Intro [00:00:02]: This is the Texas Land Guys Podcast.  Hosted by brothers Tim Dosch and Tom Dosch. With their partners David Marshall and Tripp Rich, they have built DMRE, the leading land brokerage in Texas. With decades of experience brokering deals between landowners and real estate developers, they take you inside the deals that move the market.

 

Tom Dosch [00:00:24]: Well, welcome to the Texas Land Guys Podcast. Today we’re going to pick right back up on a long conversation Tim and I were having about the overall market as we’re heading into the end of the year, looking at the 4th quarter and thinking about what we’ve seen throughout the year. If you missed part 1, feel free to go back and listen to that, and then you can pick right back up on part 2 here. It sounds like Houston is having a record year with $25 million in absorption because the Dallas market’s actually quite a bit bigger than the Houston market from an industrial standpoint. But Houston is having a record year.

 

Tim Dosch [00:01:05]: Yeah, it’s been pretty incredible. And we’re actually working directly with SpaceX to sell them some sites, representing sellers who are selling to them in an area that SpaceX is trying to buy up. So we’re, we’re seeing the investment in AI in this new infrastructure causing just massive increases in land values in the areas where they’re investing. I mean, we’re talking about a 5 multiple, 5x times the land value in some of these areas, which is pretty crazy. But on the industrial side, yeah, I would say probably 50 to 75% of what we’re working on and all the really big offers we’re making are all industrial sites. One of the biggest challenges in Houston, right now is a lot of the really good sites have a lot of problems. So there’s wetlands issues, there’s utility issues. We are seeing groups go to package treatment plants or well and septic to try and go faster and just not waiting for utilities because utilities are such a problem. But there’s those access problems, needing to get ramps in on the Grand Parkway or gain roads in. So that is hurting us a little bit from a timing standpoint. Some of these groups just can’t go that fast because they have to be able to have the site ready to develop. But we also are seeing some really fast timing. If a site is teed up and ready to go, then groups are— those are the fastest deals we’re seeing, like 60/30s on timing for those kind of deals. And the pricing has gone up, I’d say probably 40% this year, which is pretty incredible. I mean, we’re seeing even on really big sites, like almost 200-acre sites, seeing groups get into the $8 to $10 range on that size of site, which is— those are just huge numbers for what we’ve seen historically. And then on some of these smaller sites, they’re getting into the low teens range, kind of that $12, $13 range on some of those sites. So there’s a lot of activity. We haven’t really seen it slowing down. And even just talking, there’s a big deal we’re doing right now in Northwest Houston. It’s roughly an 80-acre site in a big international industrial developer has been under contract. And I talked to him yesterday and I was a little bit nervous with, this is the day that the 5-year’s running up like crazy. And he’s like, man, we just can’t wait to get this under contract. We’re already spending money. We have our engineers, we released them. They’re working hard on this deal and we’re ready to go. And so I think you’re seeing the developers look past some of the macroeconomic issues Because the story is just so good. And I think one of the problems in Houston is once the sites that are being done get done, you’re going to have to go even further out now to get new sites. And so what we’re seeing is the northern Grand Parkway, kind of northwest Grand Parkway, is getting all bought up right now. The only sites that are left are sites that are very difficult where there’s literally not even roads to them and there’s no utilities. And then now you got to go out, you know, kind of Waller, like, you know, 7 to 10 miles past the Grand Parkway, even that is starting to fill in. We’re seeing some pretty big deals happen out there. And so I think that’s maybe what they’re thinking is there’s all this absorption and it’s not like there’s that many easy sites to get done right now. And then we also have groups who have been able to sell some of their industrial deals and make a lot of money on those, and they’re redeploying that capital into new deals in Houston. So it’s been a really unusually strong market for industrial in Houston.

 

Tom Dosch [00:04:31]: Yeah. Yeah. That’s, it’s, you bring up a good point about just like the easy sites are probably gone and the, especially if you’re trying to build bigger bulk product.

 

Tim Dosch [00:04:40]: Yeah.

 

Tom Dosch [00:04:40]: And that’s been the story. I know we started the year on the podcast saying that was a prediction, was that we were going to see a lot more of that bulk product. And that’s what we’ve seen. I mean, all year, it’s even groups that traditionally didn’t do bulk product. They’ve been trying to do it. They’ve been looking for those sites and Obviously it means you pretty much have to go pretty far out into the, into these, you know, further out areas like Denton and Sanger and activity in Cleburne and Waxahachie. And of course McKinney and Melissa, those areas have exploded with growth. South Dallas, South Fort Worth, all these areas are getting activity. And in a lot of cases there’s like utility challenges, zoning challenges, you know, they’re just not, easy sites to figure out. And in the meantime, as developers have been scrambling to get these positions, the leasing activity’s been incredible. And so you’re seeing these major distribution centers get signed up. And so a lot of inventory coming offline. You know, developers that thought they were going to be holding projects for longer before they’d be able to lease them are having to subdivide buildings or selling, you know, leasing the whole thing. So that’s been so strong. And I think, Tim, you hit it. The question I was going to ask was, do you see it slowing down anytime soon? Because that’s kind of the big question. It’s been unbelievable how strong— I’ve been telling our guys here, I think this is the hottest, strongest industrial market we’ve ever had in, for sure, DFW and Houston. I know Austin’s been kind of slow and starting to come back, but it’s the strongest market we’ve had. It was strong coming out of COVID and it kind of cooled off for maybe 12, 18 months, and then it’s just come roaring back over the last, I’d say probably What do you think? Is it the last like 18 months or so that it’s really started to like— it went, it was kind of gradual and then it just like spiked?

 

Tim Dosch [00:06:25]: I think so. Yeah. 18 to 24 months. It’s hard because, you know, in Houston we’re always used to these cycles. And so it’s really hard to be like, oh, it’s going to keep going another 12 months or 24 months. What’s interesting though, is the setup is pretty interesting because I think if you have really strong GDP growth, you have all this investment that’s happening around Houston. I mean, we have a lot of these biotech companies moving to Houston and doing these massive developments. Manufacturing really seems to be coming back to Houston. You have the TeraFab deal that’s basically right outside Houston in Grimes County that I think is just going to bring a lot of vendors and a lot of other companies around it. Just a massive economic impact with what Elon’s doing there. You have his solar panel manufacturing deal down in Needville that’s going in. So you have all the data centers. There’s just all this economic growth. I’m wondering, could this continue longer? Maybe it is giving me another 12 or 24 months. I think the problem we’ll run into in Houston is, you know, where do— where’s the next round of deals? You know, how do you replace all the deals that have just happened for it to continue? And maybe we just keep seeing deals go further out on Waller, Maybe further out I-10, jumping out past Brookshire and just keep going out that way. I definitely think we’re going to see a lot of smaller industrial deals. We’re working on some industrial deals now that are in the 4 to 10-acre range. And so I think you could see a lot of these smaller buildings that start to fill in these better markets like Near Northwest, along the Beltway or inside or outside the Beltway. We’re seeing groups buy, in some cases, up to 15 acres. They’re paying these $12 to $15 a foot for industrial land, and if they can get it ready to develop, they’ll close quick. And so I think we’ll see a lot of that just kind of fill in these different markets.

