Deal Sikes Estimate of Just Compensation Upheld by Jury

By Leaders in Law

Lawyers from the Houston-based Vinson & Elkins recently won a unique eminent domain suit brought on by the State of Texas against a privately-held joint venture.

Using the power of eminent domain, the Texas Department of Transportation (TxDOT) acquired the DiMare Fresh Produce cold storage warehouse on 3.9 acres at 1415 West Loop North. The state offered to pay only $5,775,000 for the 90,000-square-foot warehouse, which was owned by Beeson Sirota Joint Venture. The offer was rejected and TxDOT subsequently filed suit against the ownership venture, which was represented by V&E partners George Murphy and David Wall.

Houston-based Deal Sikesa real estate valuation firm, estimated that the DiMare site, located in the highly popular Inner Loop location, was worth much more than TxDOT offered – $9.25 million.

“Cold storage warehouse facilities are limited in supply and in high demand in Houston and property values continue to increase in the Inner Loop district,” said Deal Sikes Principal Mark Sikes.

At the conclusion of the trial in July, the jury determined that Deal Sikes’ appraisal was accurate and the owner should be paid $9,250,000.

“This important case winds up a long series of eminent domain takings by TxDOT along Interstate 610,” said Matthew Deal, principal of Deal Sikes. “Our firm consulted with many northwest Houston property owners regarding TxDOT takings.”

Article featured at https://leadersinthelaw.com/vinson-elkins-wins-multimillion-dollar-eminent-domain-case-for-houston-company/

 

Houston real estate to benefit from better job growth

By Katherine Feser

Houston’s rosier than expected job growth in 2017 has positioned the local real estate market to gain strength across the board, Houston-based real estate valuation firm Deal Sikes & Associates said in a report. The Houston region added 62,900 jobs last year, the Texas Workforce Commission reported in its revised annual data. That’s a 37 percent jump over initial estimates of 46,000 jobs.

“The improvements in the Houston economy provide a brisk tailwind for real estate in southeast Texas,” Deal Sikes & Associates principal Matthew Deal said in a report. Apartment construction will pick up in 2018 after both rents and occupancy rates increased last year, Deal said.

“Apartment communities that were not inundated during the hurricane flooding last year are attracting investors who are willing to pay more for properties with a high-and-dry track record,” Deal said. Houston’s revised 2017 job growth, equivalent to 2.1 percent, shows a rebound from the bottom of the downturn in October 2016 when 7,300 jobs were lost year-over-year, according to the Greater Houston Partnership.

Houston’s economic growth and jobs gains support a broad trend for stronger real estate values in the year ahead, principal Mark Sikes said. “Home sales and single-family construction are strong. We expect to see strengthening residential prices in 2018,” he said.

“Across the board, the demand for land is healthy. Builders are seeking smaller sites for Inner Loop residential and boutique retail. In suburban areas, developers are actively acquiring land for industrial, distribution, retail and residential projects.” The office market, the region’s weakest sector, has provided an opportunity for investors. Significant investments made over the past year “will deliver strong returns as the market improves and values increase,” Sikes said.

Article featured at https://www.chron.com/business/real-estate/article/Report-Houston-real-estate-to-benefit-from-12767470.php
Photo: Steve Gonzales, Houston Chronicle

Jury awards developer $28.8M in Grand Parkway condemnation dispute

By Dug Begley

Jury rules in favor of Caldwell Companies against TxDOT in condemnation case

Blazing a path through a forested watershed for the Grand Parkway will carry a heavy cost for state transportation officials, if a Harris County jury’s record award is upheld.

The jury on Feb. 2 issued a $28.9 million verdict in favor of CC Telge Road, L.P., controlled by large Houston-area developer Caldwell Companies, in a dispute with the State of Texas, primarily the Texas Department of Transportation. If approved by a judge and factoring for another roughly $2.2 million in interest tacked on to the seven-year-old case, the $31 million award would go down one of the state’s largest condemnations.

TxDOT and the Texas Attorney General’s Office, which represented the state, declined to comment on the case, including whether an appeal was planned, saying the matter remains pending.

