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September 01 , 2005

Dallas Panelists Foresee Mostly Healthy RE Market

September 1st, 2005 - By Eugene Gilligan, senior editor Increased condominium development, a strengthening downtown district, and a healthy retail climate were some of the topics explored at the "Leaders Forecast: What's Hot in Commercial Real Estate" panel, which convened at the Dallas/Fort Worth Property Opportunities Conference. The conference attracted 625 commercial real estate professionals to Dallas's Westin Galleria on Tuesday. Carl Ewert, executive vice president, The Staubach Company, moderated the discussion. Job growth in the Dallas Metroplex, and continued housing construction, has made the Dallas retail climate a healthy one, said one panelist, Steve Lieberman, CEO & co-chairman of The Retail Connection. "We're seeing 360-degree development," Lieberman said, meaning that retail development is happening in every section of the Metroplex. Increasingly, that housing is in the form of condominiums. "We're seeing podium deals, and more mid-rise and high-rise condominiums," said Sue Ansel, chief operating officer, Gables Residential. "That's new and different." The growing condominium market has also influenced the construction of Dallas' rental housing, said Ansel, noting that newly-constructed rentals are being built with increased amenities such as track lighting and expensive kitchen counter finishes, perks that could make them more attractive for eventual condo conversion. "The hot condo market is offering an exit strategy to multifamily developers," Ansel said. She noted that, although increased condominium development, while new for Dallas, is nowhere on the scale of Southern California or South Florida. While condominium development should help Downtown Dallas's office climate, there are some reasons for caution about the city's office picture, said H. Mark Fewin, managing director/area director for Trammell Crow Company. "It's great to see dirt fly in the CBD," Crow said. He wondered, though, what effect the merger of JP Morgan Chase and Bank One will have on office vacancy. "The word is, they are going to stay downtown," Crow said. "But what kind of hole will the merger create?" While noting that the Dallas Metroplex office market still has a significant office vacancy rate of about 19 percent, there are some positive signals, said Robert Mohr, chairman and CEO, Mohr Partners. "We're seeing some tenants expanding, mostly smaller ones," he said, noting that the office market has enjoyed about 1 million square feet of positive absorption in the last half year. "We've also seen some subleases come off the market.' Exploding overseas trade should solidify the city's industrial real estate market, said Jeff Turner, senior vice president and head of operations for Duke Realty Corporation. Turner said the newly-opened Union Pacific intermodal facility should further link the city with the booming Asian container import trade at the Port of Los Angeles Long Beach. But while a macroeconomic trend like increased trade has had a positive effect on the city's industrial real estate, Lieberman voiced concern about another, less favorable trend: rising energy costs. "Consumers could pare back discretionary spending," Lieberman said of the effect of spiking energy costs. "It (rising energy costs) could have a ripple effect on retailers."
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