 

Tom Dosch [00:08:19]: Well, I think that it would be, and you’re right, I always think in cycles too, just after all the time I spent in Houston. It’s funny, you’re never comfortable when the market’s good. You’re always waiting for it to turn. And when the market’s bad, you’re always feeling like it’s never going to get better.

 

Tim Dosch [00:08:34]: It’s hard.

 

Tom Dosch [00:08:35]: It’s hard on that end. But I feel like it would be the bubble in the AI market. That’s what would halt things. And, you know, and it could be, and that could be somewhat related to regulation. I think if regulation causes a major slowdown, that could almost be the bubble. Because like you said, these investors that are used to these returns, all the debt these companies have taken out, they have to stay up. They have to keep going. They can’t have their revenues hit. So you do have like, you know, Governor Abbott putting a freeze on data center development. We both believe that’s going to change after the midterms and that will be back on. But if you had something like that in Texas that lasted where you couldn’t permit these data center developments, that would have a direct impact on just the health of the expansion of our industrial markets. Absent that, if the AI boom continues, Texas is perfectly positioned. I mean, with Elon’s investment that you’re talking about and with the number of data centers that we have, the infrastructure that we have, the land that we have, I mean, we’re so well positioned to benefit from that. And I think we’ll see more and more companies wanting to relocate here and come here because of that. So, but that’s probably the big question in my mind, because as you’re talking, I’m like, man, we need to go buy some more industrial land. I mean, that’s definitely what we should be doing at Ascent is buying more industrial land. But in the back of your mind, you’re also thinking, you know, you don’t want to go stretch on something as an investment and be buying at, at what could be, you know, a turning point in the market. We just don’t know that. That’s always a chance, always a chance you take.

 

Tim Dosch [00:10:06]: Yeah. I think what’s interesting is if we do have AI regulation, which is probably likely at some point, I think that there’s a benefit that the next 2— you have 2 more years of Trump, or as he says, 2 and a half more years. So I don’t think he’s going to want to regulate that much. Now, you, you may have a Democratic House and Senate that tries to, to regulate things a little bit. I don’t know how much they’ll actually be able to do with Trump in office, but I don’t think regulation is actually going to stop the AI boom because I think what regulation is going to mean is the, the, these labs cannot release extremely powerful models, you know, that they could produce biotech weapons or be a cybersecurity risk, but it will not mean that they can’t release what they’ve already released for the most part. Just something that is very effective economically that can be used in all kinds of industries, but it has a sandbox around it where it can’t cause problems. And I think even more capable models that have come out right now, I definitely am concerned about that from the standpoint of eventually them wanting to regulate things, to regulate the messaging and control what it can say. from a politically correct standpoint. I think that’s a major concern, but I don’t know that it means that you’re going to see the AI boom stop. I think that there’s an incredible capability that hasn’t permeated the market yet, mainly because a lot of industries don’t really know how to use it. But I think that people are— there’s this rush to adopt it, and I think that that is going to really gain steam over the next 2 or 3 years, no matter what happens with regulation, where they’re going to try and implement as much as they can throughout Industries. And now if you look at both Anthropic and OpenAI saying that they want to work with companies to share their revenue, if instead of just selling them tokens, if they can come in and help those companies integrate AI into their company. And so whether that happens that way or just companies get more sophisticated in how they use AI throughout their entire company, I think you’re going to see a lot of economic growth and just more value created in that space. I think the real question is, can you keep up with the debt? I mean, there’s so much debt and these companies are very profitable, but are they going to be profitable enough and is it going to increase enough or is so much of that been priced in where they just can’t keep up without the cost of that debt? And I could see that being an issue that slows them down more than regulation.

 

Tom Dosch [00:12:28]: When you’re thinking about, as you were talking, I was just thinking about landowners. that, you know, in 2021, ’22, a lot of landowners should have sold and they didn’t because the market was so hot. And it was just making me kind of think about like a landowner that’s been holding out for a data center to buy their land.

 

Tim Dosch [00:12:45]: This is—

 

Tom Dosch [00:12:48]: Maybe this is just a dumb question, but in your mind, if you were advising a landowner, you know, right now with— let’s just say they think their land could be a good data center site. Maybe they’ve gotten some calls, but there’s no, there’s no confirmation that there truly is power there or enough power there. Maybe there will be in 5 years, something like that. But, you know, but they also could sell for industrial at a reduced price. How would you help the landowner, like, think, think through that? Just almost trying for us thinking ahead and like, what do we think data centers are going to be like in 5 years? Are they going to mostly be in space? Are they, are they going to be as prolific here? And I’m just— again, it’s— this is purely hypothetical, but I had the same thought. It’s easy to think that things are always going to stay really good and I’ve got this property that’s like so valuable. But then we’ve seen the other side of that too, where the market can adjust and it doesn’t come back.

 

Tim Dosch [00:13:40]: Well, you probably have the same thing happen in Dallas, but I have people contact me all the time, you know, like I’m a data center company, I’m trying to tie up sites. Can you help me go tie up sites? And I’m nice, but I’m like, no, I’m not going to help you because it’s just— it’s a waste of time. Especially right now, like with what you said with Governor Abbott, it’s not that there’s a problem with data centers or he doesn’t want data centers. What he’s saying is there’s literally like 5 or 6 times the number that we could ever support on the grid. I mean, there’s like hundreds of them that are being proposed. A lot of them aren’t even real deals. People are just getting in line and proposing their site.

 

Tom Dosch [00:14:13]: Yeah.

 

Tim Dosch [00:14:13]: Either their site or developer has it under control and they want to do a data center on it. So, you know, so much of how we advise clients depends on their situation. And so my question is, are you like a farmer that you don’t need to sell, you’re in ag and you could wait 20 years? But in your scenario, if someone could actually do an industrial deal, probably at a really good price, that’s the real deal. And the data center is probably the pipe dream.

 

Tom Dosch [00:14:39]: Yeah.

 

Tim Dosch [00:14:39]: And so it probably isn’t going to happen. If it is going to happen, it may not happen for years. And I was just reading, Elon came out yesterday and he’s been saying this for a long time, but he’s saying that 100% compute is going to be in space. And so I think when you look out 5 to 10 years, not just Elon, but Google, all the money is going to go invest in space to do the Dyson swarm and have all these satellites and data centers. And when you look at how he’s been able to advance the cost of sending these rockets into space, reusing rockets, all that is so transformational. I think you’re right. I’d be very careful if you’re thinking I’m going to be long on data centers, data center development, you know, and that’s my only exit I’m going to take and I can still make good money selling the industrial deal. I talk to sellers so often about time value of money. If you can make a good sale right now, go reinvest that money now in something like SpaceX or maybe something more diversified, but maybe include SpaceX because it’s probably a good buy right now. And then have that be compounding for the next 10 years. Or you can make this bet that if I hold for 10 years, I can make more money and maybe it’ll work and maybe it won’t, but it’s pretty risky.

