Dallas Economy, Diversification & Our Future

[Mballar]

It's no secret that Dallas' economy took a big hit within the past 5 years due to dot-com bubble bust, and the telecom corridor "collapse." However, it appears that within the past 12 months, Dallas' economy is on the rebound. I would like to start a discussion on what other forumers think about the following:

How diversified is our economy, at present?
Is our local economy diversified enough to maintain/increase the current level of growth that the city is experiencing?
Is our local economy diviersified enough to withstand another hit to one of its major industries?
What industries do you perceive as being at the forefront of our economy at present?
What industries have significant opportunity for growth in our economy?
Are our local colleges & universities doing enough to produce an adequate workforce capable of contributing to these industries?

[Tnekster]

This economy is more diversified now then it has been at anytime in the past.

Our local economy is diversified enough to maintain our current level and should support a much higher level of growth. DFW is what? Number 6 on the fortune 500 location list.

Yes, we can withstand another hit. What do they always say...that which does not kill you can only make you stronger. All of the hits this region has withstood over the decades are only acting to make the region think better and prepare better.

The top indutries could be Logistics, Aerospace, IT, Semiconductors, Healthcare

These same industries have room from tremendous growth, especially logistics and health care.

Our nation as a whole lags adequate workforce development efforts. This problem is not confined to North Texas but is made worse by our lack of tier one institutions.

[Mballar]

^Thanks Tnekster. As usual, your comment is well thought out and informative. Others please feel free to weigh in. I think on another thread someone commented that fashion could be a big up & comming industry here in the next few years.

[Tnekster]

I worry about what I percieve as a lack of job growth centers. For example, we all know that the southern sector has potential. But when you look at where the jobs are and where the people are, there's a disconnect. There's a middle-class flight from the southern sector and into the southern suburbs. The schools in the southern sector are in jeopardy of closing down due to low attendance. There's supposed to be an influx of people in Dallas, so where are they? I think that there's a pattern and if you look at where schools are having to close down and ask why, then maybe those are the areas that should have some job center.

I hear this a lot when dealing with the Oak Cliff Chamber. How do we get a large employer to move into the southern sector? Problem is that employers go where they can find the largest pool of qualified employees that fit into their specific area of business. This is why you don't see Tech companies moving into the southern sector because most of the talent is north of downtown. Employers locate closest to their talent as they possibly can. It makes it much easier to find qualifed employees. One thing going for the city is this rapid influx of young urban types that want to live in the city center. This will quietly and slowly create an envioronment where an employer is more likely to select a downtown location based on the quality of employees living nearby. The same thing is true of the southern sector. It is kind of a chicken/egg game.

[rantanamo]

^That's why inner city revitalization is so key, incase anyone wonders if its all about being urban hipsters.

I think the whole, where the pool of employees is an excuse though for companies. They ran up to Westlake when nothing was there. They ran to West Plano before even Far North Dallas was all that developed. If a business park was built at Mountain Creek Lake, it would be just as accesible to a large pool of educated professionals as anywhere else in the metroplex. Arlington, GP, Irving, Dallas, Cedar Hill, Duncanville, Mansfield and DeSoto are all very very close to such an area. Not to mention how easily one can access this part of Dallas from DFW(another excuse used to place office development in the north).

[Mballar]

I think Tnekster and rant are both right. I wonder, though, what Paul Quinn is doing to increase the profile of its couse offerings that could benefit local businesses, and whether it could have an impact on the "relocation factor."

[Tnekster]

^Biggest factor that will influence southern development is the UNT-Dallas campus. There have been rumors of a major pharmacutical development in close proximity to the new campus.

[UrbanHope]

^ I 've heard that Paul Quinn will offer courses that are complementary to those that UNT will offer.

All these developers want to build outside Dallas, but until there is real funding for affordable housing in Dallas the Southern sector will continue to feel the pain. I am a mortgage consultant and the city's MAP (mortgage assistance program) for low-income buyers is always on backlog. You can't get the down pmt. assistance in time to close the loan in most of the cases.

I think people in the city (council, the mayor, the dallas news) need to solicit new ideas for how to solve it. When's the last time the city had a public forum on the state of affordable housing. They get on the phone and ask the same 2-3 people in the 'hood and you get the same result.

Cities like Atlanta, Houston, and others in the south are doing way more than Dallas. That's why the best and brightest in the hood get their college degrees and never come back. We have to keep those people by providing better services and that includes affordable housing.

[Bruno A.]

Is Dallas FortWorth an expensive city ?

[Tnekster]

No, not compared to others across the globe.

[Bruno A.]

Certainly less espensive than Paris ! I hope !

[The Great Hizzy!]

Speaking of Paris, my boss just returned from a site visit to one of our prospective vendors, and their hotel was very expensive. A continental breakfast cost $15.00. A bottle of water cost $5.00.

Utterly amazing. Granted, I know he was being gouged by the hotel staff but even away from the hotel, restaurants were, on average about 60% more expensive than a typical restaurant in a fairly large to very large American city.

[rantanamo]

very cheap. Lots of land and lots of choices about what kind of life you want to live compared to most metros, which makes it a real challenge to build up an urban core unlike older land-locked cities. That, central location to the U.S., job growth, great connectivity to the rest of the world and highly educated workforce makes it very attractive to companies and new residents. Also keeps us in the ire of older, more established and urban cities.

[Bruno A.]

The Great Hizzy! : It depends of the kind of hotel, maybe it was a luxurious hotel, but indeed it's hard to find a good hotel really cheap in this town. And cab are very expensive too. For restayrant there some of restaurant for tourist they grow up their price, but you can finf very good french restaurant not expensive, if some of you come in Paris, i can give them a list og restaurant.

Yes Rantanamo! It's very interesting, I would like to live here I could find work...

[2112]

Is Dallas FortWorth an expensive city ?

I think what you meant to ask is "Is Dallas and expensive city, and while I'm on the subject, is Fort Worth an expensive city, too?"

Thanks for asking.

Relatively speaking, when comparing to other areas of the contigous United States, no, Dallas is not an expensive city. And neither is Dallas's neigbor to the west: Fort Worth.

