Chris Jackson: Why this Market Recovery is Different

Chris Jackson

Dallas-Fort Worth—along with its Texas counterparts, Houston, Austin, and San Antonio—continues to be a bright spot for a country that has struggled to find solid footing since the official economic recovery began in June of 2009. The state’s ability to add jobs while many others struggle to keep them is no accident. Texas boasts one of the friendliest economic environments of any in the union.

As a result of Texas’ pro-business culture, the state and its resident cities have moved up the chart in a number of meaningful metrics:

• No. 1 (Houston) & No. 4 (Dallas) rank on Forbes’ list of the “coolest” cities in the United States.

• For the 10th year in a row, Texas ranked as the top exporting state in the country.

• Dallas-Fort Worth ranked third nationally for the creation of non-farm jobs in 2011.

• According to USA Today, Texas has surpassed New York as the nation’s second-largest economy.

For North Texas, this recovery has been different than those of the past. Historically, pent-up demand coming out of a recession has quickly led to even greater construction volume, causing Dallas-Fort Worth to earn a reputation as a market that lacks upside for rent growth and experiences significant peaks and valleys. Both are caused by sustained imbalances between supply and demand, and neither is appealing to institutional capital.

This time around, however, we’ve had a slow but steady improvement in demand, coupled with no measurable speculative development activity over the previous 30 months. The lack of new supply has given the commercial real estate market time to recover. Both rental rates and vacancy rates are trending toward a return to historical averages by mid-to-late 2013.

NOTE: On Nov. 8, Stream will host a “State-of-the-Market” event featuring Dr. W. Michael Cox, director of the O’Neil Center for Global Markets and Freedom at Southern Methodist University. Dr. Cox will focus on the past, the present, and future of the North Texas economy, highlighting the O’Neil Center’s third annual report, “Which Way, America?” Only two days removed from one of the most polarizing presidential elections in our country’s history, Dr. Cox is certain to offer a unique and experienced view into the future of Dallas-Fort Worth. For more information on this event, please contact me at [email protected]

Chris Jackson is managing partner of Stream Realty Partners, overseeing the Dallas office. Contact him at [email protected]