Harris County Judge George Barnstone still must enter the judgment for it to apply.

The case was not over the taking of the land, but the value of nearby land after TxDOT was through building the Grand Parkway. Caldwell had planned a subdivision of single-family homes in the Willow Creek watershed, east of Telge Road and north of Boudreaux near Texas 249. The development relied on the creek and forested area as a centerpiece of trail and exercise amenities.
Caldwell and the state began bickering over the value of the condemnation shortly after the company purchased the 617-acre tract in 2010.

The company unsuccessfully lobbied TxDOT to shift the parkway south, though the state already had a 40-acre easement through the site. The segment of the parkway was built from 2013 to 2016, during which crews cleared hundreds of trees and flattened the ground for the elevated parkway through the watershed.

Caldwell said it could not go forward with its initial plan without the pristine watershed as a centerpiece and developed the property as private acre lots without the community assets, such as trails, parks, sports fields and other gathering spots for residents.

“You can’t build small lots and expect people to gather around a super-freeway and say ‘Wow, what a great experience that is to be gathered up against the freeway with our kids,'” Caldwell Companies CEO Fred Caldwell said during a deposition in the case.

The question for the jury was how much that difference was worth and what the state should pay for a project planned long after the parkway was designed. In filings, the state called the condemnation negligible to the development of the property, questioning an appraisal that valued each of the lots of Caldwell’s development as worth $110,000 without any construction or infrastructure whatsoever.

That assessment, by Deal Sikes & Associates, was the exact amount awarded by the jury. TxDOT estimated the value loss of the property because of the parkway at $1.3 million.

The parkway is hugely popular with drivers, bringing in $55.6 million in tolls for the last four months of 2017, about $22.8 million more than officials expected. Use has far exceeded expectations since the lanes opened two years ago.

Still, the project has been dogged by some residents and green space promoters for cutting a wide gash in forested portions of northwest Harris County.

The parkway also remains a work in progress. Completed from Fort Bend County around the western side of the Houston, the next phases of the parkway are set to start construction in the summer.

The work, expected to take about four years, will extend the parkway south and east from Interstate 69 north of Kingwood to interstate 10 northeast of Baytown. The 37.5 mile section set to start is expected to cost $1.28 billion.

Grand Parkway Infrastructure, a joint venture of construction titans Ferrovial Agroman US Corp., Webber LLC and Granite Construction Inc., won the $855 million construction job in March 2017.

Article featured on https://www.houstonchronicle.com/news/transportation/article/Jury-awards-developer-28-8M-in-Grand-Parkway-12581191.php
Photo: Brett Coomer, Houston Chronicle

Will Hurricane Harvey Sink Real Estate Prices?

By Ralph Bivins

HOUSTON – How will Hurricane Harvey impact Houston’s real estate prices?

It’s been almost two months since the Category 4 storm hit Texas and dropped 50 inches of rain on Houston.

To know exactly how the storm impacted prices, we will have to wait until more flooded properties actually sell, says Houston valuation firm Deal Sikes & Associates. But for now, it looks like the results will be mixed.

Many real estate sales are closing as planned. The biggest post-Harvey deal, Brookfield’s $875 million acquisition of the 4.2 million SF Houston Center in downtown, which went under contract right after the storm, appears to be heading to a closing later this year.

But Houston Center did not flood. Other Houston office buildings did. Some 16 million SF of office space was impacted in some manner and a lot of those building were restored within a month.

However about 4 million SF of office space flooded significantly and it won’t be repaired until 2018. Truth be told, a lot of that 4 million SF, including Class C office space, may never be restored.

“Some of the commercial space that flooded may be permanently removed from the market. This will place upward pressure on occupancy and rents and that could be reflected in increased property values,” says valuation expert Matthew Deal, principal at Deal Sikes.

Damage reports vary. The Greater Houston Partnership reports more than 500 business establishments were hit hard and may be gone for good. Some 100,000 single-family homes and as many as 40,000 apartment units flooded.

Investors are working flooded neighborhoods, buying single-family houses for lot value.

