Texas Real Estate Business

MAY 2017

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

Issue link: https://texasrealestatebusiness.epubxp.com/i/817755

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22 • May 2017 • Texas Real Estate Business www.REBusinessOnline.com M A R K E T H I G H L I G H T: F O R T W O R T H Wow! We did this, North Texas. Give yourselves a pat on the back — you have helped digest billions of dollars of construction projects since 2012 — and we're not done yet. The retail, of- fice, healthcare and industrial markets have, in various stages, all boomed over the last year, and while new starts have slowed, they remain well above benchmark levels. Let's look at how various factors have contributed to each sector's growth, and how local vendors are maintaining the pace. Retail Many experts predicted doom and gloom for those retailers heavy on brick-and-mortar, but most have found a way to switch to the mul- tichannel needs of consumers. This holds especially true in North Texas, where new projects in Frisco, Plano, downtown Dallas and the Lake High- lands area have been associated with mixed-use functionalities, allowing retailers to incorporate omni-channel techniques into smaller footprints. Designers have increased their experi- ence in this sector and ventured into new territory with innovative cross- functional designs. Similarly, veteran retail contractors have gone back to their roots, building high quality fa- cilities that utilize seasoned experts from the retail boom from 2006 to 2008. Startup subcontractors who can flex from smaller projects to larger ones have entered the market, thus providing the general contractor base with more options. A signature of the retail trade is delivering cost-effective designs that support lower rents, even in a boom market. Office Office is the featured market this cycle. New developments in Legacy and downtown Dallas have pushed the large-project envelope and con- sumed a vast majority of the resourc- es. Designers have successfully modi- fied staffing to accommodate a high volume of work while remaining in- novative in design. The variability of tenants has allowed architecture firms to strengthen their expertise when it comes to designing tech, corporate or high-density spaces. Shell-building general contractors have settled into working on the product types they are most familiar with; finish-out spe- cialists have successfully maneuvered the challenges of high volume in spe- cialty trades like millwork. Again, new subcontractors have entered the market and provided options, keep- ing it competitive. Likewise, finish subcontractors have been able to bol- ster their staffs, in some cases drawing from Houston, where the volume of construction has decreased. Cost com- petency is a key reason behind contin- ued growth in this sector. Healthcare Firms in the healthcare sector have enjoyed a long, quiet stretch of success since the completion of the new Park- land Hospital, with major renovations or new projects occurring at Universi- ty of Texas Southwestern, Baylor Scott & White, and HCA (Medical City). The volume of work allows design experts in this field to reinforce their thought leadership and pursue new uses of talent. For example, blending medical services into a sports and en- tertainment venue, as was done with the medical office building at The Star at Frisco, enhances the experience for participating vendors in a mixed-use development. The largest key to suc- cess on the construction side has been the steady volume that allows firms to remain leaders in this category. Healthcare design and construction is the most unique of all sectors, and experts must have an intimate knowl- edge of the codes, regulations and nuances of specialty tasks, like incor- porating medical gasses into spaces that control the spread of disease. In this regard, firms in this sector have done an outstanding job of training their people and ensuring a legacy of trained professionals. Industrial The leading sector in Texas in terms of volume, industrial will continue to see growth as a number of large us- ers seek out North Texas in 2017. The manufacturing side will increase sig- nificantly over the next few years, fur- ther stretching design and construc- tion capabilities. Local shell architects are proving their ability to handle a high volume of work, with very few out-of-state firms entering the market. The millions of square feet construct- ed in the last five years have present- ed the largest firms with challenges in finding competent labor. Due to the volume of demand for concrete and steel, the industrial sector has become the training ground for workers new to these trades. Rookies can quickly learn the nuances of formwork, weld- ing and operating heavy machinery. Long-time leaders in the flatwork con- crete arena have been able to sustain their labor forces, while simultaneous- ly offering training programs for their structural counterparts. The common thread for these sec- tors is the ability of design and con- struction firms to flex and transform their companies to increase produc- tion while maintaining quality. On the design side, recruiting is key, with most firms pulling talent from the East Coast to fortify their ranks. They can no longer focus solely on recruiting the best and brightest from the sur- rounding Big 12 schools. For construc- tion firms, the key has been training, with a little luck mixed in. The slow- down in Houston, along with the an- nual migration of tradesmen above the Mason-Dixon line, has allowed firms to take on more work. Training programs through groups like TEXO have been the key for sustainable growth, and have provided a base for future leaders in the industry. Overall, the DFW market continues to be a design and construction leader in the U.S. Volumes in each sector re- main near peak levels, and we have found ways not only to succeed, but also to excel. Brian Straley Director of Project Management, CBRE HOW DFW DESIGN AND CONSTRUCTION FIRMS ARE ADAPTING TO RECORD DEMAND G AVAILABLE AVAILABLE AVAILABLE KIMBALL OAKS Southlake, TX THE COLUMNS Jackson, TN THE CENTENNIAL PORTFOLIO Memphis, TN WE KNOW SHOPPING CENTERS. SOLD $966 MILLION SINCE 2012 3131 Turtle Creek Blvd. Suite 1202 Dallas, TX 75219 214.206.3020 disneyig.com PRIMARY TENANTS: Marshalls, PGA Tour Superstore, Tuesday Morning, Bassett Furniture, Verizon Wireless, BJ's Brewhouse, Chiloso's Mexican Bistro, and Red Rock Canyon Grill PRIMARY TENANTS: Best Buy, Ross Dress for Less, Old Navy, Marshalls, rue21, Rack Room Shoes, dressbarn, Books-A-Million, Kohl's (shadow), Home Depot (shadow), and Hobby Lobby (shadow) ANCHORS: Marshalls, Toys R Us, Ulta, Dollar Tree, Lifeway Christian Store, Office Depot, JoAnn Stores, Best Buy, Burlington Coat Factory, Dick's Sport - ing Goods, LA Fitness (shadow), and JC Penney (shadow) The millions of square feet of industrial space constructed in the last five years have presented the largest firms with challenges in finding competent labor. Want commercial real estate news delivered to your inbox? 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