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Crescent Real Estate Equities, a publicly traded, Fort Worth-based real estate investment trust, is negotiating to go private in a deal that could be valued at nearly $6 billion.

Crescent (NYSE: CEI) owns and manages about 1.5 million square feet of office space in Austin, plus key office, hotel and residential assets in Houston, Dallas and other major U.S. markets.

According to REIT Newshound, a California trade publication that covers REITs and other property-linked stocks, Crescent  is in "advanced talks" to sell the entire firm to Istithmar, a Dubai-based investment holding company.

Other insiders familiar with the talks confirmed the discussions. Officials with Crescent, Istithmar and Lehman Bros., which reportedly is advising Crescent on the matter, did not return calls or declined to comment.

Crescent, through subsidiaries and partnerships, owns and manages about 74 office buildings in Dallas, Fort Worth, Houston, Austin, Denver, Miami and Las Vegas.

The company's local portfolio includes Austin  Centre and 816 Congress office buildings in downtown and The Avallon complex in the Northwest submarket. Crescent also has a stake in 301 Copngress.              

Crescent acquired it's Austin assets in the mid-1990s after going public in 1994. The company is also a partner with Dallas -based Champion Partners Group Ltd.  on the recently announced $25 million Parkway at Oak Hill office project on Southwest Parkway.      

Because the deal is so complicated, sources caution that it may not happen. If it does, it would be the latest in a trend that has public real estate companies across the country going private, says Russell Ingrum, a senior vice president with CB Richard Ellis Inc. in Dallas.

"REITs are finding that their assets are worth more in the private market than the public market," Ingrum says. "With valuations greater in the private sector, it's causing public REITs to say, 'Why not take advantage of it?'"

Jerry Frey, CB Richard Ellis' managing director over  Austin and San Antonio, says Crescent has had a positive impact on the Austin market during its years here.

"They have some nice, desirable assets, but I don't know that a change in ownership would dramatically impact the landscape," he says."The capital source doesn't always predicate what type of action will follow."

Tim Hendricks, senior vice president of Cousins Properties, says there's a tremendous amount of capital in the national market that's after real estate.

He points to the privately-held Blackstone Groups $5.6 billion purchase of New York real estate investment trust CarrAmerica Realty Group. That transaction took CarrAmerica, a major national and local landlord, private.

"Based on the size of these transactions, there seems to be an endless amount of money out there," he says. "In the current capital markets, if you're an owner of commercial real estate, you have to be evaluating if you should be a seller of commercial real estate," he says.

Other buyers looking at Crescent, according to REIT Newshound, include Los ANgeles-based Colony  Capital LLC, a private international investment firm, and Starwood Capital Group Global LLC, a Connecticut firm with a deversified prtfolio of residential and commercial properties.  Representatives at Colony and Starwood could not be reached for  comment.

The leading contender, though, is Istithmar. The holding company has a stake in more than 30 companies, with equity investment in excess of $1.8 billion (USD) and an approximate total enterprise value of $6 billion.

The leading contender, though, is Istithmar. The holding company has a stake in more than 30 companies, with equity investment in excess of $1.8 billion (USD) and an approximate total enterprise value of $6 billion.

Its limited real estate assets in the United States include three office towers -- two Park Avenue towers and The 6 Time Square building in New York City.   Istithmar acquired the Times Square tower in June and plans to convert it into a five-star hotel.

Mike Kirby, co-founder and research director for  Newport Beach,Calif.-based Green Street Advisors,  an independent research and consulting firm focusing on publicly traded real estate securities, estimates a potential deal for Crescent to be in the $23.50- to $25.50-per-share range.

Crescent shares traded at $21.38 Aug. 30, with 102.6 million shares outstanding.

REIT Newshound Editor Barry Vinocur estimates Crescent's total market cap -- equity, debt and preferred stock combined -- at $5.8 billion. The market cap, Vinocur says, can be used to estimate the expected transaction value.

The disparity between real estate and stock values has caused other national REITS to explore going private as well.

In addition to Blackstone's purchase of CarrAmerica, which closed in July, Gables Residential Trust, a REIT that develops and invests in apartments, was acquired by a subsidiary of ING Groep NV of the Nethersnads for $2.8 billion last year.  Atlanta-based Gables has multiple apartment communities throughout Austin.