Both cities are relatively inexpensive.

[Bruno A.]

Yes, it's exactly what I wanted to say. My english is not perfect. But I'm realy very interested to know this two city are inexpensive. I think all citys around too.

[2112]

No problem buddy.

[2112]

Yes, it's exactly what I wanted to say. My english is not perfect. But I'm realy very interested to know this two city are inexpensive. I think all citys around too.

That's right: there many cities around Dallas, just as there are many cities around Fort Worth (thanks for noticing). Each one has its own history and identity. I believe all of the cities have similar costs of living, as it is mainly a regional characteristic. Incidently, when leaving Dallas, if you take the trip west to Fort Worth, you will notice a very different style and culture. Fort Worth these days is one of the fastest growing cities in the nation. Its population is well over half a million, and will soon recapture its place as the fourth largest city in Texas - right behind Dallas.

I hope that helped.

[Bruno A.]

Yes, thank you, I had choice this area to make a job search. It's good to be confirmed.

[2112]

No. Thank you.

[Mballar]

It's no secret that Dallas' economy took a big hit within the past 5 years due to dot-com bubble bust, and the telecom corridor "collapse." However, it appears that within the past 12 months, Dallas' economy is on the rebound. I would like to start a discussion on what other forumers think about the following:

How diversified is our economy, at present?
Is our local economy diversified enough to maintain/increase the current level of growth that the city is experiencing?
Is our local economy diviersified enough to withstand another hit to one of its major industries?
What industries do you perceive as being at the forefront of our economy at present?
What industries have significant opportunity for growth in our economy?
Are our local colleges & universities doing enough to produce an adequate workforce capable of contributing to these industries?

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

[Fobulous]

The DFW economy is getting a lot better at least i can feel it around my immediate friends. Back in 2002-2003 most of the people i know were unemployed (i was a victim of the Telecom Meltdown...) around mid-2004 my friends started to get decent job offers and i got hired as well, eventho it was less than i was getting paid before but it sure beats sitting home all day long.

This area does have a very diversified economy. Just Plano alone you have one of the largest retailer,food and beverage,I.T., Telecom, and Financial company headquarters. Also don't forget that Dallas has 7 eleven,Motel 6,Pizza Hut,and other well known companies that have nothing to do with Telecom and Internet.

[tamtagon]

Eh, the Metroplex is about to become smokin' hot. Traditional business-to-business, um.... - business, will dominate expansion, but the new growth industries supported by UT-Southwestern and UT-Dallas will register the highest percentage of activity. The high life 1980's Dallas hinted is playing out.

Fort Worth will get as much overflow as Collin County-attempted-business-districts, but the real steam will be found downtown.

[Tnekster]

^I agree with that and on that note....

Demand for apartments rises

Leases reach levels not seen since '85


09:06 PM CDT on Thursday, July 21, 2005


By STEVE BROWN / The Dallas Morning News


"For Rent" signs are vanishing in Dallas-Fort Worth after landlords leased more apartments in the second quarter than they had in almost 20 years.

New leases increased by almost 12,000 units from the first quarter, according to industry analyst M/PF YieldStar Inc.

You have to go back to 1985 – in the middle of the last real estate boom – to find a quarter with stronger demand, said Greg Willett, M/PF's research director.

"That suggests that the job growth figures we've seen lately are probably understated," he said.

The combination of a better local employment market and a slowdown in home sales to first-time buyers caused the surge, Mr. Willett said. "Losing fewer renter households to home purchase clearly is a factor in the strong apartment demand."

The net leasing number released Thursday is more than the total for all of 2004 in D-FW.

"This is the real deal," said apartment developer Robert Shaw, who has new projects in West Plano and North Dallas.

"The leasing we are seeing now is unbelievable, and the rental concessions are down."

Homebuilding analysts had already reported that low- and moderate-priced home sales in North Texas are weakening, and thousands of renters have already made the switch to homeownership.

"I think that trend is pretty much completed," said Ted Wilson of housing analyst Residential Strategies. "We are hearing from the homebuilders that a lot more of their business is from people moving in for new jobs."

The rush of apartment rentals lifted overall occupancy in the market to 91.2 percent, and average rental rates rose 1.8 percent to $697 a month, according to M/PF.

M/PF calculates its figures by surveying landlords about occupancy rates. The group releases occupancy and net leasing figures, not a total number of apartment units leased in the area.

So, given the explosion in apartment leasing, how long before apartment builders gear up to add thousands of new units to the market?

"We are seeing an increase in rents and occupancy, and we like it," said Bob Buzby of Trammell Crow Residential.

"We are looking for development sites."

There were just 2,465 new apartments added to the market in the second quarter, and 9,902 were still under construction at the end of June.

Most of the building is in Las Colinas (1,800 units), near downtown Dallas (1,400), in Lewisville (1,000), and in West Plano and northwest Tarrant County (800 each), Mr. Willett said.

Adding top-tier apartment units to the D-FW market wouldn't be "necessarily inappropriate," Mr. Willett said. "Our challenge lies in the stockpile of vacant older product," mostly in close-in neighborhoods.

"There seems to be real opportunity for someone who wants to revitalize that product, upgrading it to appeal to young singles who can't afford the best and newest apartments, or repositioning it to better serve the needs of recent immigrants – especially Hispanic households," he said.

E-mail stevebrown@dallasnews.com

[Tnekster]

Job forecast brightest in years
Economy's growth, shortage of skilled workers are sparking gains, hiring experts say



05:46 PM CST on Saturday, December 31, 2005
By SUSAN KREIMER / Special Contributor to The Dallas Morning News


Marie Guthrie did exactly what many career consultants advise against: In October, she resigned without having another job in hand.

What's more, it was an executive human resources position that's not so easy to find. But Ms. Guthrie, who lives in Colleyville, has no qualms about her decision. Two employers have invited her in January for fourth interviews – positive steps in the sequence of six-figure hiring.

"These high-level jobs two years ago were practically nonexistent," said Ms. Guthrie, 51. "Most companies were eliminating the positions and not refilling."


