Dallas Commercial Market Forecast

Amid the media frenzy accompanying the global economic crisis, it may be that a certain sense of skepticism has filled the air at times. Nevertheless, while the green shoots of economic recovery have been referred to as if the representing the Second Coming, many parts of the United States are poured over for signs of growth, but Dallas it seems has the gumption to back it up.

Of course the real estate industry is expected to undergo a certain consolidation as huge distressed real estate volumes are digested and mergers and acquisitions visit the property industry in large numbers. To this end, the heavy hitters in commercial foreclosure property like CB Richard Ellis have acquired Tramwell Crow, and Jones Lang LaSalle similarly with The Staubach Company. CB Richard Ellis has singlehandedly the standing to turn the commercial property market in Dallas, and in leasing two floors in Uptown Dallas have done just that.  In addition to the job creation these types of expansionary moves will facilitate, Behringer Harvard and Cinemark will partner a joint venture to develop a 48 acre complex complete with a cinema, 396 apartments and 114 units at the intersection of the Dallas North Tollway and Frisco’s Main Street.

If this overt approval by investment is not enough, academics predict that the greater Dallas Fort-Worth area is to shortly become a world economic capital. A contention of such magnitude is not too difficult to understand, when taking into account the intellectual property and skill set inherent in the Dallas workforce. Combined with the affordability of land in present economic conditions, the impetus to develop Dallas retains a definite obvious quality as investment dollars flood the commercial property market, and take advantage of the established infrastructure already in place. Catering to the large concentration of families with children, this infrastructure underpins a decentralized business district which is yet another boon for local business and commercial short sale investors.

The US is tipped to expand to approximately 450 million in population by 2050, and in light of the steady economic growth inherent in such growth, the aging population will need to be addressed with demand being sustained for greater cyclical duration. Dallas will clearly mirror such national growth.

The universal labor market will also undergo necessary change as technology and environmental concerns encourage cost savings to result in telecommuting and increased micro-business as a proportion of economic activity. While office space alone may reduce substantially due to a shift in the manner in which labor is delivered, if infrastructure and education are maintained, Dallas will indeed be attractive to investment and business well into the future. Employment will increase and household income along with it. Demand across the spectrum of the economy will remain firm and this will apply commensurate pressure on asset prices, notably commercial property.

Simply due to the reliability and immediate availability of her infrastructure, investment will sponsor economic growth in Dallas in the short term. The traditional familial sense of community that has been nurtured in Dallas over past generations is now to become her vessel out of recession and into economic recovery. No doubt Dallas will drag the rest of greater Texas along in her wake.

Curiously, future residential construction contracts in Dallas have risen by 58% while commercial construction contracts dropped by approximately 20%. While juggernauts of industry such as Commercial Metals are still registering large balance sheet losses, even though attributable to weather conditions in the Northern Hemisphere rather than bald faced economic apathy, present economic realities such as fiscal regulation, tightening of credit markets, and the huge backlog of defaulting mortgages will mean that Dallas will need to absorb the current supply of commercial property on offer before she sees some strength return to the market.

Again, commercial property is inherently reduced to cash flow, and so represents present values of future returns. To successfully exploit value in such a market, a longer term view needs to be implemented. Where Dallas’ commercial property is concerned, all the economic data affirms that considerable value is to be had right now, when asset prices are still down.

Posted by Arnold Balthazaar on May 7 2010. Filed under Dallas, Headlines. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry