It is getting worse in Houston

Saturday, November 28, 2015
By Paul Martin

Matt Turner
Nov. 28, 2015

A severe slowdown could be on its way to Houston.

John Moran and David Chen at Macquarie looked at multifamily (MF) and commercial real-estate (CRE) markets in Houston in a note on Friday.

The analysts say there has been much “handwringing” over the banking sectors’ loan exposure to oil and gas companies but there could be more serious ripple effect.

“We have cautioned that second-order fallout, particularly around MF/CRE in ‘oily’ MSAs [metropolitan statistical areas], is potentially more troubling than energy credit per se,” the note said.

It added [emphasis ours]:

Recent economic data, anecdotal evidence, CRE contacts, and REIT/builder commentary suggest a more pronounced Houston slowdown may be materializing, with increased pressure on lease economics driven by: (1) free rent/tenant concessions, (2) fewer tenants/less demand, (3) new completions, and (4) an elevated sublease mrkt.

The Rest…HERE

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