transactions.

Changes for you and your transactions

You’ll need more experience to qualify for a broker’s license
The Texas Real Estate Commission will soon require more time spent as a salesperson to qualify for a broker’s license and will require you to submit evidence that you’ve performed a certain amount of brokerage activity during that time.

As of Jan. 1, 2012, you’ll need to have been licensed as a salesperson in at least four of the previous five years. You’ll also need to show, using TREC’s new point system, that you’ve participated as a salesperson in “enough” real estate transactions during that time.

How much is enough? TREC has devised a points system that awards you for various real estate tasks. For example, re
presenting a buyer or seller in a transaction that closed is worth 300 points, and an executed lease is worth 50 points. To qualify for a broker’s license, you’ll need at least 3,600 points, with some points earned in each of those four years.

Part of your broker-license application will include a sheet showing the points you’ve accumulated. If you’re part of a sales team, you may only claim points for brokerage activity for which your name is on a document (e.g., a sales contract or a property-management agreement). Initially, you won’t have to provide proof of your experience; you and your broker will sign the sheet. However, TREC will have the option to require supporting documentation.

Education requirements for a broker’s license remain the same.

Buyers can get an HOA resale certificate
Beginning January 1, a homebuyer purchasing a property in a subdivision will have the ability to request a resale certificate directly from a homeowners association. The HOA may require the buyer to show he has a valid contract for the property and may require payment before beginning work on the resale certificate. The association is prohibited from processing the payment until the resale certificate is prepared and may not charge a fee at all if the certificate is not provided in a timely manner.

Buyer’s representatives should be aware that for contracts entered into on or after January 1, buyers will be required to pay the fee for the resale certificate unless the buyer and seller have negotiated otherwise in the sales contract. Currently, the TREC addendum provides options for delivery of the resale certificate and states the seller will pay for it. That addendum is likely to change early in 2012 to reflect the change in law.

The law still allows sellers, seller’s agents, and title and insurance companies to order updates to already issued resale certificates. But under the new law, a resale certificate is only good for 60 days. For any resale certificate older than that, a new one will have to be issued.

Tweaks to owner’s and lender’s title policies
Title policies could always exclude coverage of the ownership of minerals, but as of Jan. 1, 2012, title companies are no longer required to provide a 2% credit on the cost of the owner’s policy for this exclusion.

Also on January 1, title companies are no longer required to insure a loss from damage to property resulting from the use of the surface of the land to extract minerals. Prior to that date, if title companies excluded minerals from coverage, they were required, upon request, to insure against such damage. This insurance was provided through an endorsement to the policy, which cost $50. The endorsement is still available for the lender’s policy and the owner’s policy, but there will be no charge for the endorsement to the lender’s policy. For an endorsement to the owner’s policy, the charge remains $50.

Disclosure requirements for private transfer fees.
Most future private transfer fees on real property were prohibited on Sept. 1, 2011. However, as of Jan. 1, 2012, a real estate sales contract for a property with existing private transfer fees must disclose those fees.

Changes for property owners and tenants

HOAs face new rules for foreclosures, finances, and more
Homeowners associations, as of Jan. 1, 2012, have new guidelines for maintaining association documents, providing access to association records, and conducting open meetings. Also, unless waived in writing by a property owner, a homeowners association will be required to use an “expedited foreclosure” process, which includes obtaining a court order, before foreclosing against a property owner. Property owners can now add or remove an HOA’s foreclosure power by a two-thirds vote of association members. Additionally, HOAs are prohibited under the new laws from foreclosing a debt consisting solely of fees charged for obtaining copies of HOA records.

The new law dictates the order by which a homeowners association must apply owners’ payments: delinquent assessments, current assessments, attorneys’ fees, and fines—affecting their ability to foreclose. Also, the notice that must be given to a property owner by an HOA before it can take certain actions against the owner, including foreclosure proceedings, must now inform the owner that he may have special rights or relief if the owner is on active military duty.

Paperless property-tax bills.
Starting January 1, local tax offices can offer an electronic tax bill. Interested property owners should check with their tax office to see if they can begin receiving their bill via e-mail.

Appealing property appraisals without going to court
Also January 1, property owners in Collin, Denton, Fort Bend, and Montgomery counties whose properties are worth more than $1 million can appeal their property appraisals through the State Office of Administrative Hearings rather than taking that appeal to district court. Property owners in Bexar, Cameron, El Paso, Harris, Tarrant, and Travis counties were given that option two years ago.

Tenants can appeal eviction regardless of ability to pay court costs
Effective January 1, a tenant unable to pay the costs of appealing a judgment in a residential eviction suit may still appeal by filing a pauper’s affidavit. The tenant will still be required to pay rent, which goes into the registry of the court, and must make a rent deposit into the registry within five days of filing the pauper’s affidavit. Without this deposit, a landlord can request a writ of possession in his favor, which the court will immediately issue.

Lori Levy is legislative and regulatory counsel for the Texas Association. Reprinted from Texas REALTOR® magazine.

• Clayco Academy purchases site of new Baytown Academy Sports, Houston Business Journal
• Two Clay & Co Execs Awarded CCIM Designation, REDNews
• The newest Houston-area Academy Sports + Outdoors store, at 6425 Garth Road, has a new landlord, Houston Chronicle
• The Deal Sheet, Real Estate Bisnow

Two of Clay & Company’s executives were recently awarded the Certified Commercial Investment Member (CCIM) designation by the CCIM Institute. Amy Silvey, Vice President, and Kevin Dalrymple, Director of the Sales and Brokerage Division, were awarded the designation during the Institute’s fall business meetings on October 12 in Phoenix, Arizona. Amy and Kevin were among the 348 commercial real estate professionals (9 from Houston) who earned the designation last month.

A CCIM (Certified Commercial Investment Member) is a recognized expert in the commercial and investment real estate industry. The elite designation is earned after successfully completing over 160 hours of case-driven study and submitting a comprehensive portfolio demonstrating the depth of their commercial real estate experience. Finally, they have demonstrated their proficiency in the CCIM skill sets by successfully completing a comprehensive examination. Only then is a designation candidate awarded the coveted CCIM pin, joining the ranks of highly skilled commercial and investment real estate experts.