Rental Trends

In a recent report by Axiometrics, rental trends are segregated into age groups for the years 1982 - 2013. The left hand y axis is the percentage of renter households to total households. The right hand y axis is the difference in the employment-to-population ratios for 25-34 year-olds compared to that of 20-24 year-olds (the yellow dotted line). From this chart, we can see that trends in recent years have shifted upward to include a more proportionate share in renting. Additionally, from the yellow dotted line we can see that "the ratio of employed older millennials has been increasing faster than that of younger millennials". 

Source: 

Axiometrics December 3, 2014 Mailing

Outlook for the Texas Economy

This is a plug for the Texas A&M's Real Estate Center's publication called the "Outlook for the Texas Economoy". This is a monthly report which provides a dashboard type view to various indicators and trends in the Texas economy. Texas as a whole, major MSA's, border cities, and the US are graphed for easy comparison and insight into what is happening.
Major sections of the report include:

• Economic Activity
• Manufacturing
• Housing
• Services
• Energy
• Employment
• Prices
• Trade

Each month a chart is highlighted and the source and interpretation is discussed. The "Outlook for the Texas Economoy" is produced by  Dr. Luis Torres and Dr. Mark G. Dotzour and assisted by Wayne Day. 

The report can be viewed at the following link: http://recenter.tamu.edu/econ/

EB5

In a recent article by Fortune, EB-5 funds are discussed and a world of dark and secretive capital alternatives is revealed. EB-5 is an employment based visa program that essentially sells citizenship for investment in the US. $500,000 in an investment creating 10 full-time jobs in a qualifying investment and area will get you citizenship in the US. The article discusses that EB-5 funds and the industry for obtaining these funds is largely unregulated and amatuers are chasing these dollars. Of specific interest, are that these funds have been used in real estate developments. Many questions of ethics and national pride stem out. From the article:

From the law’s inception in 1990, selling potential citizenship to the rich struck many as a corruption of American ideals. “Have we no self-respect as a nation?” asked Texas congressman John Bryant on the House floor that year. “Are we so broke we have to sell our birthright?”

Considering real estate market and appraisal fundamentals, is there a necessary or even calculatable adjustment for real estate assets funded with EB-5 capital? It is possible that participants invest their money for the right to obtain citizenship, not so much to earn an investment return. Something to consider....

For your further reading please read the sourced Fortune article and look forward to works produced by Texas A&M's Real Estate Center regarding this subject.

Source:
http://fortune.com/2014/07/24/immigration-eb-5-visa-for-sale/
http://recenter.tamu.edu/

Island Market Analysis?

In the fabulous life of the rich, Mark Zuckerberg recently purchased 700 acres of Kauai for approximately $100 million. When considering market analysis, you've got to wonder what competition and market analysis can you do for a purchase like this? What is the highest and best use of this property? At some point theoretics get thrown out the window with land as unique as this and with pockets so deep that they want what they want and will pay whatever to have it. For what uses is land valued economicaly well above it's discounted cash flow value for aesthetic and sentimental value? 

From the article: "His 700 acres on the north shore will include a pristine white sand beach, a former sugarcane plantation, and an organic farm." 

Not too long ago Larry Ellison purhcased Lana'i, Hawaii's sixth largest island, with intentions of "transforming this sleepy tourist backwater into a global pioneer of sustainable living". David Murdock listed the property at $1 Billion. It is estimated that Ellison purchased it for $500 million. 

Sources: 

http://www.businessinsider.com/mark-zuckerberg-buys-700-acres-in-hawaii-for-more-than-100-million-2014-10

http://www.telegraph.co.uk/luxury/travel/33945/lanai-hawaiis-serene-and-sustainable-private-island.html

http://www.forbes.com/sites/clareoconnor/2012/06/21/larry-ellison-hawaii-lanai-island-david-murdock-dole/

Small Living

An interesting and fun area is looking at how small living spaces can be. Numerous articles and examples can be found on the internet of small area apartments that are meant to make housing more affordable and more functional without requiring too much space. 

In San Francisco, a 216 sf apartment was put for rent on Craigslist for $1,425 which still seems steep. The apartment only has one window, a tiny restroom and has an efficiency style layout which essentially means one room. Any more than one room is difficult to comprehend with 216sf. A picture and link to the article can be found below. 

http://sf.curbed.com/archives/2014/12/08/the_smallest_apartment_for_rent_in_sf_is_just_216_square_feet.php

Probably my favorite is a 360sf apartment in Hong Kong which has been modified with modular units which shift and move to transform the space into whatever you need: a bedroom, kitchen, living room, or dance room even! See a video below for this awesome concept. 

