Market Reports

Oklahoma City Is Natural Landing Spot for Successful DFW Retailers

by Taylor Williams January 11, 2019

Retail real estate in Dallas-Fort Worth (DFW) is nearing its cyclical peak, and users that want to continue expanding in the metroplex are being hamstrung by a lack of quality space and surging rents. According to CoStar Group, DFW’s retail vacancy rate currently stands at 4.4 percent, a record low that the research firm expects to hold steady or even improve in the coming years. Rents have grown by more than 3 percent annually over the last five years, and are now 15 percent higher than their pre-recession peaks. Put simply, DFW is a landlord’s market. As such, retailers that have had success in the metroplex over the last decade and want to keep opening new stores should be considering other markets. One of the ideal landing spots for these users lies a mere 200 miles up Interstate 35 in Oklahoma City. According to CoStar, Oklahoma City’s retail vacancy has grown by approximately 100 basis points over the last two years, currently clocking in at 6.1 percent. There is very little new product under construction — less than half a million square feet — but asking rents in Oklahoma City average $14.40 per square foot, compared to $18.89 per square …

January 11, 2019

Industrial Market Reports Texas Texas Market Reports

Houston’s Industrial Vacancy, Supply of Developable Sites Dwindle

by Taylor Williams December 28, 2018

Industrial space throughout the Houston continues to be absorbed at an astonishing clip, pushing vacancy levels to some of their lowest points this cycle. According to Stream’s data, the overall industrial vacancy rate in Houston closed the third quarter at 4.9 percent. Vacancy rates in the six major Houston submarkets are all below 7 percent for the first time since Stream entered the Houston market in 2006. The low vacancy rate across the market has triggered waves of new development. Stream estimates that across Houston, there is approximately 14 million square feet of institutional-quality space under construction, with another 25 million square feet already having delivered since 2014. To put that in perspective, Stream tracked the overall market at 260 million square feet in 2014 compared to 285 million square feet today – a 9% market growth over that four-year period. If you layer in the product under construction today, that takes that growth to over 13 percent. Despite a hefty volume of development hitting the Houston market, leasing velocity continues to outpace new deliveries, keeping market fundamentals in check. This strength is attributable to many macro-economic factors but strong population growth, e-commerce, Hurricane Harvey recovery and the boom in …

December 28, 2018

Market Reports Retail Texas Texas Market Reports

Market Fundamentals Show Houston Can Absorb New Retail Space

by Taylor Williams December 21, 2018

As e-commerce continues to challenge the growth, evolution and resilience of retail, brokers in Houston have reason to be optimistic about leasing velocity and absorption in the coming months, even as new construction floods the market. There’s no denying that in the past several years, the retail industry has experienced a shakeup. The move to online shopping has spared very few retailers, and Houston is no exception. The Houston MSA has seen its fair share of big box store closures, but tenants and developers alike appear ready to face the challenges head-on. The collective mood among retail professionals in Houston is one of acceptance of a new, tech-heavy retail landscape. The retail community has evolved into embracing the likes of pop-up shops, online platforms, curbside pickup options and a service-based shopping experience. Ultimately, however, it’s the consumers who decide the fate of certain retailers. The professionals who develop and lease retail properties are integrating more psychological analysis into their daily work than ever before. In today’s environment, even the slightest of nuances in consumer behavior can mold critical aspects of real estate strategies. The evolution of retail follows the evolution of human behavior. Market Fundamentals Houston is one of the …

