McCoy’s Building Supply is building a brand new building for their headquarters and it is going to be huge. The new building will be three stories high, and encompass 73,400 square feet. About 30 percent of this area will be reserved for future growth. McCoy’s has enjoyed a growth in revenue in the approximately 30 years its headquarters has been located in San Marcos. Annual revenue has gone from $14 million to over $565 million in that time.
McCoy’s has 84 stores and 2 plants scattered over five states in the south central area of the country: Texas, New Mexico, Mississippi, Arkansas and Oklahoma. The family owned building supply company has been in business since 1923, when Frank McCoy began his contract roofing business in Houston. Soon after, he became tired of big city life and moved everything to Galveston. His son, Emmett, became interested in the business in the 1940s and began offering building materials to the public consumer. In 1984, the roofing company was discontinued and McCoy’s gave itself completely over to the building supply business.
Lumber plays a big role in most construction projects and McCoy’s prides itself on its support of environmentally friendly business practices. They have a list of preferred companies with whom they do business - companies committed to sustainable building and forestry practices. They also partner with recycling programs such as the Rechargeable Battery Recycling Corporation and offer a service for the proper disposal and recycling of cell phones and several types of rechargeable batteries such as nickel cadmium, nickel metal hydride, lithium ion and those lead rechargeable batteries used in portable electronics such as laptop computers and cordless telephones.
The new headquarter building is expected to be completed and occupied by January 2009.
Plans are in the works to develop a 1,000 acre area northeast of Round Rock near the new Seton Medical Center and the Higher Education Center. The land is owned by the Avery family and they have partnered with the Waterstone Development company to begin a mix use development project in the area.
The project, named the Avery Center, calls for as many as 1,200 single family homes and 5,500 rental units. Townhouses, student housing, and higher end homes are planned, along with a 132 acre retail area which will include stores, restaurants and professional office space. Open space is planned, with a lake, trails and park areas, with 100 acres being set aside for this purpose. The plans also include a church, school, and a child care center.
The developer is working with Round Rock city officials on a plan for bus service for residents of the development to Seton, Austin Community College, the State University, and other places of study and employment.
The project is expected to take 10 to 15 years to complete and add $1.6 billion to the tax rolls. This area of Round Rock is one that is doing well developmentally, in spite of financial troubles that have slowed or halted other projects. The national real estate and credit crisis that has affected so much of the markets hasn’t had the same impact in the central Texas area.
Robert Wunsch, chief executive officer of Waterstone, is being picky about who he chooses to build the homes and rental units. He wishes to stay close to the vision that the Avery family has for their land and intends to maintain a high set of standards for construction and design. The houses will range in price from $180,000 to over $1 million.
Complaints about late payment, partial payment or no payment at all are starting to grow louder and more insistent as the California based developers face foreclosure and lien action on many of their projects in the central Texas area.
Just three years ago, Pacific Summit Partners entered the Austin development arena with a $100 million investment in land from southwest of Austin to Liberty Hill. They planned ambitious projects consisting of thousands of homes in four development sites: Highland Meadows, Lakeline Station, Fairways at Steiner Ranch, and Aviara. Now, Lakeline Station is headed for foreclosure, the 230 acre Liberty Hill land has been foreclosed and is back on the market, and construction seems to have stopped at both Aviara and the Fairways.
The theory is that Pacific Summit is taking its spectacular nose-dive in the wake of major real estate woes on the west coast, rather than any development slow down in the central Texas market. The Austin region remains fairly sheltered from the troubles affecting the rest of the nation. Still, financial problems with large development companies who do business in central Texas translates into trouble for local companies who supply building materials and local developers who partner with them.
Pacific Summit owes dozens of local contractors and suppliers for just about every aspect of home building, from major sewer, drainage and water systems and concrete for foundations and driveways to the small details and finishing touches such as carpeting, marble counter tops, and light fixtures.
Pacific Summit Partners is a group formed especially to develop properties in the Austin area. Formed of Pacific Century Group and Summit Partners, the partnership now looks toward a bleak future as it faces numerous liens and lawsuits for breach of contract and lack of payment.
First, the bad news. New home construction in the Austin area in 2008 is still far below where it was this time last year. Housing starts had been sliding since the third quarter of 2006, possibly a delayed reaction to the national house construction slump. The 2,814 new homes started in the second quarter of 2008 is 19 percent when compared with second quarter home starts in 2007.
Buyers are still skeptical and reluctant to make an investment in real estate while conditions remain so uncertain. In the second quarter of 2008, 2,728 new homes were sold, compared with 3,110 in the first quarter. This is down 19 percent from the same period last year.
It’s not only the buyers who are wary in the midst of this housing slump, either. Builders are concerned that prospective buyers can qualify for and obtain mortgages. Lenders, too, are cautious and have raised their standards. After the fiasco of sub-prime lending practices and loose requirements resulted in the current credit crunch, state governments and government mortgage guarantors have cracked down on lending practices.
