Commercial property investors optimistic for the new year
December 23, 2010
By Steve Brown/The Dallas Morning News

Commercial property execs who are getting a lump of coal in their stockings this year have higher hopes for 2011.

Nationwide investors who were quizzed for a new PricewaterhouseCoopers report are more bullish about the year ahead.

Most sectors of the "still frail commercial real estate industry" have bottomed out, the folks surveyed said. And they intend to take more risks and make more buys in 2011.

Investors are even giving a nod to recent improvements in the Dallas-area office market, according to PricewaterhouseCoopers.

And there's talk of a limited rebound in development in some U.S. markets next year.

The North Texas office market ended the year with a modest downturn in net leasing - the second year in a row that office occupancy has declined.

But the worst of the office sector shakeout here appears to be over. Office landlords lost only about 400,000 square feet of tenants in 2010.

To put things in perspective, D-FW office declines during the last two years have been less than half what we saw in the tech wreck during the early 2000s. So much for those end-of-the-world predictions.

Office construction is already bouncing back from last year's lows with the start of several medical office and corporate building deals.

Still, don't look for Santa to bring any speculative construction.

North Texas' warehouse and industrial business was still limping along at the end of 2010. Cushman & Wakefield estimates that there was 1.5 million square feet of negative leasing this year - on top of an almost 2.9 million-square-foot slide in 2009.

Industrial leasing and construction activity won't snap back until corporate America decides it's safe to come out of the bunker and start expanding. I'm betting that's going to happen sometime in the second half of next year.

Retail center pros say they're hoping for a modest rebound in 2011. If holiday shopping sales totals continue to run ahead of projections, they are probably right.

But don't count on any meaningful retail construction in North Texas for a while.

Do we really need anything else?

The safest forecast for 2011 is that D-FW will see a surge in apartment groundbreakings.

With existing units filling up ahead of projections and rental rates on the rise, developers are already scrambling to find the next round of building sites.

Only about 3,000 rental units are currently under construction in North Texas. Don't be surprised if that number doubles in the year ahead.

Even the stingiest lenders are likely to give a thumbs-up for more apartment building.

The continued lag in the for-sale housing recovery makes this one a no-brainer.

Courtesy The Dallas Morning News
See the article in its entirety here!