The growth of the Austin economy will continue to outpace the rest of the nation over the next year, according to a forecast from oneTexas economist.
Mark Dotzour, chief economist at Texas A&M University's Real Estate Center, predicts that the U.S. economy will slow in coming months--in part the result of forces such as increased global construction costs and the rising price of oil. But Austin is likely to add 20,800 new jobs over the next 12 months, a 2.9 percent increase in employment that will significantly outpace national job growth, he says.
Dotzour made his comments Tuesday afternoon before a crowd of more than 500 at the Real Estate Council of Austin's 6th Annual Mid-Year Economic Forecast.
Dotzour says corporate pre-tax profits rose 14.4 percent during the fourth quarter of 2005, the strongest showing since 1992. He predicts corporate profits will continue to increase on the order of 5 percent to 8 percent this year, which will lead to continued absorption of space in the real estate markets.
Based on a survey taken at the end of last year, 69 percent of investors still believe real estate is a better investment than the stock market. That's due in large part to consistent news of mismanagement in Corporate America, Dotzour says. "Buildings will keep going up in value as long as the stock market looks like poison ivy."
Dotzour sees further strengthening in across Austin's real estate sectors. He forecasts office occupancy will increase to 86.4 percent with rents rising $2 a square foot to $22.89.
On the retail front, he expects more than 2 million square feet of space will get absorbed in the coming year. Another 5.2 million square feet of new product will come online, leading occupancy to drop to 85 percent. Despite the fall in occupancy, he still forecasts a 50 cent per square foot rise in rental rates to $19.18.
Meanwhile about 412,000 square feet of space will get absorbed in industrial flex-space. Occupancy in that market will go up to 79.5 percent with a 5 percent rise in rents.

The Unemployment rate in Central Texas remained stable in July.

According to the Texas Workforce Commission, the July unemployment rate for the Austin-Round Rock area totaled 4.4 percent, unchanged from June 2006. This rate is also unchanged from the July 2005 unemployment rate.

Total nonagricultural employment in the Austin-Round Rock area decreased by 5,400 jobs, or .8 percent during the month of July. Local government employment dropped by 4,200 workers, or 5.8 percent, as schools continued to reduce staff at the end of the school year.

The manufacturing sector dropped 1,000 jobs, while the leisure and hospitality sector lost 700 employees during July.

Natural resources, mining and construction added 500 jobs during the month, while employment levels in the state government and wholesale trade sectors increased by 400 workers each.

Since July 2005, total nonagricultural employment in the Austin-Round Rock  area increased by 18,500 jobs, or 2.7 percent. During that time period, state and local government added 4,600 jobs.

The leisure and hospitality sector, and the professional and business sector gained 3,200 and 3,000 workers, respectively, during the past year. Manufacturing employment has dropped by 1,400 jobs, or 2.4 percent, since July 2005.

Across the state, the unemployment rate was also stable for July, totaling 5.5 percent -- unchanged from June 2006, but down slightly from the July 2005 rate of 5.4 percent.

Expansion Management magazine puts the Austin area first among U.S. cities in the magazine's fourth annual Mayors Challenge rankings of the best cities for future business locations.

Austin ranked No. 1 overall out of 362 metro areas across the country in seven categories, including education, health care, quality of life, logistics, number of knowledgeable workers, legislative climate, and a poll of 80 prominent corporate site consultants.

Texas led all states in the rankings, with seven metros earning its "5-Star Business Opportunity Metro? distinction.

Virginia was next, with five, followed by Michigan, with four metros that earned top honors. Arizona, California, Iowa, Missouri, Ohio, Pennsylvania each had three metros that made the "5-Star" list.

In all, 33 states had at least one "5-Star Business Opportunity Metro" on this year's list.

"Among today's big-city mayors, attracting businesses -- and the new jobs and tax revenue they bring with them -- is priority No. 1," says Bill King, chief editor of Expansion Management. "Competition among cities is fierce and, despite their notoriety, incentives are not the difference maker when it comes to why businesses choose one city over another. Being able to satisfy a company's long term business requirements is much more important, and the most successful cities realize that fact."

Expansion Management is a bimonthly magazine for executives of companies actively looking for a place to expand or relocate their facilities within the next one to three years.