Now, the good news. Housing starts in the second quarter, though lower than last year at the same time, are up from the first quarter housing starts of 2,303. This is actually a smart move on the part of home builders, who are want to keep their inventory low. There were 11 percent fewer vacant homes on the market at the end of the second quarter than the previous quarter.
And, for those who qualify, lending rates remain low and builders are willing to negotiate for bargain prices.
The United States Department of Commerce reports that overall construction spending has declined in May of 2008 by four tenths of a percent. Residential construction rates went down 1.6 percent in May, the same decline as in April. Non-residential construction rose slightly at three tenths of a percent, slightly less than the eight tenths rise in April.
Private construction rates fell seven tenths of a percent in May while public construction rose slightly at four tenths of a percent. This is after an unchanged rate in private construction and a slight fall of three tenths of a percent for public construction for April.
Home builders are understandably reluctant to start new construction while the market for new homes remains so soft. Also, the incidence of foreclosures continues to rise, putting more inventory on the market and making it that much harder to sell current houses.
Construction firms are putting their money into building hotels, motels and office space rather than the residential area. The home construction rate hit a 17 year low in May, with a seasonally adjusted rate of 975,000, compared with April’s start of a little over 1 million. Single family home starts came in at 674,000. Building permit applications came in at 969,000 in May, which is actually a little better than the 950,000 economists had been predicting.
The Dallas based Trammell Crow Co. is heading a partnership to redevelop the five block area between Second Street and the Seaholm Power Plant and includes the Green Water Treatment Plant, right smack in the center of downtown Austin. Joining the partnership is Constructive Ventures Inc., based in Austin, and USAA Real Estate Company, from San Antonio.
This all-Texas team is looking at an ambitious project that will include 2.6 million square feet of office and retail space, for sale and for rent residential units, hotel and public spaces, as well as parking garage areas that will offer spaces for Austin Car Share and electric car recharge stations.
The partnership proposes major community improvements such as $500,000 toward improvements to Shoal Creek and a grant of public easement for completion of the trail running between Fourth and Fifth Streets. A pedestrian bridge is planned over Shoal Creek to connect the site with the Second Street District. Twenty-five percent of the rental residential units will be made affordable to lower income families. In addition, the group plans to fund public art and music programs and will create an endowment to fund a lunch time music series.
The project includes plans for local retail making up a bulk of the space in the Green Water Treatment Plant and Austin Energy sites. And the icing on this cake is that the firms are aiming for a sky high LEED Gold status for all the buildings, with designs that will reduce energy use up to 50 percent.
Construction is expected to begin in 2009.
It once was the American Dream to move out of that cramped apartment in the city to a spacious new home in the suburbs, leaving behind the noise and crowd for greener pastures, so to speak. As the price of a gallon of gasoline rises, more and more home owners are looking to the city as their new permanent destination.
Urban living is once again becoming the vogue. Commuters are finding it harder to shell out the cost of filling the gas tank for their daily drive and are looking seriously at homes closer to their place of employment. Urban revitalization is on the rise as people begin to realize the savings in transportation costs alone. A recent Caldwell Banker survey found that 78 percent of their clients were making the decision to move to the city based on the rising cost of gas.
The desire to make a difference in their impact on the environment was also cited. Our long love affair with petroleum products has most of the scientific community warning of impending severity of global climate change wrecking havoc on weather patterns and contributing to rising sea levels. As more of the population moves closer together, the number of gasoline burning vehicles on the road decreases, slowing the rise of carbon monoxide polluting the air and reducing the amount of wear and tear on the infrastructure.
Another side effect of moving closer to the job, recreation areas, and retail spaces is a healthier lifestyle as well, as these destinations are now within walking distance. Even new suburban communities are planned with this in mind - developers are adding amenities such as a community center or neighborhood pool, as well as retail and professional service space.
There is a troubling rise in home foreclosures in the Travis County area, causing some to believe the Central Texas region is not, after all, to be shielded from the real estate crisis hitting the rest of the nation.
In the first half of 2008, one out of every 133 homes in Travis County has succumbed to foreclosure proceedings, compared with the 2001 figures which show one in every 265 homes was foreclosed on. Over in Williamson County, one of every 95 homes went under foreclosure - another troubling rise when compared to one in 225 homes in 2001.
Some contend that the rise in foreclosures is simply due to an increased volume of homes in the area, and while “that is certainly one of the components’, other factors are involved, including the sub-prime mortgage scandal and heretofore lenience toward potential mortgagees’ financial situations. So says George Roddy Sr., who is president of Foreclosure Listing Service Inc., an Addison based company which traces foreclosure trends in some Texas cities. According to Roddy, the people bearing the brunt of the foreclosure pains are those whose homes are valued at under $200,000. “79 percent of the homes posted [for foreclosure] during the first part of this year [are] valued at under $200,000″, he reports.
Yet, the higher end is beginning to feel the pinch as well. Houses valued between $300,000 and $500,000 came under foreclosure at a rise of 44 percent compared with 2007. Foreclosures on homes valued at between $500,000 and $1 million increased 22 percent and those over $1 million were up 18 percent.
