A number of factors will both drive and temper the North Texas commercial real estate market this year. From my vantage point, here’s what we should expect:
1. Continued uncertainty in Europe.
2. The U.S. political environment will remain unstable.
3. Who will be our next President? Who cares! I don’t think there’s one candidate from either party that will step up and make the tough decisions needed to stop overspending. But I don’t think the DFW real estate market will be directly affected by whoever wins the election. The Republicans can and will offer some tax savings on asset sales, but whether it’s Obama or Romney, that decision won’t affect our market one bit!
4. Uptown, Preston Center, Tollway, Legacy, and Fort Worth markets will continue to thrive! Available space will dwindle, and lease rates will rise—yes, I said rise. You’ll also see more development in some of these markets. Most of the other submarkets will do fine; some will see absorption, but not much rent growth. I don’t think the LBJ corridor will lose much occupancy, but tenants will use road construction to keep rental rates down and concessions up.
5. There won’t be much of an increase in interest rates. The economy can’t take an increases until we see substantial recovery.
6. North Texas will continue to outpace most other U.S. markets.
7. Election years are typically stagnant, but I believe 2012 will provide some of the best buying opportunities we have seen in years. Any lending institution that is going to get healthy already has, so they’ll be able to start selling distressed assets and absorbing losses.
8. The Dallas-Fort Worth market will see another year of positive absorption. Topping 1 million square feet is very possible!
9. Most invested capital has been flowing into multifamily the last four years. I think we’ll see a lot of that money shift to other asset types. As margins shrink in the apartment sector, investors will seek other asset types that will provide greater returns.
10. The national economy will be choppy at best. I believe a stock market correction coming, but all the while, North Texas will thrive.
William R. “Bill” Cawley is chairman and CEO of Cawley Partners. Contact him at firstname.lastname@example.org.