YP Research: DFW Office Sublease Space Trends Down from All-Time High

By Steve Triolet, YP Research Director

In late 2018, the amount of DFW office sublease space reached an all-time at just under 7 million square feet.  In early 2019, however, several large sublease transactions have brought that number down significantly where it currently stands at 5.8 million square feet. 

This is a good, healthy sign for the market, especially with over 2.2 million square feet of unaccounted for spec office construction scheduled for delivery over the next year and additional new spec sites announced but not yet started.

CRE Veterans Scot Farber & Tom Strohbehn Join YP

Dallas-based commercial real estate firm Younger Partners welcomed CRE veterans Scot Farber and Tom Strohbehn to lead a new capital markets team. They will serve as managing principals effectively immediately.

Tom Strohbehn (left) with Scot Farber at YP HQ

The duo comes to Younger Partners from Cushman & Wakefield of Texas Inc. where Farber served as Executive Managing Director and Strohbehn was Senior Financial Manager within Cushman & Wakefield’s Capital Markets Group.

“Scot and Tom bring with them years of experience, extensive market knowledge, and long-term industry relationships,” says Younger Partners Co-Founder Moody Younger. 

“They are highly respected within the commercial real estate world and we are thrilled to have them join our team. Moody and I worked with them at Grubb & Ellis and know the dedication and integrity they bring to their clients,” says Younger Partners Co-Founder Kathy Permenter.

 “We have a long history with Moody and Kathy and some of the other team members at Younger Partners.  Younger Partners’ platform and reputation complements our area of focus and creates outstanding opportunities to leverage their strengths and our own in the market,” Farber says.

Strohbehn and Farber focus on the disposition of office and flex assets within DFW and other Texas markets, as well as Oklahoma, Arkansas, Louisiana and New Mexico.  

“Our goal is – and always has been – to provide institutional quality service to our clients regardless of transaction size.  As a result, we have completed nearly 250 assignments across the Southwest,” Strohbehn says.

At Cushman & Wakefield, Farber was in charge of the disposition of investment sales properties for financial institutions, banks, special servicers, pension funds, REITs, corporate users and private investors. Throughout his career, Farber has completed investment sales assignments with a market value of approximately $5 billion. 

Tom has analyzed, underwritten, and valued more than $3 billion worth of commercial property. He has completed more than 22.2 million square feet of commercial transactions, with a market value in excess of $1.5 billion.

YP Goes Blue for World Autism Awareness Day

Today we #LightItUpBlue for #WorldAutismAwarenessDay.

The YP crew sported blue to show our support for increasing understanding and acceptance of people with autism.

We also wear blue to support creating a more inclusive world for people like, Dylan, the son of YP’s Tonie Auer.

Younger Partners Wins Two More Property Management Assignments Totaling 203K SF

Younger Partners Property Services was awarded two new assignments at the 61,000-square-foot Forest Central 1 in Dallas and the 142,000-square-foot 800 W. Airport Freeway in Irving. Effective date of takeover was March 1.

“We are continually expanding our relationships with owners,” says Greg Grainger, president of Younger Partners Property Services. “These two new assignments are part of an expansion of our relationship with a local entrepreneur. They bring us up to managing six buildings for this owner. We also manage Empire Central, a 155,000 square-foot two building office complex, the 91,000-square-foot Chase Bank Building in Garland as well as the 221,000-square-foot Promenade Tower in Richardson. Our leasing team also recently picked up the leasing assignment at Promenade.”

These new assignments bring property managed by YPPS up to almost 4 million square feet of local property managed. YPPS moved up to No. 17 (from No. 21 in 2017) on Dallas Business Journal’s 2018 list of North Texas Commercial Property Managers ranked by total local commercial square feet managed.

“Four years ago, we weren’t even on the list. Today, we are No. 17 on the DBJ list,” Grainger says. “We continue to grow around core clients who are entrepreneurial owners; we grow our portfolio as they grow theirs. They appreciate the quality service that we provide.”

YP’s Moody Younger Talks CRE on NTCAR Panel

YP’s Co-Founder Moody Younger is bullish on the Dallas CRE market because of the pro-business environment, ease of starting and growing a business here and the inbound demographic growth. He was among a top-notch panel of CRE experts at NTCAR’s quarterly membership meeting today at the Frontiers of Flight Museum.

