DALLAS-Diversification, say those in the know, will be Texas' talisman for any harsh economic backlash from corporate cuts. It also doesn't hurt that the state's favorite son now resides at 1600 Pennsylvania Ave.
The story's the same in Dallas-Ft. Worth, Houston, Austin and even San Antonio. The number of new jobs coming on line is less than in years past, but who can criticize numbers upward of 50,000 for most of the state's metropolises for 2001. Multifamily developers can barely keep pace with the influx of workers coming to fill the jobs.
In Austin, it's the semiconductor business and quasi-California lifestyle sans the high cost of living that lures high-tech companies to the fold. In Houston, it's energy. Any trip to the gas pump or look at the latest utility bill should tell you how this town's faring these days. Dallas-Ft. Worth has the creme de la creme of established international businesses with budgets that aren't necessarily reliant upon the US for their wealth.
With that diversification in place, Texas is rife with prevailing optimism. Vast amount of sublease space means there's more room for more companies to come to a business-friendly state. Dell Computer's 1,700 pink slips are just the offshoot of a temporary sluggish period, say the firm's chiefs. Nokia's equally high layoff doesn't even translate to despair in Dallas-Ft. Worth. One dot-com fails, another immediately starts up.
California's energy crisis is giving rise to more migration of high-tech and support companies to Texas, where the sun still shines, the cost of living is cheaper and it's easy traveling for coast-to-coast daily business.
Jeff Deweese, vice president and managing director for Grubb & Ellis Co.'s Dallas office, best describes the state of the union in Texas: “We're increasing at a decreasing rate.” Sure, there's some belt-tightening, corporate shuffling and maybe even some downsizing. “It's slowing down,” he tells GlobeSt.com, “but the economy's good. Our diversified economy will stay the course.” There won't be 100,000 new jobs this year, but there will be 50,000 to 60,000 and “that's very healthy growth,” he emphasizes.
The Grubb & Ellis research department in Dallas places the DFW inventory at about 170 million sf of office space, with roughly an 18% vacancy. In Houston, there's a 13% vacancy for about 145.2 million sf in the office market. San Antonio, with about 20 million sf, is showing an 8.4% vacancy at year-end 2000. Austin's Colliers Oxford Commercial calculates a current 4.2% vacancy for slightly more than 25.9-million sf in the state capital, which boasts the highest rents in Texas.
Belt-tightening is a given in today's economic climate. With that in mind, says Derek McClain, Trammell Crow Co.'s CFO, “as everyone tightens their belt they will be more reluctant to make a major commitment … that will slow the pace of activity.” But what's slow in Texas would be a welcome windfall in most other states.
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