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10 Dallas Experts Share 2016 Predictions, Part 1

Big D’s 2016 forecast has its ups and downs, from rising costs to full steam ahead on projects. Ten commercial real estate pros pulled out their crystal balls and gave us reasons to be optimistic again this year. Here’s Part 1 of their predictions.

1. Multifamily Demand Continues


Multifamily overbuilding will not be an issue nationally in 2016, says Behringer CEO Bob Aisner (who will become the chairman at the end of Q1). There is still too much demand and new supply will start to pull back. Homeownership rates are not increasing for multiple reasons, keeping the renter population robust. In addition, wage growth will accelerate allowing renters to pay increased rents in most cities, although, as always, there will exceptions. All of this means no big decline in multifamily cap rates.

2. Rising Construction Costs


Interior finish-out costs will skyrocket in 2016, says Transwestern principal (tenant advisory) Robert Deptula. Because so much ground-up construction work has been awarded in the public and private sectors, service consultants like architects and engineers aren't taking the marginally profitable work, but holding out for the higher-paying projects. He's already seeing it, he tells us, and it's early in the construction cycle for much of this work. He believes tenants will begin to focus on spaces that already work for them as landlord allowances fail to keep pace with rising finish-out costs. He’s pictured here on Christmas with his family: Kristen, Claire, Bella (the pooch), Robert, Jeanne, Emmie (another fur baby) and Cameron (who works at CBRE).

3. Co-working Ramps Up


Common Desk founder & CEO Nick Clark says 2016 will be the year of co-working, which has been a hot topic over the past two years. Startups, freelancers and other independents have found co-working to be the perfect solution for a creative, fun and communal office environment. Now small to midsized companies are seeing the cost savings and flexibility it provides, Nick says, and co-working is taking center stage. The amount of Dallas co-working has doubled based on the number of spaces and members during each of the past several years. These numbers are in line with both regional and national data.

4. More Office, Lower Rent


Velocis principal Jim Yoder (pictured with wife Ana) says additional office supply could curtail excessive rent growth in certain submarkets. With several high-profile, spec office buildings set to deliver in the red-hot Uptown, Legacy and Frisco submarkets, there could be pressure on space absorption and rental rates. Uptown looks to deliver close to 1M SF in 2016 with even more coming in 2017, and it's banking on achieving top-of-market rental rates for DFW, which may not be doable. Legacy and Frisco are on track to deliver even more space than Uptown over the next two years. The question is whether the Toyota, Liberty Mutual and other corporate relocations will drive enough additional demand for the spec space coming out of the ground. 

5. Retail Will Be Experiential


Without a doubt, people love the vibe and energy that a dense, urban area like Uptown Dallas offers. So much so that, in terms of retail development, the hottest trend today is replicating Uptown-style live/work/play environments in the suburbs, even duplicating the uniquely urban tenant mixes, says The Weitzman Group and Cencor Realty Services president & CEO Marshall Mills. Marshall calls it the suburban-urban experience. It offers experiential retail that goes beyond shopping or dining to an experience in a cool setting with a mix of homegrown and urban-style concepts. This live/work/play trend has been growing since Sundance Square opened in Downtown Fort Worth decades ago, leading the way for thriving areas like Fort Worth’s West 7th and Uptown’s West Village.

Check us out Wednesday for Part 2 of the 2016 predictions.