 

Tom Dosch [00:15:53]: Go buy the 10-year.

 

Tim Dosch [00:15:54]: Yeah, that’s right.

 

Tom Dosch [00:15:56]: It’s up. It’s up again. I was just looking at it. It’s at 5.217 right now. So it’s, it’s up.

 

Tim Dosch [00:16:00]: Wow.

 

Tom Dosch [00:16:01]: Quite a bit again today already. And so, and that is crazy to think if you went and bought 10-year treasuries, your money could just sit there at that rate.

 

Tim Dosch [00:16:10]: Yeah.

 

Tom Dosch [00:16:11]: Now that’s obviously, it’s a 10-year treasury, but that’s for, you’re right. A lot of landowners, I don’t, it would depend on probably the sophistication and how comfortable they are investing, but opportunity cost doesn’t come into the equation very often. And unfortunately, people do tend to wait sometimes years before making a decision. And Um, I remember working with a large nonprofit in Houston. It was a listing we worked on together. And I remember they said, hey, if we can sell it for this much money, we’re gonna, um, we’re gonna— it was, it was like excess land. They’re like, we’re gonna put it in our foundation and it’ll— they’re like, it’ll get like a 5 to 7% return and then we’ll just pull down on it as needed. But it was like, you do the quick math on that.

 

Tim Dosch [00:16:57]: Yeah.

 

Tom Dosch [00:16:57]: And it’s like, do you know what you’d have to sell the land for 3 years from now to get to that same price?

 

Tim Dosch [00:17:01]: Yeah.

 

Tom Dosch [00:17:01]: It’s like crazy. It’s like, take the money now and invest it at 5 to 7%. Let that compound. I mean, anyways, that, that was, that was really, that was like right after I got into the business and I was like, wow, that’s an interesting way to look at it. Instead of just saying like, well, it’ll appreciate more over time. I’ll sell it for more in the future. You could actually go reinvest that money.

 

Tim Dosch [00:17:20]: Well, think about it, Tom. It’s so crazy. And I think it’s just human nature, but so many people, a huge amount of their net worth is a lot of times in their, in their sight. you know, this land, and maybe it’s because it was inherited or it was a, their businesses on it, or maybe it’s their homestead that it became super valuable. But we know from a financial standpoint, you don’t want to have all your eggs in one basket. You want to be diversified, at least to some extent diversified. But for a lot of people, maybe 80%, 60 to 80% of their net worth is tied up in this site.

 

Tom Dosch [00:17:49]: Yeah.

 

Tim Dosch [00:17:50]: And then I deal with so many families where it’s like, man, we just can’t leave any money on the table. We got to just top the market. It’s, Yeah, we want $10 a foot and we’re getting $9.50 a foot. We need that extra $0.50. We just got to kind of get there, you know, or it’s the famous, you know, 3 years ago someone mentioned over the phone they could pay $12 a foot and, you know, $9.50 a foot just isn’t quite enough. Maybe we should get $12. And people go through these mental gymnastics and then you talk to them 5 years later and it’s the same conversation. You’re like, man, if you had sold at $9.50 a foot to like a super real buyer back then.

 

Tom Dosch [00:18:22]: Yeah.

 

Tim Dosch [00:18:23]: And you’ve gone and diversified your money, not just been in one asset. Maybe you’d, I mean, put it in the S&P. Look what the S&P’s done in the last 5 years. You know, you would be in such a better place. But there’s this psychological thing, and I deal with it too, and I’m selling a stock, or even sometimes when we have a deal we own, and you’re thinking, man, I just need to get that little bit more because it’ll make me feel better about the deal if I get a little bit more. But it’s not a smart financial decision because you should take the money and then go reinvest it. is something that makes more sense.

 

Tom Dosch [00:18:51]: Yeah, that’s a really good point. And we definitely have those conversations a lot. We’re working with a couple families right now. And I think what’s hard about land is these families really want to sell. A couple of them, it’s their retirement. And now with what we’re talking about, just some of the headwinds in the market, you might be the site that these headwinds have nothing to do with your site. So you’re fine and you can close. But some of these buyers are struggling and fighting to make these deals happen right now. And it’s tough because if you’re the seller and it’s like your retirement, everything’s riding on this.

 

Tim Dosch [00:19:20]: Yeah.

 

Tom Dosch [00:19:21]: And it’s not as easy as I got an offer and that means the money’s in my pocket. It’s like from the offer to closing is a long way. And so especially when you have the opportunity to sell when the market’s hot to a good buyer, it’s like take it because that, if that’s pretty much like liquidating that asset and getting the capital, the cash out and then being able to go invest it in something, that’s a lot better than getting in position when you have to sell. And that’s kind of where we started today was you get in a position where you have to sell and now you’re up against the wall and now it’s like, well, debt’s due November 15th. It’s like, there’s not a lot of options. You’re either asking for an extension from the bank or you’re really taking it on the chin. So I think that’s a good point. And that’s a— you can’t take emotions out of all of this, even the whole 10-year. Like we don’t know, obviously where it’s going to be next week or where it’s going to be early next year. There are expectations around the Fed that we all knew there’d probably be 2 rate increases. We knew that within last quarter or so, we knew that was coming. Now it looks like there could be 3 from the one we had and 2 more, but then there’s also an expectation they’re going to bring it back down next year and start coming back the other way. But we don’t know that because it’s really going to depend a lot on these inflation numbers.

 

Tim Dosch [00:20:36]: I think what’s interesting is how close greed and fear are together. And I don’t want to disclose too much right now because we’re dealing with a situation with a seller that they’re going to get literally maybe 5 times what their property’s worth or was worth when they— what they thought maybe 6 to 9 months ago. Maybe they’ll get 7 times and they can’t make a decision because they’re worried that maybe they could get 9 times.

 

Tom Dosch [00:21:02]: Yeah.

 

Tim Dosch [00:21:02]: You know, and it is, so part of it’s like, there’s this greed aspect of it of, I gotta get more, you know, I could get more. It could be hundreds of thousands of dollars more in this case, but that’s closely combined to this fear element of what if there’s a lot, a perceived loss, you know, what if I don’t get that money that I could get? And so much of, I think, whether it’s a family or even a, you look at a corporation, whether it’s a fund or a developer, what does this transaction say about me? And people like think that way. Like, this says something about me. I gotta hold on because this admits failure, or this admits that I, you know, I made a bad decision, or I could have executed this better. And you gotta separate the actual deal, which is taking the emotion out of it, the actual deal from, from you, you know, what it means about you, you know. And maybe it is admitting like I made a bad decision, or I made a great decision 5 years ago.

