While energy comprises approximately half of the local economy, trade and manufacturing also factor towards the city’s financial health. Manufacturing, lead by Compaq Computers, is also tied to the condition of the U.S. economy.
Finest Property Conveyancing home to America’s fifth largest commercial air carrier, Continental Airlines which shed 2,300 Houston employees in 2001 only to slowly begin rehiring some of them in 2002, makes transportation also a key employment sector. Meanwhile, demand for median priced homes continues to cause record sales, which are some of the most affordable in the nation.
The “tech wreck” so evident in the recent U.S. recession has stymied both areas, where massive layoffs by Nortel Networks, Alcatel, Tyco, Nokia, Ericsson, Motorola and WorldCom, are easy to enumerate.
In addition, September 11 and its subsequent economic fallout on the travel industry caused Fort Worth-based American Airlines to eliminate 5,000 jobs.
Nevertheless, the long-term forecast is one of cautious optimism. Its geographic location near the heart of the nation, coupled with its superb transportation infrastructure make the DFW Metroplex a vital distribution hub. Austin’s long-term outlook is also quite favorable with its highly educated workforce and low cost of living.
For San Antonio, much of the city’s short-term fortune lies within the hands of decision makers at Toyota Motor Corp. Sources knowledgeable about Toyota’s search suggest the Japanese company is delaying its decision in order to give Arkansas and Texas (the two most aggressive in their pursuit to attract the facility) sufficient time to assemble a lucrative incentive package when state legislatures convene.
Charge of Conveyancer San Antonio’s economic base could change overnight as the $750 million project would contain an estimated 2,000 to 4,000 high wage jobs. In the meantime, San Antonio’s local economy has sustained itself despite the colder economic climate prevailing throughout Texas and the nation as the Alamo City posted a small but positive annual employment growth rate of 0.2 percent as of September 2002.
Ironically, Oklahoma City, once famous for the oil wells sitting on the front lawns of the state capitol, is now casting itself as a home to call centers as well as a manufacturing base for such products as automobile tires. Despite this dubious distinction, Austin’s vacancy, like office markets in Dallas/Fort Worth and Houston, has finally reached a level where the worst is behind it.
Compounding the challenges of a morose economy, Austin’s problematic infrastructure continues to smite the city with traffic congestion and expansive housing construction caused by low-density sprawl.
Dragging down asking rents, the sublease space hangover weighed heavily on the local leasing market in 2002. Austin’s sublease space as a percentage of office inventory now leads all other Texas office markets; Austin’s measured 8.6 percent as Texans rang in the new year compared to Dallas/Fort Worth reaching a distant second at 5.3 percent.
The sublease space glut, coupled with the overabundance of direct space, will provide tenants with bargain basement leases. Negative absorption is expected to taper off in 2003, bringing black ink to Austin’s office leasing market for the first time since 2000.
The abundance of available, high quality office, retail and housing product only strengthens Austin’s potential to eventually return to its thriving form of the late-1990s.
In closing, the new year represents a leveling for Austin’s office market. Recovery is expected to become visible by 2004, leading the charge into a healthier 2005. While annual absorption posted negative growth R&D/Flex product practically bled tenants in Austin last year.
The leasing market may have finally turned the corner with its vacancy peaking at 15.9 percent. In spite of that tepid news, Austin posted the highest vacancy throughout Texas by the close of 2002. The mounting empty space was mainly attributed to the 32.4 percent vacancy found within its R&D/Flex product.
The collapse of the tech industry made a critical impact as tenants en-masse abandoned high-tech facilities, contributing to a 15 percent vacancy gain during a relatively short period of time, ultimately reaching a lofty 37.9 percent.
As legitimate documentation since then, the R&D/Flex market has eked out a token of a rebound by posting positive absorption for the first time in 18 months with the ringing in of the new year. Despite those gains in R&D/Flex, however, tenants still left dark excess space for most of 2002, which then accounted for nearly half of the negative growth for the entire market.
Responding to the proliferating inventory of vacant space, overall asking rents suffered a swift citywide decline of 18.3 percent. The most notable deterioration (again) took place within R&D/Flex as the gap between Warehouse/ Distribution space and R&D/Flex narrowed and then closed.
