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January 25 , 2008

Dallas-Fort Worth job growth slowed last year, but it's still hot

January 25th, 2008 - by Steve Brown | Dallas Morning News. If there's any doubt about the economic slowdown, just look at the Dallas-Fort Worth employment numbers. Early in 2007, the D-FW area was churning out new jobs at a pace of more than 95,000 a year. But by December - the most recent numbers - the local job gain had fallen to about 65,800. Even with that big falloff in job growth, the area had one of the hottest employment markets in the country last year. The economy in D-FW was even stronger than energy boomtown Houston, which had 59,800 more jobs at the end of last month than it did in December 2006, according to the Texas Workforce Commission. But the deceleration on the D-FW job market is worth worrying about. Job growth is the engine that drives the real estate industry in demand for everything from apartments to office space. And some economists are warning that the D-FW area will fare worse than other Texas markets, if the national economic slowdown becomes an honest-to-gosh recession. The recent peak for employment growth here was in 2006, when just over 100,000 new jobs were counted in D-FW.
2008 forecast
Getting a panel of real estate execs to agree can sometimes be a long shot. But prognosticators at the Society of Industrial and Office Realtors' annual forecast session this week were consistent about one thing: 2008 is going to see a slowdown in commercial real estate. While the local property market isn't out of balance, top commercial real estate execs expect to see some decline in building sales, leasing and construction this year. "We have some outside forces coming in to affect us," said Jeff Turner, Duke Realty's executive vice president. "I think we are in for a real challenge in 2008." Cushman & Wakefield executive vice president Bill McClung predicts that office leasing in Dallas-Fort Worth - down in 2007 - will decline a bit further this year, as the economic slowdown makes businesses more cautious. Mr. McClung said there is also some sticker shock with the rents for the newest office buildings. "I'm seeing some clients say they can't afford that," he said. Top broker Jack Fraker, vice chairman of CB Richard Ellis, said there's still plenty of capital interested in commercial real estate, even though underwriting has tightened up. And the turmoil on Wall Street this year may be a plus. "There is so much money that wants to be in real estate vs. the stock market," Mr. Fraker said.
While the slowdown in homebuilding will no doubt mean cutbacks in some shopping center starts, said Steve Lieberman, CEO of the Retail Connection, some national retailers are ramping up their plans for Texas in 2008. "There is no question that the national economy and the subprime meltdown will have an impact on our market," Mr. Lieberman said. "But the cutbacks are not uniform across all markets."
D/FW-area office
A tract west of Dallas/Fort Worth International Airport has been purchased by developers. Southwest Verity Capital LLC bought almost 11 acres on State Highway 121 and Bedford Road for construction of a medical office project. Chad O'Neal of Realty Capital Corp. negotiated the land sale with Shane Jordon of Jordon Realty Advisors.
stevebrown@dallasnews.com
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