The Future of the Dallas-Fort Worth CRE Market
As we charge ahead in 2021, many are wondering what the commercial real estate landscape will look like this year and beyond as those of us in the Dallas/Fort Worth continue to fight COVID and one of the hottest market booms in the region’s history. We were able to speak with Jesse Pruitt, principal of Somervell Commercial Realty, and Jacob Blain, Vice President of Commercial Banking with Frost.
Mr. Pruitt, what trends have you seen in the last couple of years that you expect to continue?
The large influx of companies both moving to North Texas and expanding their operations to North Texas has been driving larger buildings and larger project sites. With everyone expecting this flight to North Texas to continue, I would fully expect this trend of large sites to continue.
From a Development perspective what is the biggest problem you foresee in 2021?
It is very difficult to find land for large sites (20+ acres) in DFW proper. On the rate occasion that you do happen to find commercial/industrial zoned land over 20 acres, the price is astronomically high. The difficulty finding large sites is forcing clients outside of DFW proper to the outskirts or to other areas in North Texas like Burleson, Mansfield, McKinney, Ennis, Midlothian, Sanger, and many other places.
Mr. Pruitt’s point regarding larger project sites and more job sites being outside of DFW proper both have huge economic implications for the cities that these projects are being built in. Mansfield’s growth over the past 10+ years can serve as a litmus test for what many cities on the outskirts of DFW could expect if this trend continues. The difference in the years to come is that growth could come at a comparatively accelerated pace.
Mr. Blain, how has COVID-19 affected the Construction Finance market?
Less capital is available for new construction in certain COVID-impacted sectors, adding emphasis to credit underwriting and additional underwriting on secondary sources of repayment.
What trends do you see that will affect the market in 2021 and beyond?
Flight to the DFW market from other out-of-state markets will continue to insulate our local economy from negative impact of COVID. Warehouse/industrial space has strong demand, but large office space demand may decrease as more companies shift to a work-from-home model.
Both Mr. Pruitt and Mr. Blain has interesting points. If the flight to North Texas continues, as many expect it to, and we see cities on the outskirts of DFW grow we could expect an uptick in retail and housing construction in these cities that will continue to drive economic growth across the region.