Moody says while the office market is slowing just a bit, the industrial market is off the charts. However, he says office landlords are getting longer-term leases – from 10 to 15 years — as a trade-off to offset higher TI expenses. Newer office buildings are all about added services, noting that some new buildings feel more like a hotel than an office lobby.  

Here’s Moody, far right, with Granite’s David Cunningham, CBRE Urban’s Jack Gosnell, Cushman & Wakefield’s Brad Blankenship and Structure Tone Southwest’s Vincent Gallagher.

DFW Construction Boom: What Does it Mean for Big Blocks of Space?

Dallas/Fort Worth is in a construction boom: between 2015 and 2018 almost 23 million square feet of new office inventory was completed with an additional 7.1 million square feet currently underway, says Younger Partners Director of Research Steve Triolet. 

All of these numbers are among the highest in the United States for the respective time periods. With a few notable exceptions (Toyota), the vast majority of the tenants taking occupancy of the new space are leaving behind older Class-A space that will need to be backfilled. Class-A space makes up the vast majority of the space available at 20.7 million square feet or 73% of the large blocks of space.

Moody Younger Featured in TREC Member Spotlight

TREC featured Younger Partners Co-Founder Moody Younger in its Member Spotlight. Moody will serve as the Fight Night 19 Chairman.

FightNight is the real estate industry’s premier philanthropic event, with opportunities to reconnect with friends and colleagues in a fun Vegas-style environment right here in Dallas. We are blazing a new trail this year with our theme of “black ties and boots.” I expect it to be to be tons of fun. The event is also for a great cause and the amount of work put in by volunteers and the TREC staff to continuously improve the event and raise money for the TREC Foundation is truly remarkable.

Read the full spotlight here.

FightNight 19 will be April 25 at the Hilton Anatole and help celebrate TREC Foundation’s 25th anniversary with a night of professional boxing, exceptional cuisine, casino-style gaming and the opportunity to network with the top decision makers in the commercial real estate industry and political community. Since its inception in 1989, FightNight has become one of North Texas’ largest philanthropic events, raising more than $27 million to support the Foundation and its good works. This year’s proceeds benefit TREC Foundation and the Dallas Catalyst Project. Tickets and tables are available now at RECouncil.com.

CoStar Features Arlington Commons Transaction

FEBRUARY 06, 2019|CRAIG DONAHUE

New York Investment Firm Buys Arlington Commons

A New York-based investment firm purchased a 353-unit apartment complex in Arlington, Texas, dubbed Arlington Commons, for an undisclosed price.

The Praedium Group acquired the complex from The Nehemiah Co., which developed Arlington Commons. Nehemiah broke ground on property in 2016 and completed construction this past year.

Located at 425 E. Lamar Blvd., the mid-rise complex consists of a four-story building with an attached parking garage. Arlington Commons offers a mix of one- and two-bedroom floorplans, ranging in size from 580 to 1,418 square feet.

“The acquisition of this property fits well within our strategy of purchasing quality assets in growth markets,” Peter Calatozzo, managing director at The Praedium Group, said in a statement. “The Dallas-Fort Worth metroplex continues to experience substantial population growth and strong employment gains, which have been and continue to be facilitated by a significant number of corporate relocations and expansions within the MSA.”

Bob Helterbran and Lew Wood of Younger Partners Dallas LLC brokered the deal on behalf of the seller.

YP’s Jack Gail in CoStar’s Opportunity Zones Article

FEBRUARY 05, 2019|MARK HESCHMEYER

Big Money Enters Race for Opportunity Zone Investments

Private Equity, Institutional Funds Are Likely to Drive Property Pricing, Market Selection

Markets with the most opportunity zones, such as Chicago, are areas that are likely to be on the receiving end of a substantial amount of new investment. Image: Lisa Blue

Markets with the most opportunity zones, such as Chicago, are areas that are likely to be on the receiving end of a substantial amount of new investment. Image: Lisa Blue

Large institutional and private equity funds are beginning to stream into the unseasoned strategy of investing in federally designated low-income zones where every new dollar spent on development or redevelopment could be eligible for tax breaks.

With the entrance of these funds, the nature of capital raising and the target markets where the funds will invest could change dramatically.