Harvey produced winners and losers in the valuation game, Deal says.

The winners include owners of rental properties that did not flood. The Houston Association of Realtors reports 4,233 single-family homes were rented in September, an 86 percent increase over September of 2016. Apartment occupancy jumped also. Rents are rising.

Then, there are the losers.

“For those hurt by flooding, the story is completely different,” Deal says. “These unfortunate property owners, many whose properties have never flooded before, face more than the cost of repairs and temporary displacement. The flooded properties may suffer permanent market value losses caused by the likelihood of future flooding and the stigma caused by the effects of contaminated water inundating properties, at times for more than a week.”

Article featured on http://realtynewsreport.com/2017/10/24/supply-demand-and-damage-hurricane-harveys-impact-on-real-estate-prices/

Hurricane Harvey May Determine the Winners and Losers in Houston Real Estate Valuations, Reports Deal Sikes & Associates

HOUSTON–(BUSINESS WIRE)–Some Houston properties face the possibility of permanent market value losses in the wake of Hurricane Harvey, while other properties may actually benefit from the impact of the storm, according to Deal Sikes & Associates, a Houston-based real estate valuation and consulting firm.

Hurricane Harvey inflicted an estimated $100 billion in property losses in the Greater Houston area in late August. The storm temporarily removed a significant amount of supply – apartments, single-family homes, office and retail space – from the Houston real estate market.

“Some properties that did not flood have actually benefitted. For example, apartment occupancy and rental rates have spiked and a great deal of empty office space has been absorbed,” said Matthew Deal, principal at Deal Sikes & Associates. “An otherwise soft market has tightened because flooded properties have been at least temporarily taken off the market.”

The Greater Houston Partnership reports more than 500 business establishments and 72,000 single-family homes suffered major property damage.

“Some of the commercial space that flooded may be permanently removed from the market. This will place upward pressure on occupancy and rents and that could be reflected in increased property values,” Deal said.

“For those hurt by flooding, the story is completely different,” Deal said. “These unfortunate property owners, many whose properties have never flooded before, face more than the cost of repairs and temporary displacement. The flooded properties may suffer permanent market value losses caused by the likelihood of future flooding and the stigma caused by the effects of contaminated water inundating properties, at times for more than a week.”

Mark Sikes, principal of Deal Sikes & Associates, said the Houston real estate market is filled with uncertainty during this recovery phase.

“The market is fluid and transactions involving affected properties will occur in the months ahead. We will soon begin to see a clearer picture of the impact on the value of flood-damaged properties,” Sikes said.

Houston-based Deal Sikes & Associates provides valuation and counseling services for real estate companies, governmental agencies, investors, corporate clients and attorneys.

Article featured at https://www.businesswire.com/news/home/20171009005761/en/Hurricane-Harvey-Determine-Winners-Losers-Houston-Real

Real estate firm calls Houston valuations ‘spotty and uneven’ in 2016

By Dylan Baddour

The commercial real estate market is boosting some property values while deflating others.

Houston-based real estate valuation firm Deal Sikes and Associates reported Monday that varying conditions across the city’s submarkets and property types have created uneven changes in commercial property value over the last year.

The firm said 57 percent of commercial properties recently received notifications of value increases, 18 percent received decreases and 25 percent were unchanged.

“Overall the prevailing trends for Houston commercial real estate valuations have indeed been mixed over the last year,” said Matthew Deal, principal at Deal and Sikes. “In general, Houston’s retail and industrial properties have performed better than office and multifamily. But now, more than ever, properties must be carefully evaluated on an individual basis to determine market value.”

Mark Sikes, principal with Deal Sikes, said demand for warehouses and industrial sites has pushed those property values up, while continued strength in retail has kept storefront prices high. Scarcity of land near Port Houston has driven up local prices, and a spate of development plans east of downtown should keep land property values rising there, Sikes said.

Article featured at https://www.houstonchronicle.com/business/bizfeed/article/Real-estate-firm-calls-Houston-valuations-spotty-11249742.php
Photo: Smiley N. Pool, Houston Chronicle