Stimulus a boon to Texas construction

April 14th, 2009 3:28 PM

The economic impact of stimulus investment in Texas would add about $2.7 billion to the state’s gross domestic product and could add more than 8,000 construction jobs in the state, according to a report prepared by the Associated General Contractors of America.

Stimulus investment in the state could also lead to an additional $1 billion in nonresidential construction spending, the addition of about $841 million to personal earnings and the creation of about 24,000 overall jobs, the report said.

Construction employment in the state totaled 635,000 workers in February 2009, a 6.2 percent decrease from the peak of construction employment in Texas in April 2008, the report found.

In Texas, personal income growth grew 6 percent between 2007 and 2008, compared with a national growth rate of 3.8 percent. And nonresidential construction spending in Texas total about $54.3 billion in 2007, which contributed $36.7 billion to the state GDP of $1.1 trillion, the report said.

Notes from Metro Study Forecast

April 29th, 2009 10:36 AM

March home sales down from last year

April 20th, 2009 3:25 PM

Single-family homes sales and median home prices in March were down compared with the same month last year, but the rate at which sales volumes are dropping has slowed down, according to data from the Austin Board of Realtors.

Single-family home sales in March declined 22 percent compared with March 2008, and the median home price was $180,160, down 4 percent over the same time period, according to ABoR.

But 2009 numbers may show a slowing trend in the decline of home sales, ABoR Chairman Jay Gohil said. Sales in January 2009 were down 36 percent compared with the same month last year, and in February sales were down 28 percent compared with the same month in 2008.

“Sales volumes in March are still down compared to a year ago, but we’re beginning to see the gap in volume close,” Gohil said. “We’re seeing sales volumes improve and home values remain steady. That’s good news for Austin homeowners. Those factors, combined with Austin’s strong economic fundamentals, bode well for our market heading toward the summer buying season.”

A study from the U.S. Bureau of Labor Statistics ranked Austin among the top 10 metropolitan areas in the country with the highest potential for job growth in 2009, ABoR officials said, which could also help drive the real estate market.

Report: U.S. housing market undervalued

April 20th, 2009 3:24 PM

Downtown condos to be auctioned

April 20th, 2009 3:23 PM

The developer of Brazos Place, a mixed-use development at 800 Brazos St. with 74 condominium units, is auctioning the development’s last 20 units, including its penthouse unit.

Michigan developer Pomeroy Investment Corp. announced in 2006 its plans to turn the former office building and hotel into a mixed-use development.

Opening bids for the units at the May 17 auction will start at $80,000 for one- and two-bedroom units that range up to 1,399 square feet. The units were originally priced from $199,000 to $519,000. The starting bid for the penthouse, previously listed for $1.5 million, will be $600,000.

Kennedy Wilson Auction Group will conduct the auction, one of the first condominium auctions in Austin, said Rhett Winchell, president of the auction group.

Further information is available on the auction Web site at www.brazosplaceauction.com.

Austin fighting back; jobless rate drops for 2nd month

April 17th, 2009 3:24 PM

For the second consecutive month, Austin's unemployment rate has decreased as the region tries to regain the losses it's sustained in the recession.

Austin added 5,100 jobs in the month of March, helping drop the metro area's unemployment rate from 6.3 percent in February to 6.2 percent, according to the latest figures from the Texas Workforce Commission.

Over the last 12 months, the area has added a cumulative total of just 3,300 jobs, for a 0.4 percent growth-rate. Though modest, growth of any kind is seen as a sign of health as most of the cities across the country continue to struggle with major job losses.

Indeed, Texas as a whole lost 47,100 jobs in the month of March, the TWC report shows. That brings Texas back down to its fall 2007 employment level and increases the statewide seasonally adjusted unemployment rate from 6.5 percent in February to 6.7 percent last month. The national unemployment rate now stands at 8.5 percent. Texas recorded a net loss of 106,500 jobs in the past 12 months; nationwide job losses total 4.8 million over the last year.

