The Dallas/Fort Worth industrial market is one of the healthiest in the country and dodged the recession unscathed. Texas leads the nation in job growth and has now enjoyed six years of economic growth, and the cold hard facts underpin our high-performance industrial marketplace. Some 548,000 jobs have been added to the state of Texas since 2008, and Dallas/Fort Worth ranks third among metro areas in the state for job growth, according to the U.S. Bureau of Labor Statistics. Approximately 1.2 million new residents were added to the Dallas/Fort Worth area from 2000 to 2010. Business Facilities magazine ranks Dallas as the No. 3 center in the U.S. for logistics and distribution, while Fort Worth is ranked No. 5 for aerospace and manufacturing. We know about Houston’s oil and gas-fueled economy, San Antonio’s growing entertainment and defense sector and Austin’s phenomenal growth backed by tech companies and anchored by state government. But what’s up with North Texas and the Dallas/Fort Worth economic drivers? For readers in the developer camp, they will be pleased to know that DFW was on track to have a record year of absorption in 2013 by the time we went to press with this article in …
Texas Market Reports
Looking back five years ago to the outset of 2009, new construction was the hot topic in the San Antonio office market. In 2008, 12 new office buildings were completed, adding approximately 1.5 million square feet to the market. That equated to a 6 percent increase in existing office inventory, with the new product concentrated in the key Northwest and North Central office submarkets. Of course, new development slowed considerably as the recession set in and wore on. Fast-forward to 2013, and as of press time the San Antonio office market only added 166,630 square feet of new product. The good news, though, is that San Antonio metro employment suffered much shorter and shallower losses than other metro areas as a result of the Great Recession. What’s more, the recovery from these losses has been sharp, with nearly 58,000 jobs added since local employment hit its lowest point in 2009, or approximately three new jobs for every one lost in the local downturn. One-third of these new jobs (or about 19,000) were created in office-using sectors such as finance, insurance and engineering. As a result, the office market is recovering, led by Class A space. The rapid decline in Class …
A report t on the Houston retail real estate market reads somewhat like a 1960s newspaper headline: Low vacancy rates! Rising rent for retailers! Bidding wars and a soaring housing market! Together, these factors make the greater Houston area one of the most dynamic retail markets in North America. A Landlord’s Market Conditions clearly favor the landlords. Quality space that was renting in the low $20s per square foot during the downturn now commands rents in the $30s and in some cases the low $40s. Fierce competition for quality space is particularly intense within the range of 1,500 to 3,500 square feet. This has been forcing brokers and Realtors to get creative in discovering and closing on any available quality space for their tenants. Some are pressing landlords about space that’s set to roll over or asking which tenants may be willing to relocate. Rents are increasing largely because of high retail occupancy, which edged up from 93.3 percent to 93.5 in the Houston MSA during second quarter 2013, according to CoStar. At mid-year, net retail space absorption stood at a healthy 980,185 square feet. Yet, despite these positive signs, the Houston area’s older Class B and Class C retail …
Saying that Austin's multifamily market has been a strong performer for the past several years would be stating the obvious and hardly newsworthy, considering that all of the well-reported economic rankings list Austin at or near the top. Nevertheless, the numbers from the past five years are remarkable. While 2013 will go into the record books as one of the best years for multifamily landlords, the real story for 2014 — and beyond — is how the market responds to the two forces that have clearly started to change: supply and financing. Supply Surge There is no hiding the fact that a building boom is occurring in central Austin, as the cranes for multi-family construction easily outnumber the activity in hospitality and office properties combined. Completions for 2014 are expected to be approximately 12,000 units, with the highest concentration (more than 3,000 units) in the central sub-markets. This is a dramatic increase in new supply in a market that has been significantly under supplied due to the collapse of the capital markets in 2008. After a couple of years focused on urban, in-fill projects, the recent third quarter reports indicate that developers are returning to the suburbs, with over 18,000 …
While the national economy remains sluggish, the energy-fueled Houston economy continues to power a resurgent local apartment market. The Houston multifamily market is the strongest it has been in years, with robust performance across classes and in virtually every submarket. Construction has rebounded from the depressed levels of the past few years, but demand continues to exceed supply, forcing rents ever higher. The statistics say that vacancy is at its lowest level in nearly eight years, and rents are at their highest rate on record. I am seeing that borne out, as virtually every deal that crosses my desk shows that income is on an upward trend. Houston was the first market nationally to recover all of the jobs lost during the recession, and since, the pace of job growth has accelerated. Projects that were shelved four or five years ago are now under construction throughout the region, including OliverMcMillan beginning work on its River Oaks District, Wulfe going vertical at BLVD Place and GID building on the site of the old Allen House. In addition, new developments continue to be announced. This construction activity, both residential and commercial, has created lots of good jobs for skilled and semi-skilled laborers …
