May 2022


Is Industrial Still a Prime Investment Opportunity?

  • Investing in the industrial real estate market has been very profitable for the past few years.
  • Amazon has been a big driver of that, as it has taken a lot of available space.
  • With Amazon pulling back, we could see a short term slowdown in the industrial market.

So those of you who know me personally probably think of me as just a cutting edge, smart as a whip real estate attorney. Or maybe the stunningly handsome host of the Greater Texas podcast. While those things are both true, I am also, along with some business partners, a commercial real estate investor.

As investors, we are always looking for the next opportunity. And while its been very difficult to find multifamily opportunities in a tight Texas market, many have been excelling in the industrial market. It has been the hot market in the last few years with lots of growth and some great investment opportunities.

But is that market starting to change a little? Is it cooling off? Is Amazon changing that? That’s what we talk about this week.

How does Amazon Affect the Industrial Market?


It is difficult to talk about the industrial real estate market in the United States without talking about Amazon. It is the 10,000 pound gorilla that eats up a ton of industrial capacity.

At the end of 2019 – before the pandemic – Amazon had approximately 160 million square feet of industrial space under its control. And, as we all probably know, the pandemic was very good (from a business standpoint) for Amazon. Because people were at home, online shopping soared. And with it, Amazon’s profits soared.

To meet that growing demand, Amazon had to acquire more industrial space for warehouses and distribution centers. As a result, by the end of 2021, it had approximately 385 million square feet of industrial space under its control. That’s a massive increase in a short period of time. And they did it (according to some) by sometimes paying 50% over market rates to acquire the space.

Obviously Amazon was not the only company acquiring industrial space. Lots of companies were also – for much of the same reason as Amazon. These rapid acquisitions helped drive the market and provide great returns to investors.

Dynamics are Changing for Amazon


But unfortunately, the good times do not continue forever. For multiple reasons, in the first quarter of this year, Amazon posted its first loss in a quarter since 2015. And that has caused it to rethink its growth models going forward.

As a result, Amazon is considering putting current projects on hold and dumping some of the square footage it has under its control. Inflation, supply chain issues, shopping changes have all lead to excess capacity in buildings throughout the country for Amazon. Indeed, here in Austin, Amazon put on hold a 193 acre distribution center in Robinson Ranch that was scheduled to be built.

What Does Amazon’s Change Mean for the Industrial Market?


This slowdown could potentially have a great effect on the industrial real estate market. In 2021, Amazon represented 15% of the new demand and absorption of new building in the industrial market. And now it says it is going to pull back on that and even get rid of some of its assets.

That cannot have anything but a chilling effect on the industrial market – at least in the short term. Again there are other factors that are still positive for the market. People still shop online. As we learn to live with COVID, international shipping will continue to pick up steam. As supply chain issues continue, people may need space to store goods. So in the long term, the industrial market will probably be just fine. Again, the demand is big enough without Amazon and the market is currently very tight.

But at least for the short term, it seems like it we could see a temporary slowdown. And that could hurt everyone who invests in industrial real estate – from A to Z.


Is Industrial Still a Prime Investment Opportunity? Read More »

House for sale

Time to Take a Serious Look at a Series LLC

  • A Series LLC may be a useful structure for certain real estate investors.
  • It can provide numerous individual and separate liability entities for a relatively low price.
  • But you have to follow specific rules when setting up the Series LLC to get adequate protection.

We represent a lot of real estate investors who are in the process of purchasing property. It’s a big part of what we do. And that often includes helping our clients figure out the best ownership structure for their purchase. Usually that advice ends with us telling them to set up a limited partnership or (less often) a limited liability company.

But sometimes that’s not the best advice. There is at least one new(ish) structure – a Series LLC – that can really be a benefit to certain investors – especially those that are purchasing a number of rental homes. But to set up that structure, you have to make sure you follow the specific rules that allow for its formation.

So that’s what we are going to talk about this week. What is an LLC? How do you form it? And is it right for you?

What are the Basics of a Series LLC?

A Series LLC is exactly what it sounds like: a series of limited liability companies that are connected back to the parent limited liability company. This allows for assets and operations to be broken up across various series that work as individual LLCs, but still connect to the parent LLC.

With just one filing, therefore, an owner can set up an entity that can potentially house multiple single purpose entities. That obviously has the benefit of ease, saving time, and money.

But there are specific requirements that are required when setting up a Series LLC.

What are the Requirements of Setting Up a Series LLC?

To set up a Series LLC, you must first file a standard certificate of formation with the Secretary of State. There is, however, required extra language needed on the form in order to explain how the Series LLC is formed and how its liability works. This language is extremely important to include. If it is not done, each series may not be treated as a separate LLC with separate liability.

Then, once you have the initial LLC filed with the SOS, you do not need to file a certificate of formation with each subsequent series. You simply file an assumed name certificate with the Secretary of State for each series.

It is imperative that once you have a series underneath a parent LLC, you must keep all management, recordkeeping, and funds between the two completely separate. You must not commingle any funds between the series, or you may lose their separate liability status.

