Texas Market Reports

DFW Industrial Market Poised for More Growth in 2020

by Taylor Williams February 21, 2020

The Dallas-Fort Worth (DFW) real estate market is remarkable. In a recent meeting with a broker from another market, he made the observation: “You guys in Texas are like a country unto yourself. It’s not that you don’t know there are 49 other states, you just don’t care!” While that was a bit of an exaggeration, the point was well taken. Certainly DFW is not immune to national affairs and recessions, but the market appears to have enough momentum to carry through 2020, though the uncertainty of the presidential election could cause a few users and buyers to pause before making decisions. In 2016, as Global President for the Society of Industrial and Office Realtors (SIOR), I travelled throughout North America and Europe. Continually meeting with SIOR brokers in other markets gave me unique perspective on how DFW really does compare to the rest. The leasing and absorption activity far outweigh most other markets, making it an enviable location. Texas will always be a magnet for businesses as long as it retains a pro-business state of mind: Texas is a central part of the country and a right-to-work state with no state income tax, among other attractive incentives. Oftentimes, as …

February 21, 2020

Market Reports Multifamily Texas Texas Market Reports

How Austin’s Growth Creates Opportunities for Multifamily Developers, Investors

by Taylor Williams February 18, 2020

With its unique culture, relatively low cost of living, warm weather and booming economy, Austin has emerged as one of the fastest-growing cities in the United States. As more people and companies flock to this vibrant city, the multifamily real estate market looks primed for growth from both a development and investment perspective. At its core, this real estate potential lies in the fact that the housing supply needs to keep up with a growing population of workers. According to the Austin Board of Realtors (AboR), in October 2019, the number of homes sold reached new highs, while the inventory of single-family homes reached new lows. As this gap shows, and as ABoR notes in its report, housing demand is outpacing housing stock, particularly in areas close to major employers and transit options. To remedy this problem, multifamily developers and investors can step in to build multi-unit buildings throughout Austin. Adding multifamily buildings can help tackle the housing shortage much faster than building more single-family homes, and many newcomers to Austin are young, well-paid professionals looking to rent apartments in exciting urban neighborhoods. As such, developers and investors can look to add more units in both existing high-density areas that …

February 18, 2020

Industrial Market Reports Texas Texas Market Reports

Population Growth Will Continue to Fuel Austin Industrial Market in Coming Years

by Taylor Williams February 14, 2020

When real estate professionals contemplate the nation’s top industrial markets, Austin is not the first market to come to mind. Bigger and more established markets like Dallas, California’s Inland Empire, Chicago and Houston are often the newsmakers with tens of millions of square feet of industrial product under construction and tenants routinely signing deals for million square foot-plus deals. Austin has been mostly known and admired for its office market and tech-forward economy, gaining notoriety circa 2000 with the tech boom and exploding in growth over the last five years with expansions and commitments from Apple, Google, Facebook, Indeed, Amazon, Oracle, Charles Schwab and Expedia. However, Austin’s emergence as one of the nation’s best cities to live in with ample opportunities for high-paying employment has resulted in astounding population growth — one of the biggest drivers for industrial real estate. As the population expands so does demand for goods and materials that are stored in warehouse buildings, and the Austin industrial market will certainly benefit from this trend for the foreseeable future. Per the Texas Demographic Center, the Austin metro population stood at roughly 1.25 million people in 2000. It is anticipated that the metro area will be home to …