 

Tom Dosch [00:21:55]: Yeah.

 

Tim Dosch [00:21:56]: If everything was going to play out, but nothing played out like I thought, that actually is a bad decision today. Um, even though it didn’t look like a bad decision then, if you’re able to admit that and just move on, you think about how many bad decisions you prevent yourself from making. Because a lot of people take what was probably a good decision 5 years ago, and then they make a bad decision because they’re doubling down on that now.

 

Tom Dosch [00:22:16]: Yeah, that’s a great point. You keep making further and further, like, bad decisions to kick the can, and it keeps getting worse and worse and worse. So that’s a great point. And it, the greed thing is sad because you’re right. It’s easy. It’s like you think you got a good deal on something and then you find out your friend got a better deal and then you’re not happy anymore that, oh, I didn’t, you know, and, but maybe you still did get a good deal on something, you know, it’s, but that is like a, it’s a way that I think our human nature works. Unfortunately.

 

Tim Dosch [00:22:42]: Um, we’ve had so many times where we will go bring 7 or 10 offers, all like very credible, real, you know, national developers, international developers, you know, household name kind of groups. And it’s all about, man, these are, these are really good offers. We’re really happy with this. But maybe there’s just like this unicorn buyer. Maybe there’s this user that no one’s ever heard of, or there’s some international buyer and, or some dumb money from California. There are always, there’s always like some idea like that. What if they would just come like way overpay, just do something totally non-market and pay like 30% more than all these offers from all these groups who can capitalize a deal that are looking at real numbers. And if your head’s in that space, it’s so hard to make a good decision for yourself, you know, because it’s like, is that theoretically possible? Like, sure, we’ve seen people do crazy things, but it’s extremely unlikely that it’s going to happen.

 

Tom Dosch [00:23:31]: Yeah. Yeah. No, that’s, that’s, that’s really interesting. Why don’t we talk for a little bit about single-family? Because we haven’t hit single-family as much. And, you know, I think today we were going to hit kind of Q3 where we are. And I thought you brought up a good point. You were like, I mean, with what’s going on in the market, And heading in now to the end of the year, it’s almost like this bigger conversation is more important than like what happened in Q3 because these are, there’s just new things happening. Like you said, this, it’s a, hopefully it’s not like a Black Friday type, you know, situation day. Although we are recording on a Friday, so hopefully that’s not the case. But it’d be interesting to talk about single family. You guys continue, I think in Houston, to have had just a little healthier single family market. And I don’t know if that is, could maybe be changing a little bit just because of the amount of supply you guys have had, or if you still feel like generally healthy parts of it that aren’t, parts of it that are like, what’s your take on single-family market, maybe globally in Houston, but then even more like urban, suburban, you know, product type, home value, that kind of thing?

 

Tim Dosch [00:24:31]: I wouldn’t say it’s healthy, especially compared to the last couple years. It’s still somewhat active. And I think part of that is, Yeah, a lot of these developers, a lot of developers and builders shifting from where they were, which is about as far out as you could get. I mean, it just kept being further and further out. I mean, we’re talking like, you know, past Brookshire and like Seeley. And I mean, they were getting so far out, it was almost ridiculous and just building super cheap homes. I think that’s dead for right now. We’re not really seeing that. What we are seeing is groups trying to come back into what feels like somewhat more infill, which still might be pretty far out. Like some of these are still like Waller, which I would consider still kind of far out, but at least you’re somewhat safer where there’s, you know, massive developments happening around you. So it feels like you’re, you’re still kind of in the growth area. And then even coming in further than that and coming into, you know, suburb, like true suburban infill, like really good sites where they’re paying, you know, maybe what like a multifamily guy would pay and doing a little bit higher density. But they’re kind of these protected markets where you can’t have a lot of supply coming around you. We’re not seeing the really high-density townhome deals happen in the suburbs anymore. We’re seeing a lot of that die. And then we’re starting to see a little bit more activity in the infill market. It’s a little bit too early to know if that’s going to be a broader trend. We’re seeing really high-end infill development on the home side and the townhome side, groups paying as high as like $130 a foot for good infill sites, which is kind of shocking and pretty new in our market. And then paying $70 a foot for, for good sites, but not like the incredible sites. And then certain areas like Garden Oaks, we’re seeing a lot of smaller builders who are paying up for sites and building like $700,000 to like million-plus dollar townhomes. I’m actually pretty bullish and maybe it’s just hopeful thinking that Houston is going to see the infill townhome market come back because I think that there are some areas of town like in Edo in the Heights where it really makes sense. And the challenge is we, at one point, we had a very strong bench of townhome developers in the info market, and that’s pretty much gone. A lot of those groups are not very active anymore, and the groups that are active are much smaller townhome developers doing smaller deals. So I would say it’s not like a dead single-family market, but it’s a much more challenging market. And we do have quite a few deals under contract that run the gamut of these infill deals all the way out to suburban deals that we feel pretty good about, where there’s a lot of hard-earned money. These, these, these builders and lot developers that are moving forward with sites, but they haven’t closed on a lot of these. A lot of these are getting extended, you know, to next year. These are a lot of the deals we’re seeing go from we’re going to close October, November to now, you know, hey, we’ll close in January, you know, which obviously we get a little bit worried about is that we need to January, we need to December. And like, well, now we’ll close in March, you know, and are they going to try and kind of keep kicking the can down the road and watching the market. And, you know, unfortunately, we might see some of these sellers play along with that because they’re looking at, hey, this is a good sale. These guys have spent a lot of money. They’re probably going to close. If I can just keep them on the hook, that’s better than going back to market at this point.

 

Tom Dosch [00:27:50]: When you said $130 a foot on some sites, what kind of product is that? Is that— that’s like urban townhomes?

 

Tim Dosch [00:27:56]: Yeah. So that was a— that’s definitely maybe kind of an anomaly. I won’t mention the guy’s name here. I’ll tell you off air, but it was a site in Tanglewood, a really good site in Tanglewood. So, you know, obviously knowing Houston, that’s a pretty insane site. But we’re seeing some Galleria sites that are not Tanglewood that are going in that kind of price range.

 

Tom Dosch [00:28:18]: Wow.

 

Tim Dosch [00:28:18]: And then also seeing some other infill sites in that $70,000 range. And this isn’t like, you know, 5 or 10 groups. This is like 3. You know, it’s like I’m saying, we’re not sure yet. Like, is this real? I mean, we get excited because there was a time in Houston, probably maybe 2012 to around 2020, where we did a ton of townhome deals.

 

Tom Dosch [00:28:40]: Mm-hmm.