NAN COULTER / DMN
Marie Guthrie quit her job in October without another offer, but has no regrets. An expanding economy and a skilled labor shortage have sparked a resurgence in the recruitment of employed and unemployed workers alike, including those at the high end of the pay scale, hiring experts say. That makes this year's outlook for job seekers the best since the turn of the millennium.

"We expect 2006 to be the year that 2005 should have been," said Lyssa Jenkens, chief economist and vice president at the Greater Dallas Chamber. "We project strong employment growth – 2 percent or better – that will begin to stretch many segments of the local labor force."

The Dallas-area job market hasn't seen growth that robust since 2000, when employment rose 3.9 percent, according to Texas Workforce Commission data. Payrolls actually shrank in 2002 and 2003 – as job seekers probably know – before rising 1.2 percent in 2004. Employment was up nearly 1.3 percent in 2005 through November.

Those trends track with the state as a whole. Texas employment rose 2.7 percent in 2000, lost ground in 2001-2003 and recovered in 2004. The number of Texans working in 2005 was up 0.7 percent.

"Growth will continue in education and health, which have been the only steady gainers in this century," Ms. Jenkens said. "But it is now moving into business and professional services, which holds many of the highest-skilled jobs in the economy."


The stronger hiring picture will lead to job migration and upward pressure on wages, she predicted.

Nationally, the biggest job gains are expected to come in high-paying fields such as financial services, technology, health care, energy and international business, according to Challenger, Gray & Christmas' annual employment forecast.

Together, those fields could create 1.3 million positions this year.

"There is already soaring demand for the top talent," wrote John A. Challenger, chief executive of the Chicago-based outplacement firm.

The rise in the quit rate is an indicator of a tightening labor market, experts say.

In January 2005, 24 percent of workers voluntarily resigned, a 13 percent surge from 2004, according to Ajilon Professional Staffing in Saddle Brook, N.J.

"This voluntary quit rate – employees leaving jobs without being fired, laid off or otherwise forced out – will emerge prominently in 2006," predicted Neil Lebovits, Ajilon's president and chief operating officer.

High-demand workers who switch jobs will see salary hikes as high as 30 percent, though the rest of the workforce can bank on modest wage gains, according to the Five O'Clock Club, a New York-based career counseling and outplacement service for managers and executives.

"The average American has been in a job for four years," said Kate Wendleton, president of the Five O'Clock Club. "Based on how bad the market was four years ago, many of these workers are ready to make a move."

Rather than sitting back and watching top employees jump ship, employers are finding ways to enhance worker satisfaction, Mr. Lebovits said.


Retention

One way is through financial rewards – companies will dole out larger raises to keep top talent in tough-to-fill slots.

Average increases will be about 3.5 percent, but they could rise to 10 percent in industries that are desperately short of qualified personnel, said Jeff Cooper, head of the performance and compensation practice at Authoria Inc., a Waltham, Mass., human resources software company.

Another way to improve worker satisfaction is through redeployment – assigning workers to different jobs within the company instead of replacing them. It can be a mutually beneficial retention strategy, Mr. Lebovits said.

"By and large, employees don't quit a job unless they already have something lined up or unless they believe they'll be able to quickly find another job that's as good or better than the job they have today," Mr. Cooper said.

"This situation raises the ante for employers because it means they're going to have to work harder to retain their best performers. Plus, it puts high-performing employees in a better position to jockey for a raise."

Nurses and defense engineers can count themselves among the fortunate.

"From their [employers'] point of view, it's much less expensive to give big raises to retain skilled employees than it is to recruit, hire and train new people," Mr. Cooper explained.

Jobs in construction, accounting and information technology are also riding the popularity crest.

For managers in residential and commercial construction, annual raises of 5 percent to 8 percent have become the norm, said Mike Kittelson, managing director of Dallas-based Kaye/Bassman International, the state's largest search firm.

"Single-family, townhome and high-rise residential is one of hottest markets in the nation, hands down," he said. "We are seeing more growth in this sector than in any other."


Gravy train slows

Certified public accountants are still sought after, although demand seems to be slipping for CPAs on the consulting side of the business.

David McCully was vice president of finance for Security Technologies Inc. until his Fort Worth employer relocated to Provo, Utah. Now he's working as a consultant while eyeing his next big gig.

"The gravy train, in the past year, has vanished or is on the horizon of vanishing," said Mr. McCully, 38, of Coppell.

Much of the consulting work related to implementing the Sarbanes-Oxley Act has been completed, and companies that now meet the tougher corporate accounting standards are hiring accountants to manage the process in-house.

Finally, the slow-to-recover IT field is turning a corner, experts say.

On Wednesday, Diana Rockel started a contract position as network analyst at Prince Computing Corp. in Irving.

After a 90-day probationary period, she hopes to be employed full time. Then she would earn substantially more than in her previous job, which she left in October without an offer in sight.

"Although we are competing with outsourcing, there is still a great need for experienced IT staffing," said Ms. Rockel, 40, of Richardson.

"Employers aren't treating applicants or departing employees as they did in the early '90s. Hiring practices are changing. Interviewing is becoming more effective. Benefits programs are improving. And more companies are bringing consultants on board."

With a warmer recruiting climate, it's simply a matter of matching the right people to the openings, said Vickie Graves, business development manager at RedSalsa Technologies Inc., an IT staffing firm in Dallas. "We are definitely on an uphill climb."

JOB MARKET OUTLOOK
Job gains are expected across the board as the labor picture brightens in 2006.

