Huckabee’s most recent on-demand webinars highlight the state of the market in three key areas: Bond Sales / Financing, Real Estate and Construction. The second of this series looks at the real estate market with a focus on selecting and purchasing land for new school buildings.
Our guest is George Curry of JLL, a commercial real estate firm. George has helped Texas public school districts locate and purchase land for dozens of schools (elementary to high school) over the last several years. George is joined by Gary Rademacher, a Principal at Huckabee, who has served as an architect for Texas school districts for nearly 30 years.
We’ve broken out each question for MORE Momentum #5: Real Estate below. You can view the webinar in its entirety by clicking here.
Introduction
Since the start of the pandemic, what are you seeing in the real estate market? Clients are asking how the pandemic will impact their ability to negotiate and purchase land. Is now a good time to buy?
There hasn’t been much of a change to this point. Up until March, the market was hot and Texas was doing well. It has certainly cooled some, but we haven’t seen any changes as far as land prices are concerned.
In DFW, we continue to have a good market. Globally, as far as Texas is concerned, DFW, Austin and San Antonio are steady, but Houston has taken it on the chin. They’ve been hit with a double whammy from the virus and low oil prices.
Advice for School Districts
Buy Buy Buy! The market has been strong over the past 3-5 years and prices are continuing to escalate, especially around major metroplexes. There may be a small window in the next 3-12 months where prices may not go down, but instead, may take a pause. It’s a good time to lock down sites which may go up in price over the next few years.
Working with Developers
Recently, developers seem more willing to donate land if they have a mega-site, somewhere between 200-500 acres for a development. However, with smaller acreage sites (100-200 acres), developers aren’t as willing to give land freely for schools. There’s been more resistance to donating land as homes sales have been strong.
Selecting the Right Piece of Land
The school site is important to school districts for many reason. When a school district is receiving donated land or purchasing land, they are making decisions about property that will serve them for decades. What should school districts focus on when considering a purchase?
People look for the best price or low cost, but I advise clients to get the right location. Get the best site near or in the right location and then try and get the best price you can. Some developers will go to a district and donate land, but the site is in a corner, or it’s too small or it’s got topography issues. This means that sometimes the free sites are the most expensive to develop. We try to focus on the best site in the development, and sometimes it doesn’t work out with donated land.
What else are you looking for?
Location is one of the most important things. We’ll meet with demographers and see where the growth is coming from. We’ll then search and try to find a site or multiple sites that could work in the area. Once you’ve identified a site, there are several things to consider: acreage, type of school and amenities, net usable acres, etc. It’s a good time to bring in partners, such as a civil engineer, to assess the site and estimate costs for development.
Additional Advice
Some of the most challenging sites have been the free or the “best deal” sites. Focus on the best site first, and then work on price. Price is about 3-8 percent of the total cost of a school, so you are dealing with a relatively small component of overall price. It’s critical to get it right. Having the right partners (real estate agent, civil engineer, architect) up front will help you down the road. Being diligent is important to respecting your taxpayers.
To learn more about JLL, click here.
About MORE Momentum
Huckabee’s MORE Momentum series highlights how our educational partners are investing their time, energy and focus to keep the momentum going during this unprecedented “pause.” We will explore themes related to bonds, planning, design and safety and security, among other topics that impact Texas public education. Follow us @HuckabeeInc on Facebook, Twitter, Instagram and Linked In, or complete the form below to get a first look as new content is released.