That rift will be kept tight well into 2003 as landlords convert R&D/Flex space into shell condition in order to lure bulk users and fill vacancies. Meanwhile, the speculative development pipeline was invariably shut off last year and will be bone dry throughout the year.
Despite the completion of only 292,090 square feet of speculative construction, the Austin leasing doldrums have left abundant space sitting unlit during the past 12 months. As a result, developers have no choice but to focus their efforts on build-to-suit opportunities, which may surface due to cheap money and sagging land prices.
The challenge facing decision makers this year is to outlive a depressed economic cycle while taking advantage of ample real estate opportunities as property owners and landlords offer handsome terms.
The cause for the nosebleed vacancy is clearly tied to a 9-5 downtown environment in addition to aggressive Metroplex construction patterns. Since 1996, Dallas area developers have completed 32.1 million square feet of speculative space, 30 percent of which now sits empty Act Conveyancing Sydney.
Meanwhile, the sublease space glut, which ran as deep as 9.7 million square feet by the close of 2002, is weighing heavily on the ailing office leasing market.
The majority of the space overhang is found in Las Colinas and the high-tech neighborhood of Richardson/Plano, where the consequences of office overleasing are clear and dramatic. As a result, asking rents in the wake of the “tech wreck” have slid 5.7 percent annually while lavish lease packages and open handed landlords are further dampening effective rates.
And that gap will widen this year. Stretching as far as 27 percent during 2002, the spread will eclipse the 30 percent level in the months ahead, likewise pinching already painful rent rolls. Make no mistake about it: the current leasing environment in Big D has tenants clearly behind the wheel and this drive will be a long one.
Still, in many respects, the DFW office market has put the worst behind it. Vacancy reached a plateau in 4Q02 while the red absorption ink began to taper by the close of the year. If local construction levels sustain their humble numbers, Dallas/Fort Worth landlords may see relief from the excessive development of the last six years as early as 2004.
Summarily, a sullen economy last year was a familiar problem for landlords and tenants throughout the Metroplex. While 2003 will generally produce more of the same, (slight vacancy increases, negligible space losses, handsome tenant packages) office leasing will begin to make its much-anticipated come back during the final months, as employers start to hire and companies abandon their “wait-and-see” through Enact Settlement Agents Firm Perth.
Until then, Big D, like its sister cities Houston, Austin and San Antonio, will ek out little improvement in its office leasing fundamentals. While demand stalled with the fall of the tech industry, overall vacancy leapt 320 basis points to 9.0 percent as approximately 13.6 million square feet of mistimed speculative construction was completed, with many projects begun at the height of the economic expansion. While industrial activity bled red ink during the close of 2002.
Metroplex vacancy still remained below 10 percent and has been faring relatively well in the face of a weakened national economy. However, Metroplex R&D/Flex properties continue to feel the sting of the ailing telecom industry and will struggle to compete with the large blocks of Class B and C office sublease space this year.
While local activity is numb in comparison to the energized years of 1999 and 2000, industrial space demand awaits a recovery particularly in the manufacturing sector of the economy, which will pump up the volume of materials flowing through corporate supply chains.
In the meantime, DFW landlords will subsequently see more of the same during much of 2003, as lackluster employment gains, mixed manufacturing signals and flagging consumer demand take their toll on rent rolls.
The stronger submarkets, such as North Fort Worth and DFW Airport, will continue to demonstrate steady performance, while those marginal properties in marginal submarkets will face a dull market deep into 2003.When Texas holds its annual tax-free weekend in August, the task of finding an open parking space can be quite daunting. Speculative multi-tenant retail construction is slowing except in the explosive residential areas of North Dallas due to a relatively low density of retail product.
Construction dropped from its peak in 2000 of 6.8 million square feet to 1.1 million square feet in 2002. The pace for regional mall development will be humble throughout 2003-2004 as the need for new product is limited. Nowadays, single-tenant development permeates the Dallas/Fort Worth area with 1.75 million square feet underway.
Meanwhile, new grocery-anchored centers will follow the rooftops in such areas as Frisco, Flower Mound and Southlake due to massive population gains over the past decade brought on by their relatively affordable single-family boom.