February 14, 2020

Market Reports Office Texas Texas Market Reports

As Core Rents Rise, Austin Office Market Welcomes Adaptive Reuse in Suburbs

by Taylor Williams February 11, 2020

It’s no secret that Austin has exploded with jobs and people over the last 10 years, and evidence of the growth has perhaps been most visible in the asking rents for office space. Rental rates in Austin’s most sought-after neighborhoods have essentially doubled since 2010, when major tech firms really began eyeing the state capital for its pro-business climate and supply of educated workers, as well as its high quality of living. Today, we see full-service office rates well above $50 per square foot in the hottest submarkets. According to our data, the average full-service rent in downtown Austin typically ranges from $65 to $69 per square foot. Submarkets like The Domain and East Austin command rates that typically average about $55 and $50 per square foot, respectively, on a full-service basis. These rates include operating expenses which can be between $15 to $25 per foot depending on location, mainly due to property tax increases found in these higher density areas of Austin. While these rates appear to be a smaller issue for the tech giants that drive significant growth among office-using industries in Austin, the rapid rate of appreciation is unquestionably pricing out some users that also need to …

February 11, 2020

Market Reports Retail Texas Texas Market Reports

Entertainment Users in Texas Embrace Flexibility

by Taylor Williams February 7, 2020

Retail landlords want to fill space, especially given that large gluts of it have been returned to market as store closures have accelerated, a move that has coincided with entertainment users that want to expand their footprints. But the logistics of bringing entertainment concepts into retail spaces — particularly vacated junior or big box spaces — are very complicated. This holds particularly true for entertainment concepts that involve movies and bowling. Ceiling heights and column spacing, for example, prevent many spaces from being repurposed cost-effectively for entertainment uses like bowling alleys and theaters. In addition, lease terms for these deals are often based on traditional retail metrics like sales per square foot. According to Howard Samuels, president of California-based advisory and brokerage firm Samuels & Co., there is a strong disconnect between entertainment uses and conventional retail real estate that has yet to fully integrate experiential uses or “location-based entertainment (LBE).” “Entertainment retail as a backfiller of boxes is a misnomer,” says Samuels, whose firm specializes in entertainment transactions. “Those users typically don’t want fixed walls and need higher ceiling heights. Most location-based entertainment concepts are very challenging to design, develop, open and operate. These concepts have very specific criteria …

February 7, 2020

Market Reports Texas Texas Market Reports

Texas Forecast Survey: Party Keeps Rolling in 2020

by Taylor Williams February 4, 2020

Much like the broader U.S. economy, the commercial real estate markets of Texas continue to display strong fundamentals that should fuel another year of robust demand for space, elevated valuations of commercial properties and disciplined, yet confident lending for new development. So say the majority of commercial brokers, developers and owners who responded to Texas Real Estate Business’ ninth annual forecast survey. These professionals did acknowledge that uncertainty during presidential election years — particularly when the current president is facing impeachment proceedings — can undoubtedly rattle markets. Ultimately, however, industry professionals believe that the dual drivers of job and population growth, coupled with record levels of capital seeking placement in Texas markets, are strong enough to overcome geopolitical concerns such as the United States-China trade dispute and a stark partisan divide in Washington, D.C. “Job and population growth are both indicators and driving forces for resiliency, and behind the job and population growth are systemic organizational re-allocations of capital, mission-critical operations and human resources into the Texas markets,” says Aaron Johnson, director of capital markets in JLL’s Dallas office. Johnson adds that in Dallas, the arrivals of corporate giants like Toyota, Liberty Mutual and McKesson Corp. illustrate these companies’ belief …

February 4, 2020

Civic Market Reports Texas Texas Market Reports

Local Architect Uses Texas Civic Project to Exemplify Sustainability of Design

by Taylor Williams January 31, 2020

Tony Schmitz, vice president and senior project manager at Dallas-based Hoefer Wysocki, has been leading the architecture and design firm’s sustainability initiatives across all sectors. With an academic foundation in environmental design, Schmitz has most recently taken his green building and design expertise to Collin College, in McKinney, Texas. Sustainability features of the up-and-coming campus include improvements in the areas of water conservation, design strategies and efficient technologies. At Collin College, Schmitz has made strides in the area of resource use reduction, primarily for water. As our most precious natural resource, water usage has recently come under scrutiny in the city of Dallas, where the city council unanimously passed the 2019 Water Conservation Plan. All of Schmitz’s projects have achieved or surpassed their goal of 40 percent water reduction for the last five years. This figure has become a standard for Schmitz, with a goal to increase to 50 percent water reduction and 100 percent for non-potable water reduction. Schmitz, spoke to Texas Real Estate Business about the process of integrating sustainability into all facets of the building industry, as well as the larger role design plays in the construction of highly adaptable and efficient facilities. His edited responses are …