“The Texas unemployment rate remained well below that of the nation, although Texas suffered a net loss of jobs in March,” said TWC Chairman Tom Pauken. “While the national recession continues to have an impact, TWC is focused on helping Texans find employment and weather these challenging economic times.”

Austin ranks No. 1 for job growth potential

April 14th, 2009 3:27 PM

Centex to merge with Pulte

April 8th, 2009 4:05 PM

Homebuilder Centex Corp. announced Wednesday its board of directors has approved a plan to merge with Pulte Homes Inc. In announcing the deal, Centex stated that the combined company will have $3.4 billion in cash on hand to weather the current homebuilding doldrums.

In the transaction, Dallas-based Centex (NYSE: CTX) shareholders will receive 0.975 shares of Pulte's (NYSE: PHM) common stock for each share of Centex common stock. Centex is the second largest builder in the Austin area ranked by 2007 sales.

The merger is a stock-for-stock transaction valued at $3.1 billion, which includes $1.8 billion of net debt, Centex said.

When the merger is complete, Pulte shareholders will own 68 percent of the combined home building entity, while Centex shareholders will own 32 percent.

“We believe this is the right combination at the right time in the business cycle," said Centex Chairman and CEO Timothy Eller said. "By acting decisively now, we’re creating unrivaled firepower to capitalize on the opportunities in home building that are now becoming visible on the horizon. We will have a deeper and more expanded presence that we are confident will allow us to begin realizing the benefits of our combined scale immediately. Moreover, our shareholders will receive an immediate premium for their shares as well as participate in the upside potential of the combined company."

At the end of March, Bloomfied Hills Mich.-based Pulte (NYSE: PHM) and Centex each had approximately $1.7 billion of cash on hand. Last year, both builders combined had 39,000 home closings and a combined revenue of $11.6 billion

“Combining these two industry leaders with proud legacies into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability,” said Pulte President and Chief Executive Officer Richard Dugas, Jr. “Centex’s significant presence in the entry level and move-up categories is complemented by Pulte’s strength in both the move-up and active adult segments, the latter through our popular Del Webb brand. Together we will have considerable presence in more than 59 markets across America. In addition, both organizations share an unwavering focus on delivering unparalleled customer satisfaction, maximizing the influence of strong brands and setting new standards of achievement in operational efficiency."

The companies’ leaders added that the merger will allow the combined building entity to capitalize on Centex’s land position and holdings in key markets like Texas and in the Carolinas.

In early Wednesday trading, Centex shares were up 28 percent to about $9.75, and Pulte shares were down 6 percent to $10.12.

Geithner: Government may force bank CEOs to resign

April 6th, 2009 3:23 PM

U.S. Treasury Secretary Timothy Geithner said the government is prepared to remove bank CEOs in the same way it demanded the resignation of General Motors Corp. CEO Rick Wagoner.

Geithner, speaking on CBS’s “Face the Nation” on Sunday, said the leaders of Fannie Mae and Freddie Mac, as well as many of the top people at American International Group Inc. (NYSE:AIG), already have been removed.

“Where the government has acted, like in Fannie and Freddie or like in AIG, where we've had to do exceptional things to stabilize them; we have replaced the management and the board,” Geithner said, according to a transcript of the interview on CBS News’ Web site.

“And we've done that because we want to make sure that taxpayers' assistance is going to make these companies stronger, make sure there's accountability, make sure it comes with strong conditions. And we'll do that in the future if that is necessary.”

At one point, the news program’s host, Bob Schieffer, asked Geithner whether the CEOs of Citibank (NYSE:C) and Bank of America (NYSE:BAC) need to be worried that they may face the same fate as GM’s Wagoner if their performance doesn’t improve. Geithner said all bank CEOs who take bailout funds will be held to account for their performance.

