Elon Musk Needs A DFW Real Estate Play. He Just Doesn't Know It Yet
SpaceX and Tesla leader Elon Musk is making headlines in Texas again with his hyperloop-focused tunnel construction company, The Boring Co., reportedly nabbing commercial space around Austin not far from where Musk is already setting up a Tesla gigafactory.
The real estate move adds to Musk's growing Lone Star State footprint, which already includes SpaceX sites in McGregor and South Texas and a Tesla gigafactory in the Austin area.
While it appears Austin is the winner in Musk's most recent Texas commercial real estate search, Dallas-Fort Worth CRE still could benefit from the tech guru's growing presence in the state.
Fort Worth Mayor Betsy Price is putting feelers out to grab Musk's attention, and it appears Musk has eyed DFW critically. In a recent interview about his move to Austin, the tech CEO indicated DFW was on his shortlist, according to ESRP Senior Vice President of Data and Analytics Evan Stair.
Musk ultimately chose Austin because his top talent wanted to live there, Stair added. But that doesn't mean Musk is unaware of or ignoring the logistics and talent pool accessible a few hours away in DFW.
DFW outstrips Austin in tech talent and logistics infrastructure, according to Stair. The North Texas region has 49,985 software engineers compared to Austin's 22,101, according to ESRP data. DFW also has twice as many mechanical engineers — 6,192, compared to 2,190 in Austin. The talent spread between the two cities is similar when it comes to electrical engineers.
Musk's top-line employees may want Austin as their home base, but Stair says DFW may factor in eventually as the best logistics, transport and talent hub nearby.
"They want to be in an environment that they like and that has this creative buzz going around, and Dallas might benefit from the fact that you actually have to have infrastructure and all of the other supply components, and we have a good chunk of that," Stair said. "If you look at the airport infrastructure, Austin doesn't have it. So I would imagine a lot of the product and raw materials will probably move through Dallas and will be stored in Dallas."
That could lead to ancillary development as companies serving Musk-related enterprises look for strategically located real estate, shipping and storage assets across Texas.
"There may be opportunities for suppliers to move here as well, an indirect impact from companies that are supplying the various enterprises," CoStar Group Director of Market Analytics Paul Hendershot told Bisnow.
Obvious landing spots for suppliers catering to auto, avionics and AI-focused companies like SpaceX, The Boring Co. and Tesla are situated throughout DFW. The Metroplex has a larger international airport than Austin and greater cargo transport capacity when compared to Central Texas, Hendershot noted.
North Texas also is home to the AllianceTexas Mobility Innovation Zone, a Hillwood creation that incorporates the infrastructure of AllianceTexas to cater to high-tech firms testing everything from elevating vehicles to autonomous trucks. Musk may even look to AllianceTexas and other DFW industrial hubs for his own future expansions in the state, Hendershot noted.
Frisco Station is an example of DFW's tech-focused industrial base. Developed by Hillwood, The Rudman Partnership and VanTrust Real Estate, the 242-acre mixed-use development is already the testing site for Uber Air's flying vehicles. The rise of industrial prices in Frisco shows just what high-tech innovations like Uber's flying taxi concept can do to industrial prices.
In the first quarter of 2017, industrial prices in Frisco came in at roughly $75 per SF. Three years later, after Frisco Station and its innovation hub came to fruition, industrial prices in Frisco are up to $108 per SF, Hendershot said.
This growth in the western part of the Metroplex and AllianceTexas could still attract Musk himself, firms tangentially related to Musk or other innovators of a similar caliber who follow him to Texas.
"When you look at a place like Alliance, Bell Helicopter already has a strong presence there, and you have connectivity provided by the airport for the transport of high-value-add parts and goods," Hendershot said. "So I think I would say the possibility for him to put a facility, an additional manufacturing facility or something related to one of his many enterprises in the Dallas-Fort Worth area, it definitely lends itself to that happening."
The reality of Tesla and The Boring Co. planting roots near Interstate 35 in Austin is enough of a CRE boon to get South Dallas developers like Russell Glen CEO Terrence Maiden dreaming of the possibilities for their land-rich communities.
"For the last several years, southern Dallas has experienced impressive regional industrial growth," Maiden told Bisnow. "With the proximity of southern Dallas to Austin along Interstate 35, hopefully the region can continue to successfully attract more companies that could support Tesla."
Even without The Boring Co's new lease in the Austin area, Tesla's presence had developers dreaming of ways to connect South Dallas to Austin's tech boom, Maiden noted.
"Tesla coming to Austin should eventually create several thousand job opportunities both in the central Texas region and could potentially stretch to Dallas," he added. "Given the number of technical high schools and colleges in southern Dallas, the area would offer a great pipeline of young, talented people for Tesla to recruit. Additionally, I am sure there will be many area companies competing for Tesla’s business within the region."