By: Real Estate Council of Greater Fort Worth
Another 100,000 square feet of downtown office space expected to hit market from oil and gas impact.
The Real Estate Council of Greater Fort Worth recently hosted the 27th Annual Tarrant County Commercial Real Estate Forecast, where eight industry leaders presented their insights and predictions for the area’s commercial real estate market in 2016:
Oil Industry Vacancies Buoyed by Population and Job Growth
As predicted during last year’s Forecast, low Oil prices impacted the commercial real estate market in Tarrant County during 2015. That trend is expected to continue in 2016.
Due to lower oil prices, companies have either moved out or downsized, with the equivalent of 34 full floors now vacant in downtown office buildings and another six floors that could be empty by the end of 2016, said Todd Burnette, managing director of the Fort Worth office of JLL, who gave an office market update during the event.
“There’s about 150,000 square feet available downtown today,” Burnette said. “Look for as much as another 100,000 square feet to hit the market this year.”
The good news? There’s plenty of it. 1) Fort Worth has decreased its dependence on the oil and natural gas industry, and 2) The area’s population and job growth will continue to drive retail and multifamily development, industry leaders said.
Burnette said higher levels of diversity in Fort Worth – achieved during the past 25 years - insulate Fort Worth from swings in the oil and gas industry. Energy jobs account for 2.2 percent of all jobs in Fort Worth, unlike other Texas locations. In Midland, for example, energy jobs account for 25 percent of its job base, said Burnette.
“This is not your grandparents’ Fort Worth anymore,” said David Berzina, executive vice president of economic development with the Fort Worth Chamber of Commerce, who addressed economic development during the 2016 Forecast event.
“Of all the nation’s largest cities, Fort Worth has the third fastest-growing economy,” Berzina said. “It is adding a new resident every 25 minutes and ranks 14th nationally among states luring California companies to their respective locations.”
Net job growth in 2015 resulted in more than 26,000 new jobs. “These new jobs are fueling strong population growth and improved office absorption,” Burnette said.
Addressing transportation trends, Bill Meadows, chairman of the Commission for High Speed Rail in the Dallas/ Fort Worth region, shared that by 2040, Tarrant County is expected to see the largest population growth of all counties in the Dallas/Fort Worth Metroplex, with a population of 1,788,400 in 2010 and an expected population of 3,094,640 by 2040.
Commercial construction permits were at a high in 2015, Berzina said. Last year, commercial construction permits totaled 16.4 million square feet and residential permits totaled 10.7 million. In total, permits issued in 2015 had a $2.3 billion value, compared to $2 billion in 2014.
Presenters Jay Redford, MAI, and Keri Redford, MAI, both with Integra Realty Resources, DFW, pointed out that major deals already announced -- like Facebook, the Jetta Tower, the American Airlines new headquarters and the Texas Rangers mixed-use development project -- all bode well for the Tarrant County Area.
Additionally, Berzina highlighted two future projects – an $11 million, 100-room Hampton Inn and Suites planned for the east side of Interstate 35W in the Rosedale and Evans urban village and a 200-unit multifamily project planned for Panther Island, the 800-acre development formerly known as Trinity River Vision connecting downtown and the Fort Worth Stockyards (a formal announcement is expected by the end of March, he said).
Retail on the Rise
The retail market is also growing, said Stephen Coslik, chairman of The Woodmont Co., pointing to new storefronts along West Seventh Street, Clearfork and other upscale developments.
“In 2016, we will witness the completion or near completion of retail developments started during the 2015 calendar year,” Coslik said.
These will include Trademark Property Co.’s Waterside development, anchored by Whole Foods Market; WestBend along South University Drive, anchored by The Fresh Market; and Presidio Towne Crossing in North Fort Worth along Interstate 35W. A new outlet mall is also coming, located across from the Texas Motor Speedway, and growth is expected in the supermarket sector.
Apartment occupancy and rent prices are also on the rise. Fort Worth apartment occupancy hit 95. 3 percent in 2015, an increase of 60 basis points, and annual rents grew by 6.8 percent.
“Occupancies continue to hover at their highest level in the last 10 years, and rents had another year of growth at a pace not seen in 20 years,” said Drew Kile with Institutional Property Advisors in Fort Worth, who spoke about multi-family market trends.
With home prices rising faster than rental rates and more young professionals choosing to rent for lifestyle reasons, drivers remain strong for apartments, Kile said.
“This continued demand, coupled with one of the highest job and population growth rates in the nation, will lead to another year of favorable performance for the area’s apartment owners,” Kile said.
In 2015, Dallas-Fort Worth became the nation’s fourth-largest industrial market, said Tony Creme, a vice president with Hillwood Properties, a Perot Company.
“By the numbers, Greater Tarrant County accounts for approximately 35 percent of Dallas-Fort Worth’s total industrial inventory, or 287 million square feet,” Creme said.
Tarrant County was home to many of the largest Dallas-Fort Worth industrial leases in 2015, with a vacancy rate that remains below 7 percent, said Crème, who foresees similar strength and momentum for the rest of 2016.
About Real Estate Council of Greater Fort Worth
The Real Estate Council of Greater Fort Worth is a unified voice for the commercial real estate industry, influencing action and supporting change to accomplish long-term job growth and enhance the quality of life in the Greater Fort Worth area.