December 21, 2018

Market Reports Multifamily Texas Texas Market Reports

Strong Fundamentals, Opportunity Zone Laws Define Houston Multifamily Market

by Taylor Williams December 14, 2018

Houston continues its trajectory as an exemplary market with strong multifamily fundamentals that continue to attract large-scale investment nationwide. The positive trends of strong job growth and sustained apartment demand are forecast to hold thanks to a confluence of factors. To better understand the dynamics shaping Houston’s multifamily market, it is important to look closely at several major drivers, including residual demand from Hurricane Harvey and record employment growth, as well as the impact of rising interest rates and incentives introduced by the Opportunity Zone legislation. More than a year since Hurricane Harvey made landfall, Houston’s multifamily market continues to rebound. Overall occupancy has risen 180 basis points year over year to its current rate of 90 percent. Residents displaced by Harvey’s flooding, particularly in hard-hit areas like the Energy Corridor, contributed to the increased demand for apartments. In the third quarter of 2018 alone, absorption greatly outpaced deliveries, with almost 9,200 units newly occupied and less than 6,000 units delivered. As developers taper new apartment deliveries, we expect demand to continue to outpace deliveries for the foreseeable future. Rents advanced 3 percent between October of 2017 and 2018 — almost twice the rate of growth of the previous 12 months. …

December 14, 2018

Market Reports Office Texas Texas Market Reports

Houston Office Market Is In Full Rebound Mode

by Taylor Williams December 7, 2018

Like most major cities, Houston has had its fair share of market cycles. However, this most recent decline in the local economy’s growth rate that was caused by a steep drop of oil prices put a heightened level of stress on the Houston office market. Fortunately, the energy sector has turned the corner, and, paired with the ever-diversifying economic base, the Houston economy is buzzing again. As such, Houston’s population and job growth have translated into early signs of improvement in office market fundamentals. The metro’s employment base, which is currently seeing some of the highest employment numbers in history, is growing at more than twice the national rate. This rapid rate of expansion has provided the office market with much-needed positive momentum as we look toward the new year. Improving Fundamentals The much-anticipated turnaround in the office market is here. Asking rents, occupancy rates and absorption are all increasing across the metro area and across all building classifications. In the third quarter of 2018, the office market posted approximately 1.1 million square feet of positive net absorption. This is a significant improvement compared to the negative net absorption of roughly 1.1 million square feet in the first quarter of …

December 7, 2018

Market Reports Mixed-Use Texas Texas Market Reports

Mixed-Use Developments Come in All Sizes in Far North Dallas

by Taylor Williams November 30, 2018

Mixed-use development is not new. It has been around since the shop owner lived in the apartment above the store. Today, however, the term is used to describe an urban environment that allows people to walk easily among a variety of integrated functions. At first glance, one might think mixed-use development in the Plano-Frisco-McKinney area, known as the Far North submarket, is strictly for big-name developers. Familiar destinations such as Legacy West in Plano and The Star in Frisco underscore this notion, offering retail, restaurants, office, hotels and apartments. Take a closer look, however, and you’ll see that the region is also starting to add smaller mixed-use projects that provide convenience, amenities and experience for occupants and visitors. Numbers Matter Will the many kinds of mixed-use development happening now in Far North Dallas be sustainable? If the current market reports are any indication, then the answer is yes. The saying goes that if the vacancy rate in Dallas-Fort Worth (DFW) is less than 20 percent, then the construction cranes come out. CoStar’s Mid-Year 2018 report shows that the DFW office market ended the second quarter with a 15 percent vacancy rate. Specifically in the Far North Dallas, which also comprises …

November 30, 2018

Market Reports Multifamily Texas Texas Market Reports

Industrial Development Erupts Overnight in Plano, McKinney

by Taylor Williams November 16, 2018

While most of the Dallas/Fort Worth (DFW) area has seen a boom in industrial construction over the past decade, the Plano and McKinney submarkets have been relatively quiet until recently. Due to significant growth in residential development in the northeastern side of the metroplex, e-commerce and last-mile distribution users are increasingly demanding space in these areas. Consequently, these submarkets are no longer considered just a home for technology-based tenants. Several new projects, either under construction or proposed, are focusing on mid-size to large users. Total combined vacancy rates in these areas for flex and warehouse product are now below 5 percent. The average rental rate for flex product is around $12.25 per square foot and the average rate for warehouse space is $6.36 per square foot. Although the vacancy rate is as low as it has been in the past five years, there is a tremendous amount of activity and several market transactions that are likely to positively impact demand for speculative industrial space. While no transactions completed at this time, there have been several prospects working on proposals in the 60,000- to 100,000-square-foot size range in Plano and another prospect looking to lease between 200,000 to 600,000 square feet …

