It's Becoming a Landlord's Market
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DALLAS-Nora Hogan is the chair of the SIOR Tenant Representation Specialty Practice Board and is a principal at Transwestern, specializing in office tenant representation in the local market here. She recently spoke with GlobeSt.com about what to expect from this week's convention and how the dynamic between tenants and landlords is changing in hot markets such as Dallas.
GlobeSt.com: What are you expecting from the conference this year as far as what people will be talking about as opposed to last year?
Nora Hogan: There is a total shift in the market. We saw this coming. For the last year or so we have tried to get people prepared to take advantage of where the market was headed. The market we saw, at least two years ago, was headed toward this recovery. We didnít know how long it would take to get there, so we wanted everyone to get their ducks in a row. Right now people should be capitalizing on what is happening in the market. A lot of the tenants are expanding. History says that every time after an election, and it doesnít matter who wins or loses, tenants go into an expansion mode and start doing things. In our business, itís really important that clients just do something, whether itís upsize or downsize. The hard thing is going to be tempering client expectations. Weíre ahead of where theyíre at. Theyíre thinking they can still get the types of transactions they saw previously. That train has left the station. We need to find out how to get clients what they want at the rates they want to pay.
GlobeSt.com: So the dynamic between the landlord and tenant has changed a lot in the last 12 months?
Hogan: Depending on which market youíre in Ė but I have to talk about the market Iím in because thatís the one I know the best Ė it has definitely shifted to become a landlordís market. Youíre seeing small concession packages, increased rental rates and the tenants, if theyíre looking at their budget, all of a sudden wanted to expand, but because they canít get the rental rates that they had previously, they may not be able to expand because they canít afford to take on the additional rental-rate coverage.
GlobeSt.com: Everyone talks about Dallas and most of Texas being really hot right now. Do you see any reason why that would slow down?
Hogan: Right now, even if we had a major catastrophe, like another 9/11, the problem is that we are so out of product that even that type of a catastrophe would not slow us down here in Texas.
GlobeSt.com: Do you see more development on the horizon, or is it not quite there yet?
Hogan: We have looked at that, and there are 34 buildings coming up in the Dallas market, but a lot of the buildings are really tiny, at less than 20,000 square feet. We have basically three building that are being announced that are multi-tenant buildings, and the rest are build-to-suit for people. Unlike other markets, Dallas has always loved new. For us a building thatís 20 years old, a building is outdated and functionally obsolete. They want to have their own building and own brand and everything that comes with it. The large tenants want their own footprint and brand.
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