Mike Kennedy: Does This Real Estate Market Still Have Legs?

As I find myself composing my inaugural blog post for D Real Estate Daily, I can say that I am truly blessed to have made my career in the great state of Texas, first as an architect, then in real estate. These are very different worlds of thought, but the combination of experiences gives me a unique perspective on how to get things done.

One never really stops being an architect; my fascination with creating a vision for a property, how it will function and how it will be perceived, informs everything. Getting a planning “vision” financed, built, and sold, was always my natural next step. The architectural training makes it easier to do good things in real estate. Or perhaps, just more difficult to do bad things.

Good things do happen on land here in Dallas. Good to work inside, or live inside, or just drive by. But the best developments actually make sense as real estate deals as well.  An example? Billingsley’s Cypress Waters headquarters for 7-Eleven on LBJ Freeway.  I know it was a great real estate deal, and I know that it’s a tilt wall “value” building. But it is also damn cool, with its “big window” move, and it makes me smile on my drive home. It has character, and we all benefit from that.  Nice job, Corgan.

My thoughts now turn to a real estate question as old as Dallas itself, yet as current as a freshly minted apartment development in Uptown: Does our current real estate expansion still have “legs?” Are the banks “tightening up?” Have we “overbuilt” or “maxed out values?” Is it prudent to “wait and see how absorption plays out?” 

There are as many combined variables to ponder here as there are people to consider them. Certainly, Dallas has graduated into the top bracket of relocation destinations. Thanks to our friendly business environment, passable weather, and reasonable cost of living, we have become a destination of the Toyotas of this world, rather than the back of house call centers and secondary operations centers that used to relocate here for “geographic diversity.”  The pipeline is bigger, and the inbound growth is likely to continue. 

But a real estate cycle is like a game of musical chairs.  When the music has been playing for a good long time, our instincts tell us to make a lunge for an unoccupied chair, just in case the music is a about to stop. It’s the natural thing to do. Study up, and then listen to your “gut.” Time it right and lunge for a chair at the perfect moment, leaving others holding their assets through the next dark winter. 

The music has been playing for a good while now. What do you think? Is your hand on the back of that chair? Or is the notion of a market top contradicted by the strength of the music?

Mike Kennedy is a senior vice president with Avison Young and principal with Altera Development. 

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