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Take Heed, But It's Definitely Not the 1980s

DALLAS-"Chicken Little" it's not, but a watchful eye needs to be kept on construction sectors as the Fed deliberately reins in the economy to avert inflation. But, it's definitely not the 1980s, says Cushman & Wakefield Inc.'s investment research managing director.

By Connie Gore | Updated on October 07, 2000

DALLAS-”Chicken Little” it’s not, but a watchful eye needs to be kept on construction sectors as the Fed deliberately reins in the economy to avert inflation.

“The fundamentals are clearly stronger than they were in the 1980s, but we have to closely monitor construction to preserve market health,” says Janice Stanton, managing director of investment research for Cushman & Wakefield Inc.

The words of caution fall on the heels of the FDIC keeping Dallas on its “at risk” list and adding Ft. Worth as an area of potential overbuilding. But, it’s definitely not the 1980s, Stanton emphasizes. Urban vacancy rates are 7.1% on the average nationally in comparison to 15% in 1986; suburban rates are 10% now instead of the 23% experienced 14 years ago. Today’s construction is about half of the 1986 levels, with most CBDs at 6 million sf in comparison to 36 million sf and suburban markets on the average at 70 million sf instead of 140 million sf. Plus, Stanton says, capitalization rates are significantly higher.

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