 

Tim Dosch [00:28:40]: I mean, we were doing, closing probably a couple a month and anywhere from less than an acre to several acres, and they were really good deals. And so I’m hoping we see maybe not that level, but it’s been dead for so long that maybe we start seeing that come back. There’s a lot of empty nesters who want to live infill. There’s areas like Garden Oaks and the Heights, and even Edo that are really cool now that you have great grocery stores, great restaurants. A lot of the junk has gotten cleaned out, a lot of the old industrial and old tire shops and just all that stuff is getting cleaned out. So I think that that’s coming back, but it doesn’t help that with the tenure going up and mortgage rates going up.

 

Tom Dosch [00:29:21]: Well, one of the great things about no zoning in Houston is what it allowed with those townhome deals.

 

Tim Dosch [00:29:27]: Yeah.

 

Tom Dosch [00:29:27]: Because I remember, I remember coming from Houston to Dallas, just being blown away by the lack of prolific townhome development in Dallas. And I think a lot of it is just the way that zoning works. Because in Houston, I remember we would just carve up the Heights, you know, a couple acres at a time, and it would be David Weekley or Sullivan Brothers or one of those builders that would go in and build really nice bungalows and townhomes and single-family homes. And you had a lot of the Heights and then, you know, kind of the Edo area or the north. I can’t remember what they called that area where Frank Liu is kind of over by the Midway Project, you know, kind of north of the river where Frank Liu built like thousands of townhomes. So it’d be like north side or something, but just like—

 

Tim Dosch [00:30:08]: Like the north side downtown.

 

Tom Dosch [00:30:09]: Yeah, but north and east.

 

Tim Dosch [00:30:11]: Well, there’s Edo, then like they call it NODO, north down.

 

Tom Dosch [00:30:15]: That’s the one. Yeah. NODO. It’s like amazing because you’re so close into downtown, but it’s all townhomes. Which is, which is so cool, you know, but the ability to go in there and not have to go like rezone every site actually allowed for really cool redevelopment of that area. And, you know, the whole Midway project with their golf course over there is really, really cool. Yeah.

 

Tim Dosch [00:30:36]: So that’s Ito. Yeah, that’s right. Yeah. Ito is in Ito now. Now there’s an H-E-B going in finally. You know, that was always the problem for multifamily guys is, is grocery store. But yeah, I mean, Ito is a place in particular we’re seeing multifamily deals get tied up again. And we’re seeing some townhome interest and it’s gotten cleaned up enough that now if you have a grocery store, all the great restaurants, it’s really cool downtown views. I mean, it’s a neat, it’s a super neat area. So I think single-family is in Houston, I kind of see it bumping along for these lot developers. You know, a lot of these deals are pretty long-term deals.

 

Tom Dosch [00:31:12]: Yeah.

 

Tim Dosch [00:31:12]: You know, you’re not needing to have something happen, you know, even if rates are going up, you’re looking at the next couple years to execute the deal. And so I think especially if people are feeling like I’m getting a good infill suburban site, or even it’s a little bit on the growth edge, but it’s still a good market like Waller and the pricing’s good, that’s probably a deal that they’re going to do. It just might take them longer to do it. And I think the capital is challenging. We are seeing there’s a couple capital sources in Houston that are still pretty aggressive doing these deals. Even deals that would make me nervous, but they’re still doing them. And so we’ll see how long that goes. I could see Houston going either way. I could see things staying where they are and just being kind of average, but deals still happening. Or I could see another leg down for single-family where there’s just a big shock because of rates going up and people just not buying homes and people just kind of tapping the brakes and waiting to see that recover a little bit. Before they go make bets again.

 

Tom Dosch [00:32:12]: Are the big builders out in the suburbs, has that slowed down more? Just like taking lots down, or is that still pretty healthy depending, like the big publics?

 

Tim Dosch [00:32:20]: Well, and that’s why I was saying it’s hard, like to say it’s healthy. It’s still happening. I mean, we’re doing deals with a lot of those groups, so they’re active, but they’re not active like they were.

 

Tom Dosch [00:32:30]: Yeah.

 

Tim Dosch [00:32:30]: You know, we were seeing people doing just crazy. And so I, I think the healthy thing is kind of hard to say, like, you know, it’s healthy when it’s super frothy and people are paying more than multifamily guys for suburban sites and doing, these larger tracts and doing super high density, that may not be healthy because that probably isn’t supported by the market. And we did a lot of those deals in Houston. And then also when you look at going so far out and building these homes, I just don’t know how strong that market is that far out, whether you don’t have good schools yet, you’re just way out on the edge. But I think that the deals that are happening now are the good deals. There’s a deal we have in Richmond Rosenberg that’s almost 300 acres. that we should be closing hopefully soon. It’s a really good infill core Richmond Rosenberg site. It should be a home run deal. And so I think those kind of deals I would think will continue. And I think the market’s healthy for good deals. It’s just not healthy for the crazy deals.

 

Tom Dosch [00:33:24]: Yeah. Well, and maybe it’s like, yeah, like you’re saying from a brokerage standpoint, we like the healthy markets has to be like a lot of activity, a lot of money.

 

Tim Dosch [00:33:32]: Unhealthy market.

 

Tom Dosch [00:33:33]: Maybe unhealthy for like the actual supply in the market, they’re not sustainable. We’ve seen that appear where there’s still deals happening, but you have to have a lot more of a foundational case as to why this is a good deal. You know, before it was like home lot pricing kept going up, up, up, and everyone was very aggressive. And even non-refundable earnest money that builders were putting up to secure finished lots was incredible. A couple years ago, you couldn’t even find a finished lot. I mean, if you were a broker, it was like, all those deals were just trading builder to builder. We were constantly asking the question like, how do we, how do we get in between some of these deals? And the builders were always like, we don’t need you guys. And now it’s like, it’s the reverse. Now we’re doing tons of finished lot deals and, you know, builders will still be skeptical. Like, well, we know everybody, why would we work with you guys? And then it’ll be like, well, we can actually bring somebody and we’ll, we’ll bring a buyer, we’ll market a site for builders. And will actually bring somebody that they didn’t talk to or didn’t know. And so that part of the market is definitely, it’s definitely adjusted. We also don’t have a suburban townhome market right now. I always feel like that when, and a lot of that is dictated by zoning here.

 

Tim Dosch [00:34:44]: Yeah.

 

Tom Dosch [00:34:44]: But when you see all these townhome deals get zoned way out in the suburbs, it’s a little bit of a head-scratcher. ‘Cause you just think like, you know, if you want to live in a townhome, do you really want to live like 40 miles outside of Dallas, you know, or yeah, I get it. If you’re, if you’re maybe like in Plano and you’re walkable to Legacy West or some really cool mixed-use deal, that totally makes sense. But you know, the townhome development that’s a part of the H-E-B like power center off the freeway, like random city, those, those are tough. They’re just tough to make sense of.

 

Tim Dosch [00:35:16]: And so those are crazy.

 

Tom Dosch [00:35:17]: Those have gone away.