The Opportunity Zone program was created under a provision of the Tax Cuts and Jobs Act of 2017 to encourage private capital investments in underfunded communities. Under the law, anyone owing capital gains taxes can start a qualified opportunity fund by self-certifying with the Internal Revenue Service. Until this year, the bulk of the money being raised for opportunity zone investments was coming from smaller funds targeting one deal in one market.

CoStar Group is keeping a running list of qualified real estate opportunity funds. Of the more than 230 funds on the list, more than half average a target capital raising of less than $30 million. Most of these were launched early last year when the provision in the tax law first took effect.

This year, though, has seen new funds launched by major players such as CIM Group, Bridge Investment Group Partners, The Bernstein Cos. and Starwood Capital Group. The four firms are seeking to raise a combined $7 billion, the equivalent of 233 funds trying to raise $30 million each.

“We are seeing opportunity zones restructure the traditional capital stack being deployed in emerging neighborhoods, which has largely been serviced by local and regional investors,” said Jaime Sturgis, chief executive of Native Realty in Fort Lauderdale, Florida. “Institutional capital, which historically only chased ‘Main & Main’ credit deals has been enticed by the tax savings to venture into less developed emerging neighborhoods. This introduction of institutional capital into these under-capitalized neighborhoods is going to dramatically accelerate the gentrification of these neighborhoods as the opportunity zones require substantial capital investments to the real property to qualify for the tax exceptions.”

Starwood Capital Group, a global private investment firm focused on real estate and energy investments, this month launched Starwood Opportunity Zone Partners I to raise $500 million. Starwood Capital currently has 58 properties located in opportunity zones.

It hired Anthony Balestrieri as a senior vice president to lead the business. Balestrieri joins Starwood from MetLife Real Estate Investors, where he most recently served as director and head of acquisitions in Washington, D.C.

Starwood Capital will focus its opportunity zone strategy on markets in regions where the firm has developed a strong real estate presence, including the West Coast, Southeast and large metropolitan markets such as New York City and Washington, D.C.

Time Pressure

Jack Gail, an associate with Younger Partners, a full-service boutique commercial real estate firm in Dallas, sees potential issues for some of the larger companies and private equity funds that are raising enormous amounts of capital.

“The potential problem with raising, say, a $500 million qualified opportunity fund is that based on the current guidelines, that money needs to be deployed,” Gail said. “For lack of a better term, there is a ‘shot clock’ on the fund, and its capital needs to be invested in a timely manner or the entire fund could face penalties and potentially lose the tax incentives all together.”

That means opportunity funds do not have the luxury of time to store up dry powder to spend at some future point. It has to be deployed and deployed fairly quickly.

“At the end of the day, yes, raising a few hundred million dollars is an enormous accomplishment but they will have to find quality deals that makes sense for their investors long term,” Gail said. “And that part is not as easy as you might think. The designated opportunity zones were selected for a reason — they are the more impoverished areas in our country.”

Bridge Investment Group in Salt Lake City this month launched a $1 billion qualified opportunity zone fund after announcing the beginning of the effort this past October. Bridge is targeting development and redevelopment projects to invest in alongside high-quality development partners.

“Our acquisition team has already identified over $500 million of attractive opportunities that are expected to provide meaningful impact on the districts in which capital is invested,” said Jonathan Slager, co-chief executive of Bridge Investment Group, in a statement announcing the initiative.

Over the past decade, Bridge has invested more than $12 billion of equity across its apartment, office and seniors living platforms. Given that not all opportunity zones are created equal, Bridge is leveraging its national footprint and local market knowledge to focus on zones at an inflection point or located inside of or within close proximity to high growth markets.

Michael Walker and Lane Beene are partners in a more typically sized opportunity fund, the $50 million Pilot And Legacy Opportunity Fund. The fund’s objective is to build workforce housing/apartments in opportunity zone locations in Texas.

Apartment Demand

It is choosing locations that project both job and population growth, and where a need exists for affordable, energy-efficient apartments.

“The reality is that while many taxpayers have heard about opportunity zones and opportunity funds, the majority do not yet know enough to take action,” Walker said. “So while there are many quality investors and private equity firms entering the fund arena every week, I believe this helps to bring legitimacy to socially responsible investing in distressed communities.”

Fund partner Beene added, that “the opportunity zone fundraising will niche down the investor profile and emancipate capital for new investment. We see the primary opportunity zone investor as a more seasoned investor with established funds interested in capital preservation.”

