After a year of solid economic growth, marked by population increases, low unemployment and robust construction of homes, apartments, office buildings, shopping centers and industrial warehouses, prospects for this year again appear to be bright.
That was the gist of the message delivered by commercial real estate experts at Thursday’s 2018 Real Estate Forecast presented by the Real Estate Council of Greater Fort Worth.Just prior to the annual Forecast, Amazon released its list of 20 areas under consideration the e-commerce giant’s second headquarters – basically the economic development Holy Grail. Fort Worth, as well as Dallas and other North Texas areas that made the joint bid, made the cut. For more on the Amazon decision, click here.
While the outlook for another year of strong economic growth is good, experts also cautioned that there are some challenges that could curtail growth in the long-run. These include projected labor shortages, reinvention of traditional retailing against the onslaught over overwhelming growth of e-commerce, lack of corporate relocations to Fort Worth and inadequate spending on mass transit to better connect people with jobs.
“This is going to be a year of change,” said Brandom Gengelbach, executive vice president of economic development for the Fort Worth Chamber of Commerce.
Gengelbach and Robert Sturns, director of economic development for the city of Fort Worth, jointly presented highlights from new economic development blueprints developed separately by the chamber and city.
After months of research and development, both entities plan to begin implementing recommendations. For the chamber, that includes new services for small businesses and entrepreneurs, targeting and recruiting more new business and developing solutions to reduce poverty and improve mass transit and affordable housing.
For the city, goals include adopting business-friendly procedures, improving underserved neighborhoods, creating innovation districts and identifying and establishing incentives on property ripe for growth.
Gengelbach and Sturns both said the city and chamber have shared goals to combat Fort Worth’s image as a suburb of Dallas, which is underscored by residents increasingly leave Fort Worth for jobs in Dallas and other communities. Fort Worth’s balance between jobs and housing is eroding and residents are paying an increasingly larger share of public services.
Corporate recruiting will help correct the imbalance and increase the city’s share of new jobs coming to the Dallas-Fort Worth area.
Matt Montague, vice president of JLL, reported overall strength in Fort Worth’s office
“There were 127,000 new jobs created in DFW in 2017,” Montague said. “DFW accounted for 39 percent of Texas’ job growth.
One of the hot spots for office growth has been in the Alliance area of North Fort Worth as well as Westlake and Southlake in northeast Tarrant County, which are benefiting from major relocations from companies such as Charles Schwab, Mercedes-Benz Financial Group and TD Ameritrade.
Meanwhile, construction is expected to especially strong again in 2018 because of an abundance of large projects underway across the Dallas-Fort Worth area such as the new American Airlines headquarters, the new Globe Life Park, Texas Live! In addition to new homes, apartments and retail centers, according to Scot Bennett of The Beck Group.
But while the Dallas-Fort Worth area ranks No. 5 in the United States for growth and Southern region of the country is No. 1, the local construction industry is facing a serious shortage of skilled labor that will contribute to rising costs this year.
“Dallas-Fort Worth lost 15 percent of its construction workforce during the recession,” Bennett said. “As of July 2017, we’ve had a shortage of 20,000 workers.”
Although the labor shortage is a “critical area,” Bennett said construction growth will be 2 to 3 percent this year.
Despite the well-publicized challenges facing brick-and-mortar retailers, Fort Worth’s retail centers and retailers have been innovative in adapting to the changing retail climate, said Jessica Worman, co-president of M2G Ventures.
Innovative measures include the introduction of first-to-market retailers, use of pop-up shopping sites, chef-driven restaurants, integration of office-retail-entertainment centers, creative shopping experiences for consumers, introduction of public art and maker spaces and the addition of value-oriented outlet shopping opportunities.
Dozens of new stores opened across the Fort Worth area last year with more on the horizon, including shops and restaurants in the redeveloped mule barns in the Fort Worth Stockyards, she said.
With the demise and store closings of many big-box retailers, industrial warehouse space has become the new retail, said Tony Crème, a senior vice president at Hillwood. The industrial sector was particularly strong in 2017, with a record-breaking 26.8 million square feet of new pace being added.
“This marks the 29th consecutive quarter of positive absorption and there is no sign of the momentum slowing in 2018,” Crème said. Dallas-Fort Worth has become the third largest industrial market in the U.S. with 884 million square feet. The Tarrant County area accounts for 38 percent of the market.
In 2017, more apartments were built in the Dallas-Fort Worth than in any other market in the country, said Drew Kile, senior director at Institutional Property Advisors, a multi-family brokerage division of Marcus & Millchap. An estimated 30,000 apartments were built in the area last year, up significantly from 18,000 units built in 2016.
Another 24,000 units are expected to be completed in 2018, with central Fort Worth to be among the larger beneficiaries, he said.