Stream Realty Partners Hosts 7th Annual State of the Market Event in Dallas
Business Leaders Address Developments Impacting Markets and Local Economy
Stream Realty Partners (Stream) – a national real estate development, services and investment firm, hosted its seventh annual Dallas-Fort Worth (DFW) State of the Market at the Statler Hotel with more than 200 business leaders in attendance.
Featured keynote speakers, Tom Koulopoulos, one of the industry’s leading futurists focusing on technology and business trends and Larry Burns, former General Motors Vice President of R&D, Mobility Consultant for Google Inc., discussed how the nature of business is changing dramatically and the how commercial real estate industry needs to be prepared for what’s to come.
Stream opened the State of the Market with the first of three open debates that comparatively addressed the health and well-being of the following industry submarkets, South Dallas and Fort Worth industrial, Uptown/Arts District and the Upper Tollway/West Plano Office Markets, and Dallas-Fort Worth Office and Industrial overall.
South Dallas and Fort Worth Industrial
Seth Koschak, managing director of Stream’s Fort Worth office and Drew Feagin, associate for Stream’s industrial division in Dallas, addressed the current growth patterns, demand activity and performance merits for both markets.
Feagin detailed how South Dallas continues to be a submarket to watch as this sector enjoyed another year of significant growth highlighted by nearly four million square feet of leasing activity with more than 3.5 million square feet of build-to-suit requirements under construction. Overall, South Dallas finished 2017 with strong leasing activity and 2018 is continuing this pace and should see a significant amount of positive movement going forward.
Koschak highlighted the increased activity in Fort Worth, especially north along the I-35W corridor, and shared how this sector is one of the most active in DFW, with net absorption up and continuously out-pacing deliveries. These notes coupled with increased population numbers and pro-business municipalities in the North Fort Worth region who are willing to offer incentives, industrial development is expected to thrive.
Dallas Office Market: Uptown/Arts District and Upper Tollway/West Plano
Evanich focused on the facts that the Upper Tollway submarket is one of the leading development markets in North Texas with 3.1 million square feet of positive absorption. In the past 10 years, the Upper Tollway has landed more than 25 companies greater than 100,000 square feet.
Many of the reasons for this incredible growth can be summed up with Stream’s “Sharpie” acronym: schools, housing, amenities, roads, people and incentives. Coupled with the incredible growth of Plano and Frisco, which have a combined population of more than 450,000 (larger than the City of Miami), the Upper Tollway now boasts more office square footage than Fort Worth. Additionally, Legacy has more office employees than downtown Dallas, thus showing that the bulk of office demand has shifted to the Upper Tollway submarket.
Sowanick stated that while direct rental rates for the DFW office market (across all submarkets and office classes) were up 29 percent from 2011 through 2017, Uptown/Arts District was up more than 35 percent over that same time period. Overall, Uptown/Arts District will continue maintaining its foothold on leasing demand for several reasons including its attractiveness to companies focused on recruiting top talent out of the millennial generation that desires Class A office space surrounded by walkable amenities.
Evanich and Sowanick feel that both office markets have healthy futures, and that the Dallas office market is not currently overbuilding as new construction is performing well and redevelopment activity of existing office product is robust.
Dallas-Fort Worth Office and Industrial
J.J. Leonard, managing director of Stream’s office division and Blake Kendrick, managing director and partner of Stream’s industrial division, detailed the overall status of the Dallas Office and Industrial submarkets.
Kendrick stated that Dallas-Fort Worth industrial market currently stands at 802 million square feet of industrial space ranking it third in the US; and that there is only one submarket in the entire metroplex with a double-digit vacancy rate, while absorption has been greater than 20 million square feet in 2016 and 2017, and construction has paced similar to absorption.
Leonard addressed the strength of the Dallas office market citing the current health of this cycle. One stellar example of this is Pinnacle Tower near the Galleria. At no other time has Stream seen more activity or demand for a project of this type. From an overall office market stability standpoint, Dallas is poised for more progress due overall job growth, affordable leasing (and ownership) opportunities, rising land prices and values still well under replacements costs.
Vinson & Elkins, Entos Design, RGA Architects, Republic Title, Peinado Construction and Parking Sense sponsored Stream’s 2018 State of the Market event