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Expert Insights: J. Andrew Hansz on Texas CRE, COVID Impact and More

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Andrew Hansz, PhD, CFA, MAI, is a professor in the Finance and Real Estate Department of the College of Business at the University of Texas at Arlington.

J. Andrew Hansz, Ph.D., CFA, MAI (non-practicing) holds the Gould/Mayfield Professorship in the Department of Finance and Real Estate, College of Business, the University of Texas at Arlington (UTA).

He publishes original research regularly, and his articles have appeared in the Journal of Real Estate Finance and Economics, Real Estate Economics, Journal of Property Research, Journal of Property Investment and Finance, Journal of Real Estate Research and more. With Julian Diaz, III, he co-authored the textbook Real Estate Analysis: Environments and Activities. Professor Hansz is the North American editor of the International Journal of Strategic Property Management and an ad hoc reviewer for several academic journals.

In the classroom, he has taught over 15 different topics in finance and real estate, including quantitative methods for real estate analysis, at the university level and numerous classes and seminars for the Appraisal Institute and other professional and business organizations. Dr. Hansz is active professionally with industry affiliations in the American Real Estate Society, Appraisal Institute, CFA (Chartered Financial Analyst) Institute, and the Urban Land Institute (ULI). He is also on The Pennsylvania State University Institute of Real Estate Studies advisory board.

 

Q: Tell us a little bit about your background and why you chose a career in teaching real estate.

[I’ve been] in real estate academics for over 25 years [with] prior experience in commercial/industrial property valuation and consulting.

Q: Considering the COVID-19 outbreak, what are your thoughts on the commercial real estate (CRE) market in the U.S. today, in terms of trends and challenges?

CRE has held up remarkably well. Even office and retail have some bright spots. In contrast, residential (both multi-family and single-family residential) and industrial real estate have been the shining stars of the investment industry. With employment levels recovering from pandemic lows, keep an eye on mortgage interest rates, especially in residential markets. Interest rates and housing affordability will be critical challenges.

Q: What differentiates the commercial real estate market in Texas from other major markets in the United States?

Jobs and land. The tremendous job growth in Texas is responsible for the health and growth of the Texas real estate markets. Historically, an ample supply of land and reasonable levels of regulation has allowed real estate development and supply to keep up with real estate demand.  However, since the pandemic, Texas job growth and residential/industrial space demand have outpaced development and supply. Limited supply has caused aggressive price increases in these markets. Too much price inflation may become a problem if this increase dampens our reputation as a relatively low-cost business/living location.

Q: How have you seen the industry evolve in the last 10 years?

[There’s been a] great increase and improvements in capital, data and technology. It is an exciting time with many opportunities in CRE.

Q: Where do you see it going in the future?

I think defi (decentralized finance) and blockchain technology will revolutionize CRE, making the CRE markets more efficient and easier/desirable to invest in. I just do not know how long the revolution will take.

Q: Are there any lessons from the past few years that you would impart as an absolute must for those looking to get into the CRE industry?

Education, obviously. Learn as much as you can. The fastest way to make $1 million in CRE is to start with $2 million. In other words, you can create and lose a lot of money in CRE. It’s no longer good enough to be lucky. It’s also necessary to be smart.

Q: What is your general assessment for the commercial real estate market in 2022? Have you spotted some interesting market trends?

Office and retail markets will find their footings, and the hot residential/multifamily markets may slow if interest rates keep marching upward. Industrial seems strong in most locations, including North Texas, especially around the DFW airport.

Q: How has the evolution of online marketing influenced the commercial real estate industry?

CRE markets are less localized as online marketing and data have decreased the information costs. Boots on the ground are still necessary, but investors now research and invest in CRE markets from anywhere in the world.

Q: Are there any other insights that you would like to add?

If you are a passive investor, diversify. If real estate is your passion, strive to create a spatial monopoly.

Interested in being interviewed for our Expert Insights series? Feel free to reach out to us at [email protected] or check out other articles from our series here.

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