Friday, July 30, 2010

Region's Expanding Manufacturing, Industrial and Retail Operations Create Hundreds of Jobs

Rio South Texas Attracting New Factories, Start-up Companies and Industrial Expansions
EDINBURG, Texas, July 28, 2010 /PRNewswire via COMTEX/ --

Business is booming in Rio South Texas. New manufacturing plants are being built, existing industrial operations are expanding and new retail is coming online. This new activity will create more than 1,500 new jobs in one of the fastest growing and most affordable regions in the country.

New Manufacturing Operations

Santana Textiles of Ceara, Brazil, one of the world's largest denim manufacturers, will build a $180 million, 300,000 SF plant in Edinburg. The company will create 800 new jobs.

South Korea-based CS Wind Corporation broke ground on a $60 million plant in Matamoros, Mexico to manufacture metal towers and generator components for the wind turbine industry. Initially 400 jobs will be created and increase to 700 jobs over three years

Tyco Flow Control broke ground on its $5 million dollar facility expansion that will add 33,000 square feet to its existing 80,000 SF Harlingen facility. This expansion will add 65 new jobs to the current workforce of 120 people.

New Biotech Company

Biotech start-up, Photon8, recently relocated from New Jersey to Brownsville to develop economically viable ways for turning algae into clean biofuel. Photon8 moved to Rio South Texas because of the region's abundance of sunshine and affordable land.

New High-End Retail

A new 30,000 SF Mercedes-Benz dealership is being built in San Juan. Annual sales of $15 million are projected, and the dealership will create 20 new jobs.

Bass Pro Shops has announced a 150,000 square foot destination retail store in Harlingen.

"Rio South Texas continues to attract global attention," says Edinburg City Manager, Ramiro Garza. "The region has the geographic and economic assets that offer companies in all industry sectors the types of competitive advantages they can't find anywhere else in the world."

Rio South Texas encompasses the southernmost tip of Texas and the Northeastern part of Mexico. The region is currently the largest U.S./Mexico border region in America, the third largest market in Texas, and the 23rd largest market in the U.S. The Rio South Texas Economic Council was formed in 2008 to attract private sector investment, economic diversification and business expansions to the region.

Media Contact:
Gwendolyn McCormack
1-888-RSTEC01 (888-778-3201)
Direct Line: 956-607-1197

SOURCE Rio South Texas Economic Council

Wednesday, July 28, 2010

How Will the New Financial Reform Bill Impact Commercial Lending?

Last week the Senate passed the conference version of the financial reform bill, formally call the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act’s sponsors say it is intended to “create a sound financial foundation to create jobs, protect consumers, rein in Wall Street, end too big to fail and prevent another financial crisis.” Quite an ambitious goal, but like anything coming from Congress, it represents compromises and bargains. President Obama is expected to sign the Bill this week. While this is a major accomplishment for the Obama administration, whether it will accomplish many of its ambitious goals will only be determined over time.

The causes of the financial and banking crisis that ushered in the current recession are still being (and may forever be) argued, but there is no argument that among the key contributors were a housing bubble fed by irresponsible borrowing and lending; a lack of transparency in financial derivative products and transactions; and a deep belief that some financial institutions were too big to fail – a belief that their failure would cause a systemic collapse of the interconnected financial system far more serious than the massive subsidies that were infused to forestall the collapse. In the crisis atmosphere of early fall 2008, lawmakers, generally on both sides of the aisle, approved emergency actions they believed necessary to forestall an immediate disaster. Having had nearly two years to consider the causes of that crisis and vulnerabilities in the financial system, Congress passed the 2,300 page Dodd-Frank Act, which is a collection of disparate measures intended to address various of the favorite financial bogies, reflecting more of the give and take of the political process more than any coherent economic theory or well-grounded view of financial and regulatory reform.

While the details of this 2,300 page Act are complex and varied, the thrust, at least initially was simple:

First, to reduce the risk to the entire financial system created by huge institutions trading in obscure and opaque instruments with counter-parties who may not be able to perform – It was this financial daisy chain that both generated huge profits for financial firms and created the risk of an AIG failure, for example, bringing down the entire system.

Second, to enhance protection of consumers, either from lending practices such as extending loans to unqualified borrowers (so-called NINJA loans of the 2007 era), from unfair lending practices such as yield spread premiums or from the need to bail out the financial entities who faced overwhelming losses through those obscure trades above.