With more seasoned investors coming into the space, comes more competition for deals.

“One additional impact of opportunity zones is increased competition for sites with strong investment fundamentals,” Beene added. “Many opportunity zone locations are difficult investment scenarios with poor financial appeal and decades of negative momentum. The few opportunity zone sites with stronger investment fundamentals will be pursued in high demand. I anticipate a price premium for opportunity zone locations in attractive areas as more investors learn about the advantages.”

For Roland Pott, broker of record for New Jersey at Slatehouse Group Property Management, that means increased uncertainty for what happens in markets in which he works.

“I do a lot of work in Trenton, New Jersey, and we have a concentration of opportunity zones. Because it is not a major market city, I think that our zones here will be slower to receive the influx of capital, whereas opportunity zone neighborhoods in larger cities will be more primed to receive capital more quickly.”

Still the coming wave of big institutional money into opportunity zones could mean an extension of the already long-running recovery, according to Matthew Honnold, an economic analyst with Wells Fargo Securities.

The new opportunity zone initiative comes at a time when overall property prices have begun to ease, especially in major gateway markets. Outside of Puerto Rico, the markets with the most opportunity zones are located within New York, Los Angeles, Chicago and Houston, areas that will likely be on the receiving end of a substantial amount of new investment, Honnold’s group reported.

“The net effect of these provisions will likely be to draw significantly more capital into the industry in 2019, which will further support property valuations and restrain cap rates, even as interest rates increase,” the company reported.

An Evening of Winners: NTCAR 2018 Stemmons Service Award Event

Congrats to Younger Partners Co-Founder Kathy Permenter on her NTCAR Stemmons Service Award nomination. We are so incredibly proud of her achievements both professionally and within the community she serves. She was nominated along with Venture’s Mike Geisler, Fischer & Co’s Sharon Friedberg & Citadel Partners’ Scott Morse. Congratulations to the 2018 winner, Scott Morse. Here’s a wrap up of the Younger Partners team at the event at the Dallas Country Club.

Younger Partners Brokers Sale of Arlington Commons

Younger Partners rang in the New Year by brokering the sale of Arlington Commons — Arlington’s first market-rate Class-A multifamily development (outside of student housing) — for an undisclosed price. The public-private partnership has been almost a decade in the making and is already achieving goals set by City of Arlington leadership, neighborhood groups and developer, The Nehemiah Company.

In 2018, Arlington-based The Nehemiah Company completed the 353-unit first phase of Arlington Commons at 425 E. Lamar Blvd. It was sold to New York City-based national real estate investment firm, Praedium Group. Younger Partners’ Bob Helterbran and Lew Wood negotiated the sale.

“The city and community worked for years to encourage a developer to step up in this area with redevelopment. No developer was willing to take the risk. We live here and believed strongly in Arlington and this submarket,” says The Nehemiah Company President and Partner Robert Kembel.

“It is good for Arlington and our company to demonstrate that Class-A housing works so well in Arlington. We are grateful to the City Council and Tarrant County Commissioners for giving us the tools to make this successful for all of the stakeholders in the region.”

Around the mid-2000s, Arlington City Council saw an opportunity to replace three aging apartment complexes on Lamar Boulevard, with high-quality housing and a goal of increasing the city’s property tax base while spurring additional investment. To achieve the goal, city leaders were willing to provide economic development incentives to the developer and allow higher density units to get the most bang for the buck. Unfortunately, there were no developers willing to take the risk, so city leaders approached the Nehemiah Company to find a solution.Arlington Commons

“With our success with the Viridian housing development along some hard-to-develop land in North Arlington, former Mayor Bob Cluck and the council approached us to consider a redevelopment effort within the Lamar/Collins overlay,” Kembel says. “The assessed valuation of the target properties was $10 million before demolition. After the first phase of Arlington Commons, the property is valued at $40 million and by build-out, we anticipate the value to reach $200 million or higher. We are proud that the project has received unanimous support from the Arlington City Council and a ‘thumbs-up’ from neighborhood groups, the school district, and other stakeholders.”

Prior to this redevelopment, property values were declining in the area; now they’re on the rise with the creation of this pedestrian-friendly project, Kembel says. The traffic study supported a more pedestrian friendly street section allowing for a new linear park in the median adjacent to the project. These types of trails and parks are significant quality of life additions expected today by young professionals.

