Who Said Retail Is A Bust? It’s Actually Booming In DFW, Reports Say

For all the gloom and doom about retail, the sector is actually doing quite well across the Lone Star State.  The sector has a 94.7% occupancy rate across the Metroplex, a second-quarter 2019 CBRE report on DFW retail shows. The region absorbed 893K SF in the second quarter, with Far North Dallas alone accounting for 230K SF of absorption.

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Who Said Retail Is A Bust? It’s Actually Booming In DFW, Reports Say

Construction related to retail in DFW rose 18% for the quarter with 2.6M SF of retail space under development — a statistic that shows while retail is changing in the face of technology, brick-and-mortar itself is not dead.

With the DFW area attracting 132,000 residents from 2017 to 2018 and unemployment at 3%, its lowest rate in 20 years, retail is actually on a positive path, according to CBRE.

Many of the newer DFW retail developments are in far North Dallas suburbs where transplants from across the nation continue to move for jobs and housing opportunities.

Mixed-use developments in these areas, which combine retail with multifamily units, also are driving up construction and absorption numbers in the retail segment.

Warren Buffett’s Grandscape in The Colony is one such development driving retail construction in Q2, with 3M SF allocated to retail, restaurants and apartments.

Data from CoStar Group Director of Market Analytics Paul Hendershot shows a similar pattern with retail activity simply killing it across Texas.

“The Dallas-Fort Worth, Houston and Austin metropolitan areas have built 9.9M SF of new retail space in the past 12 months,”

Hendershot wrote in his report. “In Dallas-Fort Worth, retail comprises 24% of all commercial property space and 12% of employment, adding over 77,000 new retail jobs since 2010.” Hendershot said in his report that the death of brick-and-mortar stores is an overblown topic, particularly in relation to Texas markets.

“Dallas-Fort Worth has led the nation with 3.8M SF of net absorption during the past 12 months, followed by Houston with 3.4M SF,” he wrote.

Kerri Panchuk, Bisnow Dallas-Fort Worth 

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Sachse set for $250 million mixed-use development

Developers are breaking ground this week on a new $250 million mixed-use development in Sachse.

PMB Capital Investments is building the 119-acre Station development in collaboration with the city of Sachse.

The development is on Bush Turnpike between Miles and Merritt roads and includes apartments, houses, townhomes, restaurants, retail and office space.

The Station surrounds Sachse’s Heritage Park and will open late next year.

Steve Brown, Real Estate Editor

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Downtown Dallas’ landmark First National Bank tower is getting its restored marble exterior two years after removal

Construction crews in downtown Dallas are racing to finish a 52-story jigsaw puzzle.

They are installing tons of marble that was taken down two years ago from the exterior of landmark First National Bank tower on Elm Street.

As part of the renovation of the 54-story skyscraper, contractors had to remove acres of Greek marble that had covered the tower since it opened in the mid-1960s.

Decades of wind, water and sun had left the polished stone exterior of the 1.5 million-square-foot office high-rise cracked and discolored.

The original stone panels were all removed and shipped to plants in Asia and Florida for restoration.

Getting all that stonework back on the building is critical to maintaining the tower’s historic status. It’s like putting new tile in your shower — if your shower were the size of an aircraft carrier.

When Dallas’ Todd Interests recently took over the $450 million redevelopment project, getting the marble instillation on a fast track was a top priority.

The project has to be finished by the end of next year to qualify for $100 million in historic preservation tax credits.

Steve Brown, Real Estate Editor

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Uber Finds Developer to Ride Into Future With ‘Flying Cars’

Ride-Hailing Tech Giant Teams With Related Cos. on Bay Area Skyport

Uber and developer Related Cos. released renderings of a skyport that could be built at Related’s mixed-use development underway in Santa Clara, Calif. Illustration: Foster + PartnersUber and developer Related Cos. released renderings of a skyport that could be built at Related's mixed-use development underway in Santa Clara, Calif.  Illustration: Foster + Partners

