Texas Real Estate Business • JUL 2018

www.REBusinessOnline.com July 2018 • Volume 14, Issue 5 LENDERS SCRAMBLE TO LOCK IN RATES Growth in production of loans backed by CMBS and life companies and a shift toward fixed-rate financing define our mid-year capital markets update. By Taylor Williams he Federal Reserve met during the second week of June, and as expected, the nation’s cen-tral bank opted to raise short-term interest rates for the second time this year. In short order, this means that borrowing costs for banks are going up, which means that increased bor-rowing costs for consumers will fol-low close behind. At least one more rate hike is an-ticipated to occur before year’s end as part of the Fed’s stated goal of in-creasing the federal funds rate from its current range of 1.75 percent to 2 percent to 2.5 percent by year’s end. In addition, the Fed has pledged to T Houston-based Q10 KDH recently arranged a CMBS loan with 75 percent leverage for the acquisition of this 42,440-square-foot retail property in Fort Bend County. continue its rate hikes through 2019 and potentially into 2020 as it pur-sues a tighter monetary policy. The capital markets behind com-mercial real estate in Texas have long seen these rate hikes coming — nec-essary measures to choke off inflation brought on by tax cuts, a ballooning stock market, an 18-year low unem-ployment rate and near-3-percent an-nual growth in GDP (2.9 percent in the first quarter). Some borrowers have been able to refinance existing debt and lock in favorable rates in advance of the Fed’s hikes. Those who didn’t, per-haps because their loans were too far SEE LENDING, page 16 TEXAS NEEDS MORE WORKERS Texas has jobs and people to fill them, but economic development specialists say talent gaps and misalignments are keeping the state’s labor force participation in check. By Taylor Williams exas, like the broader U.S. economy, has a labor issue. Right now, growth is coming naturally to the state that roughly 28.5 million people call home and whose economy routinely adds tens of thousands of new jobs per quar -ter. Rebounding oil prices, corpo-rate tax cuts and a rising role as a distribution hub — to name just a few economic factors — are bring-ing jobs to the state at record clips. But the growth in employment counts for very little without the right people to fill the jobs. Con -T sequently, many economic devel -opment department in Texas are working to mold their labor pools to better fit the needs of their major industries. “The business of economic devel-opment has really become one of worker availability and talent avail-ability,” says Carlton Schwab, CEO of the Texas Economic Develop -ment Council. “Bridging those em -ployment gaps has always been an important component of economic development, but today, that’s what the business is all about.” The Strand, a new corporate campus and mixed-use development from Hines, is being developed in Allen, a secondary market experiencing strong labor force participation. SEE EDCs, page 21 INSIDE THIS ISSUE West Texas Market Highlights, including Lubbock, Amarillo and Midland-Odessa pages 12-15 Financial Resource: Our Inaugural Lenders Resource Directory pages 18-20 Updated Agenda/Details for InterFace Multifamily Texas page 20