Highlights of the Act include the establishment of a mechanism that is intended to end the view of any financial institution as too big to fail, along with a requirement that certain large institutions create “funeral plans” explaining how they could be unwound in an orderly manner were they to fail; the requirement that many derivatives, including many asset-backed securities be traded and cleared on markets where counter-party risk is mitigated through the requirements of certain margin or collateral requirements; requiring banks, bank holding companies and subsidiaries to separate their proprietary derivatives trading (other than traditional hedging activities) and hedge fund/private equity fund sponsorships or investments from their banking activities. This last is the “Volcker Rule” which will bar both banks and other financial institutions regulated by the Fed from such high risk positions, unless they are undertaken by a separately capitalized entity, which itself meets the capitalization and margin requirements to be established for such trades. The Act further creates a consumer protection agency and forbids mortgage lenders from unfair lending practices and making loans unless they have gone through a process to ensure that the borrower can make the payments. The Act brings in new requirements and oversight of credit rating agencies, appointing the SEC to annually examine rating agencies and make key findings public; requiring education and qualifying exams for ratings analysts; and empowering the SEC to deregister a rating agency for providing bad ratings over a three year period.

What does this all mean for commercial real estate? Probably not much, directly at least, but the attempt to bring some more transparency and regulation to derivatives and exotic financial instruments may limit the availability of some real estate related loan securitizations, and until the markets more fully understand the implications of the Act the uncertainty will likely be something of a damper. It will take years for the regulatory agencies and the affected industries to establish and work under the market mechanisms and regulatory structure called for by the Dodd-Frank Act. Only over that time will we begin to learn whether it has reduced systemic risk, increased consumer protection, or had any unintended side impact.

-Ed Finn

Ed Finn is General Counsel and Chief Operating Officer at NAI Global.

Tuesday, July 20, 2010

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Monday, July 19, 2010

Last Chance to Register for Dr. Linneman's Economic Outlook to be held July 21 at 1PM

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Pharr, TX to get a new H.E.B. supermarket

Mayor: Pharr to get a new H.E.B. supermarket

PHARR — The city may soon see a new H.E.B. grocery store, Mayor Leo “Polo” Palacios said.

Company officials would not confirm they are planning a new location in south Pharr, but Palacios said he has been working with the company and that construction may begin in 2011.

“We’ve been working with them to get things going,” Palacios said. “We met last week to discuss the plans.”

A H.E.B. spokeswoman ... Click here to read more

Friday, July 16, 2010

Mexico looks to gain edge over struggling China

The Monitor
Ana Ley
July 15, 2010 9:50 PM

McALLEN — Mexican business leaders hope to gain an edge over Chinese manufacturers reeling from rising production costs.

Foreign companies that depend on China’s low costs to compete — from distributors of plumbing equipment to automobile manufacturers — are shifting factories to other developing countries.

“There are a lot of companies that are leaving China,” said Eduardo Coronado Quintanilla with the Camara de la Industria de Transformacion de Nuevo León, the state’s chamber of industry. “It’s not as cheap as they thought.”

That message resonated during a conference Texas A&M University hosted Thursday in McAllen, where Coronado noted difficulties in working with companies overseas. Calling a supplier on the phone, he said, is often too complicated due to time-zone differences. E-mail exchanges can often take days.

At the start of the economic recession in late 2007, some companies were overwhelmed with surplus inventory from suppliers in China. It took months before many could reduce their supply to meet a dramatically lower demand. As the economy began to recover, companies ran into the opposite problem — not enough inventory.

“Their ability to react is very limited,” Coronado said. “We have ... click here to read more

Wednesday, July 14, 2010

CNBC: Texas No. 1 state for business in 2010

McAllen Economic Development Corporation
July 14th, 2010

And the article starts:

“They say everything in Texas is big, and that sure goes for its stature in business.”A recent study from CNBC ranked Texas the No. 1 state in the United States for business based:

* Cost of Doing Business, Workforce, Quality of Life, Economy, Transportation & Infrastructure, Technology & Innovation, Education, Business Friendliness, Access to Capital and Cost of Living.  Texas received the highest amount of points ever.

This is great news for McAllen. McAllen offers a competitive, low-cost business model that allows companies to have a strategic global location and direct access to the North American and Latin American markets.

