Month: January 2022

Texas

Everything is Bigger in Texas

  • There has been a lot of growth and activity in the Texas commercial real estate market in the last couple of years.
  • Last week, some new reports and data came out that showed exactly how dynamic and heated the Texas market is.
  • And there is no real reason to think that the hot market will end any time real soon.

If you have been reading this blog lately (and why wouldn’t you?), you have probably noticed that I have written multiple times that you cannot go a day without reading about a new commercial real estate closing in Texas. It sure seems like it is a crazy busy time to be a buyer.

But, of course, you probably did not need me to tell you that. You are out there in the market – you see how hot it is. And while things definitely slowed down at the start of COVID, they have picked back up to very active levels.

Of course, all of this evidence has been purely anecdotal. Its our collective experiences on how things are going. Well last week that changed when I read some summaries of some studies that showed the Texas commercial real estate market really is booming. So that’s what we are going to talk about this week – the huge Texas market.

Last Year was a Great Year for Commercial Real Estate Investment in Texas

It was pretty clear to tell that, at least at first, COVID slowed down real estate sales everywhere – including in Texas. For those first six months, there just were not a lot of deals taking place. But that definitely started to change in late 2020. I mean – deal junkies gotta do deals, right? We cannot just sit on the sidelines forever.

And then 2021 was a great year for commercial real estate in Texas.* And it happened all over Texas. Houston, for example, had a terrific third quarter last year. There were more sales there than any other city in the United States that quarter. This centered around the booming multifamily and warehouse markets. No doubt its yearly totals were near the top nationally also.

We have talked about it a lot in this blog, but of course Austin has been on fire for the last year also. It has set itself up as a leading tech city and continues to attract new businesses. As a result, the demand for office space and housing continues to grow. One report called Austin the second best city in the country for real estate investors in 2021.

And finally, nothing can really compare to the banner year that Dallas saw. For the second year in a row, Dallas was the had more commercial real estate sales than any city in the country. Indeed, almost $13.4 billion traded hands in Dallas in 2021. No other city has seen more multifamily sales ever. Bottom line – Dallas is booming.

Will the Texas Real Estate Market Continue to Boom?

Seeing this growth all over Texas, the obvious question is will we continue to thrive like it has the last few years? I think it will. And I suspect most of you agree. The bottom line is people still want to invest in Texas. And that is unlikely to change in the near future.

Perhaps the biggest driver of that desire is that people keep moving to Texas. Dallas, Houston, and Austin all continue to be near the top of the fastest growing large cities in the country. And the suburbs that surround them often grow even faster.

And its not just people that are moving here. Companies are also. Whether is the business friendly climate, the state’s tax structure, whatever – companies seem to be flocking to the State. Indeed, in 2021 multiple fortune 500 companies moved their headquarters to Texas.

There are, of course, many things that could change that could derail the State’s growth. We are far from perfect. And while I will continue to address those issues in future blog posts, this one is purely optimistic. If you are in commercial real estate, Texas is a great place to be.

 

 

 

*For this entry, I’m looking at commercial real estate in general. Obviously there is a big difference between the performance of industrial versus office versus retail. But that is a big topic for another time.

Hourglass

You do not Want to Miss Your Deadline

  • Monday, January 31 is the hard deadline to pay your 2021 property taxes.
  • If you do not pay them by January 31, you will be subject to a penalty equal to six percent of the total tax bill.
  • Once you pay your 2021 taxes, the next property tax deadline is not until May 15 when your Notice of Appeal is due.

Do you know what a Texan’s favorite past-time is? Complaining about property taxes. You cannot talk to a Texan about their house, real estate, changes to the city … almost anything without property taxes coming up. And, as real estate investors, developers, etc. – you know that nothing can derail a great investment quicker than runaway property taxes.

Well believe it or not, we are already at the first property tax deadline of 2022. So it’s time to start complaining about property taxes all over again. And to make sure you do not miss this week’s important deadline, read more below.

When are 2021 Property Taxes Due?

Enough with the suspense, eh? Most of you reading probably already know what the deadline is anyway.  But in Texas, property taxes payments are due on January 31 every year. So 2021 taxes are due next Monday, January 31.

Obviously that means that we pay our taxes in arrears. Last summer when someone (hopefully Bukowski Law Firm) protested your property taxes, what they were really doing is protesting the appraised values set by the local appraisal districts.

Once all of the appraised values are set throughout the county, the county taxing authorities release the tax rates. This was done last fall. Then the appraised value multiplied by the different tax rates sets the total amount of property taxes owed. And that total amount is what is due next Monday.

Two important points to remember –

  • First, if you have a mortgage, there is a good chance that your lender has escrowed the amount of your property taxes. Thus, you have been paying your property taxes a little each month. And the lender either has already paid your annual bill or will do so by next Monday.
  • Second, if you miss the January 31 deadline, you will be subject to an immediate six percent penalty on the total amount of the tax bill. You will also then be charged a one percent interest rate for each month you are late. I am sure you can see how quickly that could add up.

