2014 corpus christi review - texas a&m university · christus spohn health systems hospital...

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Corpus Christi 4Q14 Multifamily Overview

YOC 4Q14 Rent/Mo. 4Q14 Rent PSF4Q14

Occupancy3Q14 Rent/Mo. 3Q14 Rent PSF

3Q14 Occupancy

2Q14 Rent/Mo. 2Q14 Rent PSF2Q14

Occupancy

2000+ $997 $1.014 96.3% $964 $0.985 96.4% $997 $1.012 96.0%

1990's $923 $1.041 94.7% $981 $1.100 96.6% $915 $1.021 94.3%

1980's $838 $1.071 93.5% $835 $1.066 94.7% $818 $1.043 95.7%

1970's $777 $0.961 95.4% $781 $0.970 96.0% $784 $0.971 95.7%

Pre-1970 $774 $0.892 95.0% $760 $0.876 94.2% $764 $0.880 94.8%

Bedroom Type 4Q14 Rent/Mo. 4Q14 Rent PSF4Q14

Occupancy3Q14 Rent/Mo. 3Q14 Rent PSF

3Q14 Occupancy

2Q14 Rent/Mo. 2Q14 Rent PSF2Q14

Occupancy

Efficiency $596 $1.262 90.5% $621 $1.005 95.8% $560 $0.998 95.0%

1BR $751 $1.108 94.3% $756 $1.315 95.5% $740 $1.203 95.4%

2BR $903 $0.963 95.1% $904 $1.118 95.1% $899 $1.092 95.6%

3BR $1,089 $0.915 96.4% $1,025 $0.966 96.6% $1,090 $0.959 96.3%

Totals $855 $1.007 94.8% $850 $1.005 95.5% $848 $0.998 95.6%

Source: MPF Research 4Q14 Corpus Christi Apartment Market Report

4Q14 3Q14 2Q14

ARA | Fourth Quarter 2014

• With an overall occupancy rate of 94.8% the Corpus Christi multifamily market remains one of the nation’s top performers. Given the diversification of Corpus Christi’s employment base, the explosive growth surrounding the Port of Corpus Christi and Eagle Ford Shale, and underlying strength of the market, occupancy rates are expected to remain strong in the long term.

• Average rental rates in Corpus Christi were $855/mo., or $1.007 PSF in 4Q14, representing a 0.7% quarterly decrease and a year-over-year increase of 1.7%.

• According to MPF Research’s permit-based model, completions totaled 319 units during 4Q14 with a quarterly absorption of 171 units.

• Based on ARA Secondary’s internal analysis, there are currently three conventional projects under construction and another five properties proposed as of January 2015. Four of these properties fall within Corpus Christi’s South Side, two in the Bay Area, one in Ingleside, and one in Northwest Corpus/Calallen.

2014 CORPUS CHRISTI REVIEW

Multifamily Fundamentals

Real EstateInvestment Services


• The average home price in Corpus Christi stands at $207,700 (Dec’14), representing an annual appreciation of 10.7%.

• The Outlets at Corpus Christi Bay, located at the intersection of Hwy-77 and Hwy-44, is under construction and is expected to create approximately 600 permanent jobs. Phase I of the project contains over 300,000 SF of retail while phase II will add an ad-ditional 150,00 SF to the outlet mall which is the first of its kind in the area.

• Throughout 2014, 294 commercial building permits were issued by the city of Corpus Christi with a total valuation north of $225M.

• R.S. Means, a leading construction cost consultant group, indi-cates that Corpus Christi residential and commercial construc-tion costs are 78% of the national average.

• For the fall 2014 semester, Texas A&M University Corpus Christi recorded an enrollment of over 11,230 students, marking the highest enrollment in the University’s history. The university has adopted a strategic plan knows as Momentum 2020, which in-cludes a goal to attract 15,000 students within the next five years, implying that student enrollment could double by 2025.