2004 employment 2006 gains (projected)
Financial services
Personal financial planners 394,000 48,000
Loan counselors/officers 425,000 85,000
Accountants, auditors 1,723,000 334,000
Total 2,542,000 467,000
Construction
Electricians 781,000 61,000
Plumbers 635,000 42,500
Carpenters 1,764,000 277,500
Total 3,180,000 381,000
International business
Marketing & sales managers 806,000 130,000
Advertising, promotions managers 70,000 4,625
Purchasing managers 170,000 31,000
Purchasing agents 285,000 20,000
Wholesale and retail buyers 212,000 28,500
Total 1,543,000 214,125
Health care
Pharmacists 233,000 1,500
Physical therapists 234,000 48,500
Nurses 2,464,000 90,000
Medical technicians 1,203,000 11,500
Total 4,134,000 151,500
Technology
Electrical engineers 343,000 25,500
Network administrators 190,000 19,000
Computer support specialists 325,000 41,000
Total 858,000 85,500
Energy
Petroleum engineers 23,000 4,500
Chemical engineers 63,000 15,000
Misc. extraction workers 25,000 6,500
Mining machine operators 42,000 12,000
Total 153,000 38,000

SOURCES: Challenger, Gray & Christmas; Bureau of Labor Statistics

E-mail businessnews@dallasnews.com

[aceplace]

That's right: there many cities around Dallas, just as there are many cities around Fort Worth (thanks for noticing). Each one has its own history and identity.

Bruno A., you may be confused by the word city. When we say that Dallas and Plano and Richardson are seperate cities, we mean they are seperate governments. Like a Paris arrondisment in a way, except that the Dallas arrondisments are completely independent of one another... Something like a borough in London.

In reality, greater Dallas-Fort Worth is a single mass of streets and buildings, and the so-called "cities" are just seperate governments, each governing a portion of greater Dallas. Except in rare cases, there is no countryside, or physical separation, between these "cities".

Greater Dallas is one of the largest urban areas in population in the US. But it is very inexpensive compared to other large cities like LA or New York or San Francisco. People in greater Dallas have more money to spend on things like larger houses, better cars, more meals in restaurants, better clothes... and so, many Americans are moving to Dallas. Greater Dallas is thus growing in population very quickly.

Also, when I say greater Dallas I mean Dallas-Fort Worth. The US Government considers the territories of Dallas, Fot Worth, Arlington, and the others as one large "metropolitan area", where people can easily travel in order to work, to eat in a restaurant, see a show... Since automobiles are so common, people can live and easily drive in a metropolitan area that is 70 kilometers across. In reality, everything you might want is in an area just a few kilometers across, but it would not be difficult to travel farther than that if you needed to...

[AndyIvey]

Except in rare cases, there is no countryside, or physical separation, between these "cities".

There is some "countryside" along CF Hawn.... used to be lots of boats, too. :biggrin2:

[Aporkalypse]

DFW and Houston are probably the least expensive major metropolitan areas in the country. I think that's a big lure for employers as so many parts of California, the Northeast and now even Florida are becoming too expensive for average employees. Dallas, Houston, and Atlanta are popular places to relocated because of this.


I'd love to see Dallas get more biotechnology. Southwestern's medical complex could easily serve as a nidus for development but there's almost no biotech influence right now, we need to lure a company or two to spur growth. I wish we could've gotten something like the Scripps Institute, which is supposed to be building a new campus in West Palm Beach, here.

Still, we have about as diversified an economy as you can find here.

[Fobulous]

Yes, i agree that the DFW area needs to add Biotech to it's flavor of industries. However, i think Houston has got Dallas beaten in this regard since the UT MD Anderson is just so much popular than UT Southwest..

[Tnekster]

Real Estate
Study: Leasing gains driven by job market
Dallas Business Journal - March 10, 2006by Christine PerezStaff Writer
http://www.bizjournals.com/dallas/st...ml?t=printable

The Dallas office leasing market is poised for occupancy and rental-rate gains in 2006, according to a new report from Marcus & Millichap, the country's largest real estate investment brokerage.

Gains will be driven by employment growth. The job base in Dallas-Fort Worth is expected to see a 3.2% improvement in 2006, creating about 87,000 new positions.

"Employment growth has been on a steady climb the past few years, and positive absorption is helping to put a dent in the high vacancy rates," said Tim Speck, vice president and regional manager of Marcus & Millichap's Dallas office.

Overall vacancy is predicted to drop to 19.7% by the end of the year, ranging from a high of 23% in Las Colinas to a low of 10.5% in the Fort Worth Central Business District. Average asking rents will grow by nearly 4% to $18.50 per square foot.

A growing number of speculative development projects, though, will temper market improvement.

Developers are expected to add 2.1 million square feet of new office space in 2006, more than double what was added last year. Most of the new development -- 1.8 million square feet -- is coming from speculative projects.

[Aporkalypse]

Yes, i agree that the DFW area needs to add Biotech to it's flavor of industries. However, i think Houston has got Dallas beaten in this regard since the UT MD Anderson is just so much popular than UT Southwest..

It's not just MD Anderson, it's Texas Heart and the whole complex down there. Still, private investment's what you really want. UCSD's med school is no more notable than Southwestern but they are a biotech hotbed because of Scripps. Private investment fuels the market. Making Dallas a hub for the pharmaceutical industry which is now largely bicoastal would be great but I have no idea how to get that started.

[darkblood]

It's not just MD Anderson, it's Texas Heart and the whole complex down there. Still, private investment's what you really want. UCSD's med school is no more notable than Southwestern but they are a biotech hotbed because of Scripps. Private investment fuels the market. Making Dallas a hub for the pharmaceutical industry which is now largely bicoastal would be great but I have no idea how to get that started.

I'm hoping to see more nanotechnology, and renewable energy companies. And it looks like both of those are growing too.

[Tnekster]

Dallas Fed chief: Texas growing faster than national economy
Dallas Business Journal - 4:14 PM CDT Wednesdayby Christine Perez and Conrad WilsonStaff Writers
http://dallas.bizjournals.com/dallas...l?surround=lfn

The United States appears to be at a crossroads in the conduct of monetary policy and the national economy, which is slowing from its unsustainable, blistering pace of earlier this year, said Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas.

Texas, though, is faring well, growing faster than the rest of the country -- "One percent faster, which is quite substantial," he said.

Fisher made the comments at an Aug. 16 luncheon hosted by Commercial Real Estate Women and the North Texas Certified Commercial Investment Members, held at the Westin Galleria.