So the bottom line is you need to make sure that you or your lender is paying your tax bill by next Monday.

What are the Other Important Dates on the Texas Property Tax Calendar?

Assuming you do not have an active lawsuit against the appraisal district, once you pay your property tax bill, we can close the door on 2021 and look forward to 2022.

But before you take too much of a deep breath, know that the 2022 calendar is right around the corner. The first step is your local appraisal district will send out the Notice of Appraised Value for your property. This usually happens in March or early April but (almost) always by April 15.

You then have until May 15 to file your protest of the appraised value.* This is an extremely strict deadline. You absolutely do not want to miss it and file your Notice of Appeal late. If you do, the odds are you will not be able to protest your property taxes that year.

But do not worry about that yet. I’m sure we will write about that deadline again come May.

 

 

 

 

 

 

*In the rare circumstance where the appraisal district does not get the Notice of Appraised Value to you by April 15, then you may have later than May 15 to file your Notice of Appeal.

Signing Contract

Good Escrow is Hard to Find

  • In Texas, attorneys can work with title companies as fee attorneys to help the parties to a transaction get it closed.
  • This includes providing escrow services to the parties.
  • A good, honest escrow agent is essential to make sure that a transaction is closed according to the terms of the purchase agreement.

I want to start this week’s article by hoping everyone was able to celebrate Martin Luther King, Jr.’s legacy on Monday. He was truly an American hero and I was thankful to be able to take some time to reflect on what he did for our country. Its humbling to think of the sacrifices he and others made to make this country a better place for all of its citizens. Thank you, Dr. King.

Ok back to the far less important world of commercial real estate. If you are like me, you have probably noticed there have been a lot of closings lately in Texas. If you read the business journals or some other real estate site, you cannot go a day without seeing an article on a new closing.

And that, of course, got me thinking about the closing process. And how vital different parts of it are. For example, sometimes I think people can just take escrow for granted. But you should not. Its very important.

I’ve written before how Bukowski Law Firm is a title fee attorney. That means we are intimately involved in the closing and escrow process. This week, therefore, we are going to discuss the importance of escrow in more detail.

A Title Fee Attorney can Work with a Title Company to Provide Escrow Services

As a quick recap, a title fee attorney is a statutory position under Texas law that allows attorneys and title companies to work together to close a transaction. As a result, at Bukowski Law Firm, we work with Stewart Title to help commercial buyers and sellers get a transaction closed.

When you hire us as the fee attorney, we act as the primary contact on the transaction. We will help communicate with title and the underwriter to make sure the deal is moving forward to completion and gets closed.

The real benefit to the buyer and seller is that – on other transactions – we also work on the side of the buyer or seller. We know, therefore, how important it is to take a transaction to completion. As a result, we are going to do everything in our power – everything that is allowed under the Texas Department of Insurance rules – to get your deal closed. We will push the title company and underwriter to work within the confines of the rules to close the deal.

In Addition to Closing Services, We can Provide Escrow Services

As a title fee attorney, we are also responsible – with the title company – to provide escrow services. Often the lender requires the title company to actually hold the escrow deposit and then we or the title company holds the signed documents in escrow.

I have found in a commercial transaction escrow services are often taken for granted – just an additional piece of title services that the parties do not usually consider. But I think its more than that. When we are entrusted with escrow duties, that is a huge responsibility. Its our obligation to make sure we protect the money and documents and strictly adhere to the rules that everyone has agreed on prior to the relationship being set up.

That is why it is so important to make sure you choose the right escrow officer. You need to pick someone you can trust. Someone who has the utmost integrity and can be absolutely counted on to follow the escrow rules as the parties agreed. As an escrow agent, you are truly a neutral party – just holding money and documents until the parties tell you what to do with them. That’s a big responsibility and one that should not be taken lightly.

As a buyer or seller, you again also want someone who understands that everyone’s goal is to get the transaction closed. The escrow officer, therefore, should be available to go above and beyond to help achieve that goal.

At Bukowski Law Firm, we pride ourselves on both our integrity and our business understanding. We know the goal of the parties – and we want to do everything in our power to help them achieve that goal. So next time you are closing a deal, give us a call.

Did Meta Save the Austin Office Market?

  • Since COVID began, we have been concerned about the future of the Texas office market.
  • Meta announced last week that it has leased the entire office portion of what will be the tallest tower in Austin.
  • This hopefully signals a good sign that companies will still continue to lease office space.

Since COVID began, in this blog I’ve talked a lot about the fate of the office market. It really concerns me because I have a lot of clients who own and/or are developing a lot of office space. And so much uncertainty in that market is not a good thing.

