The Hot North Texas Market
The commercial real estate market in Dallas is strong and doesn’t show any signs of letting up – that’s the agreement of nearly everyone who attended a recent NAIOP North Texas market outlook and awards luncheon.
The experts agree. “I don’t see anything going on in the Dallas area that indicates the air will run out during the next year or two,” writes Steve Brown for the Dallas Morning News. He continues, “Virtually every property sector — from warehouses to office high-rises — is booming. A combination of soaring population growth and near-record job gains is driving demand for all kinds of real estate in the Dallas-Fort Worth area.”
Texas topped the charts in two of the three categories included in the NAIOP Research Foundation’s annual Economic Impacts of Commercial Real Estate report. The state’s industrial/warehouse and retail products were the highest by construction value in 2014.
Texas’s office market ranked second in the nation. D Magazine says much of office’s growth is predominantly fueled by 1) huge corporate relocations to the business friendly state; and 2) expansions by existing tenants.
Commercial real estate development in Texas is a powerful economic engine, creating jobs and generating significant fiscal contributions to local, state and national economies. Based on the most recent data, here’s how the state stacks up:
- Contributions to State Economy (GDP) . . $103.2 billion
- Wages and Salaries Generated . . . . . . . . . $34.6 billion
- Jobs Created and Supported. . . . . . . . . . . . . . . 776,128
I kept my ear to the ground to pick up facts and figures by some of the area’s leading deal makers. Here’s what I heard:
“Fifty different developers have built industrial product in the Dallas/Fort Worth market this cycle – at least 20 of those companies are new to the area. The vacancy [for industrial] is at 6.7 percent. That’s the lowest in 35 years, with the average typically at about 9 percent.” Dave Anderson, CBRE
“The Dallas market, of all places, will start having to think about land limitations. You’d never think we’d be talking about teardown and rebuild for industrial, but it’s possible in the next two-to-three years.” Jon Sorg, Prologis
“I am as busy as I’ve ever been. It’s been a landlord’s market since 2013 and it is still climbing.” Chris Taylor, Cushman & Wakefield
“The fundamentals of the local market to be sound and expects sustained growth for another three years – maybe four.” Jeff Ellerman, CBRE
What are you seeing in Texas? I’m inviting you to join NAIOP and some of industrial real estate’s top developers, owners, investors, brokers and more at I.CON ’16: Impact Projects, where you’ll have the opportunity to tour some of Dallas’ best industrial projects and learn about four unique industrial projects from across North America that are raising the bar.
They say everything is bigger in Texas. Join me at I.CON’16: Impact Projects and see what big ideas you can take back home with you.
Chris Ware is Vice President, Business Development at NAIOP.