All indications are Fort Worth’s office market has turned the corner and is improving. The beginning of the year started out with activity and transaction levels that have not been experienced since early 2008. While activity has slowed down, we are still on pace for a good year. With limited new supply and increased activity, we are now seeing rates firm up, reduced free rent and positive net absorption. Currently, there are a few options outside of the Central Business District for large blocks of Class A space. One lease that helped tighten the market further was the Alcon lease for 87,000 square feet in the Wilcox Plaza. Vacancy rates for suburban Class A space stands at a record low of 3.88 percent. As a result, several developers are actively looking for sites to build new projects. Hillwood recently announced two new office buildings that will be built in the Alliance corridor totaling more than 160,000 square feet. Construction on the first of the two buildings should break ground in January 2013. In addition, by year end, we expect one or two additional projects to be announced in the Fort Worth suburban market. For tenants looking for space, downtown Fort …
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Following a near record level of seniors housing transactions nationally in 2011, the Dallas/Fort Worth seniors housing market has continued to plow ahead through the Great Recession, supported by positive job growth from the aged child, strong demographics and a resilient housing market. This resilience has led DFW to become one of the most sought after seniors housing investment and development markets in the country for institutional quality investors looking to hedge risk in their portfolio. Like in most major metros, Dallas saw a significant pullback from renters through 2009 and 2010 in the independent living product, primarily caused by senior’s inability to sell their homes, combined with 2,550 units of new construction coming on line. This created significant softness in the suburban markets (Plano, Frisco and McKinney) during the downturn, but all have gained momentum as the economy and housing market has strengthened. From 2008 to 2010, the overall independent living occupancy dropped across the Metroplex from 86.1 percent to 83.0 percent, but has recovered to approximately 85.7 percent through the absorption of 803 units during the past four quarters. “We expect to continue to see positive absorption and rent growth in the DFW Metroplex over the next 12 …
Like other markets in the country, the Fort Worth office market began its decline in 2007, got worse in 2008 and 2009 and then visibly rebounded by the end of 2010. The ‘bottom’ of the market, by general consensus of local brokers, was in mid-2010. Without the booming energy business, conditions would have been much worse. Additional market drivers that helped support the local economy and office market during the recession were healthcare and government. The Central Business District Class A sector is comprised of 13 projects with 5.39 million square feet, while the Class B inventory includes 31 buildings with 3,726,829 square feet. Including Class C buildings, total office inventory is a little more than 10 million square feet and the current overall vacancy rate is 12.1 percent. The reported Class A rent averages $26.87 per square foot, plus electricity. The Class B reported average rent is $18.38 per square foot, plus electricity, according to the most recent CoStar Market Report. Other Fort Worth submarkets include Northside, Southside, Alliance, Wise County and Hood County. The downturn and recovery has looked like the classic hockey stick pattern — slow downturn and sharp upturn toward the previous high when things started …
For years El Paso was thought of as a sleepy little outpost in far West Texas on the Mexican border. Many people from the rest of the state knew little about the city, and thought it well suited to be part of New Mexico. The economy was always fairly stable especially in the commercial real estate sector. There was never boom nor bust, just steady growth fueled internally. Arguably the biggest things to happen in El Paso were the construction of Interstate 10 and the Sun Bowl. That was of course until recently with the opening of the Texas Tech School of Medicine, and explosive growth at Fort Bliss. The Army post is in the last phases of a $4.5 billion expansion. That does not include a $1.5 billion, 250-acre Army medical campus, and VA Hospital that recently broke ground. It is estimated that Ft Bliss’s population will expand by 40,000 troops and their families during the next few years. In spite of the economic downturn, El Paso’s future is as bright as ever. It has received many national accolades. Forbes Magazine recently ranked the city as having the 2nd best performing economy nationally in 2011. El Paso is the …
2011 was a good year for the Dallas office market with above average demand, minimal new construction and two quarters of rising overall asking rates. If you look at the Dallas office market since 2001, a typical year net absorption is usually about 800,000 square feet. In 2011, the Dallas market recorded more than 1.6 million square feet. New construction (excluding owner-occupied properties) averages 2.5 million square feet for that same time period, but a little more than 200,000 square feet was completed in 2011. Still, the overall total vacancy rate remains higher than normal at 22.5 percent. Keep in mind Dallas, with its abundance of land and pro-development climate, rarely dips below 20 percent vacancy. The average total vacancy since 2001 is 21.4 percent. Typically if it nears 20 percent, the construction cycle picks up again and more new product is brought to the market. That’s about where the market is headed at this point. Developers have not made any official announcements for new construction yet, but more than a few are prepared to break ground on potential projects in a few submarkets (Far North Dallas and the Dallas CBD being two of the more likely submarkets). Unless there …