The Austin residential market is shifting into overdrive. The latest Austin Board of Realtors report shows single-family home sales were up 12 percent from last year to 2,190 and contributed $517,812,360 to the local economy -- 27 percent more than in April 2005. But this number is down from March, when almost 2,400 single family houses sold for an increase of 18 percent over the year before. Single-family properties in the Central Texas area earned a median price of $175,000 in April, up 8 percent from 2005, and up 5 percent from the March median price of $166,500. "There is no question the Austin real estate market is hot," says Board Chairman John Rosshirt. "Supply is shrinking, particularly in south Austin, which continues to push up prices for residential properties - making Austin a great place to buy and sell homes." Homes sat on the market for an average of 59 days, which represents both a 20 percent decrease and the first time in two years that number has fallen below 60. Of those homes, 98 percent sold for the list price, which is the largest portion since June 2005. One reason for the growth "is that the cooling markets in other areas of the country are drawing out-of-state investors to Austin," Rosshirt says. "Unlike many other markets, where property values skyrocketed in a short period of time, Austin has enjoyed steady growth in real estate values that are more sustainable over the long-term. As this investment continues, we will see a continued increase in the number of properties for rent and a steady appreciation in property values and rent in areas in the north and south parts of town." The board says that declines across the board in active listings and average days on the market which, combined with increases in pending and total sales, indicate that Austin's appetite for properties is showing no signs of slowing soon.

The potent combination of the Texas state government and the University of Texas propel Austin to third place. There are just three large communities where more than 40 percent of adults have earned bachelor's degrees. Austin is one. The others are Seattle and San Francisco.

Percentage of city adults who stopped at each level:
Earned a graduate and/or professional degree: 14.7%
Earned a bachelor's degree: 25.7%
Earned an associate degree: 5.0%
Went to college, but didn't earn a degree: 21.1%
Graduated from high school: 17.0%
Dropped out of high school: 16.6%

Which community boasts the highest concentration of brainpower -- and therefore can claim to be America's smartest big city?
The answer is Seattle, according to a new study by Bizjournals.com.

An analysis of U.S. Census Bureau data puts Seattle's No. 1 ranking in perspective:

-- Forty-seven percent of Seattle's adults hold bachelor's degrees, the strongest proportion of college-educated residents in any big city. It's nearly double the U.S. average of 24.4 percent.

-- Seattle is second to Washington, D.C., in the share of people with advanced diplomas. Twenty-one percent of Washington's adults have earned graduate or professional degrees, followed by Seattle at 17 percent. The national average is 8.9 percent.

San Francisco and Austin are the runners-up in the Bizjournals.com study, which ranks the relative brainpower of 53 large communities.

Rounding out the top 10 are Colorado Springs, Minneapolis, Charlotte, San Diego, Washington, Portland, Ore., and Albuquerque. Bizjournals.com analyzed the educational levels of adults in nearly 16,000 cities, towns, villages, boroughs and unincorporated areas. Communities were ranked in three population categories, based on a formula that rewards places with heavy concentrations of college graduates.

The rankings reflect each community's collective brainpower, which is tied to its residents' abilities to innovate, create, compete -- and make money.

A worker with a graduate degree earns 45 percent more, on average, than a colleague with a bachelor's degree, and 167 percent more than someone who never went beyond high school, according to figures released last year by the Census Bureau.

#1: Seattle

#2: San Francisco

#3: Austin

#4: Colorado Springs

#5: Minneapolis

#6: Charlotte

#7: San Diego

#8: Washington D.C.

#9: Portland

#10: Albuquerque

Austin area employers are expecting to hire at a hefty pace during the third quarter of 2006, according to a new study.

The recent Manpower Employment Outlook Survey found that from July to September, 37 percent of the companies interviewed plan to hire more employees. None expect to reduce their payrolls, says Manpower spokesperson Shirley Sanders.

"Austin area employers have weaker hiring intentions than in the second quarter when 50 percent of the companies interviewed intended to add staff, and 3 percent planned to reduce headcount," Sanders says. "Employers are more positive about hiring than they were a year ago when 27 percent of companies surveyed thought employment increases were likely and 3 percent intended to cut back."

For the coming quarter, the survey found that job prospects appear best in the durable goods manufacturing sector, the wholesale/retail trade, education, services and public administration. Hiring in construction, the non-durable goods manufacturing sector, transportation/public utilities and the finance/insurance/real estate sector is expected to remain unchanged.