November 16, 2018

Market Reports Retail Texas Texas Market Reports

Retail Growth in Plano-Frisco-McKinney Comes Full Circle

by Taylor Williams November 9, 2018

Twenty-five years ago, the Plano-Frisco-McKinney area was replete with open fields, cows and dirt roads. Today, the intersection of State Highway 121 and the Dallas North Tollway is central to Dallas-Fort Worth’s (DFW) development activity. Every red light within a three-mile radius of that intersection has cars stacked 10 deep. The entire area is a metropolitan buzz of noise and activity. The key to understanding how real estate markets — not just retail —in these cities changed so dramatically in less than 20 years lies in geography. The (DFW) metroplex consists of about 9,286 square miles, which is roughly double the size of the Los Angeles metro area, not to mention bigger than the combined size of Rhode Island and Connecticut. The sheer mass of land in DFW and diverse city development policies ensure population densities and characters vary tremendously from one submarket to another. Consequently, retail real estate in the metroplex exists and thrives in pockets. Given the benefit of the expanded infrastructure that the Plano-Frisco-McKinney area has enjoyed over the last two decades, it comes as little surprise that the region would eventually be a magnet for rooftops — and associated retail activity. Basic Numbers CoStar Group identifies …

November 9, 2018

Market Reports Multifamily Texas Texas Market Reports

In Terms of Multifamily Demand, Far Northeast DFW Has It All

by Taylor Williams November 2, 2018

In the world of multifamily development, it’s rare to find a market that quite literally checks every box. But in Dallas-Fort Worth’s (DFW) Far Northeast submarket, which encompasses Plano, Frisco, Allen and McKinney, that’s precisely the case. In terms of fundamental demand drivers, Collin County is growing by about 80 new residents per day, one of the fastest rates in the country. The county’s population is expected to increase by nearly 800,000 over the next two decades, and to add more than 300,000 new jobs during that stretch as well. The region also epitomizes the corporate relocations for which DFW has become renowned. The arrivals of Toyota North America, JPMorgan Chase, Liberty Mutual and FedEx have already brought thousands of high-paying jobs to the Far Northeast submarket. Just as important, these companies have established precedents for medium-sized companies to follow suit and keep the job growth train rolling. The impacts of those demand drivers on multifamily growth in the region has been tremendous. But there’s more to the story of this area’s multifamily explosion than the increase in jobs and population. Lesser-Known Factors While corporate relocations have brought swaths of millennials to the area — in Frisco, that group comprises …

November 2, 2018

Data Centers Industrial Market Reports Texas Texas Market Reports

DFW Emerges As Top Five Data Center Market

by Taylor Williams October 26, 2018

Development of data centers is surging across the Dallas-Fort Worth (DFW) metroplex, and the party is really just getting started. According to research from JLL, DFW is the fourth-largest data center market in the country in terms of supply with approximately 3.7 million square feet of inventory providing 505 critical megawatts of power. DFW’s development pipeline spans more than 1.1 million square feet of new projects totaling about 215 critical megawatts that are either planned or already under construction. Data centers typically produce about 150 watts of power per square foot. A facility’s total power intake minus the portion needed to cool the equipment represents its critical megawattage — its true capacity for storing and processing data. A number of state-level factors have contributed to DFW’s rapid ascension up the national data center ladder. Texas possesses a great deal of fiber optic connectivity, which gives users fast, reliable transmission of data and helps reduce costs. In addition, the state has its own power grid, as well as an abundant, cheap supply of natural gas to fuel power costs, which are typically the most expensive operating item for data centers. An arid climate, ample available land and friendly development policies have …

October 26, 2018

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