• Corpus Christi’s unemployment rate registered at 4.7% in Dec’14, compared to 6% a year earlier, which is approximately one per-centage point below the national average of 5.8%.

• Over the past year, the Corpus Christi MSA has added roughly 5,400 jobs, an annual increase of 2.8%. This can be compared to the 2013 job growth of 3.7% which led the nation (second only to Midland and the Permian Basin). Over the next year, the submarket is expected to continue this trend with 3.2% job growth projected in 2015.

• Current single family inventory of 4.8 months (Dec’14) is the lowest seen in decades. This can be com-pared with 5.2 months at this time last year, 6.9 months in 2012, and 9.1 months in 2011.

Market Drivers & Employment Highlights

Company Product/Services Number of Employees

Corpus Christi Army Depot Helicopter Repair 6,500

Corpus Christi ISD School District 5,178

Christus Spohn Health Systems Hospital 5,144

H.E.B. Grocery Company 5,000

City of Corpus Christi City Government 3,171

Naval Air Station Corpus Christi Flight Training 2,822

Bay, Ltd. Heavy Fabrication 2,100

Driscoll Children's Hospital Children's Hospital 1,800

Del Mar College Junior College 1,542

Corpus Christi Medical Center Hospital 1,300

Nueces County County Government 1,034

Texas A&M Corpus Christi University 991

Source: Corpus Christi Regional Economic Development Corporation

Corpus Christi MSA Top Employers

18%

16%

16% 14%

13%

8%

5% 4% 4% 1%

Corpus Christi Employment Profile Trade, Transportation, & Utilities

Government

Education and Health Services

Leisure & Hospitality

Mining, Logging, and Construction

Professional & Business Services

Manufacturing

Other Services

Financial Activities

Information

Corpus Christi Employment & Single Family StatsCorpus Christi Employment

Nov'14 T12 Nonfarm Employment (Total, Thousands) 195.3

Nov'14 T12 Job Growth (Total, Thousands) 5.4

Nov'14 T12 Job Growth (% Increase) 2.80%

Dec'14 Unemployment Rate 4.7%

Corpus Christi Single Family

Single Family Housing Inventory (Dec'14) 4.8 Months

Dec'14 Average Single Family Home Price $207,700

Dec'14 T12 Single Family Home Price (% Increase) 10.7%

Source: BLS gov December 2014 Preliminary vs December Seasonally Adjusted Total Nonfarm, Recenter.tamu.edu for Housing Inventory



• 45’ deep water port (authorized to 52’) with 40 miles of ship channel spread over 25,000 acres of land• 42 miles of rail consisting of three Class 1 railroad connections• 5th Largest Port by Tonnage – 83 million tons of cargo annually• $13.1 billion dollar economic impact on the state• Closest port to the explosive Eagle Ford Shale and 150 miles from the U.S./Mexico border

• Supports over 65,500 jobs in the state of Texas;13,746 direct jobs with an average salary of $49K• Between 2014 and 2018, the Corpus Christ Port District is expected to see over $22 billion in capital projects, creating an addition-

al 2,500 construction and craft jobs each year through 2018, and several thousand permanent jobs once complete. • Cheniere’s LNG export facility alone would support an estimated 8,000 permanent jobs annually, 225 facility jobs, and create 1,800

construction jobs over the next five years• EPA recently green lighted M&G’s $1 Billion Chemical plant which will create 3,000 construction jobs, 250 facility jobs, and 700

support jobs for the area

Port of Corpus Christi/Ship Channel

Company FacilityInvestment ($

Million)Operation Year Permanent Jobs

TPCO Steel Mill $1,300 2014-2017 800

OxyChem Propane Distribution $75 2015 TBD

LyondellBassel Ethylene Plant $400 2015 TBD

Voestalpine Natural Gas Reduction Plant $770 2016 150

M&G Resins PET Resin Plant $1,100 2016 250

CCI Condensate Splitter $500 2016 35

Magellan Midstream Partners Condensate Splitter $400 2016 110

OxyChem Ethylene Plant $1,400 2017 150

Cheniere LNG Plant $12,000 2018-2019 225+

Valero Energy Corp. Crude Distillation Tower $730 TBD TBD

Source: Corpus Christi Regional Economic Development Corp. & Port of Corpus Christi