The Dallas-Fort Worth area, which has been slower to rebound than Austin, Houston and some of the border areas in Texas, is gaining momentum.

According to the Dallas Fed, first-quarter 2006 job growth in Dallas-Plano-Irving was 4.3 percent; it had been projected at 3.1 percent. Job growth in Fort Worth-Arlington was 3.3 percent, an improvement over the projected 2.2 percent.

The state's actual first-quarter job growth of 4.4 percent was nearly double the expected 2.4 percent.

"Ten million women and men work in this state; we mean something," Fisher said.

Nationally, productivity of U.S. workers had been advancing at the same pace as wages and benefits costs -- until recently, the chairman said. In the last few months, anecdotal evidence suggests an emerging and widening shortage of skilled and semi-skilled workers, along with accompanying upward wage pressures.

Fisher also talked about the national real estate industry, which has returned to more normal conditions since the boom-bust at the start of the century. Commercial rents have risen across all sectors, and prices for commercial properties have outpaced that growth. Still, some industry analysts are concerned about a disconnect between demand and supply. Some condo projects, for example, have been canceled. Fisher said he expects to see additional cancellations.

For its part, Texas has one of the most resilient housing markets in the country. So far in 2006, single-family permits in Texas are up 11 percent over last year -- the third-fastest growth rate in the nation and a sharp contrast to the 7-percent decline for the United States as a whole.
Nationally, single-family permits are down 26 percent from the peak of last September, Fisher said.

"A friend who has been a major homebuilder since 1973 recently told me, 'This is the roughest, most sudden correction we have ever seen in the housing market,'" he said. "Builders are responding as one would expect: they're cutting staff, renegotiating prices and getting concessions from subcontractors, and either walking away from or renegotiating planned land purchases and other contracts."

Because the homebuilding industry has consolidated since the last slowdown in the early 1990s, the net effect of the current correction may not be as severe. Fisher said today's homebuilders are quicker to adjust to new conditions and have enough financial wherewithal to cut prices in reaction to inventory upswings.

Still, he said, "It's clear from my perch on the economic tree that the housing downturn and the cumulative effect of energy and electricity price increases and higher interest rates, among other factors, are definitely having an impact on the consumer."

Fisher also discussed the Federal Open Market Committee's recent decision to hold key short-term interest rates, after 17 consecutive quarter-point hikes.

"The Federal Reserve will not tolerate inflation," he said. "But that doesn't mean we need to take a sledgehammer to the economy."

The pause decision was made "in significant part because of the lags in time it takes for the tightening measure the committee had taken over the previous 17 meetings to affect the economy's inflationary impulses," Fisher said.

But it should in no way be taken as an indication of what lies ahead.

"If anybody tells you with absolute conviction that the Fed is done raising interest rates, or with equal conviction that they have only paused and will raise rates more starting in September or October, remind yourself that at best -- and I'm being generous here -- they're only guessing."

[St-T]

COMMERCIAL PROPERTY NEWS
TUESDAY, AUGUST 1, 2006

Market Profile | Dallas

By Eugene Gilligan

Chris Peck believes he is seeing nothing less than the transformation of Dallas right before his eyes. "Dallas has always been known as a great place to do business, a great place to raise a family," said the vice president of the Texas division for construction company McCarthy Building Cos. "But now it is getting a cultural reputation, a vibe that it's never had in my lifetime."

The face of Downtown Dallas and its neighboring Uptown district is changing, powered by significant apartment and condominium projects, entertainment venues and mixed-use hotel and residential projects that are either under construction or in the planning process. McCarthy is working on two such developments. One is The Tower Residences at The Stoneleigh Hotel, a 21-story condo tower that will contain approximately 110 units, starting at just under $400,000. The company is also working on the new W Dallas Victory Hotel & Residences, part of Hillwood Development Co.'s $3 billion Victory Park development, being built around the American Airlines Center.

The hotel portion opened in late June; McCarthy is building the North Tower and South Tower condos, scheduled to be completed by the end of this year.

Old Is New Again Key to the revitalization of Downtown Dallas is the conversion of old, vacant office buildings into residential properties. The Mercantile Block project is one example. Forest City Enterprises Inc. is converting the Mercantile Bank building, which at its scheduled Spring 2008 completion will contain 225 apartments. The project will also include a new 15-story tower that will provide 150 apartments and 30,000 square feet of retail space. And Hamilton Properties Corp., which has already converted two vacant Downtown office buildings—the Davis Building and the Dallas Power & Light building—is now converting Fidelity Union Towers into about 500 apartments. The central business district houses 2,227 residential units and has another 1,914 housing units under construction. By 2010, the CBD is projected to have approximately 10,000 housing units, noted Greg Biggs, a senior vice president & branch manager for Studley Inc.

Most observers see these conversions as having a two-pronged effect. Not only will they remove substantial vacant office space from the city's inventory, but the addition of residential units will strengthen Downtown's office market by making it an around-the-clock live-work-play area. Carl Ewert, an executive vice president for The Staubach Co., believes that Dallas companies, in order to recruit top young talent, will look at Downtown more favorably going forward because employees in the 22- to 35-year age bracket are not interested in living in the suburbs, choosing instead to live in or near core city locations. "They don't want to have an hour commute but want to live close to where they work and hang out," he said.

Randy Cooper, a senior vice president for CB Richard Ellis Inc., noted that some of the demand for condos is coming from "well-heeled" people who live in Albuquerque and Santa Fe, N.M., and are buying Uptown and Downtown Dallas units to have access to the entertainment outlets. "That's happening a lot," he said. Downtown Dallas has approximately 30 million square feet of office space, 6 million to 8 million square feet of which is "obsolete, for one reason or another," Biggs said, noting that the conversions to residential properties are a plus. "It will take about 1 million square feet of office space off the books. This is space that has small floorplates and poor parking.

Converting them makes sense. It's a positive for Dallas." Bill McClung, executive vice president of Cushman & Wakefield of Texas Inc., agreed, terming the office space "antiquated and not leasable."

