About a year ago, I posted my first blog post for RealPoints. “A Transplanted Californian’s View of Dallas” was written a few weeks after I had moved here from Manhattan Beach. Now that a year has passed, I’ve had ample time to reflect on those first impressions and come up with a few new ones. Here are a few thoughts, along with some things I am paying close attention to in the commercial real estate world.
• Real Estate Talent: Wow! I knew Dallas-Fort Worth was competitive and full of talented commercial real estate professionals, but I had no idea just how competitive and how talented they would be. There is no market in the country more competitive than DFW—bar none. In Los Angeles, where I previously worked, brokers work across numerous submarkets separated by crowded freeways, and rarely did they intersect. In DFW, the talent is far more concentrated, resulting in greater competition. If you can make it in commercial real estate here, you can truly make it anywhere.
• Real Estate Psychics: Dallas is the smallest “big city” where I’ve done business. Information moves faster here than in the local middle school locker room. For example, I was recently enjoying a cocktail with friends at D CEO’s Power Brokers Event (it was fantastic, by the way), and was congratulated on a new hire I haven’t yet hired—or in this case, even met. After the third congratulations, I determined the only logical explanation for this level of clairvoyance is that there are a disproportionate number of commercial real estate professionals in Dallas who also happen to be psychic. I should have responded by asking for lottery numbers and the name of my future wife.
• The People of Dallas: Thankfully, my first impression of Dallas being welcoming, kind, and civic-minded was right on. Last year, Colliers began a tradition of adopting a charity for an entire calendar year in hopes of making a big impact over an extended period of time. It was great fun and a huge success. This year we’ve chosen a wonderful local charity called Promise House, after one of our top brokers, Charlie Morris, brought it to my attention. Following a few casual happy hour conversations with other business leaders in town, we now have a group of contractors, architects, etc., that jumped in to help out—no questions asked. This is just a small example of compassion those in the Dallas business community have for those in need of a helping hand.
Switching gears away from my rambling thoughts, and because this blog focuses on commercial real estate, here are some predictions and trends I’m watching in the remainder of 2013.
• Job Growth: In 2012, four of the top 25 MSA’s for job growth were in Texas. DFW was No. 4, adding 62,500 new jobs. I believe this trend will continue and likely accelerate as Texas continues to outperform the rest of the nation. I expect to see DFW benefit from corporate relocations from California and Illinois, as employers look for a reasonable cost of living, an educated labor force, pro-business taxation/incentives and Right to Work laws.
• FIRE and ICEE: Look for a fundamental growth shift from traditional FIRE (Financial, Insurance, and Real Estate) markets to ICEE (Intellectual Capital, Energy, and Education) markets. DFW is a strong ICEE market, as are Austin and Houston.
• Economic Growth: GDP will hover around 1 percent in the first half of the year, then accelerate to greater than 2 percent in the second half of the year. I believe interest rates will remain low for 2013, and that CMBS activity will continue to increase. I am concerned that there is a better than 50/50 chance of another debt downgrade if Washington does not get its act together, the repercussions of which could be extremely damaging.
• Sequestration: K.C. Conway, Colliers International’s lead economist, had a great thought regarding Sequestration: “If we can’t handle $120 billion in annual cuts when racking up $1 trillion in new debt every 11 months, we are worse than Greece.” Key dates to keep in mind for possible government shutdowns are March 27 and August 9.
• Panama Canal: Look for a boom in industrial real estate in the Southeast, especially South Florida. The widening and expansion of the Panama Canal will be a game-changer, and Miami and other port cities in Florida are investing heavily in order to accommodate Post Panamax (12,500 container) ships. Miami is strategically located as the first major U.S. port north of Panama for these new ships. I expect distribution centers and rail-served industrial sights to grow substantially in the region, with cap rates and rental rates to rise proportionally. That said, North Texas will benefit from this growth, too, especially in areas like South Dallas, where we have excellent rail potential. Rail will become even more important as the least expensive way to move goods to and from port cities. There are some extremely intelligent business minds in DFW that have been strategically preparing for this eventuality.
The preceding thoughts and predictions may or may not come true, but I do encourage you to investigate them more. You never know when you might need something smart to say in a business blog.