Dallas ranks second in the U.S. for commercial development potential
While the COVID-19 pandemic has slowed construction activity in north Texas, the Dallas area has been ranked as the second cheapest market in the country for new developments and commercial construction.
Only Atlanta was rated higher in commercial real estate firm CBRE’s new forecast.
The Dallas area received top marks for industrial and retail development opportunities.
CBRE examined the 50 largest metro areas in the country and ranked them based on construction costs, available property, performance and property forecast for the areas.
“Dallas continues to epitomize a truly diversified market for real estate growth and sustainability,” said Chris Bone, CBRE senior managing director with project management in Dallas, in the report. “With its centralized national location, proximity to inland and port trade routes, and the availability of land, North Texas remains the central hub for employers and skilled workers to conduct their business.
“The success of commercial real estate in the region has had a direct impact on the steady rise in multi-family investment and residential permits, and increased the need for more retail and industrial products to meet the surge in consumer demand.”
CBRE analysts predict that Dallas, with its diverse economy, favorable tax climate, and high levels of immigration and labor productivity, will outperform national recovery.
The area continues to attract thousands of new residents from California, the Northeast, and the Midwest.
The Dallas-Fort Worth area ranked fourth nationwide in total commercial starts in 2020, despite construction activity declining 20% due to the pandemic, reports Dodge Data & Analytics.
“We expect a significant increase in home furnishing projects in 2021 as employers redesign and reconfigure the spaces to meet new standards of health, wellness and safety,” said Jim Dobleske, CBRE global president for project management, in a statement . “The cost is unlikely to change much, however. Markets with high land and labor costs are not getting much cheaper, if at all. “
Along with Dallas, two other metropolitan areas in Texas landed on CBRE’s top 10 market list: Houston in eighth place and Austin in ninth place.
Fort Worth finished in 16th place.
No California or Northeastern cities made the top 10 list.
In North Texas, demand for office space fell sharply in 2020. More than 60% of workers were at home due to COVID-19. The net office rental ratio fell by nearly 5 million square feet – the biggest drop in decades.
“We continue to see challenges in the office market as tenant occupancy is decreasing due to COVID risks. This has piqued the appetite to implement our pandemic resetting guidelines to customize the office space through new design solutions, infrastructure engineering and technology. Scott Eldredge, CBRE’s executive director of project management, said in a statement.
At the same time, the demand for industrial buildings boomed due to changes in consumer habits during the pandemic.
More than 26 million square feet of warehouse space is being built in North Texas – most of all areas in the country.