Will the economy recover in time for kick off?

by

Notes from our researcher, Steve Triolet
While we’re still around ten months away from the next Super Bowl, people are already asking if things will be better when the big game comes to town.  Let’s take a look the local economy today, and what we think the remainder of the year will bring.

According to most economists, Dallas/Fort Worth and other central region markets will lead the way in recovery from the national recession.  The local economy, despite a high number of residential foreclosures, continues to outperform most of the country. We’ve had the highest population growth in the nation over the past year and positive job growth in three of the four past months. The Dallas/Fort Worth unemployment rate currently stands at 8.3%, significantly lower than the national rate of 9.9%.  The current forecast for the local economy shows a 1 percent job growth rate in 2010 and 3 percent growth in 2011.

The DFW industrial market appears, as it often does, to be improving faster than the other commercial real estate sectors including office, retail and multifamily. Manufacturing, which was flat for most of 2009, is now showing signs of improvement. According to the Federal Reserve Bank of Dallas, the manufacturing sector of Texas has been expanding for five consecutive months and manufacturing job growth has likewise been positive, adding 4,700 jobs in the past two months.

Total industrial vacancy held steady at 12.3 percent in the first quarter of 2010. An increase in leasing activity, combined with limited new construction, is expected to push the vacancy rate down as the year progresses. Average asking rents actually edged up to $3.66 per square foot, but this increase was largely attributed to some cheaper blocks of space being leased up, as opposed to landlords raising their rates. A number of large lease transactions resulted in another quarter of positive total net absorption of 344,443 square feet in the period. This was the second consecutive quarter of positive net absorption.

Market fundamentals are expected to improve as the year progresses. Dallas/Fort Worth’s prime geographic location, along with its existing infrastructure, make the market an attractive location for companies looking to expand or relocate operations. Additionally, due to the low cost of doing business and an abundance of land for expansion, Dallas/Fort Worth will continue to strongly compete on nationwide searches. Economic indicators like population and job growth have been a positive catalyst for the local market. Almost all signs point to the fact that a recovery is currently underway. Our hope is that by the time the top two teams kick off next February, today’s encouraging signs will be realized and the market will be in full swing.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: