Welcome to Dallas-Fort Worth
The nation's fourth-largest metropolitan area, Dallas-Fort Worth Metroplex (DFW) is a fashionable, trendy, distinctive entrepreneurial culture with more than 6.1 million area residents. By 2030, the total population is anticipated to reach almost eight million.
Dallas is the third largest city in Texas and the ninth largest in the United States making it the main economic powerhouse of the 12-county, Dallas-Fort Worth Metropolitan Area. The DFW Metroplex hosts twenty-two Fortune 500 Companies and boasts the fifth largest media market in the United States.
Dallas is also home to the Federal Reserve Bank of Dallas, which serves Texas, Louisiana, and southern New Mexico in the Eleventh Federal District. Naturally, this positions Dallas as the central banking hub of the Southwest, giving the city a position of international importance.
Insulated Commercial Market
DFW has a well-developed economic composition, and has become a major economic investment target for both domestic and international investors. It has a sustainable, well-developed foundational economic backbone with three principal characteristics, all providing a solid footing the Dallas-Fort Worth commercial real estate market.
First, the area has the largest concentration of corporate headquarters in the United States. Major corporate headquarters include the following:
Notable defense contractors located in the DFW Metroplex include the following:
The relative low cost of housing and a well-educated and price competitive labor force offer DFW as a very compelling business solution for today’s corporations. Comerica recently relocated to DFW from Detroit and AT&T relocated here from San Anntonio.
Secondly, DFW has the most diverse economic base in the country. Banking, insurance, electronics, aerospace, oil and gas, and real estate all form the diverse economic backbone which allows the DFW to successfully compete on an international basis and buck the national trends of the economic downturn.
This especially holds true in Ft. Worth where the market boasts strong fundamentals. This stability is driven by precise and calculated development, allowing for timely deliveries. Absorption remains high throughout both central business districts with healthy companies securing expansions. This organic growth is again, stimulated by the diverse make-up of businesses benefiting from relative low costs of rent and solid demographic foundations.
Dallas has an excellent educational community including Southern Methodist University, The University of Texas (Dallas), Forth Worth’s TCU (Texas Christian University), and in nearby Denton, North Texas University and Texas Women’s University.
Dallas is also home to renowned medical facilities such as Parkland, Baylor, and Presbyterian medical centers. Distinguished medical schools such as Southwestern Medical School and Baylor Dental School consistently receive high rankings in primary care and research.
Third, Dallas-Fort Worth’s geographical location gives it special significance. Centrally located in the south and the heart of America, between the east and west coasts, DFW offers the sophistication of any major metro area and serves as a major national distribution channel for the United States, Canada, and Mexico through its excellent interstate highway system.
Additionally an extensive rail system has been developed which allows Dallas and Fort Worth to be a major distribution hub for the Houston Shipping Port.
Fort Worth is the world headquarters of Santa Fe-Burlington Northern Railways. The intermodal systems also serves Union Pacific Railways for the ever-increasing international shipping demands.
DFW Intercontinental Airport is the second largest in the United States and the seventh largest in the world. The airport recently underwent a $2.8 billion renovation to include the newest innovative technology in personal automated transportation.
“Skylink” is the world’s largest double-linked airport train, and capable of top speeds of 37 miles per hour (60 km/h). The largest airliner in the world, American Airlines, claims the airport as home employing over 21,000 employees. Super-regional Southwest Airlines also makes it home at adjacent Dallas Love Field.
Dallas is currently the third most popular destination for business travel in the United States. The Dallas Convention Center is one of the largest and busiest convention centers in the country. As the Southwest’s leading business and financial center, the city boasts the largest wholesale market in the world and lays claim to being one of the top convention cities in the United States.
Fashion Forward
In addition to its large number of businesses, Dallas has more shopping centers per capita then any other city in the United States and is also home to the second shopping center built in the United States, Highland Park Village, which opened in 1931. Dallas is home of the two other major malls in North Texas, the Dallas Galleria and NorthPark Center, which is the largest mall in Texas. Both malls feature high-end stores and are major tourist draws for the region.
Dallas is home to 15 billionaires, placing it ninth worldwide among cities with the most billionaires. This ranking excludes the eight billionaires who live in the neighboring city of Fort Worth.
1st Quarter 2009 Market Overview
The Dallas-Fort Worth Metroplex surpassed most of the nation coming out of 2008 with moderate growth, but beginning to show signs of wearing out its previosly insulated position by the recession. The Metroplex maintained one of the highest employment growth percentages among urban metros, according to the Bureau of Labor Statistics, finishing with an annualized growth rate of 2% respectively.
Employment gains were generally moderate in all sectors with the exclusion of manufacturing. Pre-recession expansion within the financial, legal, and business services sectors gave employment numbers a superficial boost, giving moderate relief from the ailing residential and technology sectors.
Even through the massive amounts of national foreclosures, local banks have held ground comparatively to the rest of the nation. As a consequence of the significant downtrend in the housing market, job cuts will primarily occur in business development as banks tighten credit requirements and adjust their loan portfolios that are heavily weighted in the commercial real estate market.
The distribution of TARP funds, as well as the pending economic doctrine of the new Obama administration, offers more reasons for local and regional capital markets to hold firm until future uncertain variables become apparent.
In many cases, institutional lenders such as GE Capital are calling loans–even to borrowers with pristine credit when loan terms expire.
It appears the demand for liquidity will place increased pressure on real property owners to amass sufficient amounts of equity capital to balance the stringent long term debt requirements of institutional lenders as mortgagees lower their "risk tolerance" and continue to constrict typical loan-to-value ratios from their former aggressive 75-80% loan underwritings to their more conservative postures which typically are in 50%-70% LTV range.
This should provide additional purchasing opportunities for the low and non-leveraged commercial buyers.
Most of the affluent neighborhoods of Dallas-Fort Worth have held their home value; however, homes in middle-class areas have felt a severe pinch, as prices have eroded from 3%-12%. The number of new homes purchased was also down 12 percent, leaving the average new home with a 4% discount from one year ago.
When compared to the rest of the country, the DFW metroplex has some degree of insulation from economic travesty and is somewhat protected due to the strong and diverse economic base of the area. Homebuilders have not over-saturated the market leaving room for a quicker recovery when this current economic cycle subsides.
The national economic downturn has had a modest impact on the local market. The unemployment rate for the Dallas-Fort Worth area was 5.9 percent in December, up from 4.6 percent a year earlier.
However, the economic gap between Dallas-Fort Worth and the rest of the country has been narrowing as economic gloom cuts its way throughout the national economy.
Forecast for 2009
Many businesses and business owners are presuming a distressing and uncomfortable 2009 with anticipated economic recovery in 2010. They are assuming a “button-down the hatches” bunker-seeking mentality.
The forecast for 2009 by both corporate America business leaders and Wall Street Market Makers has become increasingly pessimistic. This is forcing business owners to make cautious bottom-line operational decisions. Most businesses will postpone or completely terminate expansion.
They will continue to maintain a strong risk-aversion posture while patiently awaiting signs of a slow economic recovery. The recession is expected to continue and “the trimming of the fat” is hoping to produce and leaner and healthier 2010.
Conversely, sophisticated cash-rich investors believe that a major wealth accumulation opportunity is poised on the other side of this stringent economic downturn. Numerous cash equity fund accumulation is being positioned to take advantage of these potential opportunities.
The local economy has lost much of its momentum from the recession. However, DFW is a very resilient market place and is well position for a “first in line” recovery ticket when the economy breathes new life. The Metroplex should be able to outperform other cities across the nation due to its low composite cost of living index at 89.7 average.
Other state attributes which will dinstinguish it from other metro areas include the fact that Texas has no state income tax and has a strong fundamental base of skilled and unskilled labor.
All of these three factors offer compelling investment alternatives to both domestic and international investors who are contemplating national investment opportunity throughout the country.
