{"id":3003,"date":"2014-10-09T09:33:01","date_gmt":"2014-10-09T14:33:01","guid":{"rendered":"http:\/\/kbicblog.com\/blog\/construction-recruiter\/?p=3003"},"modified":"2014-10-09T09:37:43","modified_gmt":"2014-10-09T14:37:43","slug":"the-boom-is-back-commercial-building-hits-new-high-in-dfw","status":"publish","type":"post","link":"https:\/\/kbicblog.com\/construction-recruiter\/blog\/the-boom-is-back-commercial-building-hits-new-high-in-dfw\/","title":{"rendered":"The boom is back: Commercial building hits new high in DFW"},"content":{"rendered":"
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David Woo\/Staff Photographer<\/div>\n
The Hall Arts Tower is on its way up in the Dallas Arts District. The 18-story, half-million-square-foot building is between Ross Avenue and Flora Street across from the Meyerson Symphony Center.<\/div>\n
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Recession? What recession?<\/strong><\/h4>\n

Looking at the number of construction cranes popping up in North Texas, you\u2019d never know that the area recently saw an economic downturn.<\/p>\n

Construction of most types of commercial real estate \u2014 especially industrial buildings and offices \u2014 is now pulling ahead of where it was at the peak of the market in 2008.<\/p>\n

And with additional projects approved for construction, commercial development in Dallas-Fort Worth should hit new highs.<\/p>\n

Why is this happening?<\/p>\n

\u201cThe increase in construction is due to the continued job growth virtually across all sectors of the DFW economy,\u201d said Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University. \u201cVacancy rates are declining, and rents are rising.<\/p>\n

\u201cThis is a surefire recipe to call out the state bird of Texas, the construction crane.\u201d<\/p>\n

The region saw little or no construction at the worst of the recession.<\/p>\n

\u201cYes, I am somewhat surprised at the volume of building,\u201d said Randy Guttery, director of real estate programs at the University of Texas at Dallas. \u201cThat\u2019s not to say the market is overheating.<\/p>\n

\u201cRather, we are backfilling several years of little to no construction and filling current demand.\u201d<\/p>\n

Real estate industry leaders say that so far they aren\u2019t worried about the pace of construction.<\/p>\n

\u201cWe are not going down a path of ridiculous overbuilding like we have in the past,\u201d said Jack Eimer, who heads the Dallas office of commercial real estate firm Transwestern. \u201cThe lenders are still making it reasonably difficult to develop speculative office space.\u201d<\/p>\n

More than 20 buildings with almost 6 million square feet of office space are being built in North Texas. About a quarter of the space in the more than a dozen speculative buildings is already leased to tenants.<\/p>\n

With net office leasing in the area running at more than 4 million square feet a year, real estate brokers say the supply of new office space is reasonable. Office vacancy rates in the DFW area are at the lowest level in more than a decade.<\/p>\n

As the first wave of buildings opens this year and into the next, lenders and investors will be closely watching leasing activity.<\/p>\n

If the projects don\u2019t meet expectations, \u201cthat will put the brakes on,\u201d Eimer said.<\/p>\n

Industrial<\/strong><\/p>\n

The response to the industrial building boom should come even quicker than in the office sector, where projects take longer to construct.<\/p>\n

More than 16.5 million square feet of warehouse space is in the pipeline in North Texas \u2014 more than what was being built here before the recession.<\/p>\n

About 12 million square feet of that space is in speculative projects that don\u2019t already have tenants.<\/p>\n

Dave Anderson, an executive vice president with commercial real estate firm CBRE Group, said the volume of industrial development in North Texas isn\u2019t excessive yet.<\/p>\n

\u201cIt sounds like a lot, but 30 percent of that is already committed to tenants,\u201d Anderson said. \u201cAnd last year, we did 18.7 million square feet of absorption,\u201d or net leasing.<\/p>\n

\u201dThe construction doesn\u2019t worry me too much.\u201d<\/p>\n

About 6 percent of the DFW industrial market is vacant, well below the average 9 percent vacancy rate for the area, Anderson said.<\/p>\n

\u201cIn this last quarter, we\u2019ve seen a big jump in speculative construction. That\u2019s OK because we need some product,\u201d Anderson said. \u201cWe had a 7 million-square-foot increase of new starts in the last quarter.<\/p>\n

\u201cYou wouldn\u2019t want to sustain that, or you will get out of balance at some point.\u201d<\/p>\n

He\u2019s predicting that the number of speculative warehouse projects coming out of the ground will slow until the current batch of projects is leased.<\/p>\n

Apartments<\/strong><\/p>\n

Apartment builders have been the most aggressive in the current cycle, with about 27,000 rental units being built \u2014 significantly more than at the top of the previous market in 2008.<\/p>\n

North Texas now leads the nation in apartment building, and more starts are coming, said Greg Willett, vice president of Carrollton-based apartment analyst MPF Research Inc.<\/p>\n

\u201cIt wouldn\u2019t surprise me if the next peak is somewhere around 30,000 units,\u201d Willett said. \u201cIt\u2019s an aggressive pace, but as long as we keep the high job production levels, it should be fine.<\/p>\n

\u201cWe still feel pretty optimistic about the outlook.\u201d<\/p>\n

Source:\u00a0http:\/\/www.dallasnews.com\/business\/commercial-real-estate\/20140424-the-boom-is-back-commercial-building-hits-new-high-in-d-fw.ece<\/p>\n","protected":false},"excerpt":{"rendered":"

David Woo\/Staff Photographer The Hall Arts Tower is on its way up in the Dallas Arts District. The 18-story, half-million-square-foot building is between Ross Avenue and Flora Street across from the Meyerson Symphony Center. Recession? What recession? Looking at the number of construction cranes popping up in North Texas, you\u2019d …<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"image","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[758,756,755,760,757,759],"class_list":["post-3003","post","type-post","status-publish","format-image","hentry","category-blog","tag-cbre-group","tag-commercial-buildings","tag-dfw","tag-hall-arts-tower","tag-high-rise","tag-industrial-markets","post_format-post-format-image","column","twocol"],"yoast_head":"\nThe boom is back: Commercial building hits new high in DFW<\/title>\n<meta name=\"description\" content=\"Construction of most types of commercial real estate \u2014 especially industrial buildings and offices \u2014 is now pulling ahead of where it was at the peak of...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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