The Austin multifamily market is extremely strong overall, with the most robust submarkets found in the Central Business District, South Central and Southwest submarkets. Due to the number of previously shelved projects coming back online, potential deliveries in 2012 will likely be around 3,500 units, followed by another 5,500 units or so in 2013. However, there are no major projects scheduled to be completed in 2012 that will have a drastic effect on the market — most of the starts that have taken place will not come on line until the first part of 2013. As a result, the upward push on occupancy and rental rates seen during 2011 will continue throughout 2012 — until the market sees some of these new projects coming online, owners of Austin multifamily properties will continue to be aggressive on rents and not offer concessions. One of the leading factors supporting this focused rise in apartment revenues is Austin’s ranking as one of the top growth markets for jobs. In particular, the CBD and South Central areas have seen an influx of new companies that want to be located in the middle of the action — and, thanks to the employees brought to the …
The land market in Austin, like the rest of the country, is driven by future expectations throughout the real estate product types from new home construction and apartments to office, retail and industrial development. Therefore, the same underlying fundamentals driving demand for new construction will also drive the demand for land development. Fortunately, Austin, like much of Texas, continues to outperform the nation economically. While the recovery has been sluggish elsewhere, Austin continues to gain economic momentum. Most metro areas throughout the country have yet to recover the employment losses sustained through the Great Recession. Austin with a net job growth of 16,300 in 2011 has now surpassed its pre-recession employment peak of 770,000 in August 2008. Current estimated employment is more than 787,000, according to the Bureau of Labor Statistics. Austin remains attractive to a variety of employers because of its educational infrastructure, young educated workforce, IT infrastructure and concentration of technology industries. While not the lowest cost of living or the lowest cost of doing business it is far and away more affordable than other tech centers such as San Jose, California, Boston and northern Virginia. Consistently ranked high by top economic development, relocation and business consultants, Austin …
The Houston retail market experienced modest improvement in 2011 as the area economy began to shake off the effects of the national recession with strong local job growth and reasonably steady, if not particularly noteworthy, housing starts. Positive retail space absorption of 2.8 million square feet combined with only 1.2 million square feet of new construction resulted in a decline in the overall retail vacancy rate from 7.1 percent in the first quarter of 2011 to 6.7 percent at year-end. However, average quoted rental rates edged down slightly from $14.51 per square foot in the first quarter to $14.35 per square foot in the fourth quarter. Although the retail statistics for the past year aren’t terribly compelling on their own, they are more encouraging in the context of the regional economy in the sense that retail leasing and development activity generally lags the overall economy. The national recession hit Houston in full force in September 2008. The area lost 152,800 jobs through January 2010. In February 2010, Houston began to create new jobs again, and by October 2011, Houston had regained all the jobs lost during the recession. The Greater Houston Partnership projects that the Houston metro area will add …
The Houston retail market experienced modest improvement in 2011 as the area economy began to shake off the effects of the national recession with strong local job growth and reasonably steady, if not particularly noteworthy, housing starts. Positive retail space absorption of 2.8 million square feet combined with only 1.2 million square feet of new construction resulted in a decline in the overall retail vacancy rate from 7.1 percent in the first quarter of 2011 to 6.7 percent at year-end. However, average quoted rental rates edged down slightly from $14.51 per square foot in the first quarter to $14.35 per square foot in the fourth quarter. Although the retail statistics for the past year aren’t terribly compelling on their own, they are more encouraging in the context of the regional economy in the sense that retail leasing and development activity generally lags the overall economy. The national recession hit Houston in full force in September 2008. The area lost 152,800 jobs through January 2010. In February 2010, Houston began to create new jobs again, and by October 2011, Houston had regained all the jobs lost during the recession. The Greater Houston Partnership projects that the Houston metro area will add …
Austin’s industrial market tends to be a bell-weather for the local economy, as the market is more focused on local consumption rather than logistics for the transport of goods to other markets. As a result, employment and the overall health of the local economy are reflected in the demand and supply of warehouse, flex and general industrial product. Austin’s go-go economy of 2005 until 2008 saw a rapid absorption of product, as well as more than 2 million square feet of new developments that hit the market during that period. As the economy turned south in 2008, employment numbers and consumer confidence followed. The result was that new product delivered in 2008 and early 2009 took longer to lease. There were also casualties over this time period as projects such as Centerpoint at Colorado Crossing and Plaza 35 went into foreclosure. We are now seeing a return to normalcy, as absorption improved markedly with 477,518 square feet of industrial product absorbed in the third quarter. This is broken down into 183,577 square feet of warehouse/distribution product, 150,121 square feet of general industrial product and 143,820 square feet of R&D/flex space. This market sector has witnessed significant fluctuations in absorption during …