January 31, 2020

Market Reports Retail Texas Texas Market Reports

Texas Malls Receive Facelifts, New Life

by Taylor Williams January 21, 2020

Virtually every American mall that is struggling owes its woes to some combination of e-commerce growth and millennials’ preference for experiential retail. But the simple fact remains that e-commerce still only accounts for about 10 percent of total retail sales, according to the U.S. Department of Commerce. And while store closures are still running rampant, new retailers are rapidly backfilling those shuttered spaces and introducing new concepts to maintain consumer appeal. To that end, projects that convert enclosed malls into open-air destinations that feature local or first-to-market retail concepts, more food and beverage options, open spaces for communal events and distinct entertainment (and other) uses represent paths to salvation. These projects offer developers and landlord opportunities to restore their malls as bastions of shopping, dining and entertainment — and to address unfulfilled needs within the local retail market. While every project is different in terms of how the tenant roster is revamped and how much construction is required, all mall redevelopments share the goal of returning to relevance within the community. In this piece, we highlight four Texas malls that have or are undergoing extensive redevelopments to boost occupancy, sales, foot traffic and prestige in the eyes of consumers. Park …

January 21, 2020

Affordable Housing Market Reports Multifamily Texas Texas Market Reports

Investor Demand for Texas Affordable Housing Intensifies

by Taylor Williams January 17, 2020

The declining affordability of housing has become a worsening problem in many areas throughout the country, and Texas is no exception. Despite talk of a cooling housing market, home prices in both North and Central Texas are hitting high-water marks, making the dream of homeownership less likely to become a reality for many people. According to the Austin Board of Realtors, median home prices in Austin hit an all-time high in May, topping $400,000. As for North Texas, a report from ATTOM Data reveals that as of the third quarter, the median home price in Dallas-Fort Worth (DFW) was 73 percent above the market’s pre-recession peak. As home prices skyrocket in the these markets, apartment rental rates are also experiencing upward pressure. The Austin Affordable Housing Corp., a nonprofit subsidiary of the Housing Authority of the City of Austin, reports that Austin is now the most expensive rental market in Texas. In addition, The Dallas Morning News reported in August that while Dallas-area apartment rents are growing at a slower rate than the national average, these figures rose 3 percent from a year earlier. Rising apartment rental rates in these markets are resulting in a greater percentage of cost-burdened renters …

January 17, 2020

Market Reports Retail Texas Texas Market Reports

Texas Retailers Embrace Age of Reinvention

by Taylor Williams January 14, 2020

Innovative new retail experiences are appearing across the United States, and Texas is no exception. We started with food halls and experiential outings like escape rooms and now see even more creativity, from axe-throwing bars and esports arenas to Instagram-worthy art installations like Candytopia and experience-driven restaurants and bars like Pinewood Social. Throughout the country, there is a preferential trend toward experiential retail — businesses that provide consumers with unique, unforgettable encounters — and it’s simply a response to changing consumer tastes. Typically, a shopper visits a particular store for one of three reasons: convenience, value or experience. Today, we enjoy greater shopping convenience than ever before. In many areas of the country, we can get nearly everything we need from internet retailers, often with same-day or two-day shipping. According to PwC’s Global Consumer Insights Survey 2018, 41 percent of consumers are willing to pay extra in order to get same-day delivery, while 23 percent are willing to pay for delivery within three hours. Meanwhile, companies that provide exceptional value are showing growth compared to their peers. For example, the parent company of T.J. Maxx and Marshall’s showed steady positive increases in annual sales growth from 6 percent in 2015 …

January 14, 2020

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