“Without Younger Partners, this project wouldn’t have happened and have the success it has experienced,” Kembel says. “Early on, Younger Partners was working to assemble this land. We were having difficulty locating owners and convincing them to sell to us. Younger Partners stepped in and made it happen.” 

Arlington Commons consists of a four-story elevatored building with an attached structured parking garage, 10- to 12-foot ceilings, and views of the adjacent Rolling Hills Country Club golf course, Downtown Fort Worth, and Downtown Dallas. The property’s unit mix consists of one- and two- bedroom homes ranging from 580 to 1,418 square feet. Unit interiors feature granite or quartz countertops, stainless steel appliances, undermount sinks, designer backsplashes, chrome finishes, electronic door entry, vinyl plank wood flooring, custom track lighting, full size washer/dryers, and balconies or patios. Community amenities include a swimming pool, resident lounge and business center within the clubhouse, wellness center with fitness on demand, valet trash, dog park with dog wash station, electronic parcel lockers, and a lounge deck with barbecue grills.

“Arlington has had a dearth of multifamily deliveries. Excluding student housing, only two new market rent projects other than Arlington Commons have been built since 2004 and no new projects are under construction,” says Helterbran, one of the brokers on the deal. “Arlington 

Commons continues to outperform the surrounding multifamily market because of its top-of-class location, quality construction and lack of supply for a demographic group that demands excellence. Leasing velocity continues to accelerate without any rental concessions, confirming the depth of this target market.”

The multifamily complex is 85 percent occupied with approximately 65 percent made up of young professionals, he says. 

Helterbran says The Nehemiah Company’s multifamily expertise and historical track record with the City of Arlington and Tarrant County, coupled with the city’s commitment to the revitalization of the Lamar/Collins area of North Arlington, led to the private-public partnership for the development of the property and streetscape improvements along East Lamar Boulevard. 

Arlington Commons is centrally located within the Dallas-Fort Worth MSA and roughly equidistant from the major employment centers in both downtown Dallas and downtown Fort Worth. The property provides great accessibility and connectivity throughout the Metroplex, as it is proximate to I-30, SH-360, and SH-161, and sits only 12 miles south of the DFW airport.

North Arlington is proximate to both a growing employment base and an expanding entertainment district. The property benefits from close proximity to a diverse employment base such as GM Financial, D.R. Horton, General Motors, the Great Southwest Industrial District, the University of Texas-Arlington, Texas Health Resources, the Centreport Business Park, American Airlines Group, and UPS.  In addition, the property is located less than four miles from Arlington’s Entertainment District, which includes AT&T Stadium (home to the Dallas Cowboys), Globe Life Park/Globe Life Field (home to the Texas Rangers), Texas Live!, and Six Flags Over Texas/Hurricane Harbor.

2018 North Texas Land Absorption Report

By Robert Grunnah

For many years, our Investments/Land Division, formerly Novus Realty Advisors, now a division of Younger Partners, has produced a report designed to assist investors in deciding the viability of acquiring undeveloped land for medium and long-term positive returns. Since our 2017 report was distributed, DFW has experienced continued active growth in virtually every commercial and residential product type. As the accompanying exhibits indicate, transaction volume held steady for both user and investment product. Much remains the same in our report this year, except we are seeing legitimate evolving trends that should be acknowledged. Absorption of developed, undeveloped (land with limited or no access to infrastructure permitting immediate use), and underutilized land activity traded at a comparable rate to 2017. The trend continues as
aggressive, new vertical development has left even fewer desirable infill sites remaining available. More peripheral sites are seeing increasing activity with employers competing for employees desiring a shorter commuting distance. This competition for employees, inflated raw
land and construction costs, a rapidly increasing cost of living, and transportation congestion are all beginning to affect our extended growth cycle. However, we remain attractive to geographical relocations when compared to our competition. With the anticipated continued job growth,
inbound population increases, relatively low interest rates, and a sound local economy, there is no reason for an immediate corrective cycle. Should any one of those benchmarks collapse or even display a solid weakness, a correction is imminent.