New office development is also underway. The 419,000-square-foot One Arts Plaza, being developed by Billingsley Co., will house the headquarters of 7-Eleven Inc.; the building is slated to open in the second quarter of 2007. Also, Hunt Consolidated Inc. is developing a 375,000-square-foot headquarters that it will occupy late next year.

But Downtown still has much office product to absorb, as evidenced by the 22.6 percent CBD vacancy, according to CB Richard Ellis. Some indicators, however, point to positive momentum. Transwestern Commercial Services, in its mid-year report on the Metroplex office market, noted that the Dallas-Fort Worth economy continues to grow. Payrolls increased by 3 percent, or 81,200 jobs, in the 12-month period ending in April.

While adding residential options Downtown should help the office market, infrastructure improvements could also provide a boost. Many observers point to a proposed $70 million park to be built over the Woodall Rogers Freeway—which separates Uptown from Downtown—as a key in connecting the two areas' residences, offices and entertainment venues. The Woodall Rogers Park Foundation announced in June that it has received more than $10 million in private donations for the 5.2-acre park. Another $20 million has been allocated to the project as part of the city's Capital Bond Program, which city residents will vote on this November.

Increased ridership of the Dallas Area Rapid Transit systems has also helped Downtown, said John Shaunfeld, managing partner of Mohr Partners. "DART provides good access to Downtown," he noted. "Many people who live in the suburbs take DART Downtown." New entertainment venues will also increase Downtown's vibrancy, Peck said. While the American Airlines Center has been a great help by hosting once-a-week attractions, such as concerts and sporting events, the addition of entertainment venues like the House of Blues, which will be part of Victory Park, means there "will be activities and events every night of the week," Peck said. And two performing arts centers now under construction—the Dee & Charles Wyly Theater and The Winspear Opera House—will both be part of Downtown's growing Arts District.

Considerable problems remain, however. Downtown Dallas still has a significant
homeless population, said Ran Holman, president of GVA Cawley. "That's a challenge," Holman said. "Office tenants aren't comfortable in that situation." Others say Downtown needs more retail development, although some initial steps have not been positive. An upscale grocery that opened last year has been losing money, but Tim Young, senior vice president of KeyBank Real Estate Capital, said the large Forest City Mercantile Bank project, which contains significant retail space, should be hugely beneficial to Downtown. Brian O'Boyle, owner of the Dallas office of Apartment Realty Advisors, anticipates an oversupply of high-end condo projects. "There is a risk of overbuilding," he said. "The quality of the floorplates in these projects will separate them from one another."

Overall, though, Dallas' population growth should outpace its supply of center city apartments, said Chris Johnson, vice president of Corgan Associates Inc., an architecture firm currently working on One Arts Plaza. "There is more product, but there are more people to absorb it," Johnson said. Another executive agrees that supply, at least of yet, is not a concern. "We're seeing positive momentum Downtown," said Mark Bryant, senior vice president of JPI, which owns four multi-family developments Downtown.
"Relatively speaking, (Downtown and Uptown apartments are) a small part of Dallas' total housing picture."

http://www.the7thart.com/accounts/vi...8e72d77fd6.pdf

[aceplace]

According to the Dallas Fed, first-quarter 2006 job growth in Dallas-Plano-Irving was 4.3 percent; it had been projected at 3.1 percent. Job growth in Fort Worth-Arlington was 3.3 percent, an improvement over the projected 2.2 percent.

The fallacy in that analysis is that Fort Worth-Arlington is not a self-contained and self-sustaining economic unit. 30% of Tarrant county's workers commute to Dallas county. Thus, separate growth rates for Dallas and Fort Worth are meaningless...

It's as if someone drew an arbitrary line separating Waco into two pieces, of unequal size, and then published a growth statistic for portion # 1 and portion # 2. Since anyone in Waco can easily drive to a job anywhere else in Waco, the numbers have no real significance. What would be significant would be the growth rate for the entire Waco metro area, in order to accurately portray job opportunities for the people of Waco.

In a similar fashion, the job opportunities available to the people of the Metroplex are most realistically portrayed by a growth rate for the entire Metroplex. Assuming there is not a Berlin-wall type barrier on the Tarrant county line preventing people from commuting.

[Haretip]

Do they count the job where the person lives or where the job is performed? If the statistic is sampled at the workplace, then where they commute from is irrelevant. 3.3% job growth is still a good thing for the FW-A area as it has been the smaller market for so many years.

[aceplace]

Do they count the job where the person lives or where the job is performed? If the statistic is sampled at the workplace, then where they commute from is irrelevant. 3.3% job growth is still a good thing for the FW-A area as it has been the smaller market for so many years.

I'd think they're counting jobs, not workers.

A 3.3 growth rate understates the benefit to the people of Tarrant county because they are not dependent on Tarrant county employment. Likewise, a higher growth rate overstates the benefit to the people of Dallas county because some of the Dallas county jobs will be given to Tarrant county people. And Dallas county people did not singlehandedly create these jobs in Dallas county... people in Tarrant contributed to the growth rate as well.

Thus, it is just not fair, and is quite misleading, to publish a stat that gives Dallas county a higher number than Tarrant county.

[Tnekster]

Experts say influx of low-wage workers cuts adjusted pay 10%
http://www.dallasnews.com/sharedcont....4a36578c.html

12:13 AM CDT on Wednesday, August 30, 2006

By PAULA LAVIGNE / The Dallas Morning News

Layoffs, foreclosures, rising debt and other bad news about the economy would naturally put a damper on household earnings in North Texas.

But economic experts say the biggest reason for a six-year slump in median household income has been the migration of more low-income people into the region.

Figures released Tuesday from the U.S. Census Bureau show that from 1999 to 2005, the median household income in the Dallas-Fort Worth area fell 10 percent when adjusted for inflation.

The trend was the same in Texas and nationwide, but incomes fell harder in the Dallas-Fort Worth area.

For many areas across the U.S., Tuesday's mid-decade estimates provided the first local figures on median household income since the 2000 census. Economic information from the American Community Survey covered all areas with at least 65,000 people.

For the D-FW area, median household income in 2005 was $49,740. In 1999, it was $55,545, ($47,418 in unadjusted 1999 dollars).