What are the Benefits of a Series LLC?

As you can see, there are a number of rules and policies you have to follow when setting up a Series LLC. So why do it? What’s the benefit?

The two main benefits to creating a Series LLC are cost and protection. The cost for filing a Series LLC rather than a set of normal LLCs is drastically different because the series only requires a Assumed Name Certificate for each series rather than filing a separate Certificate of Formation with the SOS with each series. And as long as you do this correctly, each series will be treated as a separate entity with its own liability. Thus providing separate protection at a relatively low cost.

As mentioned above, the ideal use of a Series LLC in real estate is for a company that wants to purchase numerous single family home rentals. For a relatively low price, the owner can set up multiple single purpose entities all rising up through the initial LLC.

Filing for a Series LLC can be inexpensive and prove to be much more viable in protecting assets. However, it is vital to follow the guidelines put in place by the State of Texas when filing to avoid any legal trouble that could result in seizure.

Time to Take a Serious Look at a Series LLC Read More »

voting hands

Are We Headed for a Crazy November?

  • In 2012, Austin switched from a open seating city council format to a 10-1 district plan with representatives from each of the ten districts.
  • In 2020, the City started a redistricting plan that attempted to equally distribute population throughout the ten districts.
  • If a lawsuit challenging that redistricting plan is successful, all ten district seats could be up for election this November.

There has been a lot of talk recently about who is going to be running for office in Austin in November. Indeed, with Mayor Adler finishing his term, Kirk Watson and Celia Israel seem to be the front runners for the open Mayor seat. And a number of candidates have thrown their names in the ring for the open City Council seats.

But that is where things kind of get interesting. There is an ongoing lawsuit that could throw the November Austin election into disarray. It has the potential to be a huge issue. If successful, it could challenge the whole election and city council system this year. And yet, until recently we had not heard much about this lawsuit.

So that’s what we are going to talk about this week. Not only the upcoming election but how they could be thrown off kilter by an outstanding lawsuit.

How the Austin City Council is Set Up

To understand the ramifications and reasoning of the lawsuit, you must first understand the history of the Austin City Council. Prior to 2012, the Austin City Council was open seating. That means that the City Council members could come from anywhere within the City.

That changed in November 2012 when Austin residents elected to move to a 10-1 system. This created 10 regional districts which would each send a member to sit on City Council from that district.*

Part of that change was that the City was to redraw the districts every ten years. As a result, the City undertook a proposal and hearing process to redraw the districts based on the shifting population. That process started in 2020 and has now been completed. The new districts are scheduled to go into effect for the 2022 elections.

Lawsuit Challenges Austin Redistricting

Well that is where things got kind of messy. Austin city council members are elected to four year terms. The city, therefore, staggers the elections. So some of the seats are up for election every two years.

But because of redistricting, there are some residents that voted for a council member in 2018 but are no longer in that district. As a result, they will not vote for a council member for six years – from 2018 to 2024.

Some of those residents, therefore, filed a lawsuit claiming that they were effectively disenfranchised from voting for city council. As a result, they wanted the court to force the City to call elections in all ten districts and have every council member seat up for election this year. As I am sure you can see, this would cause quite a stir on the Austin election scene as the council members who did not intend to run again this year would have to run for his or her seat this November.

As I was writing this article, the local district court granted the City’s request for summary judgment against the plaintiffs. As a result, the lawsuit could be dismissed. But that does not mean the fight is over.

The Plaintiffs had already asked the Court of Appeals and the Texas Supreme Court to hear the matter. And the Supreme Court has said it will hear the appeal. As a result, it will have the final say on whether Austin will have to have ten district court elections this November. And, if that happens, it could be a wild few months leading up to that election.



*The extra “1” is for the mayor.

Are We Headed for a Crazy November? Read More »


Its That Time of Year

  • The deadline for protesting your property taxes is coming up very quickly.
  • Its important to follow the deadlines and guidelines for protesting your taxes or you may lose your best chance to lower your assessed value.
  • When presenting your argument to the appraisal district, you have to support it with facts and analysis.

You don’t need me to tell you what time of year it is. It seems to be pretty popular news these days. They even have faces for radio talking about it on television. But in case you have missed it – its property tax season again in Texas.

At our office, we have been bombarded by phone calls and emails since the Notices of Appraised Value came out. Its not hard to see why. The appraisal districts seem to have beaten all records in the amount of the increases this year. So if that is what you are seeing on your properties, we highly recommend you file a protest.

Indeed, we think all property owners should protest their appraised values every year. Obviously this is a little self-serving but its also in the owner’s best interest. This is especially true for commercial property owners. But if you are going to protest, you have to make sure that you follow the deadlines. Because if you miss a deadline, you can miss your chance to have your taxes lowered.

So that’s what we are going to talk about this week – the process of protesting your property taxes.

What are the Basics of Protesting Property Taxes in Texas?


Many of you may know this already, but I want to start by making it clear that when I write “protest your property taxes” what I mean is protesting the assessed value of your property. The local county appraisal districts will assess your property every year. And you can protest that they have assessed it too high. Once the assessed value is assigned, in the fall the tax rates will be determined. And then the amount you owe is the assessed value multiplied by the tax rate.