While we have retained historically low capitalization rates, despite sale prices at a multiple of replacement cost and static retail demand, income producing investments have maintained their active volume due largely to the need to invest 1031 trade equity and the lack of competition with alternative investments. Excessive competition to acquire cash flow assets providing even the smallest yields produces increased vulnerability to market corrections. A cyclical downturn in the national economy would have a dour negative impact and threaten positive cash flows. Inherently, land investment differs greatly from other types of real estate products generally because of its inability to produce interim cash flow and its considerably more sensitive vulnerability to recurring cycles. The criteria used to determine potential land opportunities, while becoming more sophisticated over the last two cycles, remains principally in implementing basic strategies. Perhaps the most important of these is the ability to project and fund ownership long term. Positive liquidity, the allowed ability to sell for an acceptable profit at the optimum market time, can be highly speculative. When an investor is placed in an imposed forced sale position or loses confidence in the future of the investment, returns are jeopardized and most frequently result in a significant loss. 

With expanding IT capabilities and the proliferation of social media vehicles, should an investor wish to search hard enough, she can find support for any speculative investment philosophy, positive or negative, to justify an action. This presentation qualifies as but one of many. However, certain facts remain more pertinent than most as they may apply to investments in unimproved or underutilized land assets in DFW. Again, referring to the accompanying charts, a conservative estimate of pending ten-year population growth for DFW is one million plus new residents. Climate, central location, progressive state and local government, and no personal or corporate income tax would support this projection. Possessing no true natural barriers for continued land absorption, there appears to be no single real estate oriented obstacle to limit this projection. Population growth can be fueled both organically and by external inbound relocations. With trailing twelve-month growth of 120,000 jobs, the majority of the population increase stems from such relocations. It is estimated that only eighty percent of the jobs created by recent moves into DFW have been filled. In the last six years, over thirty-five thousand acres of land have traded with an additional large number not being included when classified as long-term investment land.

Like most types of investments, real estate is cyclical. Investment success or failure can often solely depend on where the cycle is at the time the purchase is made in conjunction with the investor’s ability to determine the true state of the cycle. Buying at various points in a cycle, cost averaging, can provide some security allowing for both buying selling to generate positive results. There has yet to be a final cycle. The ability to hold long term may negatively impact the final yield, but does offer security. While the ability to use historical data to project long term value is logical, many down cycles have been created by artificial, non-real estate related influences that were difficult to anticipate. For example, in the late 1980’s, tax law changes and deregulation destroyed the market. In the late 2000’s, the subprime collapse did the same. It is reasonable to assume there will be more fragile “bubbles”. Included in our report is our Land Absorption Map which sets out various types of 2018 commercial real estate activity in specific geographic areas. Actual sales, current listings and announcements of pending projects are the basic criteria used and have been benchmarked annually to complete the current year’s map. Not difficult to understand, the progression from active to long term generally follows the current availability of infrastructure and newer, expanding city services. Land currently available for vertical construction will bring significantly higher values and greater activity over those that must physically wait for services. Over the twenty plus year’s of presenting the map, it is interesting to note that, while the circles have limited movement, the colors have many changes and generally move out from the core in concentric circles. An ever-increasing burden to investors and developers is the dramatic involvement of politically motivated, impractical restrictions imposed on reasonable growth by many local municipalities. Frequently, viable, beneficial projects are excluded from fruition by flawed, unrelated personal or political interests. Younger Partners is a member of the highly respected North Texas Land Council (NTLC), a group comprised of 50 of the most active and talented land brokers in our area. Believing that activity generates more activity, the North Texas Land Council freely shares information with its competing members, and the market in general, on a level of professionalism unusual within similar organizations and, as such, is a benefit to all clients. Much of the projected activity displayed on the Younger Land Absorption Map (YLAM) reflects the activities of the NTLC.

The market today continues to see record prices for infill, readily developable sites possessing available infrastructure, permitted anticipated uses, and demand for completed product. However, distinct indications of this aggressive approach are beginning to surface perhaps harboring at a minimum at least a cooling off period, or perhaps the “correction” we have anticipated the last few years. As it relates to land, pricing levels may have achieved their pinnacle for this long evolving cycle. For many increased cost factors, single family new home prices have increased fifty percent in five years making affordability more difficult. Less obvious are completed per square foot costs in all commercial sectors. The strong national economy, as well as local, and the continued relocations have provided record employment and income. That momentum will carry through at least the first half of 2019. Past that, projections are difficult. DFW is well positioned to absorb a moderate abated market. Land prices, however, must readjust for the return of an active market.

