Commercial Investment Real Estate November/December 2017 | Page 14

CCIM
Q& A
Career Chameleon
by Sarah Hoban
W
12
November | December 2017
CIRE: Can you discuss some challenges in Austin’s
current market?
Nelson: One of our biggest is real estate tax increases. Since
2015, our county appraisal offices have become more aggressive
about getting the tax values closer to the market value.
In some of the hotter areas of Austin, retail tenants are
concerned because of these massive tax increases. We put
together a prospecting campaign earlier this year to get feed-
back from owners.
One of my clients had to move three retail tenants out of his
shopping centers; the tenants just couldn’t pay the increase, which
was as high as 50 to 70 percent during the last two or three years.
If you’ve got a tenant who expects to pay per a rent schedule,
its margins are in balance with that. If you give the tenant a
50-percent increase in property taxes, the retailer just can’t
handle it. In all candor, base rents in hot areas have to flatten
a little bit.
CIRE: You work with a lot of 1031 exchanges. How does
that work in this market?
Nelson: Many properties have been traded during the last few
years in Austin, resulting in a limited supply for sale now.
COMMERCIAL INVESTMENT REAL ESTATE
ith a 2015 population growth rate of 3.15 percent,
Austin, Texas, is the fastest growing large city in
the U.S. It’s consistently ranked high on lists of the
best places to live. Major draws include a vibrant
music and culture scene, a robust high-tech industry, and the
University of Texas.
“I do think Austin is a good market,” says Nick Nelson,
CCIM, principal at Longbow Real
Estate Group in Austin. “One interest-
ing component: Millennials represent
approximately 24 percent of the Aus-
tin MSA, according to Esri. As they
move into homes, they need to furnish
them, and that helps retailers focused
on those products, as well as restaurants
and other businesses.
“There are many fearless entrepre-
neurs here. That creates opportunities
for technology companies to come in
Nick Nelson
and thrive.”
CIRE talked to Nelson about the opportunities — and chal-
lenges — for commercial real estate in the Texas capital.