It is probably obvious but I timed this article for this week because the protest deadline is coming up. Usually it is on May 15 of each year. This year, May 15 falls on a Sunday. The deadline, therefore, is moved to May 16. Just to be safe, though, I recommend you make sure your protest is filed by Friday, May 13. The deadline is too important – if you miss it you will likely not be able to protest your taxes.

When you protest, it is VERY important that you check two boxes. The first is that the market value of the property is incorrect. The second is that the property is not equal with other similar properties. These should be the first two boxes on the protest form.* And they are both valuable to give you your best shot to have your taxes lowered.

Once you protest, you will have an informal hearing first. In some districts – especially Travis – this has gone largely online. The process is you submit your evidence through the county’s portal and then a week or two later, the appraisal district will email you back an offer. If you do not accept its offer, you will go to a formal hearing. There are some districts that still have in person informal hearings. In those districts, you will meet one on one with a county appraiser and try to reach a settlement.

If you go to the formal hearing, you will be in front of a panel of three people. You will present your case for why the value should be lowered, the appraisal district will present its case, and then the panel will decide what it thinks should be the appraised value. If you are unsatisfied with the Panel’s determination, you can then file a lawsuit against the local appraisal district.

The Information You Need to Have the Best Chance to Lower Your Assessed Value


As you have probably noticed, in the last five to ten years the appraisal districts have gotten much more aggressive. They have access to information they did not have before from companies like CoStar. And they are searching county records for deeds of trust.

As a result, if you are going to have any success protesting, you need to be prepared. And you need to be prepared WITH DATA. A narrative of why your appraised value should be lowered is probably not going to be successful. You need to have analysis that supports exactly how much lower the appraised value should be. That is by far the most influential way to get your taxes lowered.

This is a stressful time for property owners. Runaway taxes can sink a commercial real estate investment. If we can help at Bukowski Law Firm, please give me a call.






*Some counties may combine these two categories into one box to check.

Its That Time of Year Read More »

student homeless

Where am I Supposed to Live?

  • Some ACC students have requested that the Board of Trustees help them find affordable housing.
  • The Board of Trustees has agreed to help them with a few different initiatives.
  • But real change and help will not occur until Austin’s City Council has better housing policies.

There was an article this week in the Austin-American Statesman that caught my eye. In it, the local reporter interviewed some college students about their struggles with finding affordable housing.

We have all been talking a lot about affordable housing. I mean, its one of the biggest issues in the country. The article was especially interesting to me because it was a real world example of all the bad local housing policies in action.

It kind of fired me up again to talk about all the mistakes the Austin City Council is making and how there’s still time to fix it – but its fading fast. So that’s what we will talk about this week – Austin’s bad housing policies and how they directly affect Austinites.

Its Difficult for Students to Find Affordable Housing in Austin

The author of the article in the Statesman interviewed a few Austin Community College students who were having difficulty finding housing. According to the article, there are thousands of ACC students struggling with the rising cost of housing. And some of them have to resort to couch surfing, regularly visiting food pantries, or moving far away from Central Austin to make ends meet.

Obviously this is not what anyone wants. It does not serve anyone’s best interests for students to have to commute from far outside the city because they cannot afford to live in Austin. In response to these issues, the ACC student government asked the Board of Trustees to respond to the affordability crisis with a variety of measures, including working with community partners to find affordable housing options, identifying housing sites close to campus with reliable free transportation, and creating a committee to prioritize student housing.

ACC seems sympathetic to the cause and it plans to work with the students to identify housing solutions, increase awareness of housing resources, and alleviate the personal and financial challenges that students face.

Need to Face the Core Problem for the Affordability Crisis

The one thing that was noticeably absent from the article was a discussion of why the students are in this situation in the first place and how they can get out of it. The reality is, they are right. Austin has an affordable housing issue. And I know we have talked a lot about this but the main culprit for it are Austin City Council’s terrible housing policies.

To the Council’s credit, some of the members have tried to enact an overhaul of the zoning code that would be friendlier to building density. But as you know, this has been struck down by the courts. As a result, Austin is basically back at square one for an overhaul.

But that does not mean there is nothing the City Council can do. A few months ago, we hosted a roundtable with the Austin Business Journal where we talked to a number of leaders in the real estate industry. They had a lot of ideas about how the City Council can help improve housing affordability. Without making a complete overhaul to the code, the City Council can –

  • Allow all homeowners to be able to build accessory dwelling units (ADUs);
  • Reduce the minimum parking requirements;
  • Reduce the minimum lot size for single family homes;
  • Participate in private/public partnerships to encourage more affordable building; and
  • Adapt zoning changes in smaller areas to encourage denser building.

All of these changes will help to increase the supply of housing in Austin and, therefore, control the cost. Of course, there are still a number of folks on the Council and throughout the City that oppose even these changes. As a result, I fear that things are going to get much worse for these ACC students before they get better.

Where am I Supposed to Live? Read More »