 

Tim Dosch [00:35:17]: Yeah. These municipalities, it’s either they want you to do larger lots.

 

Tom Dosch [00:35:22]: Yeah.

 

Tim Dosch [00:35:22]: That are not really, the market doesn’t want, or townhomes. It’s like the market doesn’t want either of those.

 

Tom Dosch [00:35:27]: Yeah. A lot of it is related to zoning and what they want to see. But then yeah, there’s certain areas in the suburbs where you still see the bigger builders doing deals. We have a couple big master plan deals that will close before the end of the year. And those are a couple years in the making. And so those deals are still progressing and happening. Some of the stronger suburban demographic markets have held up pretty well. And then, you know, I think some of the areas where it got so hot that there was just activity everywhere, including areas that just had never really seen a lot of activity or just historically they don’t really have the schools, the infrastructure, or the demographics to support this many homes getting built. Those areas have really struggled.

 

Tim Dosch [00:36:14]: Yeah.

 

Tom Dosch [00:36:15]: And I think, you know, it’ll be a while before those come back. But again, we’re fortunate because we have people moving here all the time and we have jobs that we’re still creating and companies relocating. And so I think that it’s probably in a pretty healthy place or trending towards a healthy place, not from a brokerage standpoint, but just like a single-family market standpoint. I mean, there’s been a lot of really ton of negativity from the different groups that the builders meet with that kind of talk about like lot inventory and you know, just the over-inventory that we have. But builders have been working really hard to sell lots, to get homes built, to move inventory, to get in a healthier position. And I think that’s been going on now for a while. And so I think that’s really good and that’ll help us just be in a better spot going into next year.

 

Tim Dosch [00:37:02]: What do you guys see on the retail side and what’s kind of your outlook there?

 

Tom Dosch [00:37:06]: Retail’s really hot in the suburbs. It’s in the in this urban market, I think it’s still just challenging because it’s so expensive to build. As an aside, it was interesting to talk to Tripp and hear what kind of rents they’re getting in Austin. I mean, that was—

 

Tim Dosch [00:37:19]: Yeah.

 

Tom Dosch [00:37:20]: That was crazy. There are a couple really high-end, cool, like boutique, like, you know, really name-brand retail developments going on in like primo parts of DFW. But for the most part, we’re seeing grocery anchored, centers again. H-E-B’s been expanding a lot up here. Kroger’s still expanding, Tom Thumb. So the grocers are really expanding. Trader Joe’s has announced a couple new stores, Sprouts, Whole Foods has announced a couple new stores. So like we’re definitely seeing traditional grocery-anchored growth. It’s really just on the back of incredible population growth. There’s, it’s crazy. There’s parts of town where a couple years ago, You’d be like, where’s the closest grocery store? There’s like no grocery store. Or maybe there was a Brookshire’s or a Walmart, but there was no kind of like Tom Thumb, H-E-B, Whole Foods. Even like Southlake is just now getting their Whole Foods. So I think that’s, that’s been really positive to see that in different parts of town, up the 75 corridor, the 121 corridor, the 30 corridor, West Fort Worth. North Fort Worth, all these areas are getting these power centers again. And then you’re seeing, you’re seeing, you know, like TJ Maxx and Ross and you’re seeing the home improvement stores expanding again. So we’re seeing a lot of activity on that. And I think it’s just rooftops. It’s like the, you know, it’s like Real Estate 101 other than location, location. It’s like, how do you get commercial? You get rooftops first. And we got an incredible amount of rooftops built and we didn’t have the commercial. And now we’re seeing that. We’re also seeing a lot of hospital expansion in all the suburbs for the same reason. We’ve had so much rooftop growth that now you’re seeing like kind of hospital after hospital announced up the tollway, up 75, 20, 30, all these different major freeway corridors. We’re seeing hospitals announced there too, which is great because that’s jobs. Those will be jobs for— again, both those are so important because I think that’s part of why the multi has struggled. in these further out suburbs is you built a lot of multi and there weren’t a lot of jobs in those markets. And now there will be more jobs, you know, between the hospitals and a lot of the commercial and retail that’s getting built.

 

Tim Dosch [00:39:33]: Yeah, Houston’s been the same. And I think you’re exactly right. It’s when you have thousands and thousands of homes get built and these huge master plans that are, that are further out, you need retail to support that. And so in Houston, it’s been a lot of neighborhood retail, these smaller retail deals, corners, That kind of thing, which I’m remembering back to when I first started in the business in the early 2000s. And that was happening in Katy. There’s this massive growth in all these 5 to 10-acre corners and grocery anchor deals. And so we’re seeing that again in Houston and all the same, the junior box deals, the grocery anchor deals, the neighborhood retail. It’s interesting because you wonder, once you get past that wave of giving services to all these communities, Is the consumer strong enough to keep creating retail demand beyond that? It makes sense that people have to have basic, they have to have grocery store, they have to have some of these areas to shop. But I’m wondering, I don’t even— it’d be interesting to look at the numbers. How well are some of these retailers doing? I’m sure the grocers are killing it, but I’m not sure how they’re doing across the board.

 

Tom Dosch [00:40:39]: Yeah. And you have a lot of expansion of a lot of these pad sites for all these little restaurant concepts. You have a lot of that happening right now again. And I think people, especially in these suburban areas, people are, they like to eat out, they like to do takeout, they like to do DoorDash.

 

Tim Dosch [00:40:55]: Yeah.

 

Tom Dosch [00:40:55]: And so I would assume a lot of those are probably doing pretty well, but you do also see pretty often, you’ll see, oh, that business didn’t make it. That restaurant’s turning over again. And so you do see that quite a bit too. But yeah, I think commercial’s been strong, but I agree with you. It’s That you can’t just— it’s not like some of these other uses where it’s like, okay, well now we’ll go put another H-E-B just like 10 miles further out. It’s like they’re going to wait then for the growth. And we have seen H-E-B do what they like to do, go buy sites too, like just to get ahead. And they may not be building right away. They’ll go kind of sit and wait, which is smart because that’s maybe how you get some pretty good land pricing is don’t go wait to buy the corner you need when When you need it.

 

Tim Dosch [00:41:40]: Yeah, that’s right. What are you seeing about the other uses like storage and seniors and some of the other kind of uses we don’t talk about a lot?

 

Tom Dosch [00:41:46]: Yeah, I mean, I think in like, in maybe hospitality, you know, the hotels, there’s been a lot of hotel activity and development in DFW. And there’s, I was talking to the guys yesterday about Urban Fort Worth because there’s been a handful of really high-end hotels built in urban Fort Worth, the Bowie and the Crescent that have done really well. It was like, it was TCU, some TCU like parents weekend last weekend. And the rents were like, or the nightly rates were like $1,200 and $1,700 a night at those 2 hotels, which is crazy.

 

Tim Dosch [00:42:21]: Wow.