I am feeling a little better and more confident this week because there was a huge office space announcement. And, as a result, I think the Central Texas office market is a little brighter – at least in my eyes.

So that’s what we are talking about this week – the state of the Texas office market and how the huge Austin announcement affects it.

How much Uncertainty has COVID Brought to the Texas Office Market

As I wrote above, we have talked about this before, but I just want to quickly rehash my thoughts on the post-COVID Texas office market. Here’s my opinion – I have no idea what is going to happen.

I do want to start by saying all of this is anecdotal based on discussions with people in the industry and just my own thoughts. But it seems like companies have learned a lot during COVID. Having people work at home may not be the disaster we once thought. Just speaking from my own experience, I was pleasantly surprised at how effectively we have worked from home when it was necessary. And, as a result, we have a much more flexible work schedule now.

Its easy to see, therefore, that companies could work a) entirely remotely or b) partially remotely with office sharing/hoteling. And this could potentially put the office market in danger. Indeed, a very large law firm – Quinn Emmanuel – recently announced that it will not be hiring new associates for any particular office. People will work where they are.

And on top of this, there is a lot of office space in the pipeline in Texas. I’m sure you can see how this would make me nervous about the future of office.

Meta Leases Entire Office Space of Largest High Rise in Austin

That’s why this week’s news about Meta (Facebook’s parent) was so welcomed. According to the ABJ, on December 31 Meta signed a lease for the all the office space in what will become the tallest tower in Austin.

At the corner of Sixth and Guadalupe, a 66 story tower is being built. Half of those floors will be office space. Meta has agreed to lease all of them – 589,000 square feet. The tower is scheduled to be complete some time in 2023.

Meta currently has about 2000 employees in Austin. And with this lease, it expects to add another 400 or so.

Meta’s Large Lease Brings Renewed Life to Texas Office Market

Obviously one lease – regardless of how big it is – does not solve all of the future concerns for Texas office space. But to me, what it does is signal where the employers’ mindset is at. Lets face it, Meta is a cutting edge, Silicon Valley tech company. And if it is showing that having office space is important to it, then I would think other companies will not be far behind.

Obviously that is no guarantee that the Texas office market is going to continue/return to a boom. But it certainly is a lot more optimistic than it was two weeks ago.

A New Year’s Vice – Checking Out Miami

  • I was in Miami over New Years and was fortunate enough to view some of the new developments going up there.
  • There is apparently a huge demand for high-rise living in the Miami area.
  • And, as a result, developers keep adding to the Miami skyline with residential housing.

Its here. A new year. 2022. I hope everyone had a safe and fun holiday. And is looking forward to a great and profitable 2022.

I was lucky enough over the break to travel to Miami. My main purpose was to watch my Michigan Wolverines play the Georgia Bulldogs in the National Semifinals. Unfortunately, that did not go as planned.

But while I was there, I took the opportunity to see what was going on in Miami. It had been a while since I have been there and I wanted to see what the housing and real estate landscape looked like. So that’s what we will talk about in this week’s blog – Miami developments.

Commercial Real Estate Landscape has Changed Since I Last Visited

I do not remember the exact last time I was in Miami, but I can definitively say it was during the great crash of the late 2000s. So I would estimate it was in the 2008 timeframe.

I know it was during this time because it was one of the most remarkable scenes I have ever seen. Downtown Miami was filled with high-rise condos – and almost all of them were empty. At least it appeared that almost all of them were empty. It was eery and sad. But the locals assured me that it was only temporary and they would all soon be filled. And its my understanding that they were correct.

Current Miami Residential Landscape is Beset with High-Rise Apartments and Condos

It was interesting, therefore, to be able to drive around the Miami area and see what the residential market looks like now. As I remembered, it is dominated by high-rise condos and apartments.

 

 

It is amazing how many high-rises are all throughout the Miami area. Its hard to believe there are that many people to fill all of them. This is, obviously, purely anecdotal but I spoke with a friend who is familiar with the market. He told me that not only are there enough people to fill them, but it is actually difficult to find a place to live. Indeed, current occupancy rates for apartments appear to be approximately 95% – even with a 25% increase in rents over the last year.

It would seem, therefore, that we will probably see more high-rises going up in the next couple of years in the area. At least twelve new projects were announced in 2021. And I reckon there will be many more this year.

Some Condos have Very Cool Designs

Many condos that go up in Miami, however, are not just normal looking buildings. Its Miami. They have cool designs and painting on them. I especially found this in an area called Wynwood – which is an art district.

 

 

No doubt these cool buildings help attract residents. And it adds to the developing Miami skyline.

It was fun to get to drive around Miami and see all the high-rise developments. If you have not been there, its clear that the demand for high-rise living is huge in Miami. And developers continue to build to meet that demand.