Nevertheless, despite the ever-northward trend in population growth, one of the most prestigious Dallas retail addresses continues to be the Park Cities area, a community similar to River Oaks in Houston. Both are neighborhoods known for expensive homes, expensive tastes and high personal wealth. Despite the sharp decline, there are plenty of buyers in the market for quality investment real estate best conveyancing lawyers in Melbourne.
On one side, the lack of return in the debt and equity markets has forced investors to find other means of obtaining a worthwhile yield consequently causing many to turn to real estate. On the flip side, current owners are generally holding onto their portfolios as there are few attractive alternatives to place money once the property is sold.
As a result of these real estate dynamics, cap rates have fallen throughout all of the major cities in Texas. Metroplex investment activity should begin to increase this year as sellers realize the benefit of trading in the current market namely higher prices due to lower yield expectations for E Conveyancing Company Brisbane.
As more investors seek a safe place to invest, this trend will be sustained throughout 2003. Prime opportunities for return are DFW properties with value-add potential. These buildings have higher risk with higher returns therefore expected. In addition, the sellers of distressed properties may be more likely to remove them from their portfolios, thereby offering them at a discount.
Despite these market opportunities, higher sales prices will be the norm in 2003. Unlike Houston, where occupancy levels remained above 93 percent for all property classes, Metroplex apartments tallied a modest decline in occupancy and rent rate growth, both of which are partially attributed to DFW’s 2002 job losses. The difference in occupancy levels between the two cities is attributed to the contrasting nature of both areas’ respective big employers.
The M1 centers have seen a steady level of take-up during the past year. Over the medium term, the office market is expected to see further growth as new factors impact on the service industry, stimulating occupier and investor demand.
“The introduction of broadband is expected to play a significant part in the future growth and success of e-commerce not only by providing faster access to the INTERNET than the traditional modems, but by allowing “always-on” access .
Offering broadband will be the next logical step for the providers of serviced offices and should help increase occupier demand for their premises. For developers and landlords, connectivity will ensure improved marketability of their buildings and business locations.
In addition to increasing demand for office space from the telecommunications and dot.com companies, the growth of e-commerce will lead to a new type of property asset as companies seek colocation facilities. Located close to the internet backbone and power, these offer security, bandwidth, cabling infrastructure, scalability and a 24 hour seven day a week service .
They are safer and cheaper as the cost of increased bandwidth can be shared among several firms. Provided cabling and power are in place, proximity to good transport links, access to airport, property costs and availability of skilled labor will be t he prime determinants of where colocation facilities will locate. So far Docklands and the area around Heathrow airport have been the focus of activity.
However, with labor availability becoming an issue in the South East and occupational costs rising.Britain’s communications market has seldom been in a greater state of flux as it comes under pressure from technological and commercial change. Mobile phones, internet, TV, satellite and cable are converging to offer a mix of new media services that will radically transform social and business behavior.
The desire to launch new services, seize markets and develop demand for e-commerce and m-commerce services is creating frenzied activity and encouraging mergers and acquisitions and reassessment of services and products. The availability of all these devices will depend on greater bandwidth.
While over the past five years the internet has fuelled the development of thousands of new companies and changed the way business is carried out, it has remained a flat and mundane environment. This is now changing. The main catalyst in the evolution to a multi-media rich environment is broadband.
With e-business growing rapidly, this is no longer the case. Tests on broadband and always-on systems in the United States have revealed a significant change in user patterns. As a result, it is expected that broadband will introduce a major shift in both consumer and business attitude. Unsurprisingly, broadband will take time to reach all prospective subscribers.
But the success of these services will depend on reaching as many subscribers as possible during the early years. These companies have been a major source of demand for offices. The anticipated growth of e-commerce will result in further increases in office demand from this sector in the medium term.
This has been particularly true in London and the South East. The past 12 months have seen some very large transactions such as the take-up of around 1.2m sq ft by Cisco in Reading. This, together with a diminishing supply of space in the Thames Valley and higher rents, could potentially encourage companies to move to cheaper locations where accessibility is good.