 

Tom Dosch [00:42:22]: But like, you know, so there’s been some really high-end hotels and there’s been a lot of just suburban hotel growth. And then on the senior side, that’s been slow. I mean, there’s a little bit of it. We’ll see deals here and there, But we’re not seeing as much activity. You know, some of the groups that were pretty prolific and were doing a lot of senior housing have really not been doing as much. I know it got really overbuilt for a while and, you know, active adult was really popular for a while and a lot of developers were chasing kind of the 55 and older, basically just age-restricted apartments is all it was.

 

Tim Dosch [00:42:56]: Yeah.

 

Tom Dosch [00:42:56]: Not seeing a lot of that. I mean, there’s still a handful of groups that do it, but not seeing very much of that anymore. And then storage, we are seeing some storage, but again, I think that’s storage in the growth markets where it just doesn’t exist. But it’s not, it was pretty overbuilt in a lot of the urban markets, so we haven’t seen it as much in like some of the urban areas. But I know you guys have, you guys have had some more urban storage activity.

 

Tim Dosch [00:43:21]: We have.

 

Tom Dosch [00:43:23]: Yeah.

 

Tim Dosch [00:43:23]: I would say that all those uses though are somewhat quiet. I wouldn’t say that they’re super active. I think you’re right. They’re happen in areas where there’s growth, population growth. We have seen an uptick in age-restricted seniors deals, which is kind of interesting. Some groups that are going pretty aggressively into that space and trying to get deals. I’m not sure if that’ll be a broad trend or just a couple one-off groups that are doing it. On the storage side, they’re just very sensitive to supply and Houston’s had a lot of supply. So we are seeing some storage deals are just It has to be the right site. It has to be a site that doesn’t have a lot of competition around it, which can be tough. And then the hotel side, we haven’t seen a very aggressive move on the hotel side. We did close a very high-end deal last year, like $270 a foot dirt. And we’re seeing some deals. We have a deal we’re hopefully going to get done by year end that’s in the $150 range. a foot in the suburbs. So pretty shocking pricing.

 

Tom Dosch [00:44:24]: In the suburbs? Yeah, that’s crazy. Yeah.

 

Tim Dosch [00:44:26]: So I mean, we’re seeing some stuff like that and this is like corner of Main and main, really high-end suburban site, I think makes sense for a nice hotel, but we’re not seeing a really strong hospitality move across the market. I think to your point, it’s a lot of these are just filling in in places where there’s just a need. You know, because there’s population growth.

 

Tom Dosch [00:44:48]: Maybe to kind of wrap up, I was going to ask, where do you think looking out over the last quarter of the year, do you think we’re still going to be— we obviously have the midterms ahead. Do you think we’ll still be talking about the 10-year, the Iran war, you know, the higher interest rates, more hikes, kind of thinking if we’re staring over the cliff into next year, are we thinking at the end of this year that Oh wow, Fed’s going to actually increase into early next year. That’s the projection. And the Iran war is still going. What’s your take? None of us know the future, but what’s your take on where we might be?

 

Tim Dosch [00:45:23]: It’s hard because I think it’s easy to have a bias. You can sort of construct the facts in your mind in a way that plays out the way you want it to play out. And so for me, my thought is, The Iran War gets worked out one way or another, which is probably not like it’s solved and there’s peace, but it’s probably a de-escalation, which I think both sides want. And somehow they get to that point where there’s more traffic through the Strait of Hormuz, oil prices come down. Maybe it’s an uneasy kind of standoff where there’s still— we have troops over there. There’s still these fighting that happen, attacks that happen back and forth every now and then. oil spikes up and then comes back down. But I don’t see this as long-term Brent at 105 to 110, which would be very damaging for the market. I also don’t think the 10-year is going to stay up like it is right now. And I also don’t think we’ll keep raising rates. I think we might see an October raise. That’s probably pretty likely at this point, like a 75% chance that we see an October raise at 25 basis points and maybe a December raise. That wouldn’t surprise me. And I could see a pretty bearish negative feeling going into next year, which I think we’ll see a capitulation in a lot of these deals that just get sold. We’ve already talked to clients like, we’re just going to sell next year. We don’t really even care. Our partners just want to get out of these deals. We know it’s not a great time. We just need to sell. So I think that happens. And I think it’s a bad environment going into next year, but I would see either no increased Fed rate raises next year or maybe them even slowly dropping rates back down. To where maybe it just kind of evens out what they did this year with raising 50 to 75 basis points. Maybe they drop it 25 to 75 basis points or even 100 basis points next year. And so that was kind of the way I’m thinking about it. And like I said, maybe that’s wishful thinking. It just doesn’t feel like we’re going into a continued longer-term tightening because of just how negative that would be. I think the only caveat to that is If you do see AI continue to be successful and you see economic growth continue to happen, maybe GDP goes up to 3% or 4%, something like that that could happen where the Fed feels like we need to keep tightening because inflation’s going to keep up. I think there’s a chance that happens, which would be pretty interesting. But what do you think?

 

Tom Dosch [00:47:50]: Well, I like everything you said. I think that that’s where I’m hoping too, that we have The Iran war more solved. If you would’ve told me, I think that what we started, the war started in February, right? Or I mean, I don’t know if it’s technically called a war.

 

Tim Dosch [00:48:03]: February, early February. Yeah.

 

Tom Dosch [00:48:04]: Yeah. If you would’ve told me we’d be sitting in basically October and it would still be ongoing this close to the midterm elections, I would’ve thought no way. Because I think everyone expected that Trump’s going to get into it and then he’s going to get out of it because he wants to make a deal and he doesn’t want to— this is bad for him and the Republican Party to be to be at war. So that’s really interesting. It just makes me wonder, can we get out of this thing? I hope we can.

 

Tim Dosch [00:48:29]: Yeah.

 

Tom Dosch [00:48:29]: And like you said, we may not really be out of the conflict, but there might just be a way that we can get oil back under control. I mean, diesel prices and oil, it’s a real concern right now. It’s just like, it’s so expensive and that’s such a drag on the economy. That’s a concern. So we’ll see there. I thought something you said that I wanted to highlight that I definitely agree is we took a lot of sites out to market early in the year for developers. And even, I think this goes even into last year, late 2024, we marketed them. We got what we thought were pretty good offers, but again, they bought them in 2021, so we didn’t get back to their basis. And so they said, hey, let’s, we’re going to wait. We’ll wait for the market to come back next year. Well, now we’re sitting where we’re sitting. The market’s not coming back. I don’t know how you would sit here today and say, I feel like if I have a site, it’s going to be worth a lot more in 2027 than it was worth at the beginning of 2026. And so I think that’s going to be really interesting. I think you’re going to see more of those sellers, which is what you just said, make the decision that we need to sell because their basis continues to increase. And by not selling, you’re really just, you’re kicking the can down the road to have a higher basis down the road. And I think some of these areas where we’ve seen really no movement the last 5 years, since we saw a turn, there’s not a lot of indication we’re going to see a movement over the next couple years.

