Mark Twain said, “History doesn’t repeat itself, but it does rhyme.” Clearly, he never saw a real estate cycle like the one we’re currently experiencing.
This up cycle has defied gravity longer than any, at least in this epoch. So, all the talk of innings and double headers has been replaced with a smile, a shoulder shrug, and the statement, “Who knows how long this will run?” The engine that has fueled this run is the six-figure annual job growth we have had for seven years. Creating a new job every four minutes tends to extend play time. Or, said differently, we add the population of Waco every year.
Truthfully, no one can see more than a handful of quarters ahead of where we are. Developers of major projects with any lease-up risk are rolling the bones on demand and the capital market climate two or three years out. That is why supply and demand have been in much better sync in this cycle than those of the past. Whether fear or discipline, the relative restraint is healthy.
If there is a bet to hedge, it is on Dallas-Fort Worth. A generation ago, this was an embattled place. A ghost town after the gold rush of the S&Ls and the crushing blow of the 1986 tax reform. The region endured the perfect storm. Today, DFW is another world. Hard evidence supports that despite its lack of mountains and beaches, it is among the most attractive places in the country.
DFW is a confluence of things that are manna compared to the states that feed us. Right to work, no state income tax, reasonable housing, education, airports, distribution infrastructure, and business friendliness are just a few attributes that when combined, make DFW a very strong cocktail.
The bane of the real estate business is that in good times, we watch the horizon, looking for storms. DFW is well on its way to becoming the third-largest MSA in the country. And although that will create some challenges along the way, it will also create vast opportunities in real estate. So, there may be a shower or two out there, but, for fundamental reasons, DFW’s future is very bright.
Managing Principal Ran Holman leads Cushman & Wakefield’s Dallas-Fort Worth office, one of the largest and most active within the global organization.