Resilient Cities

Recently, the Rockefeller Foundation announced it's next round of world cities to participate in its 100 Resilient Cities Challenge. Awesomally, Dallas made the list. Resilience in mosts minds deals with response to and ability to recover quickly from economic disasters. It is actually much more broad than that and Michael Berkowitz, President of 100 Resilient Cities, states that “When you think about what makes a resilient city, you have to think in holistic terms. The reality is that resilience building is a multi-sector, multi-level kind of enterprise.” 

Some of Dallas identified challenges are:

• Aging Infrastructure
• Chronic Energy Shortages
• Flooding (Coastal and Rainfall)
• Infrastructure Failure
• Terrorism (???)
• Growing income inequality
• Limited water supply
• Lack of affordable housing
• And others...

It will be interesting how the public and private sectors respond to this challenge and how resiliency becomes a new tenant of Dallas city development. 

Sources:

Archdaily article

http://www.100resilientcities.org/cities/entry/dallas#/-_/

REITs

Recently, Marcus & Millichap’s Hessam Nadji appeared on CNBC’s Fast Money to discuss some of the recent trends on REITs. They give a quick insight into what REITs are but also talk about the performance in light of recent economic troubles and his projections into the future. In short, he views that REITs got hit hard during the recession from an over-selloff but have since rebounded and outperformed the S&P 500. He does not expect interest rates to dramatically increase which do have an inverse effect on property values, but if it does he believes it will be coupled with both job growth and some inflation which both provide upward pressure on real estate values. Most notably, he makes reference to Dillard's offering a REIT which had me look elsewere for commentary. In an article by Bloomberg, Marcato Capital Management LLC is urging Dillard's to sell it's corporate real estate to a REIT and perform a lease-back. This shows an interesting scenario if companies like Dillard's that are real estate heavy do sell-off and financing is brought to the public market. Additionally, what happens with underlying assets that have a specific purpose (ie. Dillards being a department store). 

Sources:
http://www.marcusmillichap.com/about-us/news-events/videos/2014/11/20/cnbc-fast-money
http://www.bloomberg.com/news/2014-11-20/marcato-urges-dillard-s-to-spin-off-real-estate-into-reit.html

Formulas: Sumifs, and Index & Match

When creating financial or other data models in excel, formulas as provided by excel functionality can become indefensible in creating an efficient model that is potentially reusable. In a prior internship, I exhausted the use of the (1) 'SUMIFS', (2) 'INDEX', and 'MATCH' formulas (index and match are used in conjunction with eachother).
(Note, this blog is not a tutorial but rather to provide examples for each formula mentioned.

SUMIFS
This formula works great in summing an array of numbers based on defined conditions. An easy example would be if you had financial output that was displayed on a month by month basis. But say that you wanted to summarize this detailed information into quarterly or yearly numbers. Use of this formula does not need to some a set of numbers; it can be used to single out a particular number based on a defined selection criteria. I've heard it referred to as 'poor mans SQL'.

Here's an example of SUMIFS and changing monthly into quarterly data. Cell G6 shows the formula used in cells G3:G6.

INDEX & MATCH
This combination can be used to select data that has a X and Y axis and linearize it. I get the most use of this formula when linearizing government data which is presented in an Year by Month format.
The INDEX syntax is: INDEX(array, row_num, [column_num])

• array is the selection area (not including the columns and row names such as year and month)
• row-num is the row to pull the selection from
• column_num is the column to pull the selection from

You can think of this formula as creating a cross-hair on the exact cell that you want to pull a value from. 

MATCH is used in the row_num and column_num to dynamically select the correct row and column. Otherwise, a number (position) has to be manually input. 

The MATCH syntax is: MATCH(lookup_value, lookup_array, [match_type])

• lookup_value is the value that you want to match in either column or the row, whichever you are targeting in the INDEX formula
• lookup_array is either the column or row names such as the years as the rows or the months (or quarters) as the headers. 

See below for an example:

Hope this helps you think of ways to better your financial models and cut down on time fooling with excel!

Seaside, Florida in the Truman Show

Recently we watched a video in Dr. Peterson's class about Seaside, Florida. It is a unique master-planned community based on New Urbanism concepts. Seaside exists on 80-acres of Florida's Gulf Coast. It has become an example of New Urbanist development throughout the planning and architecture disciplines called the poster child of New Urbanism by some. Features include walkability, sustainable development practices, anti-sprawl disposition, compactness, landscape designed as multi-use (ex. amphitheater/retention-pond). 