Port of Corpus Christi Major Industrial Developments 2014-2019

Economic Impact of the Eagle Ford Shale on Corpus Christi

Economic Impact* 2013 2023 2013 2023 2013 2023

Output $11,830,469,550 $24,313,461,300 $282,179,425 $1,300,532,507 $87,757,429,832 $137,428,984,102

Employment, full time 22,986 20,755 1,487 2,136 154,984 196,660

Payroll $1,263,650,613 $1,172,001,111 $88,476,602 $135,336,237 $5,639,684,182 $12,078,708,391

Gross Regional Product $4,183,007,505 $7,354,890,222 $132,695,070 $393,959,952 $42,832,671,293 $72,794,426,994

Local Govt. Revenues $108,937,116 $201,020,516 $2,966,784 $6,999,740 $2,218,877,342 $4,073,239,614

State Revenue Including Severance Taxes $104,903,356 $197,561,269 $2,699,259 $6,610,505 $2,214,664,000 $4,098,369,070

*Includes direct, indirect, and inducted impacts

Source: IMPLAN. Elaboration CCBR

Nueces County San Patricio County Total 21-County Area



37

35

286358

44

79

8932985

1074

1634

1694

665

43

17

13

24

57

2444

665

24

3386

763

2292

70

Nueces Bay

NORTHWEST CORPUS CHRISTI

CENTRAL CITY

PORTLAND

SOUTH SIDE

FLOUR BLUFF

BAY AREA

Corpus Christi Bay

Oso Bay

Rincon Bayou

Sunset Lake

44

407

544

286

357

358

Naval Air StationCorpus Christi

Texas A&MCorpus Christi

La Palmera

Del Mar CollegeEast Campus

Del Mar CED

Del Mar CollegeWest Campus

Corpus ChristiInternational Airport

Del Mar CollegeNorthwest Center

• Historically, major WTI price declines have been attributed to an international conflict or reces-sion whereas this time around the drop in price is a result of an oversupply. With tailwinds from a surging national economy, crude oil prices are expected to rebound quickly from the historically low levels seen in 2014.

• Texas oil plays including Permian and Eagle Ford basins have some of the lowest break-even prices in the nation in the $50-$65/bbl range – Goldman Sachs expect the Texas Eagle Ford and Permian shales to grow 29.1% from 2014-2016, leading US growth despite price declines.

• The three largest oil producing basins (Permian/Eagle Ford/Bakken) break-even points are all well below today’s oil prices. The Bakken shale play is a 10% profit for Exxon at $40/bbl.

• Low natural gas pricing has spurred a massive construction cycle along the Gulf Coast – Merrill Lynch projects natural gas demand to increase by 18% over the next five years.

• The EIA forecasts US output to be 9.5 million bbl in 2015, the highest since 1970.• Energy imports accounted for 32% of liquid fuel consumption in ‘13, down from 60% in ‘05. This

number is projected to drop to 21% in ’15.• Many companies have hedged oil prices via futures locking in profits for years to come.• Technological advances have allowed companies to produce oil much cheaper than before. The

oil industry is contemplating a second wave of fracking, or “re-fracking” for 50,000 existing wells which would save nearly $6 million per well compared to drilling new.