View the full report here

Free Web Conference - A Global Economic Briefing with Chief Economist Dr. Peter Linneman

NAI Global is holding our live quarterly web conference ~

A Global Economic Briefing with Chief Economist Dr. Peter Linneman on Wednesday, July 21st at 1 PM EDT.

We invite you to listen to this free web conference. Please click here to register

TxDOT awards $34 million for East Loop Project

July 13, 2010 9:25 PM
By LAURA B. MARTINEZ, The Brownsville Herald

The sights and sounds of tractor-trailer rigs traveling through state Highway 48 to International Boulevard in Brownsville could become less of a nuisance for motorists and businesses in a few years.

The Texas Department of Transportation of TxDOT’s State’s Pass Through Financing Program recently awarded Cameron County more than $34 million for the construction of the East Loop Project.

The East Loop project, which has been in the planning stages for at least 15 years, would connect Veterans International Bridge at Los Tomates to the Port of Brownsville.

It would allow the rerouting of traffic from ... Click here to read more

Friday, July 9, 2010

New Logistical Model Gives Manufacturers an Alternative to China

Third Coast Offers Competitive Advantages Businesses Can't Find Anywhere Else in the World
PR Newswire
EDINBURG, Texas, July 2 /PRNewswire/ --

Where else in the world do you have a region that has wages at an average fringed labor rate of $2.50 per hour on the south side, and the largest market in the world on the north side? That's the question Keith Patridge, President and CEO of the McAllen (TX) Economic Development Corporation asks manufacturers from around the world who are looking for locations that keep them competitive in the global marketplace. The answer is Rio South Texas, which encompasses the southernmost counties of Texas, Northeastern Mexico and the new Third Coast.

The "Third Coast" refers to the Port of Brownsville in Rio South Texas, the Mexico West and East Coast Ports of Lazaro Cardenas, Manzanillo and Altamira and Veracruz. "In the new Third Coast logistical model, shipments from these ports are moved by truck or rail to Rio South Texas where they're combined with products produced in maquiladora plants in Reynosa and Matamoros, then shipped directly to the customer," Patridge says.

Redefining the Business of Manufacturing

This model saves companies time and money because:

• Transportation costs decrease.

• Delivery is generally 3-5 days faster.

• Globally sourced and produced products go through a central location, eliminating the need for regional warehouses.

• Final assembly and customization at time of sale can be completed using the low cost ($2.50/hour labor) maquiladora plants in Northeastern Mexico.

• Customized product orders can be delivered in 24-48 hours.

China Can't Compete

In its report – Competitive Alternative 2010 – KPMG has ranked Mexico as the world's most cost competitive location among developed nations in all industry sectors. "Add all the savings of the Third Coast model and Rio South Texas is more competitive than China," Patridge says. "Plus, China can't compete with the flexibility, build-to-order capabilities and fast customer delivery available with a Rio South Texas location."

The development of Rio South Texas – the 3rd largest market in Texas, 23rd largest market in the United States and largest U.S./Mexico border region – is being guided by the Rio South Texas Economic Council (RSTEC). Because of the strategic advantages Rio South Texas offers, RSTEC is developing the infrastructure and skilled labor necessary to support global manufacturing.

Media Contact:
Gwendolyn McCormack

1-888-RSTEC01 (888-778-3201)
Direct Line: 956-607-1197

Click here to read more

Walmart Strategy Demonstrates Retailers’ Ongoing Demand for Warehouse/Distribution Space

In 2009, American retailers occupied more than 5 billion square feet of warehousing/distribution space. Although significant new leases are way down, retailers do continue to extend and/or renew their lease holdings. Many are attempting to downsize, but all are said to be reviewing their long-term warehousing strategies.

Marc Wulfraat, a transportation industry expert at TranSystems in Montreal, CA, suggests we look at the distribution strategy of Walmart, the world’s largest and most successful retailer, to better understand why retailers will still need distribution centers. “At last count, Walmart’s U.S. network consisted of 147 large-scale distribution centers, comprising flow-through general merchandise facilities, grocery distribution centers, fashion/apparel facilities and dedicated import facilities,” Wulfraat notes. “Walmart’s distribution centers are absolutely massive. The prototype general merchandise distribution center is 1.2 million square feet; the typical grocery distribution center is 880,000 square feet; and its largest import facility in Texas is 4 million square feet. Most of the distribution centers are an average of 125 to 150 miles from the stores—a huge competitive cost advantage compared to retailers who ship from farther away.”