Futuristic flying cars edged a step closer to present-day reality: Ride-hailing tech giant Uber struck a deal with prominent developer Related Cos. as a partner to design and develop future skyports in the United States for its planned Uber Air service.
The companies released the first joint renderings for a proposed skyport that could eventually be built as part of Related’s 240-acre mixed-use community planned in the Silicon Valley city of Santa Clara, California. It would serve as a transit hub for Uber vehicles that resemble flying cars from the 1960s cartoon “The Jetsons” but are actually aircraft with vertical takeoff and landing capabilities.
Related Cos., based in New York, is currently working with Santa Clara city officials on a sprawling development, once known as City Place, that is expected to remake a golf course and landfill into 5.4 million square feet of office space, 1,280 new apartments, 400 “extended-stay” apartments, 1 million square feet of retail and a 440-room hotel near connections to Caltrain and Bay Area Rapid Transit.
“Our shared commitment to innovation and passion for cities and enhancing urban life makes this an ideal partnership,” said Related Cos. Chief Executive Jeff Blau, in a joint statement. “Related has been exploring, investing in, and implementing new forms of urban mobility from bike-share to self-driving vehicles – and urban aviation is the next frontier.”
As cities become more congested with traffic, entrepreneurs and companies have been exploring alternative methods of travel to the car, which could become a kind of amenity that could attract more attention to commercial properties. Billionaire Elon Musk is exploring underground tunnels while firms such as Uber are experimenting with flying cars and helicopters. The ideas are also a sign of how the rapidly evolving high-tech industry is pushing more commercial real estate executives and developers to plan into the future to compete for tenants and make their projects more lucrative.
Santa Clara renderings from design firm Foster + Partners envision a skyport to be placed along a major traffic artery, with a flight deck designed to charge up to five aircraft simultaneously, similar to the way in which electric cars are powered. There are also dedicated landing and take-off areas.
No timetable for aerial service at that location has been established, and Uber is exploring other potential locations with the Related Cos., among the nation’s largest developers of residential and mixed-use communities including New York’s Hudson Yards.
But the service is not expected to be limited to Santa Clara or Related. Eric Allison, who heads Uber Elevate, said in a statement the skyports are part of plans for aerial ride-hailing that the company said “can help improve urban mobility in cities around the world.”
In fact, Uber spokesman Matt Wing told CoStar News the first demonstration flights for Uber Air are already planned for 2020 in the Dallas-Fort Worth market. Uber last year entered into an agreement with developer Hillwood Properties to plan a skyport in the Dallas suburb of Frisco, Texas.
After Dallas, the tech firm’s Uber Elevate division plans to test services in the Los Angeles market, then Melbourne, Australia, though Uber has not announced developers in those cities.

JUNE 11, 2019|LOU HIRSH

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Dallas, McKinney urge Gov. Greg Abbott to veto bill limiting cities’ construction regulations

AUSTIN — Dallas and McKinney are among cities urging Gov. Greg Abbott to veto a bill that would limit cities’ ability to regulate construction of housing and commercial buildings.

Advocates maintain that the proposed bar on cities imposing construction regulations exceeding basic national standards will reduce costs by quashing mandates now in place that benefit dominant vendors. Model codes that would rule are written by groups combining industry and government fire and building safety officials.

Lee Kleinman, a Dallas City Council member and the council’s legislative liaison, wrote Abbott urging him to veto House Bill 2439, which the House sent Abbott last week.

W. Gardner Selby, Staff Writer

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Investing In Opportunity Zone Funds? Experts Warn Of Hidden Financial Risk

Investors who fail to select the right opportunity zone funds could face unexpected financial headwinds.

Investing In Opportunity Zone Funds? Experts Warn Of Hidden Financial Risk

Investors welcomed the second set of opportunity zone rules in April, which allows exits from qualified funds with a chance to take advantage of eligible tax benefits via asset sales in addition to the previously allowed equity sales. If you do an equity sale, everything in the fund is required to go with the sale, while asset sales allow a purchaser to acquire individual fund assets, McGinnis Lochridge attorney and partner Douglas Jones said.  While asset sales give investors and funds another exit strategy, it isn’t always the best choice.  “Even though the asset sales are allowable and you can do them, it’s a good idea in some situations to be able to preserve the ability to do an equity sale even though we have these asset rules,” Jones said.   It comes down to the blend of qualifying and non-qualifying properties within a fund. “The reason the asset sales can be sort of not optimal in some situations is because the way the second set of regs reads is that only capital gains from the sale of qualifying properties [are] eligible for people to take advantage of the 10-year-hold benefit, and these funds are not going to have 100% qualifying properties,” Jones said.  “They have up to 10% or sometimes up to 30% non-qualifying properties, so if you’re doing an asset sale, you’re not getting tax benefit for potentially 30% of the assets in the fund. Whereas if you did an equity sale, you would get the tax benefit related to non-qualifying assets.”

Kerri Panchuck, Bisnow Dallas Ft. Worth

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Recession ahead? Yes, but probably not soon

Don’t look for a recession in the months ahead.

That’s what economist Mark Zandi is saying as he scouts the economy for signs of the next downturn.

While Zandi is optimistic that the U.S. economy will continue humming into 2020, the risks of another setback are growing.

“The next six to 12 months feel pretty good to me,” Zandi, chief economist with Moody’s Analytics, said in Dallas on Wednesday. “If this expansion continues, it will become the longest in history.”

Steve Brown, Real Estate Editor