We hear about it every day – the interest rate is going up, supply issues, backed-up permit offices, and the pending recession. A lot of what you read might be clickbait, the doom, and gloom that draws our ever-inquisitive attention to the story at hand. The media faces the challenge of keeping readers gripped to the story while being informative about every market and submarket in the country. Writers often must choose between macro and microeconomics to share a more transparent look into what’s going on specifically in our state and even deeper for a more augmented look into our city.
We are not in good shape; WE ARE IN GREAT SHAPE!
According to the US Bureau of Economic Analysis, Texas is the 9th largest economy in the world. We’re the second biggest economy in the U.S., and our exports are higher than New York and California combined. Commercial real estate sales in Dallas Fort Worth are the highest in the country, almost equaling Los Angeles and Atlanta combined.
Texas, and specifically Dallas, is not just in good shape; it’s in great shape! Let’s dive into a few of the main reasons why…
First, ample office space.
Plato said, “Opinion is the medium between knowledge and ignorance”, I believe that the notion that people won’t be coming back to the office is not the full truth. I think that the goal of an office is to create a space where people can collaborate to reach a common goal. Successful companies have teams that work together to achieve a solution. Every day, we are introduced to new technology that makes communication easier and allows us to work from anywhere, but it’s not the same as being in person.
My real estate office is a very faced-paced environment. We are not joking when we say we work at 100 mph. If my team isn’t together things often move much slower. Decisions that could be made through a quick in-person conversation often require playing phone tag, multiple emails, and redlines on plans over a couple of days.
This concept of collaboration is what has shaped real estate in our physical world. Why do you think we have a downtown or business districts? These districts were formed before zoning laws were enacted in those areas by businesses that needed to be near each other creating manufacturing, distribution, and office districts. The necessity of efficiency by the nature of business created these areas. If I was near the wood, nail, glue, and upholstery person, then I could design and manufacture my chair myself quicker and cheaper than my competitors, and thus be more profitable.
This is not the first time that we are witnessing migration from office to home. During the Dot Com boom in the early 2000s, companies like Apple and Google were allowing people to work from home as a perk until they found out what John Sullivan, a professor of management at San Francisco State University who runs a human resource advisory firm has been saying all along – people who work at home are significantly more productive but less innovative. There is a New York Times article about this study and the previous migration written by Claire Cain Miller and Catherine Rampell in February 2013. Working from home for many companies who are in a competitive business environment is a perk that is often unsustainable.
Dallas currently has more jobs than we have people to fill them. For three consecutive years, the Bureau of Labor Statistics has named Dallas second in the country for job growth. During the same time period, Dallas has added more jobs than Miami, Atlanta, Houston, and Phoenix combined, says the data from the Dallas Regional Chamber. We have the headquarters of Toyota, Cinemark, State Farm, and TD Ameritrade, as well as 22 Fortune 500 companies. What many people don’t realize is when these companies move into town, dozens of ancillary companies also move with them. Why do so many companies move here? Why does Dallas create and have many jobs? I believe it’s because we have an environment that allows entrepreneurs, risk-takers, and business owners to flourish.
Second, housing.
DFW is the top apartment market in the United States. According to RealPage, we have over 56,000 units under construction. While the housing market across the U.S., in general, is slowing down, in Texas, our housing permits increased by another 9.3% month over month, sales increased to 1,400 closings, and active listings went up to 5,400 according to Texas A&M Real Estate Research Center Texas. I’ve noticed that pricing is stabilizing, and it’s taking a bit longer to sell some properties, but there is still high demand for housing in Dallas due to the increasing number of people continuing to move to the area.
Next, real estate investment opportunities.
Texas real estate, whether it’s land, residential, or commercial, is an asset class of its own. I encourage everyone to take advantage of the investment opportunities in Texas. Make it part of your portfolio, just like stocks, currency, baseball cards, classic cars, or whatever you choose to invest in. For the reasons I’ve mentioned in this article and dozens more, Texas real estate continues to stand out and has remained consistent overall during tough times. Texas didn’t have a significant number of foreclosures or steep price drops. What I have noticed is that the length of time it takes a property to sell can be extended, but that’s not such a bad consequence.
The Opportunists
Wealth, abundance, prosperity, and substantiality are our “gold.” Our spirit and policies drive and create the gold. This way of life attracts Opportunists. We are free with our lending practices just like every other state, but we choose to be careful. We have the discretion to overbuild, but we have the competence to hold back. We are unrestrained from our ideas, but we don’t push and force them onto others. We have the liberty to take on risk, but we are very calculated with it. Go-getters from every state and country come to Dallas to express their freedom through business and venture, and from the looks of it, we (the citizens) are all rewarded greatly for it. We have the variable that cannot be replicated – it is our charisma, our magnetism, our character. It is our Dallas.
