By Blake Shipley, Vice President, JLL Agency Leasing
What’s left to say about Texas, or more specifically Dallas, that hasn’t already been said? The city has made headlines for its job creation, industry diversity, business-friendly environment and big wins of corporate and regional headquarters (Toyota and State Farm, to name a couple).
The statistics are impressive. Since 1990, Texas has added 2.9 million residents. That’s an increase of more than 70 percent – and that kind of growth occurred over three national recessions, two of which hit the market very hard. Driving this level of raw growth are consistent and diverse job gains. Having added more than 600,000 jobs since 2005, Texas is at a new employment peak. For Texas, the most important factor is that these kinds of gains will likely continue into the foreseeable future. While experts may disagree about how much growth the market will see, the one thing they all agree on is that growth is inevitable.
It’s undeniable that North Texas as a whole is healthy and growing; growth has always been a Dallas hallmark. For all of its success, Dallas must ask, “What are we growing up to be?” Is there any evidence of the elusive and intangible elements that lead to a sense of place? Or to a city that is sustainable and desirable because it is unique? Dallas has built the nation’s largest arts district, and stitched together a challenged CBD with the robust Uptown submarket via a wildly successful urban park. Both of these feats are evidence of that Dallas is maturing and making continued strides to becoming a rich and complex city.
Like in many other markets, tenants in Dallas have been gravitating toward areas that feel urban, such as Uptown, bringing with them the expected demographics, vibrancy and rent growth. Again, as in many markets, tenants are signing leases in buildings that were developed in the late 1980s, but would have always been classified as “B” commodity space.
Dallas’ development community has always been most prolific within the office sector, but this last cycle has been a little more diverse and seen the advent of incredible multifamily development. In core markets like Uptown, land prices have doubled in the last five years and substantially changed the landscape of the office market. A multitude of living options has produced a more diverse submarket, brought land scarcity, made it impossible to develop office comparable to some of the commodity space and subsequently created a boutique class that has previously never existed. In less than three years, rents have risen well over 30 percent.
Dallas is still a city that celebrates all things new, but possibly that is beginning to change. Fundamentally, new is less available than it once was. Could it possibly be less desirable?
The aforementioned transition from commodity to boutique is indicative of a changing mindset and a growing diversity, complexity and richness. Dallas’s greatness, commonly defined in scale, might just now be appreciated in subtlety. Dallas’s growth is unquestionably in its teen years but perhaps genuinely maturing.