256 replies to this topic

[Austin55]

Things that stood out from the SoDT:

 

-DTFW has the lowest office vacancy of any comparable DFW area market, 11% of all office and 14% of Class A. Downtown Dallas is at 29% and 31% respectively. (Pages 16-17)

-DTFW Class A office space is now more expensive than Downtown Dallas (Page 18)

-DTFW employee visits by day are still well below 2019's pre-covid numbers. (Pagge 23)

 

-Residential rent growths are -5%, below DFW (-1%) and National (+1%) trends. Good news for renters, bad news for new development. Those rates have been falling since q2 2022. (Page 9)

-Residential vacany rates seem be a tad higher than US/DFW but healthy at 10% and stable for the last few quarters. (page 8)

-Downtown's population should soon surpass 10,000 residents, as it is currently at 9,914. (Page 25)

-Owning a townhome downtown requires a lot of cash. 72$ of townhome residents had an income over $250,000 (Page 29)

-About 95% of residents consider downtown clean or very clean, 5% say unclean. (Page 31)

 

 

-Hotel rates all seem solid. (Pages 10-11)

-Total TABC reciepts in 2023 were below 2019 levels, still recovering from Covid. (Page 43)

-Except in January and Feburuary, 2023 saw fewer downtown visitors than 2023. (Page 42)

 

 

 

From the development side, I noticed that the 1,000 Weatherford project by AHS/Resia seems to not be mentioned in either document. 

[hannerhan]

Things that stood out from the SoDT:

 

-DTFW has the lowest office vacancy of any comparable DFW area market, 11% of all office and 14% of Class A. Downtown Dallas is at 29% and 31% respectively. (Pages 16-17)

-DTFW Class A office space is now more expensive than Downtown Dallas (Page 18)

-DTFW employee visits by day are still well below 2019's pre-covid numbers. (Pagge 23)

 

 

It's going to be very interesting to watch these numbers over the next decade. I have heard from multiple sources that JPM is moving their private banking operations to W. 7th area as soon as one of the new buildings is done (either Crescent #2 or the Goldenrod development across from the Modern). That's a pretty important "hit" to downtown given their prominence in Fort Worth.

 

The DTFW vs. DTD office rent thing is mostly a function of the fact that Uptown Dallas has sucked all the air out of the room when it comes to high-end office renters in Dallas. We're starting to see signs that this same effect is going to occur in Fort Worth.

 

And the last thing you mention "employee visits" is a leading indicator, predicting the above. I think the downtown office environment is in a precarious situation. Thankfully, hotel/education news has been really good.

[Urbndwlr]

 

Things that stood out from the SoDT:

 

-DTFW has the lowest office vacancy of any comparable DFW area market, 11% of all office and 14% of Class A. Downtown Dallas is at 29% and 31% respectively. (Pages 16-17)

-DTFW Class A office space is now more expensive than Downtown Dallas (Page 18)

-DTFW employee visits by day are still well below 2019's pre-covid numbers. (Pagge 23)

 

 

It's going to be very interesting to watch these numbers over the next decade. I have heard from multiple sources that JPM is moving their private banking operations to W. 7th area as soon as one of the new buildings is done (either Crescent #2 or the Goldenrod development across from the Modern). That's a pretty important "hit" to downtown given their prominence in Fort Worth.

 

The DTFW vs. DTD office rent thing is mostly a function of the fact that Uptown Dallas has sucked all the air out of the room when it comes to high-end office renters in Dallas. We're starting to see signs that this same effect is going to occur in Fort Worth.

 

And the last thing you mention "employee visits" is a leading indicator, predicting the above. I think the downtown office environment is in a precarious situation. Thankfully, hotel/education news has been really good.

 

This has really been happening all over the US. 

 

The strongest office-using companies (who can pay any rate) seem to be migrating to wherever the newest, truly high end buildings are, provided location is generally convenient and has appealing amenities within walking distance.

 

Locally, these 3-4 buildings (two by Crescent and two by Goldenrod) are the only recent "class AA" office buildings to come on line since 2017 (right?) when Frost Tower was completed.  The 2-3 at Clearfork are probably part of that conversation too. 

I dont know why Frost Tower didn't experience quite as much of a clear migration of gold-plated local companies (investment, financial firms) - they got some, but didn't get a bunch of wealth management companies, for example. Frost Bank might have some exclusivity clauses in its lease that keeps some of those firms out.

 

Its not as though 7th/University is "suburban".  Its 2 miles west of Downtown.  I think its more about migrating to the newest/best designed with sharpest amenities (like Canyon Ranch club across the street), not so much wanting to avoid Downtown.  I'd wager the latter plays a small role but purely because Downtown hasn't had as many new, exciting openings in recent years that get people excited. (note: there are some great newer restaurants that have opened)

 

What I find somewhat troubling for the financial stability of the buildings themselves is that even 10 year old buildings seem to have trouble holding on to these "high end" office tenants when a newer option emerges.  I assume there are others glad to backfill those but the office market, but I know it costs a lot to have to wait to replace them and then spend money to redo the interiors for the new occupant. 

[Doohickie]

Its not as though 7th/University is "suburban".

A tangent but, I know a lot of people that include W7th, the Near Southside and the hospital district in their definition of "downtown."  The further someone lives outside the Loop, the more likely they are to think of downtown as that expanded area.  Some even think of the Stockyards as part of downtown.

[johnfwd]

 

Its not as though 7th/University is "suburban".

A tangent but, I know a lot of people that include W7th, the Near Southside and the hospital district in their definition of "downtown."  The further someone lives outside the Loop, the more likely they are to think of downtown as that expanded area.  Some even think of the Stockyards as part of downtown.

 

I think you're right about the perception of newcomers to our city.  I believe they have a "macro" perspective of downtown, mostly influenced by density and the height of structures.  If I came to Fort Worth for the first time, I probably would lump the hospital district and West Seventh with downtown.  In the distant future, I might also add Panther Island.

[Doohickie]

Yeah, driving down the developed areas or W7th or 8th Ave, it really does have "urban density" however you want to construe that.

[hannerhan]

 

What I find somewhat troubling for the financial stability of the buildings themselves is that even 10 year old buildings seem to have trouble holding on to these "high end" office tenants when a newer option emerges.  I assume there are others glad to backfill those but the office market, but I know it costs a lot to have to wait to replace them and then spend money to redo the interiors for the new occupant. 

 

 

I think this is just the way things are in North Texas. It's true with hotels, restaurants, office buildings, etc. As someone who invests in real estate regularly, I have thought about this a lot. In Texas we build, tear down, and rebuild. It's embedded in the culture (in addition to being embedded into the regulatory environment). Contrast this with West Los Angeles where building a new apartment complex basically takes an act of God. 

 

So what we end up with is a very trend-following moving target in these areas. In Dallas, office buildings probably have a 20 year shelf life. Old Parkland is dominating currently, and anything within 3 blocks of the Ritz is in great shape. Outside of that, lots of struggles. A new hotel has about 10-12 years to really make hay before they lose cachet. The Mansion was the place to be for a time, then the Crescent, then ZaZa had a brief stint, and for the past decade the Ritz has been on top. Perot is about to develop a new Four Seasons and it's going to be the hot property as soon as it opens. Etc. Restaurants are even worse. Maybe 5 years before people move on.

 

DFW have a small number of properties that have bucked trends and become institutions. University Park Village is the closest thing in Fort Worth, in my opinion. Highland Park Village in Dallas is the main one that comes to mind. But these are very rare.