The new information revealed the following trends locally:

•In Dallas County, the median household income fell 16 percent. Suburbs such as Garland, Irving, and Mesquite saw their incomes decline between 10 percent and 20 percent as well.

•Household income in Collin County dropped almost 15 percent. Collin County also lost its status as one of the 10 highest-income counties in the nation.

•Among the wealthy suburbs of Allen, Frisco, McKinney and Plano, declines in household income ranged from 6.2 percent (McKinney) to 22.4 percent (Plano).

Breakouts of various demographic groups in the D-FW area show that median household income fell steeper for Hispanics (19.6 percent to $33,493) and Asians (11.4 percent to $55,771) than the regional average. Incomes for blacks fell 9.5 percent to $34,388. White, non-Hispanic residents' median household incomes were down 4.2 percent to $61,151.

A drop in formerly high-income areas doesn't mean that individual incomes in the region are suffering, although many people have certainly experienced stagnant wages, said Pia Orrenius, a senior economist with the Federal Reserve Bank of Dallas.

More likely, she said, the decline stems from more low-income people moving into the area – both immigrants and others who moved from other regions and states.


Poverty rates up

Changes in poverty rates, also released Tuesday, reflect some of that shift. The percentage of people in the D-FW area living in poverty rose from 10.8 percent in 2000 to 13 percent in 2005.

"The type of people we're drawing into North Texas are less educated," Ms. Orrenius said. Job growth is strong, she said, but many expanding sectors are hiring for lower-skill positions.

Bernard Weinstein, director of the Center for Economic Development at the University of North Texas, had similar theories.

"The lion's share of population growth in this region is going to be among immigrants and low- to moderate-income minorities," he said.

If the region continues to provide workers who haven't graduated from high school or gone to college, then the workforce is going to respond with more low-wage jobs, he said.

"It certainly drives home the need to invest more heavily in education," he said.

Layoffs hit the area hard in 2001 and 2002, and they are partly to blame for the decline in household incomes. But Mr. Weinstein said it's unlikely that a flood of underpaid, overeducated workers – refugees from the high-tech bust – are dragging down the area's average incomes.

"People who are well educated and easily trained, they find better things to do," he said.

The decline in incomes might mean a change in status, a drop in the rankings or a kick to the ego of some areas, but it's not necessarily a bad thing for the economy, said Ms. Orrenius of the Federal Reserve.

"It's a bad thing if you follow the same person over time because he's becoming poorer," she said. She said that if growth and jobs are bringing lower-income people into a higher-income area, "that's a good thing. That's what you expect the economy to do."


Effect on economy

In several areas of the economy, the lower median income seems to be offset by the overall population growth, said Brad Shanklin, president of the Plano Chamber of Commerce. Spending hasn't slowed, city sales tax revenues are up, and area malls – including the high-end Shops at Willow Bend – are seeing more shoppers, he said.

Mr. Shanklin said he also sees the drop in incomes as the natural balancing of a high-growth area.

High-wage jobs from Electronic Data Systems and J.C. Penney helped the area grow quickly with high-income families, he said. The layoffs and economic slowdown tempered some of that, but so did the need to expand the service sector, he said.

"We didn't have the ancillary structure in Plano – the retail, the veterinarians, the dry cleaners, grocery stores and flower shops," he said.

The introduction of more low-wage earners poses a problem for urban and suburban areas trying to provide services such as health care, education and housing for people who can't afford them.

Of Collin County's social service providers, Mr. Shanklin said: "In a lot of areas, they're very ready. In some areas, they're not as ready as they should be. As the demand grows, and our diversity grows, and our demographics grow in Collin County, we'll see those stepping up."

In Dallas, service providers have already felt the crunch.

Jay Dunn, a manager at Stewpot, said that six years ago, the homeless ministry served about 300 free lunches per day. Now, the downtown Dallas kitchen dishes out about 550 meals during a typical lunch hour.

"The numbers are moving in the wrong direction," he said.

Central Dallas Ministries is a nonprofit group that tries to fill the gap between what working families bring home and what they need to survive. Executive director Larry James said that gap is widening.

From May to July of last year, about 8,000 families walked through the resource center's doors, he said. Over the same period this year, 13,000 sought help.

"It isn't that people aren't working or that they're not willing to work," he said. "It's that they're not earning enough."

The rising cost of housing, food, gasoline and utilities drains the pocketbooks of people who can afford it least, he said. When wages dive as expenses climb, more families are pushed into poverty.

"The economy is certainly a big factor in all this. ... It pushes everything down," Mr. Dunn said. "If somebody was making $50,000 a year, and now he's making $35,000 a year, what happens to the guy who was making $35,000 a year?"

Staff writer Scott Farwell contributed to this report.

E-mail plavigne@dallasnews.com

[Insidetheloop]

I think the numbers for the metroplex are skewed by the huge influx of illegal aliens and hurricane refugees.

As the article mentions in today's DMN, it's the native uneducated or low-educated working class that feels the pinch. I feel sorry for them.

[disruptivehair]

What about I.T. workers?

[mjblazin]

Do the numbers support this published conclusion? The key number is that the real 1999 number is $47.4K vs. 2005's real number of $49.7K. That means existing workers did not get pay raises equal to the inflation rate. What inflation rate was used? National/TX/DFW rates? Why the big drop in Asian's household income? Did we get a big influx of poor Asians?

Another explanation could be DFW's cost of living increases lagged much of the country (isn't our housing index showing 15% undervalued?) and incomes stayed in line with local needs. Maybe the real story is DFW is good for providing a job at a reasonable salary, but don't expect much of pay raise.

[Tnekster]

Does the US Census count illegals?

[grantboston]

I don't think so. Nor do I think they could calculate wages of people who are paid in cash under the table.

[Tnekster]

So in reality if they really counted all of that it would paint an even more dismal picture?

[Insidetheloop]

Does the US Census count illegals?

Si!

