Texas Economy Doesn’t Need High Oil Prices
Oil companies are struggling, but they aren’t dragging everything down. Southern Methodist University’s O’Neil Center for Global Markets and Freedom founding director Dr. Michael Cox (who keynoted Stream's recent DFW state of the market presentation) says non-energy businesses are now carrying greater weight, making the Texas non-oil economy (yes, there is such a thing) 14.3 times larger than previous years.
He even went so far as to say the Texas economy could thrive despite oil prices. Stream’s sector leaders agree; managing director of Stream’s office division, J.J. Leonard (looking on, above), pointed to the demand created by small to midsized tenants that are expanding. Large corporations like Toyota and 7-Eleven are either consolidating or moving into North Texas, driving considerable build-to-suit activity. The top three submarkets for office construction are the Upper Tollway, Uptown and Freeport.
2015 was a record year for Stream’s DFW industrial division, with 373 transactions encompassing 22M SF. Managing director Cannon Green, show here between Clarion Partners' Andy Lowe and LaSalle Asset Management's Nick Firth, says 2016 should be another strong year; vacancy is still below the historical average and land constraints will impact supply by limiting development within infill submarkets. The caveat is South Dallas, where there’s a labor shortage and shallow amenity base.
The development landscape is just as sunny over in Fort Worth, where there are six office buildings under construction totaling 700k SF, and 7.5M SF of industrial product under construction or recently delivered. Stream’s Fort Worth managing director, Seth Koschak, called the city a new frontier for the industrial sector. And with the new North Tarrant Express and Chisholm Trail Parkway, there are 10,500 acres worth of development underway in several product types.