Texas Real Estate Business

OCT 2017

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

Issue link: http://texasrealestatebusiness.epubxp.com/i/885420

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www.REBusinessOnline.com October 2017 • Volume 13, Issue 8 URBAN DALLAS FACES SHORTAGE OF RETAIL SPACE Rising rents and growing volumes of investment sales and capital lending for retail properties in Dallas are heightening competition for quality space inside the 635 loop. By Taylor Williams see RETAIL Page 50 HEALTHY DESIGN PIPELINE Architects are shouldering a heavier workload as their clients lean on them more than ever for innovative, future-proofed projects. By John Nelson see ARCHITECTURE Page 52 Market Highlights: Fort Worth Needs More Housing, XTO Vacates Offices pages 24-34 pages 46-48 Hurricane Harvey's Impact on CRE Markets Throughout Houston INSIDE THIS ISSUE InterFace Houston Industrial Real Estate, October 31 at the Royal Sonesta Galleria W hile many brick-and-mortar retailers are reconfiguring their distribution systems, re- thinking the sizes of their stores and/or shoring up their digital sales platforms, those operating inside the Interstate 635 loop in Dallas are facing a more old-fashioned problem: How to find more locations and sell more product. The difference between cutting costs via the steps listed above and generat- ing more sales is important when con- sidered in the context of the Dallas re- tail market, which has been fueled by remarkable job growth — more than 100,000 new positions already created in 2017, according to the Bureau of La- bor Statistics (BLS). Combined with population growth of about 10,000 new residents per month, the demographic fundamentals of the market have kept its brick-and- mortar members somewhat insulated from the e-commerce threat. And that's the kicker: while excep- tional job and population growth canto some extent protect brick-and-mortar merchandisers from online competi- tion, they also breed rampant rent growth. Strong rent growth would normally generate more investor inter- est in the property type, jumpstarting heavier lending and development. All of these forces point to greater de- mand for retail space within the Dallas market. However, at the end of the day, F or the seventh month in a row, architectural firms are seeing an increase in their design pipeline for commercial real estate projects, ac- cording to the American Institute of Architects (AIA). In the organization's latest Architec- ture Billings Index, which is a depend- able indicator for future nonresiden- tial construction activity, architectural firms are reporting a monthly increase in billings across all property sectors and geographical regions. "We have seen a gradual increase in workload the past few months," says Jeff Gunning, senior vice president of CallisonRTKL's Dallas office. "There seems to have been a mid-year re-ig- nition with a lot of developers. We've seen a positive turn in the forward momentum and consistency in devel- opment, as opposed to a start-and stop mentality." To help with the increased design activity, architectural firms are in hir- ing mode. The Bureau of Labor Sta- tistics forecasts that architectural em- ployment will increase 7 percent from Omniplan recently added a restaurant complex and boardwalk to a suburban office park in Plano. Dubbed Boardwalk at Granite Park, the addition has brought a new energy to the 1990s-era development. Strong rent growth inside the Interstate 635 loop is forcing Dallas retail developers to target submarkets like Plano, Frisco and McKinney for newer projects.

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