 

Tim Dosch [00:49:47]: Yeah.

 

Tom Dosch [00:49:48]: And that’s what I’ve been trying to help sellers understand. This is not like a, it’ll be better in 3 months. This is like, it might not be better for a couple years, you know, or even back to kind of where we are or where we were on a deal that made sense maybe 12 months ago, like for a couple years. Because I think we saw deals that were actually pretty good deals for sellers, where developers were still pretty bullish on the market 12, 18 months ago, and sellers rejected those deals. And those deals aren’t there anymore. Like if you came back, those sites we marketed at the beginning of the year and the pricing we got to these sites, I’m specifically thinking about if you go call back those buyers about their offers, none of them are at the price they were at the beginning of the year. And so I think, I think we’re going to see more of that. I also think less flexibility from banks to keep extending So I think you’ll, you’ll probably still see some extensions, but you’ll see some of these deals starting to, to come back, get foreclosed on, or, or just selling like basically at the note value because the bank’s telling the, the, you know, the lender like, or the, the lendee, like, we’re going to take this back if you don’t figure out how to sell this. So it’ll, it’ll be interesting. But I think that all helps reprice the market.

 

Tim Dosch [00:50:57]: Yeah. Well, it might be a little bit funny for our listeners because in one way we’re, we’re being pessimistic and optimistic at the same time. You know, we’re talking about things potentially getting worse and pricing coming down, but also the beginning of a new bull market. And I think that both those things are true. I think you have to have the market realize a floor of pricing, and that’s what’s going to happen. I think we’ve had this, this artificial elevated pricing in the market for a long time where you call people and they want these numbers that everyone knows. It’s just there’s no deal there.

 

Tom Dosch [00:51:27]: Yeah.

 

Tim Dosch [00:51:28]: I think you finally get a realization in that that only happens through transactions. It’s actual comps. People start appraising everything lower because all the comps are lower, and the market finally comes to terms with, okay, here’s the new values. And what happens is they actually get artificially set low. It’s funny because right now they’ve been artificially set high the last 4 years. When the market reprices, they get artificially set lower than they probably should be because they’re distressed sales. And then you actually have new deals start happening, and those start happening just above that price. Pricing. And so the, like you’re saying, what, what this doesn’t mean is I’ve been holding out for this pricing. I should wait because next year we’re going to get back to this. What it probably means is there’s a recovery, pricing’s down here, and it just starts doing this over the next couple years.

 

Tom Dosch [00:52:13]: Yeah.

 

Tim Dosch [00:52:13]: And so maybe we do get back to that at some point, but maybe it takes years to get back to that. And so you start having a lot more transaction volume, real deals, but different pricing.

 

Tom Dosch [00:52:22]: Yeah.

 

Tim Dosch [00:52:22]: And we’ve seen that happen every single time in the market. It, you, you, it overcorrects. And then it slowly builds back up until it gets too frothy again. And then it just happens all over again.

 

Tom Dosch [00:52:31]: Well, I definitely think, like you said, there, you know, I was on a call yesterday and I told the guy like, yeah, it’s a, it’s a hard day to be very optimistic. That’s just the way it felt yesterday. But I think we are optimistic. I mean, I think we have real challenges, which we’ve talked about. There’s a lot of questions and concerns just about the greater economy and AI and our national debt and inflation. All of these things, but wouldn’t want to be anywhere other than Texas. We still have job and population growth. We have investment by incredible companies like Tesla and SpaceX and a lot of other corporate relocations and people moving here. We have the infrastructure. I mean, so yeah, there’s challenges in the market and that’s what I’ve been trying to help sellers understand is what we’re not saying is like you have a bad property or there’s something wrong with your property. This is timing. This is timing of like the today, this is a really difficult capital market story. So let’s figure out the best way to approach this. Like, how do we get you, how do we, how do we maybe get to a closing if there’s a way to get to a closing? Or how do we get you non-refundable money to, to keep going, which isn’t the worst thing, and maybe even released. So you have that, like, let’s get the best outcome we can. And if there, if we have some of these deals have other options, like options B, C, D, if we have other options, that’s great. Some of them won’t have other options. Like, it’s like, hey, the best thing to do is make a deal with you, with the group that’s been working on it. Sometimes there’ll be, you know, like almost like a white knight that can be another option, which is great. But it’s, I think it’s hard, like you said earlier, because for sellers, it just sounds like the market’s bad, your site’s bad. And it’s like, that’s not, that’s not really what we’re saying. We’re just saying the timing of what we’re dealing with in the market from a capital markets standpoint is making it really challenging today.

 

Tim Dosch [00:54:19]: Well, a lot of sellers, I think, have like this, this idea that my property is worth whatever they think it’s worth, almost like this static number that doesn’t change. So it’s worth $10 a foot or $15 a foot. And no matter what’s happening in the market, it’s just worth that because it’s a great site and everybody should want my site. But what is always true is sites are worth what the cost of money is and what rents you can get for that property. Yeah. Because in commercial real estate, it’s always rents. It’s office rents, it’s retail rents, it’s industrial rents, it’s multifamily rents. Maybe on the, on the single-family side, it’s what you can sell the house for. All that comes back to the cost of money. And so when the cost of money changes dramatically, it is going to impact the value of your site. And the only way that you get safe from that is if rents go up substantially to offset that. And so people have to look past like, well, I just think this is worth this because 2 years ago or 4 years ago or 5 years ago, someone else got this price for their property. You gotta compare the cost of money at that time and the, the rent demands at that time. So.

 

Tom Dosch [00:55:20]: Well, Sam, good conversation. I think we just went almost 2 hours, so we’ll probably end up cutting, cutting this into 2 parts for the audience. But yeah, this was an interesting conversation. We’ll, we’ll be back on here in a couple weeks to record our next episodes, and I’m pretty interested just to see where we were. I know when we recorded last, we talked a lot about oil prices. And, you know, so we’ll probably be talking about midterms here pretty soon, just with a little more certainty on what we’re going to see, which always has an impact, more of a timing impact. So that’ll be interesting to discuss. But thanks for joining today. This is a good conversation.

 

Tim Dosch [00:55:57]: Yeah. Thanks, Tom. That was good.

 

Tom Dosch [00:55:59]: Yeah. And to our audience, please follow us on Texas Land Guys. like and subscribe to us on Apple or Spotify or YouTube. Definitely subscribe to our channel so that we know that you listen. And if you could take just 10 seconds, give us a 5-star review on Spotify, Apple, or YouTube, wherever you’re watching or listening. Until next time, thanks.

 

Outro [00:56:21]: Thank you for listening to our podcast today. If you have questions about land you own in Texas, send us an email at texaslandguys@dmre.com and follow us on LinkedIn to stay updated.