Again, as last year, the “pipeline” for new projects of all types has gotten understandably smaller which presents an interesting speculative projection for 2020 and beyond. Increased activity for pure, longer term investment sites has continued the extension to the outer lying, concentric circle tracts, considered “pure investment tracts”. Until 2016 such tracts remained fairly benign in sales activity and price fluctuation. These specific investments are becoming more attractive since competing investments such as oil and gas (price fluctuation and over production), a pending bear stock and bond market (the same non-occurring “pending” from last year), and the tech world which offer much higher risk vehicles. Additionally, local investors (the heretofore most active group of land speculators) are seeing increased competition from more patient national and foreign investors. Yet, historically, and perhaps ironically, a large number of the most successful, wealthiest investors have made their patient fortunes in land by simply applying these basic techniques.

Our continuing and extended analysis, as displayed on the “Younger Land Absorption Map” (revised November 2018) is principally based on extensive historical data collected utilizing over 150 years of market experience possessed by Younger associates, members of the NTLC, and reliable future projections from sources that have traditionally displayed accurate demographic information. Our attached graphs were constructed by Steve Triolet, Director of Younger Research. Depending on which source one chooses to use, the DFW market still expects to absorb an additional population expansion of twenty five to thirty percent over the next fifteen years. Success in real estate investment will be to determine where that growth will locate. History has taught us that product will be made available and priced based on pure economics. The cost to provide available product to meet demand will depend on the availability of affordable infrastructure (sewer, water, roads, proximity to employment centers, service commercial, schools, political climate, etc.). Land prices will fluctuate according to such availability, absorption, the national economy, and the popularity of any specific product. Investing in the right opportunities will generate exceptional rewards. Some estimate that it requires approximately 12,000 to 15,000 acres of raw land to accommodate one million people in a reasonably confined, socially acceptable, service provided environment. DFW enjoyed record rainfall in 2018 keeping our resources at sustainable levels. Given the droughts of previous years, with the population growth that has occurred, a dry year will present some worrisome challenges only new sources can cure. A partial answer lies in the creation of two new reservoirs in East Texas, probably ten years from service. Lack of both potable and irrigation water access will be an inevitable liability. We have been fortunate to have had an extended period of prodigious activity which can at least be partially credited to our aggressive political structure, both local and state, our sophisticated and informed developers and engineers, and our incredibly competent and equally aggressive local and regional Economic Development Corporations. Of equal depth, however, is the dynamic, well educated, hard working, and professional “under 40” group of brokers, administrators, managers, and general employment base whom have emerged during this cycle. They may well be the first group exiting a positive cycle who have learned and benefited from the experience of their predecessors. They may not need a disaster to stay relevant and solvent. In conclusion, the principals of successful, sophisticated investment must utilize basic criteria, some of which is outlined above. Access to infrastructure, most importantly water, the admirable, continued effort by our current Dallas Mayor to utilize available land in our southern corridor, absorption of the remaining few infill sites, high suburban infill land costs, and the migration of employment centers will all play significant roles in prudent investment decisions. Utilized in the investment process, the only remaining elements are sound financial strength and patience.

YP Runners Take on BMW Dallas Marathon

Congrats to YP’s Tyler Hemenway, Tanja McAleavey and Autumn Stallings for their participation in the BMW Dallas Marathon. This was Autumn’s sixth year to participate in the BMW Dallas Marathon and her first year to run the Ultra with a time of 7:26:47. Tanja and Tyler both ran in the half-marathon. Tanja finished 20th out of 3,114 women and fifth in her age group. Tyler finished seventh overall with a time of 1:12:14.

The BMW Dallas Marathon Charity Program brings together various local charities in Dallas and national non-profit entities that partner with the BMW Dallas Marathon organization to raise funds in support of various causes. Charity Program partners play a vital role in supporting the success of the BMW Dallas Marathon and related events by providing both runners and volunteers. Among the charities supported are: Muscular Dystrophy Association Team Momentum, Big Brothers Big Sisters, Leukemia & Lymphoma Society Team In Training, Back On My Feet, The Tom Joyner Foundation, and For The Love of the Lake

BMW Dallas Marathon info.