Bank of America Merrill Lynch’s Global Energy Weekly (1/6/15): -WTI will reach $82.00 by 4Q’15 (2015 average price -$72.00)

Deutsche Bank Markets Research Team’s 2015 Capex –A Moving Target (1/6/15): -2015 WTI Estimate (average) -$67.50

T. Boone Pickens Fox Business News Interview (1/5/15): -Predicted prices would return to $100 within 12-18 months

S&P Oil Price Assumption Update (1/6/15): -WTI Prices of $65 in 2015, $70 in 2016 and $80 thereafter

Current State of the Oil Market

David [email protected]

Matt [email protected]

Matthew [email protected]

ARA Houston

Brandon [email protected]

Zach [email protected]


Russell [email protected]


Thomas [email protected]

Adam [email protected]

Jeff Patterson512-637-1296 Direct512-925-7700 Cell

[email protected]

901 S. MoPac ExpresswayBuilding II, Suite 275

Austin, TX 78746512-342-8100 Main512-637-1740 Fax

www.ARAusa.com

Kelly Witherspoon512-637-1298 Direct512-968-1989 Cell

[email protected]

Corpus Christi MSAARA Multifamily Market Summary

ARA Central • 901 South MoPac Expressway • Building II, Suite 275 • Austin, Texas 78746 • www.ARAusa.com

We invite you to contact us for a confidential financial

analysis and valuation of your multifamily property including rent comparables, sales comparables, insurance and tax information, and other market specific data.

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MARKET OVERVIEWMidway through 2012, the Corpus Christi MSA was reporting an average occupancy of 95.9%, a sizeable increase from the 4Q-2011 reported occupancy of 93.8% and the highest occupancy in over seven years. Average market rent for the entire MSA was $753 per unit, or $0.91 psf, with units averaging 824 square feet. When factoring in concessions, the average effective rent was $740, or $0.90 psf, for a 1.78% disparity in effective vs. market. The multifamily fundamentals continue to strengthen, following a familiar trend evidenced in the last twelve months; decreasing concessions, increasing occupancies and same-store rents. Same-store rent growth, from 4Q-2011 to 2Q-2012, was 2.29%. The annual rent growth, when combined with 2Q-2011 to 4Q-2011 figures, was 3.05%. Expansive growth in the Eagle Ford Shale, a limited multifamily supply pipeline, as well as other large developments taking shape in the MSA continue to fuel the demand for multifamily housing in the region. Concentrating on multifamily communities over 50 units, a total of 21,690 units were surveyed during the reporting period.

According to Trepp, a company that tracks CMBS debt, the Corpus Christi MSA will have approximately $78.5 million in debt that will mature within the next four years, with 64% of that balance maturing within the next two years. This volume represents 38.7% of the total CMBS loans in the MSA, making up 34.2% of the total loan amount outstanding. The total outstanding principal balance of CMBS debt in the area, as of July 2012, was $230 million, secured by 31 different multifamily properties. Two CMBS loans were paid off and two more were originated since the beginning of 2012.

MARKET RENTS & OCCUPANCYProperties built after 2000 carried the occupancy torch during the reporting period at 96.9%, with no properties offering concessions. With a total of 2,801 units, roughly 13% of the total inventory in the MSA, the 2000 vintage’s effective and market rents averaged $994 per unit, $1.08 psf, while units

2Q 2012Corpus Christi MSA 2Q 2012 Market Summary by Unit Type

Unit Type

No. of Units

Avg. SFper Unit

AverageEffective

Rent

Average Market

Rent

%Conces-

sions

Effective RentPSF

Market Rent PSF

Eff. 433 472 $525 $535 -1.84% $1.11 $1.131/1 9,776 670 $642 $658 -2.42% $0.96 $0.982/1 4,509 883 $709 $722 -1.81% $0.80 $0.822/2 5,140 982 $886 $897 -1.27% $0.90 $0.91

3 Bed 1,689 1,135 $912 $920 -0.93% $0.80 $0.814 Bed 143 1,212 $1,771 $1,771 0.00% $1.46 $1.46

Totals/Averages: 21,690 824 $740 $753 -1.78% $0.90 $0.91

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$0$200$400$600$800

$1,000$1,200$1,400$1,600$1,800$2,000

Eff. 1/1 2/1 2/2 3 Bed 4 Bed

Avg. Effective Rent Avg. Market Rent

Avg. Effective Rent PSF Avg. Market Rent PSF

continued on reverse...

