When I shared my thoughts on the market impact of the pandemic last March, my uninformed view of how long it would take for us to come out of this was way too aggressive. Now, after 10 months of living in the COVID world, I remain very optimistic about the outlook for Dallas.
Dallas is a can-do city, and that will show up as the economy takes off this summer. As the vaccine rollout continues, people will become more confident and will make adjustments accordingly.
It’s my belief that the DFW market will be in recovery by mid-summer and very active by later this year. Corporations are going to move to Dallas in greater numbers than we have ever seen. Our residential real estate market is hot because people from the Midwest and West Coast are coming here to avoid the increased taxes and difficult business environments in other states.
The moves have already started, with small to midsized companies leading the way. Larger corporations will come, but their process of choosing the best relocation market is more comprehensive and time-consuming, so they, among other things, can get tax incentives from the city they ultimately choose for the new jobs they’ll bring to the area.
Here are other predictions for the Dallas market in 2021:
Most people will be back in the office by mid-summer.
- The work-from-home movement won’t materially affect the market. Larger firms may have 15 percent to 20 percent of their people work from home, but I think most employees who work from home will still be in the office a portion of their week. Whatever decrease in occupancy is created will have a minimal effect on vacancy rates in Dallas.
- Sublease space will start to decrease by mid-summer and be mostly absorbed by early 2022.
- Large relocations will be active by this summer.
- Dallas will be fully recovered by the first quarter of 2022.
- Demand will be greater than supply. COVID slowed or stopped speculative development, so there will be limited supply. The demand will restart office development in late 2021.
- The Dallas market will exceed 2019 activity levels.
- The improving market will give retail and restaurant entrepreneurs a chance to have a low-cost entry into business because of the vacant space created by the shutdowns. Restaurant spaces will be absorbed by new concepts and quality up-and-coming restaurateurs.
On a related note, COVID has created many opportunities to lean into a slower-paced lifestyle. Personally, I have especially enjoyed the extra time I’ve been able to spend with family.
I look forward to getting back to having dinner with friends and doing more leisure travel, but I don’t plan to go back to the pre-COVID way of life. I hope we all remember the rewards that have come along with this as the market rebounds and life starts to become more hectic.
Bill Cawley is chairman and CEO of Cawley Partners.