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Commercial Real Estate

CRE Opinion: Cautiously Enjoying the Best of Times

A cautionary tale of two cities.

I am certainly not the only commercial real estate professional to characterize this current economic cycle—the last decade or so—as being the “best of times” in the Dallas-Fort Worth. It’s pretty evident that the rapid pace of development has been simply stunning, and most have benefitted from this evolution. A finer point here is that what’s most impressive about this growth is the quality of the development with a consistent eye toward building sustainable projects and communities—consider the maturation of Uptown and the emergence of key live/work/play centers, such as Legacy West, The Star, and CityLine.

It seems the temptation to use cheap land, cheap construction, and cheap labor has waned in favor of building more lifestyle developments that are amenity rich and less prone to the rubber band effect that tends to occur when a cycle goes south. And this leads me to my cautionary tale of two cities. While the current growth is great, increased traffic and population density remain growing concerns of mine. Local governments and the business community are focused on long-term solutions—evidence being the investment in DART, GrowSouth, and Smart City initiatives, among other economic development initiatives—but need to remain focused, lest we veer toward “the worst of times.”

I always sense this best and worst duality when I travel for business. It was especially striking this past March while I participated in two weeks of college tours with my musician daughter. From Western New York to the Rust Belt to the Fruited Plain to the Rocky Mountains and wrapping up in the Golden State, you see a tale of two cities. I saw tired towns promoting occasional stories of transition and renaissance that were more wishful thinking than reality. I saw that socioeconomic issues had begun to define and subsume once glorious communities. Many places I traveled through during those two weeks were once juggernauts, but conditions, politics, labor, regulation, and taxation changed over time making them less desirable for continued growth and prosperity.

As DFW has seen, with growth comes prosperity, but we must deploy a bit of caution to ensure that we don’t repeat the mistakes of others and, in time, suffer their struggles. This may not seem like a reality for us, but it’s a consistent theme that has repeated itself over and over again across the U.S. The beleaguered communities my daughter and I passed through on our college tour didn’t likely consider that their growth would ever end and, in some cases, retreat—yet all of the signs were there.

And another point—not trivial in the least—but perhaps not very obvious: DFW’s growth is, in part, at the expense of other states. Are we really creating net new jobs, or in many cases, are we taking food off of someone else’s table? What I am talking about is that some of our region’s job growth is due to companies and employees moving out of, for instance, California, Illinois, Massachusetts, and New Jersey, in favor of lower costs. Understanding why this is occurring will go a long way toward our building a community that can avoid these struggles, which I see as over-regulation, over-taxation, and debt.

All of this stated, DFW business and community leaders should be proud of what has occurred during this cycle. This is the “best of times” and we want to keep it that way. We need to be mindful of how things can turn toward the “worst of times.” Let’s stay on the “best” side of the scale through pre-emptive action and self-awareness, and continue to be thankful for our growth.

Frank McCafferty is the executive managing director and co-branch manager of Savills Studley’s Dallas office.