Four experts weigh in on what’s next for the state’s booming market
The booming Texas property market shows few signs of faltering in 2022, at least when it comes to the state’s four largest cities.
That’s the conclusion of four commercial real estate lawyers interviewed by Texas Lawyer who point to strong demand for housing and development as companies expand local operations and hire more workers.
Expansions or relocations by the likes of Oracle, Facebook, Apple, Tesla and Samsung that spurred Austin’s explosive growth will drive commercial real estate development. Residential real estate of all kinds is in high demand. Multifamily housing demand will outpace building, and construction of more condos, townhouses, apartments, and single-family rental homes will try to keep up. Developers will acquire more land and build more subdivisions and workforce and affordable housing will be in the mix.
Mixed-use buildings dominate new construction. Healthy demand for Class A offices that defies pandemic trends may accelerate. Major highway corridors will draw more industrial warehouse development.
The industrial sector will increase its Houston footprint in the new year. Shops and restaurants have adapted to pandemic conditions and are in surprisingly strong shape. The multifamily housing market won’t slow and occupancy rates should remain high. The office market is less certain: Houston’s central business district still has high vacancy rates.
Single-home and multifamily development construction could keep setting records. While rising construction costs might have sparked some overvaluation, prices aren’t likely to fall. And even though the commercial office market hasn’t returned to pre-pandemic levels, several Dallas-Fort Worth area urban centers outside downtown are thriving, with office projects in the works. The industrial sector will be active across North Texas.
Office, retail and industrial are all hot in Fort Worth. Leases are outpacing expectations, leading to a landlord’s market. Biotech, warehouse and e-commerce facilities dominate the industrial space. Class A office building sales prices are setting records. Corporate relocations have driven new construction of office campuses outside downtown. A surprising number of new leases have been signed by out-of-town restaurants moving in to replace shuttered local ones.
San Antonio will keep drawing new residents. The single-home and multifamily housing market has responded accordingly. While multifamily development will outpace much of the nation, single-family home growth could slow slightly from this year’s rapid clip.
The city’s commercial real estate markets should remain healthy. Almost 900,000 square feet of new office space is on deck for the first half of 2022 and more than 4.9 million square feet of industrial projects are also in the works. This year’s slight increase in office vacancies and rent decreases should cede to stronger activity, lower vacancy rates and rent growth. Several hospitality projects that have broken ground will be complete in two years. While retail rents and occupancy declined this year, more than 2 million square feet of projects are on track for completion.
[Texas Lawyer] — Cindy Widner