When I think about Seaside, I think of old-school, traditional, comfortable, and simple living. Many features are desirable such as the walkability and access to commercial and entertainment, but the community still lacks the density and diversity that I would like out of a big city. But that's my taste. To each their own! 

The real point of this blog is, interestingly enough, as we were watching the clip in Peterson's class, it dawned on me that this community was very similar to what I remember from the 1998 movie the Truman Show starring Jim Carrey. I checked it out, and sure enough it was the same community used as the setting! The director is said to have desired a location that would create a dreamlike quality in a real life place. The movie definitely portrays the community as simple and traditional as previously stated, but it would be interesting to experience the ambiance first hand to see if the portrayal is actually the perceived vibe received in a 'real-life'. 

SpaceX in South Texas

During class, we discussed that Tesla motors is moving to Nevada bringing thousands of jobs bringing $100 billion in economic activity. Tesla CEO Elon Musk is taking his pribately owned SpaceX company to south Texas right at the mouth of the Rio Grande River. SpaceX’ vision as found on their website is “SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.”

Photo Source: http://www.spacex.com/sites/spacex/files/spacex_default.jpg

Some key points from an article are provided below: 

• SpaceX will be the first private commercial orbital launch facility in the world

• Site will be operating by 2016 launching 12 flights per year

• Texas offered $15 million in incentives

• $80 million in improvements will be made to Boca Chica Beach

• SpaceX will bring 300 direct jobs to the southwest border region

• SpaceX already has a facility in central Texas that does rocket testing

The activity in this region will be extremely interesting to watch. With the 300 direct jobs serving private commercial orbital launches, it is safe to say that other additional nonbasic jobs will be added to the local economy. Additionally, tourism should be expected to increase. The article mentions the prevailing immigration issues in the region which bring connotation of regional/local decay and relatively poorer economic conditions. The attraction should bring positive effects to the region in the form of renewal, increased labor, and increased overall general market conditions. 

Article source: http://news.yahoo.com/spacex-breaks-ground-texas-orbital-launch-facility-194228703--finance.html#

http://www.spacex.com/

Fast Growing City Under 150K People!

According to the Census Bureau, San Marcos is the fastest growing city in the US by percentage growth and with population over 50,000. From July 2012 to July 2013, San Marcos grew by 8%. The 2009 & 2012 ACS 5-year estimate data was used for analysis. Although the city grew by 8% according to the Census, the employment figures were far less appealing for the 2009-2012 period. Another data source may prove beneficial for analyzing more current figures.

San Marcos
2009 ACS 5-year Estimates Population: 49,565
2012 ACS 5-year Estimates Population: 46,131

Below, we can see that the population for San Marcos has been trending upward but a decrease between 2010 and 2011. Currently, the market is regaining that lost population. Investors may be able to capitalize on a currently depressed economy that is recovering.

Economic Base Analysis

 Employment Growth from 2009 to 2012

 National Employment Growth

Industry Mix Table

Regional Shift Table

 Summary Table: Shift Share Components of Growth

San Marcos: Shift-Share Results

See: http://www.foxnews.com/politics/2014/05/22/census-bureau-says-texas-utah-home-fastest-growing-cities/

Data Source: Census, 2009 & 2012 ACS 5-year Estimates, Table. Selected Economic Characteristics

Real Estate Development and Partners

In this past week we discussed various participants in real estate development. A developer isn't someone who knows everything about developing a piece of real estate but he better know people who know the various components of real estate development. He will rely upon professionals who are experts in their subject area. For my blog, I would like to high-light urban planners and the public entities, particularly in the case of a planned development in Bellingham, Washington. 

Georgia-Pacific owned a property that was historically industrial and operated as a pulp and tissue mill from the 1920's until 2007. The 137-acre property was put on the market, but due to the historical operations contamination was pervasive throughout the site. The Port of Bellingham expressed interest in a portion of the property for initial development as a public marina but later decided to purchase the property for full redevelopment of the Bellingham waterfront into mixed-use development including light industrial, commercial, retail, residential and public spaces. Costs to remediate made the property difficult to sell. The Port was able to envision a use for the entire property in addition to other adjacent properties that were being acquired or owned around the Bellingham waterfront. The Port partnered with the City and Department of Ecology in order to make the remediation and redevelopment of the site feasible. A master plan was approved in 2013 detailing the various uses and layout of the entire waterfront district. Planners and the local government took on this project when the private market could/would not. The public nature of the partnering entities and funds available that made this project feasible financially. Additionally, they entire waterfront district could be planned holistically allowing for arguably better integration of uses and serving as a public good. 

