Na­tion’s top mar­ket: Dal­las-fort Worth

The Dallas Morning News - - Business - By STEVE BROWN Real Es­tate Ed­i­tor steve­brown@dal­las­news.com

Dal­las-fort Worth tops the list of U.S. cities that real es­tate in­dus­try ex­ecs say will be the best for their busi­ness in 2019.

D-FW has been rated the high­est for prop­erty in­vest­ment and con­struc­tion in a closely watched real es­tate beauty con­test — the an­nual Emerg­ing Trends in Real Es­tate re­port, which polled in­dus­try lead­ers on their out­look for 79 U.S. cities. The last time D-FW topped the list was in 2015, in the re­port look­ing ahead to 2016.

“I’m thrilled to see Dal­las at the top of the list again,” said By­ron Car­lock, na­tional real es­tate leader with Price­wa­ter­house­c­oop­ers, which, with the Ur­ban Land In­sti­tute, spon­sors the an­nual sur­vey. “Dal­las is do­ing a lot of things right.

“Dal­las is one of the bright spots in our coun­try,” Car­lock said. “We are watch­ing Dal­las lead the way among ma­jor cities piv­ot­ing to the new econ­omy.”

The re­cent strong­est U.S. mar­ket for both job growth and pop­u­la­tion gains, D-FW is the top home and apart­ment build­ing cen­ter in the coun­try and a leader in de­mand

for all kinds of com­mer­cial real es­tate. In just the first half of 2018, more than $11 bil­lion in con­struc­tion projects were started in North Texas. Only New York City had more to­tal build­ing.

Austin and San An­to­nio also placed among the Emerg­ing Trends re­port’s 20 fa­vorite cities for in­vest­ment and de­vel­op­ment in 2019.

Seven­teen of the 20 cities are con­sid­ered “sec­ondary” mar­kets — as op­posed to the big “gate­way” lo­ca­tions such as New York, San Fran­cisco and Washington, D.C., that are usu­ally fa­vored by in­vestors.

Along with D-FW, the cities in­vestors like most for next year in­clude Raleigh­durham, N.C.; Or­lando, Fla.; Nashville; and Char­lotte, N.C.

“More job growth is hap­pen­ing in those mar­kets,” said Ur­ban Land In­sti­tute’s global CEO, Ed Wal­ter. “And the amount of in­vest­ment [cap­i­tal] that has flowed into the gate­way mar­kets has in a lot of cases cre­ated some im­bal­ances.”

Wal­ter said Dal­las-fort Worth is a prime ex­am­ple of one of fast-growth, non­coastal metro ar­eas.

“The five-year growth rate of Dal­las for em­ploy­ment is more than dou­ble the na­tional aver­age,” he said. “When you add up all the dif­fer­ent in­gre­di­ents, Dal­las ends up rank­ing as the best mar­ket over the near term.”

More than 2,300 prop­erty own­ers, lenders, bro­kers, in­vestors, builders and other prop­erty pro­fes­sion­als were polled for their out­look on the U.S. real es­tate mar­ket.

This is the 40th year that the Emerg­ing Trends re­port has been pub­lished. Real es­tate ex­ecs were asked to rank their fa­vorite prop­erty types for next year — in­dus­trial build­ings, gar­den apart­ments and shop­ping cen­ter re­de­vel­op­ments. Chief in­dus­try wor­ries for the com­ing year were also high­lighted.

The top con­cerns for 2019 in­clude:

■ Ris­ing in­ter­est rates, which are at the high­est level in more than five years.

■ Higher prop­erty in­surance costs, be­cause of climate change and ex­pen­sive storms and fires, which are rais­ing pol­icy pre­mi­ums.

■ Im­mi­gra­tion re­stric­tions, which could cause “neg­a­tive eco­nomic con­se­quences and long-term weak­en­ing of our na­tional growth po­ten­tial” and lead to fur­ther la­bor short­ages.

■ The long real es­tate cy­cle, which means a fu­ture down­turn is more likely. “The de­cline in real es­tate trans­ac­tion vol­ume seems to say that in­vestors as a group are pulling back in the face of such con­cerns.”

So far, there’s no sign of over­sup­ply in most of the coun­try’s cities, Wal­ter said. “What’s been dif­fer­ent about this cy­cle com­pared to the oth­ers is that sup­ply growth has gen­er­ally been con­strained.”

Pwc’s Car­lock said only a tiny per­cent­age of the prop­erty pro­fes­sion­als sur­veyed were neg­a­tive about 2019.

“As you look at sup­ply­de­mand char­ac­ter­is­tics and the dis­ci­plined ap­proach to the mar­ket and the amount of eq­uity go­ing into deals, we have a fairly healthy in­dus­try,” he said.

Ver­non Bryant/staff Pho­tog­ra­pher

Con­struc­tion con­tin­ues in down­town Dal­las. In the an­nual Emerg­ing Trends in Real Es­tate re­port, which polled in­dus­try lead­ers on their out­look for 79 U.S. cities, Dal­las-fort Worth came in at No. 1.

Ver­non Bryant/staff Pho­tog­ra­pher

If the na­tion’s real es­tate ex­ec­u­tives are right, con­struc­tion cranes will re­main a com­mon sight in Dal­las-fort Worth next year.

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