CORPUS CHRISTI BAY

77

77

631 2512 361

44286

286

70

2444

43665

Corpus ChristiInternational

Airport

358

358

22

361

37 181

Texas A&MUniversity-Corpus Christi

Corpus ChristiNaval AirStation

CBD

CORPUS CHRISTI

CORPUS CHRISTI MSAMULTIFAMILY MARKET SUMMARY

ARA - CENTRAL REGION901 S. MoPac ExpresswayBarton Oaks Plaza II, Suite 275Austin, TX 78746Tel: 512.342.8100 | Fax: 512.637.1740

KnowledgeProcess Relationships

MARKET RENTS & OCCUPANCY, continued

averaged 917 square feet. The second highest occupancy was the 1990’s vintage assets at 96.4%, with a total of 1,319 units surveyed, the smallest inventory in the market. Average effective and market rents were $950 per unit, $1.03 psf, with units averaging 925 square feet. Demand for newer product continues its strength as none of the 1990’s and 2000’s vintage communities were reportedly offering specials at the end of the 2Q-2012. Next in the occupancy line was 1980’s vintage communities at 96.2%, with 6,584 units surveyed. Average effective rents were $717 per unit, $0.92 psf, while market rents averaged $735 per unit, $0.94 psf, for a disparity of 2.46%. Units averaged 782 square feet, the smallest average unit size in the market. Occupancy for 1970’s vintage communities was 95.4%, with the largest inventory of 6,885 units, 32% of the multifamily inventory in the MSA, with units averaging 808 square feet. Effective rent averaged $676 per unit, $0.84 psf, with market rents of $694 per unit, $0.86 psf, for the largest reported concession difference of 2.53%. 1960’s vintage communities had an average occupancy of 95.3%, with a total of 4,101 units surveyed. Units averaged 823 square feet, while effective rents were $641 per unit, $0.78 psf., and market rents of $654 per unit, $0.79 psf, for a 1.93% concession disparity.

Corpus Christi MSA 2Q 2012 Market Summary by Property Age

Unit Type

Occu-pancy

No. of Units

Avg. SFper Unit

AverageEffective

Rent

Average Market

Rent

%Conces-

sions

Effective RentPSF

Market Rent PSF

1960's and Prior 95.3% 4,101 823 $641 $654 -1.93% $0.78 $0.79

1970's 95.4% 6,885 808 $676 $694 -2.53% $0.84 $0.861980's 96.2% 6,584 782 $717 $735 -2.46% $0.92 $0.941990's 96.4% 1,319 925 $950 $950 0.00% $1.03 $1.032000's 96.9% 2,801 917 $994 $994 0.00% $1.08 $1.08

Totals/Averages: 95.9% 21,690 824 $740 $753 -1.78% $0.90 $0.91

94.5%

95.0%

95.5%

96.0%

96.5%

97.0%

97.5%

$0

$200

$400

$600

$800

$1,000

$1,200

1960's andPrior

1970's 1980's 1990's 2000's

Avg. Effective Rent Avg. Market Rent Occupancy

Rockport Oaks60 Units, Rockport

Built 1984

Corpus ChristiMSA

Listings

Windwood40 Units, Rockport

Built 1980

Sold Sold

Dolphins Landing218 Units, Corpus Christi

Built 1973

Under Contract

Bayshore64 Units, Aransas Pass

Built 1986

Sold

St. Laurent74 Units, Aransas Pass

Built 1973

Sold AvailableStoneleigh

348 Units, Corpus ChristiBuilt Ph I 2005 / Ph II 2008

Coming Soon!Summer House

136 Units, Corpus ChristiBuilt 1983

2014 corpus christi review - texas a&m university · christus spohn health systems hospital...

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