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DFW Ranks No. 2, Houston No. 8 In Survey of Best Commercial Construction Markets

The pandemic-fueled economic slowdown is impacting every U.S. market in terms of construction activity, but Dallas-Fort Worth and Houston remain top 10 U.S. markets when it comes to their overall development appeal and ability to accommodate new commercial construction, a new survey from CBRE concludes. 


CBRE's U.S. Development Opportunity Index ranks DFW as the No. 2 market nationwide and Houston as No. 8 after evaluating the strength of every individual U.S. market when it comes to local construction costs, the robustness of existing commercial real estate asset supply, prior market cycle performance and the overall local property forecast, CBRE said. 

Different asset classes boosted DFW and Houston into the top 10. DFW's retail and industrial development opportunities in its highly diversified local economy drove the market to its high billing. DFW also ranks sixth in the nation for multifamily development strength and No. 11 when it comes to the strength of its office construction segment. 

DFW's No. 2 spot is attributed to its ability to maintain steady development costs, a favorable tax climate and high levels of new talent as more professionals migrate into the market. 

Houston, meanwhile, ranked eighth overall for its favorability in accommodating new commercial construction, but the South Texas metro really put a dent in the competition when it came to retail construction, where it ranked sixth in the nation, and in multifamily, where it ranked 13th.

The Houston market struggled more than DFW in the office segment, ranking 24th nationwide in the inaugural CBRE report. Houston's weaker office construction market comes as the local CRE economy is facing ongoing occupancy pressures sparked by weakness in the area's core oil and gas industry and the aftermath of the coronavirus pandemic. 

Even still, Houston and Dallas-Fort Worth remain in better positions than other critical construction markets, according to CBRE. 

“People and businesses continue to move to Houston, driving construction and development for all of the lines of business: industrial, office including healthcare, retail and multifamily,” CBRE Managing Director of Project Management Robert Del’Ve said in a statement. 

DFW's strength comes in large part from its infrastructure, particularly segments of the market that have rapidly expanded to accommodate industrial product demand.  

“Dallas continues to be the bellwether of a true diversified market for real estate growth and sustainability,” CBRE Senior Managing Director with Project Management Chris Bone said in a statement. “With its centralized national location, proximity to inland and port trade routes and the availability of land, North Texas remains the central focal point for employers and skilled workers to operate their businesses."