According to the national seasonally adjusted results of the Manpower Employment Outlook Survey, U.S. employers still won't budge on hiring plans for the third quarter of 2006.

Of the 16,000 U.S. employers surveyed, 31 percent expect to add to their payrolls during the third quarter of 2006, while 6 percent expect to reduce staff levels.

Fifty-seven percent expect no change in the hiring pace, while 6 percent are undecided about their July through September hiring plans.

The Manpower Employment Outlook Survey is conducted quarterly by Manpower Inc. (NYSE: MAN) to measure employers' intentions to increase or decrease the number of employees in their workforce during the next quarter.

The survey is based on interviews with nearly 16,000 public and private employers in 470 markets across the country.

Noble Development Group is breaking ground on a 32,000-square-foot retail and office building in Cedar Park Road.

The complex will have 18,270 square feet of retail space and 12,956 square feet of office space. The building is expected to be completed by winter 2006.

Noble Development geared the building to have a bank on one end and a restaurant on the other and is working to attract high-end retailers, such as a wine bar, salon, spa, or clothing store.

Noble will be taking about 5,000 square feet on the top floor.

Founded in 2001, Austin-based Noble Development focuses on developing retail portfolio property and other revenue

A San Diego education software company is saying howdy to the Texas market.

Compass Learning Inc. has moved its headquarters from San Diego to Austin, staking claim at the former Schlotzsky's Inc. building at 203 Colorado St. Compass Learning is taking the entire space, which includes 29,745 square feet of office space and a 12,000-square-foot basement.

Compass Learning, founded in 1974, provides research-based educational software that centers around assessment, pre-K to 12 curriculum and data reporting that shows how each student is progressing. Although the privately held company doesn't disclose exact revenue figures, President and CEO Eric Loeffel says the company's annual revenue tops $50 million.

At its new Austin headquarters, Compass Learning employs about 122 employees. Overall, the company has between 300 and 350 employees spread throughout the country.

Compass Learning is on what's known as Block 19, an area bounded by Second and Third streets, Congress Avenue and Colorado Street. The Austin Children's Museum is next to Compass Learning.

Cypress Real Estate Advisors Inc. is the landlord of the building. Nick Whittaker, asset manager at Cypress Real Estate Advisors, says it took three months to lease the space.

Austin's Commercial Texas LLC represented Compass Learning in the transaction.

The company has shut down its San Diego office and is in the process of closing its Westin, Fla., offices to consolidate its operations here, Loeffel says.

Because the company has been around for decades and has gone through a number of transitions, Loeffel says the company decided to consolidate its operations in one central city. At one point, the company had offices in four cities.

"Austin came out on top," Loeffel says. "One, it's the state capital in a large state that has an influence in national education issues. Two, there's an ample supply of educational institutions within proximity. Our [downtown] location was picked specifically because we're close to the university."

Loeffel adds that Austin also sits smack-dab in the middle of the country, which gives Compass Learning better access to its customers across the United States.

"We believe it's going to be really efficient to be here," Loeffel says. "Texas is a big market for us."

Compass Learning has its programs in more than 20,000 schools and serves about 11 million students nationwide.

Loeffel calls Compass Learning the "leader in the K-12 space" because it offers Web-enabled products that are comprehensive. The company's software covers reading, math, science, language arts, among other areas, to name a few, and all of its courses are tied to the objectives of the No Child Left Behind Act.

Experts say the educational software space is very competitive. Standing out in that space is the biggest challenge for many education software companies.

The City of Austin received $11.2 million in sales tax revenue this month, down 2.5 percent from August 2005, according to figures released Friday by the Texas Comptroller's Office.

So far this year, the City has received $88.8 million in sales tax payments from the comptroller's office, up 12.5 percent from the same period in 2005.

Comptroller Carole Keeton Strayhorn says the State collected $1.6 billion in sales tax revenue in July, an increase of 10.2 percent compared with the year-earlier period. Her office sent a total of $508.4 million in tax revenue to local governments this month.

"Texas' sales tax revenues continue to grow," Strayhorn says. "With just one month remaining in the 2006 fiscal year, I'm looking forward to ending August with three years -- 36 consecutive months -- of [statewide] sales tax growth."

July state sales tax revenue and August allocations to local governments represent sales taxes collected in June by businesses that report sales taxes monthly, and sales taxes collected in April, May and June by quarterly filers.