Strong job and household growth across the San Antonio metro will boost demand for apartments this year, tightening vacancy and pushing rents higher. Apartment developers are preparing to build more units in the upcoming quarters thanks to the formation of new households throughout the metro. However, the development of new rental housing will not jeopardize the operations of existing properties and will keep the investors very active in the coming months. Job creation in the metro is supported by the Eagle Ford Shale, the primary driver of a booming oil industry in South Texas. Exploration and extraction are creating thousands of jobs and bringing billions of dollars to Bexar County. Overall, the economic impact of the Eagle Ford Shale will continue to increase as Kinder Morgan expands its crude and condensate pipeline 31 miles into Karnes County. In addition, plans call for a 400-acre rail park in the South submarket to meet heightened demand for rail-based logistics and warehousing related to Eagle Ford Shale oil production. As employment opportunities grow, the metro’s population will grow 2 percent by the end of 2013, two times the U.S. population growth rate. Of the roughly 46,000 new residents projected this year, approximately one-quarter …
Transportation and third-party logistics companies are flocking to fill San Antonio’s industrial space. For example, Tennessee-based logistics company Forward Air recently announced the lease of an 89,600-square-foot Air Cargo Terminal at Port San Antonio. But Forward Air is just the latest among those moving in. Listed among the larger leases inked in the second quarter were companies such as JB Hunt (26,227 SF) and HDR Trucking (11,827 SF) at Woodlake Distribution Center I, CFI Delivery (23,400 SF) at City Park East Distribution Center B, Towne Services Moving Co. (21,964 SF) at Interstate Business Park 3 and the recent renewal and expansion of Hazen Transport (20,000 SF) at Rittiman Industrial Park — all of which are situated in the Northeast sector. The growing oil production in the nearby Eagle Ford shale is the major driving force behind the increased transportation-related activity. The oil industry depends on trucks to haul machinery, equipment, piping and sand to the oil fields, and San Antonio serves as a hub for those services. In addition, growing demand for rail-based logistics has prompted the development of two new rail parks in Southeast Bexar County – Alamo Junction Rail Park and Mission Rail Park. Railroads in and near …
During the past several years, Laredo’s retail sector has experienced tremendous growth. With the continued development of the Bob Bullock Loop (Loop 20) that connects I-35 to South Laredo, retail stores and restaurants are finding this major roadway to be an attractive alternative to the existing I-35 corridor. Up to this point, the major retail corridor in Laredo has been I-35, which serves the Mexican shoppers as they visit Laredo from Nuevo Laredo and Monterrey. However, since the development of Loop 20, a shift in retail clusters along the loop has brought in local shoppers and growing number of Mexican shoppers. • Weingarten Real Estate Investment Trust now owns and operates three shopping centers in Laredo, all anchored by HEB. Its third and most recent acquisition, Independence Plaza, was purchased from San Isidro Ranch. The property, designed by Madeline Slay Architecture, has the only HEB plus! in Laredo as well as Ross Dress for Less and other junior anchor retailers. • The City of Laredo recently sold 79 acres across from Laredo International Airport off Loop 20 to Laredo Town Center LP. The property will be developed into a shopping center. • To help revitalize downtown, a public-private partnership between …
The North Texas industrial real estate market is hot, both in terms of development and leasing. The Dallas/Fort Worth Metroplex has seen a reduction in vacancy rates to just under 8 percent (which is an historic low), approximately 3.55 million square feet of positive net absorption and 6.4 million square feet of industrial space under construction as of the end of the second quarter of 2013. Add to these encouraging numbers the Bureau of Economic Analysis’ estimates of annualized U.S. GDP growth of approximately 2.4 percent for 2013, and the outlook is even sunnier. According to the Census Bureau, Dallas/Fort Worth is the largest metropolitan statistical area in Texas and fourth largest in the U.S. Demographics remain strong regarding a skilled labor pool and explosive population growth in the coming years, and at an unemployment rate of 6 percent, the Dallas/Fort Worth Metroplex is below both the U.S. and Texas average unemployment rate. Such statistics have Dallas/Fort Worth poised to continue to be an attractive location for industrial users and tenants. E-tailing is Here to Stay One key macroeconomic trend affecting industrial real estate in the Dallas/Fort Worth market — as well as that of the nation — is the …
Dallas/Fort Worth’s office market has experienced some of the strongest leasing activity in its history and will continue to tighten through 2013 as job sectors that demand space lead to record expansion. Additions to local office inventory should more than double this year compared with 2012. Meanwhile, pre-leasing has been steady, and its impact on the vacancy rate is predicted to be minimal. However, vacancy may start to inch up in 2014 as developers fill the pipeline with sizable speculative projects. Far North Dallas has become a draw for major corporate relocations, and therefore a hotbed for office development. This is due in part to the area’s relatively affordable housing and well-rated schools. Space slated for delivery this year in Far North Dallas has been largely spoken for, but the area is also home to one of the largest speculative projects underway, a 342,000-square-foot office tower scheduled to become available in late 2014. Office development has also increased in the Fort Worth area. That being said, near-term deliveries are expected to be light and limited to buildings less than 75,000 square feet, including some properties dedicated entirely for medical uses. Looking at both quarterly trends and monthly updates, healthy employment …