The commercial real estate sectors hit hardest by the pandemic – office, hospitality and retail – are slowly bouncing back, but with new innovations to reflect changes in the market.
That was the consensus at the 2022 Tarrant County Commercial Real Estate Forecast on July 27, presented by the Real Estate Council of Greater Fort Worth.
The office market was initially hit hard by the pandemic as the labor force that could do so began working remotely. Now, as workers return to the office, they may find it a different place than the one they left, several speakers said.
Companies are beginning to ask employees to come back to the office in many cases, panelists said, although many companies are adopting a hybrid model.
“Hybrid is here to say,” said Cannon Camp, senior vice president at JLL in Fort Worth, who presented at the event.
Business and professional services were likely to return more quickly to the office environment while the technology industry, which was already doing remote work pre-pandemic, was likely to maintain that remote work option for longer, Camp said. But some companies may have to offer the virtual option to keep personnel, he said.
Some companies have already adopted a hybrid model. In mid-2021, Capital One announced it will be a hybrid work company with employees spending some time in the office and some working virtually. That will impact the financial services giant’s more than 5,000 employees in the Dallas-Fort Worth area.
The in-office experience of the future will likely be more open campuses on large tracts of land with landscaping and walking paths. Amenities will include cafes, workout facilities and lounges, Camp said.
Camp noted three new office projects recently announced demonstrate the continued economic strength of the area. The three are:
- The Crescent Fort Worth project from Crescent Real Estate with 168,000 square feet of office space
- The Van Zandt on West 7th Street from Goldenrod Companies with 109,000 square feet of office space and
- Hillwood Commons II, a 135,295-square- foot office project from Hillwood in the AllianceTexas area.
All three are expected to open in 2023.
Amber Calhoun, a commercial real estate broker at Graham Property Brokerage, said that retail was already shifting toward ecommerce and online shopping before the pandemic, which only accelerated that trend.
“At the beginning of 2020, 17% of consumers were buying groceries online, according to Category Partners,” she said. “By summer of ’21 this number had jumped to 51%.”
However, she noted that surveys suggest that consumers enjoy going into the grocery store and picking up the food that they want to buy.
“If it’s toilet paper, that’s easy to order online, but I think some people still enjoy the experience of walking down every aisle,” she said.
Locally, Calhoun pointed to the success of the revitalized Stockyards in retail and hospitality. The Hotel Drover, a Marriott Autograph property that opened in March 2021, is at maximum occupancy and “continues to stay that way,” she said.
On the Near Southside, Calhoun said another hotel timed its opening perfectly. The Hotel Revel, at 1165 8th Ave., is a highly automated boutique hotel, which was just what was required during the pandemic when interactions needed to be reduced and labor became scarce, she said.
“It was pretty genius timing ,” she said. “Nobody’s opening hotels during the pandemic. But it worked, and they’re at full occupancy as well.“
Inflation and staffing issues are continuing to hammer some industries, particularly restaurants, said Jessica Miller Essl of developer M2G Ventures.
Ryan Dodson, of Dodson Commercial Real Estate, said the strong restaurant operators are going to get stronger. “The guys that can go in and pay the most to their employees and have the highest volumes where the waiters and wait staff and bartenders can make higher wages, those guys are getting the talent,” he said. “The people who are a little bit lower volume and not as strong, they’re struggling.”
Robert Sturns, director of economic development for the city of Fort Worth, noted that Fort Worth has always been thought of as “the low-cost alternative.”
Fort Worth began putting wage requirements into its incentive agreements with companies locating in the city to raise overall wages and attract quality workers, Sturns said.
“We’ve got to get out of this mindset of being the low-wage alternative across the board among industries,” said Sturns. “We have to position ourselves and focus ourselves as a community of choice and where people want to come to.”
This article was originally published by Fort Worth Report.