It is generally accepted that the world’s largest retailer set the stage for warehousing strategies. “It is estimated that Walmart self-distributes 85% of the cost of goods on its retail shelves as compared to less than 50% for its competitors,” Wulfraat says. “While Walmart has contracted with third party logistics providers for specific distribution operations, it owns and operates the vast majority of its 120 million square feet of distribution center space. In simple terms, Walmart’s entire business strategy is based on squeezing out cost across all levels of operations to achieve its low-price competitive advantage. For most retailers, logistics represents one of the largest controllable expenses on the income statement and Walmart’s distribution efficiencies are at the heart of why this company has grown to $405 billion since the first Walton’s five and dime was opened in 1962.”

The need for warehousing is directly related to the type of products sold. Turnover of product SKUs and restocking requirements will ultimately define the warehousing strategy. Calibrated correctly, calculating square footage will be a simple metric exercise. If short-term and long-term distribution strategies are not professionally determined and leveraged against best practices, spikes in demand will create expensive and disruptive challenges to the retailer.

-Paul A. Waters, SIOR, CCIM, CRE, FRICS

Based in New York City, Paul Waters, SIOR, CCIM, CRE, FRICS, is Executive Vice President-The Americas at NAI Global, where he is responsible for business development and client relationships among major corporate end users of office and industrial space.

Thursday, July 8, 2010

New white paper from Dr. Peter Linneman now available!

Robust Recovery in 2010 Will Just Return U.S. to Middling Economy, Says NAI Global Chief Economist Dr. Peter Linneman

Strong, steady economic growth over the next two years will just return the U.S. economy to a pre-2008 level, giving us back what we needlessly lost due to government-induced panic and poor lending practices, according to a new white paper from NAI Global Chief Economist Dr. Peter Linneman. The white paper examines the overall outlook for the job market and provides a forecast for the next three years.

“The key for the real estate sector is job growth, as a recovery without jobs does not fill buildings,” Dr. Linneman noted. “We anticipate that the next three years will continue to see average job growth of 250,000 jobs per month, for a three-year job increase of at least 9 million jobs by early 2013.”

“That is robust job growth, but it is important to remember that our forecast would leave us with almost the same number of jobs in mid-2013 as existed at the beginning of September 2008,” said Dr. Linneman. “Even with a robust recovery adding 9 million jobs over the next three years, we will still have an anemic unemployment rate of 7%. Hence, we expect a robust rebound to mediocrity.”

A Robust Rebound to Mediocrity?, NAI Global’s white paper, reviews payroll history and trends, providing an economist’s view of the recovery’s impact on the jobs market today and tomorrow.

This latest white paper follows Capital Markets Show First Signs of Recovery, Dr. Linneman’s treatise on the impact of how a rise and recovery in asset prices will lead to investors becoming more active, how capital markets will start to show recovery and the impact on the commercial real estate industry.

Click here  to view the white paper from NAI Global Chief Economist Dr. Peter Linneman

Dr. Linneman is also Professor of Real Estate, Finance and Public Policy at the Wharton School of Business, University of Pennsylvania, and Principal, Linneman Associates.

Santana Textiles to start construction on Edinburg plant later this month

July 07, 2010 10:11 PM
Jared Janes
The Monitor

EDINBURG — Brazilian denim manufacturer Santana Textiles is set to begin building a production facility later this month on a 33-acre site at the Edinburg North Industrial Park.

Steel and other construction materials have been delivered to an adjacent property in preparation for the work that is expected to begin within the next few weeks, said Roberto Cantu, the company’s CEO for its Edinburg operations. The manufacturer will apply for a building permit once it receives authorization from the state to proceed.

The company first announced in July 2008 that it would open its sixth plant — and first in North America — in Edinburg to produce high-end denim, but the 775,000-square-foot facility has ... Click here to read more

Friday, July 2, 2010

Happy 4th of July!

“All the great things are simple, and many can be expressed in a single word: freedom; justice; honor; duty; mercy; hope.”

― Winston Churchill

Have a safe and wonderful 4th!

Family Fun:
Why do we celebrate the 4th of July?  Click here for an article to share with your family.