“When, in the future -- or I'll just say, if, in the future, banks need exceptional assistance in order to get through this, then we'll make sure that assistance comes with conditions, not just to protect the taxpayer but to make sure this is the kind of restructuring necessary for them to emerge stronger. And where that requires a change of management of the board, we'll do that,” Geithner said.

Some people have been critical of President Barack Obama’s administration for demanding the resignation of GM’s (NYSE:GM) CEO, but not taking similar action to remove top people on Wall Street and at the banks. Geithner added that it was a “single standard” being applied by the government.

He added, “… our obligation to the American people is to do what's necessary to try to bring recovery back on track as quickly as possible.”

Report: Stimulus money could end up costing Texas jobs

April 6th, 2009 3:22 PM

A new report from the Texas Public Policy Foundation argues that the money flowing in to the state from the federal stimulus package could actually hinder private sector growth and end up costing Texas more than 131,000 jobs.

The report, titled The Economic Impact of Federal Spending on State Economic Performance—A Texas Perspective, was released at the Capitol on Monday.

Foundation researchers looked at historical patterns of economic growth and spending by federal, state and local governments; the implications for Texas unemployment payments and taxes; and estimated effects that the recently passed federal stimulus package will have on Texas private sector economic activity and employment.

“These findings show clearly that growth in government crowds out growth in the private sector,” said Talmadge Heflin, director of the Foundation’s Center for Fiscal Policy and a former chairman of the Texas House Appropriations Committee. “Texas taxpayers and workers will pay a high price if our legislators use this supposedly free, one-time federal money to expand state government programs.”

Heflin said there is a clear negative correlation between increased government spending and reduced private sector output. The report concluded that the federal stimulus package would reduce net business output by 2.5 percent. The report’s authors say that would translate to a loss of between 131,400 and 171,900 jobs.

Heflin said the findings emphasize the importance of the legislature “rejecting the unemployment stimulus funds, as well as all others that would lead to permanent increases in state government spending.”

The foundation commissioned research firm Arduin Laffer & Moore Econometrics to complete the report, which is available on the foundation’s Web site.

Austin office vacancies up, rents down

April 3rd, 2009 3:38 PM

The first quarter of 2009 saw rental rates decline and vacancy climb in Austin’s office market, according to research from Oxford Commercial.

At the end of the first quarter, Austin’s overall office vacancy rose to 20 percent, up from 19 percent at the end of the fourth quarter 2008. Average annual rental rates per square foot for Austin’s office space declined slightly from $26.59 in the fourth quarter of 2008 to $26.04 in the first quarter of 2009. The largest decline in rental rates took place in suburban markets like the northwest and southwest sectors, where new construction has recently delivered a spate of new space. Some sectors, like the Central Business District, actually saw a slight increase in rental rates.

Ted Doucet, a broker with Oxford who specializes in tenant services, said clients are acting conservatively, and only committing to deals as far as they can see into the future.

Absorption for the first quarter was positive - 48,890 square feet. That’s a sharp decline from the 341,022 square feet absorbed in the last quarter of 2008, which Doucet said was largely driven by some large tenant deals in the suburban markets.

Doucet said one of this quarter’s more significant deals was SolarWinds Inc.’s expansion to 102,587 square feet in the Park on Barton Creek.

“49,000 square feet of absorption is not indicative of a robust market, especially with all the construction we’ve had over the last three years,” Doucet said.

Sublease vacancy has also risen over the past quarter, to a market-wide total of 1.1 million square feet for the first quarter, up from 800,000 square feet in the fourth quarter of last year.

Doucet said he predicts absorption will remain fairly flat in the second quarter as well. But Doucet said conversation with other brokers around the country have convinced him that Austin remains relatively robust compared with other markets.

Brent Powdrill, a research director with Oxford, said given that nearly 3 million square feet of office space has been delivered to the Austin market over the past year, the fact that overall vacancy only rose by four percentage points this quarter compared with the first quarter 2008 is a good sign for the area.

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