Dallas January 2022 Key Take Aways
Laila Assanie with the Federal Reserve Bank of Dallas, shared the following:
• Overall, the labor market in Texas ended on a high note with “strong numbers at the end of the 4th Quarter”. Numbers show a 5% job growth increase compared to the U.S. with a 4.5% increase. Also, the job growth numbers are based across all sectors with the strongest performers being in the Professional and Business service sectors.
• Laila also shared that their records indicate strong numbers in the Leisure and Hospitality service sectors, which was expected given that the economy began “normalizing since the lock down was essentially behind us and many people were beginning to move around again”.
• Laila is expecting that the “upward growth will moderate in 2022 in terms of employment” and does not expect things to not be as strong as they saw in 2021.
Steve Bruszer with Spring Valley Construction Company, shared his “word of the month is UNCERTAINTY”. Here is more of what Steve had to say:
• There is so much uncertainty in the marketplace right now which is what’s causing pricing increases. For example, but no surprise, lumber and constructions costs are up approximately 20% … “it’s like “a rollercoaster”. He also shared the following: “there is still such a great demand for developers to build and there is so much capital being put in place for lenders to build and people want to put their money some place so it’s creating a gigantic demand in the DFW area”.
• Steve feels that the construction market is not going to slow down because the demand is at an all-time high and it’s “scary crazy and our back log is higher than it’s ever been and our competitors are experiencing the same thing. I don’t see the DFW area slowing down at all”.
Raheem Suleman with Top Cap Funding Solutions, shared the following:
• With regards to construction loans, construction lenders have increased the minimum by at least 5x, or to “put things in perspective, a construction loan pre-pandemic minimum was $10 million for a construction loan but now the same lender is up to $50 million and even then they are still back logged. They want to make more money because of the demand”.
Paul Hendershot with CoStar Group, shared the following:
• The current construction craze that is happening in the Dallas/Fort Worth area; to put things in perspective, he shared the following: “We currently have 61.3 million sq. ft. of industrial space under way right now and in one submarket in southeast Dallas there are approximately 10 buildings that are one million sq. ft. or greater. We could take Phoenix and Atlanta and double them and they still won’t equal the construction pipeline we currently have in the DFW area”.
• He finds that the office sector seems to have entered a stable recovery. CoStar had just over 1.4 million sq. ft. of positive net absorption so that’s a 3rd Quarter in the black and currently they are projecting that their 1st Quarter of 2022 to be big with 1.8 million sq. ft. in the black. Also seeing a lot of leasing activity picking up”.
Bob Young with the Weitzman Group shared the following:
• Development will go up in 2022 but it will really increase in 2023 and 2024 because “you can’t stop the people from coming here that are employed with good jobs that love our area. I’m as “bullish” about North Texas than I’ve ever been in a changing environment meaning digital and brick and mortar has collided and the result of that has been a creative adaptive market that’s as fun as it can be”.
• North Texas has been the home for “overbuilding of every product type since time began and in retail a decade ago they may have been doing $10 a clip every year but what’s happened over the past eight years with all of the discounters, mostly Walmart and Target, they put all their money into technology and not into new stores, and grocers did the same thing, so in 2021 in our data set the retail market in DFW only delivered 644,000 sq. ft. of new construction, which is the lowest in the 33 year history of our survey”.
• He feels that “the consumers want to buy whatever they want, when they want it in whatever format they want but also have the ability to return it to a physical store”.
Guest speaker Marsha Getto-Aikens with HKS, an architectural company, shared the following notes:
• She’s working with a NextGen/Young Professionals group and she’s learning that they are so much more aware and connected then people think they are and culture and atmosphere are “very important to them”. While they appreciate the work and they want the work, they also want to have the feeling that when they are in the office they are part of something that motivates them to be better.
• With regards to the Labor shortage, Marsha was curious how the group will lean and/or is leaning into the idea of the need for more skilled labor and then how will they support the places of education that can actual foster teaching those skills. She works with a group at the Dallas Community College which has created a better platform for teaching such skills and is noticing more and more young women entering the construction industry. She said their energy and excitement was “amazing to see”.
• She’s seeing a “weird intersection of who wants to work from home and who wants to be in the office and interestingly enough it seems to be both a generational and occupational decision”.
• All the bankruptcies in retail happened early on and now they are repositioning themselves, so she feels that in order to be successful, “their website has to look more like the store and the store has to look more like the website”.
• She feels that technology has “showed up in such a way during the pandemic and has peeled the curtain back and showed us what they are going to be doing to us going forward. It is a big deal and the more we embrace it and the more we understand what they can provide the better we will all be. I would say “data, data, data, data, and use it wisely and get the right people to advise you”.
• She feels that people want certainty and they want it to be intentional certainty and she doesn’t think that they mind being told what to do but “you have to have a really good reason to tell them and what it means to the organization”.
• They are doing a lot of resorts internationally (Dubai, Bahamas, Caribbean, South America, Spain, etc.) not in the U.S. They look like places you would want to live and not vacation.
• They are doing a lot of sports work in smaller communities, focusing on youth sports, such as smaller ball parks, soccer field developments, etc. with mixed use around them.
• Marsha is taking on an initiative called “Taking the Complexity and Leading us Towards Simplification” because we have developed layers and layers and layers of complexity. She feels that we all obsess on things that really don’t matter and are working on things that really matter. She says it’s not as easy as you would think because people like processing things. She continued by saying the idea of complexity is less exciting now to people and simplicity is becoming a huge leap for the future. She feels that “simple might be the new normal”.
Recent Comments