Source: https://www.djc.com/stories/images/20130520/AerialViewJS2_big.jpg

Source: http://www.ccim.com/sites/default/images/cire-legacy/MarApr07-bilsky-lydia.jpg

2013 Master Plan

Most interesting piece of Real Estate...

What is the most fascinating, interesting, or inspiring parcel of real estate from your perspective?

This is such a loaded question and one that I am not willing to commit to answering. But for sake of the class and assignment I will submit an answer. I'm going to pick one that I've visited. It is a place called Tortuguero in Costa Rica which is translated Land of Turtles. I took a winter study-abroad trip in my undergraduate education to Panama and Costa Rica and we happened upon this resort. What makes it most interesting to me is my affinity for tropics and beach towns. I also reserve the right to choose another tropical beach town when I come across another better one. We had to take a one hour river ride to access the resort which was located along a peninsula with the ocean to one side of the resort and the river and jungle to the interior. I enjoy leisure and aesthetics. For me, this place was paradise and invigorating. It may not be interesting from an operational, historical, and investment perspective, but I hope to return here again. We were greeted with punch and rum drinks and taken to our simple but comfortable cabins made of rain forest woods. Everything is designed to adhere to the tropical and humid environment. The resort provided meals and everything. As removed as the place was, the food was phenomenal. This was the first time I ever had Sea Bass and was blown away by how great fish can be. I've really only ever had Fried Catfish prior to this point. Howler Monkeys howled in the distance. Toucans hopped among the trees. Poison Arrow Dart Frogs suctioned to trees. We kept our distance as told. With the land comes a new way of living. Urban amenities are not near; only a small village - Tortuguero Village. Yet, people call the area home. The rain forest is their backyard. Real Estate can be special for various reasons. Many times it is due to historical significance or unique profitability. I choose Tortuguero for the sentimental and unforgettable experience I had there compounded by the attractive nature of the tropical rain forest and neighboring ocean. It's something completely foreign to me, and that is attractive.

Source: http://sportfishing-costarica.com/wp-content/uploads/2013/05/Tortuguero1.jpg

Source:  http://www.eclipse-tours.com/app/cms/www/index.php?id_menu=35&pk_categoria=13&pk_product=176&id_menu=35 

Howdy!

Good Day,
This blog will introduce myself.

Name: Wayne Day

Major: Master of Real Estate '15, PhD Urban and Regional Science '17

Hometown: I consider a few towns my hometowns. McKinney, Van Alstyne, and Carrollton, Texas

What would I like to get out of this class? For Real Estate Development Analysis: I'm hoping to gain a good overview of the development process and various considerations when planning for and/or analyzing a development. For Real Estate Market Analysis: I'm hoping to understand various points of analysis when understanding what types of real estate products will be successful for development or where various products are in the supply/demand cycle.

Hobbies and Interests: Right now it's school. Lots of it. So when I get free time I just like to veg out. I like movies and anime. I'm still getting my bearings in College Station, but if I'm in Dallas I'll go out with friends and eat. I really like food. I like it even more when people cook for me. I would like to pick up Muay Thai fighting again.

Short-Term Goals: Graduate!; be completely debt free; get appraisal and brokers licenses; create and land opportunities related to my career

Long-Term Goals: Graduate! always be debt free; amass wealth for purposes of benevolence and generational transfer; consistently travel; own various investments and businesses; participate in academia and teaching

What is unique about you? I consider myself blessed and my life is a dream. Though times may seem stagnant, if I take a break and look at where I'm at in life and what I have, I'M BLESSED! I'm a dork. That's what I think. But I've come to accept that. The nerdiest thing I do is I like anime. Also, I think I've almost died a few times. Once due to MRSA infection on my leg which almost had to be amputated. Another time was on a 4-wheeler. Surprisingly I didn't get hurt at all since I didn't crash, but it was a close encounter with seeing the lights. I'm a sucker for buying premium things. If there is a regular version of something or a premium deluxe edition, I'm gonna get the premium deluxe. I'm also a sort of wanderer. I tend to be a part of various social groups without identifying with any one. I guess I just like diversity.

Items from Bucket List:

Dive with Great White Sharks (in cage of course!)

Climb a mountain, I'm thinking Mt. Kilamanjaro.

Live in another country for at least 2 years

Learn Spanish and some Asian language (still undecided)

Give away tons of money

Favorite sites:

Business/Academic

http://recenter.tamu.edu/

www.wsjonline.com

Whatever gives me the sources/resources that I need! Life is a hunt and a grind!

Personal/Entertainment

www.imgur.com

www.uncrate.com

www.animefreak.com

www.woodinked.com

7mcity.com