Economic growth, marked by milestone accomplishments such as the long anticipated launch of TEXRail, made 2018 as another prosperous year for Fort Worth and Tarrant County.
Projections for continued economic growth are good as the population continues to grow and unemployment remains low, driving demand for construction of new residences, office buildings and warehouse space for storing manufactured goods and parts, according to industry experts speaking Wednesday at the 2019 Tarrant County Commercial Real Estate Commercial Forecast hosted by the Real Estate Council of Greater Fort Worth.
Looking back at 2018 and making predictions for 2019, experts said the economic outlook is strong for 2019 although there will be some slowdown in some sectors as the new development is absorbed and a worsening labor shortage, along with other challenges, beg for solutions.
Brandom Gengelbach, executive vice president of the economic development for the Fort Worth Chamber of Commerce, and Robert Sturns, director of economic development for the City of Fort Worth, said efforts begun in 2018 to implement the recommendations in separate economic development plans released in 2017, which include increasing corporation relocations.
But translating strategy on paper to progress in reality is another matter, Gengelbach said.
“The Dallas-Fort Worth region has 14 cities with over 100,000 population and each of these communities are vying for economic development projects,” Sturns said. “I’m not sure there is a more competitive area in the country.”
Incentives can be a useful tool for landing economic development projects and corporate relocations but factors such as a strong workforce, transportation and available land are even more important, he said.
“At the end of the day, no amount of incentives will make up for a poor site or unavailable workforce,” Sturns said.
But one area where Fort Worth earns high marks is in walk-able urban development, which is where much and maybe most future economic growth and development will occur nationally and in Dallas-Fort Worth, according to Christopher Leinberger of the Center for Real Estate and Urban Analysis at George Washington University in Washington, D.C., keynote speaker of the Forecast.
“Downtown Fort Worth is leading Downtown Dallas in walk-able urban development and Fort Worth started first,” Leinberger said.
Locations such as Sundance Square and the Near Southside are flourishing because of their walkability, favored by the “growing millennial generation and companies hoping to attract s knowledge-economy workforce,” he said.
Millennials are also a reckoning force in retail growth and multi-family development.
Although multi-family development has fallen off a bit since 30,000 new multi-family were added in the Dallas-Fort Worth market in 2017. This year, 28,400 units are expected to become available, up from 26,000 in 2018.
“The market absorbed 24,500 of those 26,000 units,” said Drew Kile, senior director at Institutional Property Advisors, a multi-family brokerage division of Marcus & Millchap.
Despite rent spikes, apartments remain an attractive option for millennials, given the higher cost of home buying, coupled with rising interest rates, and millennial preference for denser, urban environments, he said.
“Fort Worth is doing about as much as Austin in job and population growth,” he said but it is not getting the same attention.
Retail growth has been a scattershot with 2019 predicted to be a year of stabilizing and settling into the “new normal,” which is “nothing is normal,” said Jessica Miller, co-president of M2G Ventures.
As traditional retailing and shopping malls continue their descent, brick-and-mortar stores are finding a niche in an uncharted market. New partnerships between brands like Macy’s and Facebook and Walgreens and Birch Box will begin to emerge, bringing new presence to the brick-and-mortar shopping.
“In the next five years, we’re going to see a lot more brick-and-mortar stores,” Miller said.
Brick-and-mortar shopping will also continue to change and evolve in response to millennial desires for “experience” based shopping centers, which offer yoga classes and coffee bars as well as stores.
In other areas of commercial real estate, industrial remains the “champion” and is “very, very active,” said Tony Crème, a senior vice president at Hillwood.
The DFW market completed nearly 26.2 million square feet of new industrial space last year. The Tarrant County area accounts for about 37 percent of the total DFW industrial inventory and was had more than one-third of the 25.3 million square feet under construction in the region at the end of 2018.
“The Tarrant County market was extremely active in 2018, and we see this momentum continuing into 2019,” Crème said.
The office market will also see stabilization in 2019, according to Matt Montague, vice president of JLL.
“We’ve seen very, very strong absorption,” he said.
He predicted that 2019 will be year of more headquarters relocations as companies such as Freese and Nichols and Whitley Penn will be moving into new office space in downtown Fort Worth soon.