I know someone who was a census taker for the 2000 Census. They liked their job and were disappointed to see it end. About 3 months after the census was complete the numbers came up funny. Their numbers were vastly under reported for hispanic areas in Dallas County based on school enrollment, welfare records, hospital visits etc. So low were the numbers that they went back and did a house by house recount. The new numbers were 4 times higher than the old. Dallas County really pushed for a recount since each new resident equalled much more federal money for the county.

There were a couple DMN articles on the subject. I'll see if I can find 'em.

[Hannibal Lecter]

Related: I read today that DFW is now the fourth largest metropolitan area in the country, behind NYC, LA, and Chicago.

[disruptivehair]

My husband and I are both in I.T. and I'm very nervous about us being able to find work in DFW when we get there. He's in grid computing/biometric stuff and I've done QA for years but am currently working as a DB programmer.

This is the thing that's keeping me up at night; I'm worried sick that we'll get to Dallas and be unemployed for months and months.

[vman]

I was on the FW forum yesterday and posted a thread asking if any of the forum members noticed that in the past few weeks, between Radioshack and Lockeed, there were almost 1,000 layoffs annuounced in FW. I also mentioned my company is aware of another very possible large layoff at another well-known FW company that could take place in early 2007. Do you know not a single person had anything to say about that. I guess they only want to focus on good news like that whopping 16 story new office tower. But FW has a history of burying its head in the sand.

[Tnekster]

...

[Tnekster]

http://www.globest.com/news/785_785/.../150781-1.html
By Connie Gore
DALLAS-With the 2007 forecast season rolling out, leading economists are making it clear that the signs are in place for a much slower growth rate in Texas. It's not been labeled a recession, but Dallas and Houston economies are going to feel the pinch.
In Dallas, Dr. Ray Perryman was yesterday's keynote speaker for the 23rd consecutive time at the annual Greater Dallas Chamber breakfast. In Houston, Dr. Barton Smith unveiled his forecast at the University of Houston's bi-annual symposium. Based on recent studies, the general consensus is Central Texas, Austin specifically, most likely will be the state's shining star in 2007.

The culprit for the slowdown in Dallas and Houston is the slowing housing market, Perryman and Smith concur. Because it's Texas, energy factors into the economic previews for reasons other than rising costs. The two metros' economic growth rates might slow to an estimated 2% or 2.5% from the 3.5% to 4%, but neither city will grind to a halt.

"I don't see any forces in motion that are likely to lead to a recession," Perryman told the roomful of local business leaders and market watchers at the event, held in the Renaissance Hotel at 2222 Stemmons Freeway. With the US markets softening, Texas' investment into building diverse and sustainable economic engines "will pay some real dividends for us," he says. "Our momentum is well above the rest of the country. We have done a lot of things right. Even the down side of this cycle is going to be one of the best in four or five years."

From Smith's podium: "While the likelihood of a national recession is remote, the housing market correction is far from over." Data is too inconsistent to predict the severity of the correction or its shelf life, driving a division in economic circles over whether the storm clouds will end in a recession or softening much like 1995-96, he reports.

In Dallas, Perryman says suburban office and retail markets will underwrite gains in the commercial real estate sector. "Commercial looks pretty good," he tells GlobeSt.com. "We still will see some momentum on suburban office and suburban retail."

Perryman also doesn't expect any commercial slowdown due to the controversial margin tax. "We looked at it carefully," says the founder of the Waco, TX-based Perryman Group, who was part of the state's study panel. "It's more efficient than the system we have. There are winners and losers. I'm a loser because I'm in the service business." Capital-intensive companies, though, will fare alright in the transition from a franchise tax to a margin tax.

Perryman's research shows more than 37% of the state's jobs are in the service business. He estimates that roughly 935,000 jobs will be created in the next five years, of which more than half will be in services' industries.

"In Houston, the economic slowdown, though present, is much less obvious," the university's economics professor told yesterday's 1,100 registrants for the annual symposium, held in the Hilton Americas-Houston at 1600 Lamar St. "Two threats cloud next year's picture for Houston." First, the city most likely won't "receive as strong a stimulus from energy in 2007 as in 2005 and 2006," he explains.

Secondly, region's hot housing market is destined to cool. "We are simply building homes at a pace that is faster that can be absorbed, given the rate of growth of population in the region," says Smith, who's also director of the University of Houston's Institute for Regional Forecasting. "This doesn’t mean that new home construction will collapse in Houston as it has in some parts of the country, merely that the current pace can't be sustained. Thus, growth in construction employment is also likely to come to an end for a while as well."

In Dallas, there have been 38 corporate relocations to date this year, creating 33,000 jobs. The stepped-up focus on globalization has put Texas in third position by foreign-owned companies looking for a US location. California leads the pack, with 547,000 "in-sourced" jobs and New York's 377,000 is second, according to Perryman's stats. The Texas total is 341,200 jobs. Rounding out the Top Five is Florida and Illinois with 238,400 and 235,600 jobs, respectively.

But, the future isn't without challenge. Perryman says immigration and infrastructure issues are chief on the watch list. "We have 11 million people undocumented in the US. We do not have 11 million unemployed people," he says. "If we start to try to replace that workforce, we don't have a way to do it."

On the infrastructure issue, Perryman backs the Trans-Texas Corridor. His research shows the state is $86 billion short on highway infrastructure. "The Feds aren't going to give us any money for it," he says. Not only will the privately built toll road ease congestion, but history has shown that the rate of return for highway projects is 30% annually. Historically, all road projects result in a land grab, he says. But the end result, he adds, "is there is a lot of potential for economic payoff."

Smith's defined challenges lie in foreign energy, global social unrest and the national savings crisis. He says too few commentators and politicians talk about the savings problem. "The national savings rate is actually negative this year," he says. "As a nation, we are spending more than we earn."

Smith explains the lack of savings has "direct relevance" on the nation's trade deficit and upcoming Social Security drain by Baby Boomers. "There is a tendency to treat the Social Security 'crisis' as a pure accounting problem, but it ultimately stems from the fact that American haven't been saving enough for the winter of their lives," he says. "The burden on the rising generation will be alarmingly heavy in supporting the large retiree population of the future."