"This has been the tale of two markets this year," says JeffEllerman, vice chairman with CB Richard Ellis' Dallas office. "Wehad a great market for the first half, which was fairly resilientand with a good activity and deal flow, even as the rest of thecountry was suffering a downturn."Then came September and thestring of bank failures. "Things ground to a halt," Ellerman says."What we've seen here is a real significant decrease in thevelocity of transactions."

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"We're not frozen in Dallas, not yet," comments Mark Noble,managing director with Colliers International Dallas-Fort Worth."But we're currently skidding and no one's certain what conditionwe're going to be in during the coming year."

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Jones Lang LaSalle Inc. managing director John Alvarado agreeswith his colleagues' assessment, saying the local market iscontaminated by the country's economic downturn. Though the NorthTexas economy is diversified and not severely overbuilt, "everybodyis anticipating seeing a little slowdown in the coming quarters,"says Alvarado, who works from the company's Dallas office.

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Still, not everything is on a negative path. Associate partnerTom Warren with Hendricks & Partners' Dallas office says thearea managed to escape the over-inflated housing bubble thatplagued other parts of the nation. "We didn't have thehyper-inflation in housing prices," he comments. "We also didn'thave that situation in which all of our apartments were convertedto condominiums." Nor is the Metroplex suffering from the so-calledshadow housing market that is impacting Arizona, Florida and LasVegas, he adds.

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But what protected North Texas during the past year 2008 was acombination of high oil prices and positive job growth. And it'sjob growth, says CBRE first vice president Jake Marks, thatcontinues driving the area economy. As a result, deal flow hasremained stronger than during the early 2000s downturn. "Therereally wasn't anything there during the last downturn," Marks adds."But we're still tracking in this market."

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The job growth has also meant rental growth, which is good newsfor apartment owners. However Ryan Reid, CBRE senior vice presidentof multihousing sales warns there are a lot more units in thepipeline, and something to be watched. "If that job growth slows,"he says. "It could have a negative impact."

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Warren agrees, adding that with 19,000 units under construction,an inventory glut could be an issue. "Our crystal ball says we'llstill gain between 50,000 and 60,000 jobs in 2009," he comments."But nobody knows how broad or deep this recession will be. If oilprices stay down long enough, it will start tempering the number ofjobs created here."

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Out of all the sectors, retail, perhaps unsurprisingly, is themost negatively impacted and will continue to be so in 2009. CBREresearch manager Steve Triolet says a lot of retail space wasdelivered in 2008. That, combined with retailers likely to declarebankruptcy in early 2009 will mean negative absorption. Theretailers that are hanging on through the Christmas holidays noware likely to be gone in February and March of 2009, he adds.

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"The malls will be particularly vulnerable," he explains."Valley View (in Dallas) lost both Macy's and Dillards as anchors.When you lose big anchors like that, it's hard to replace them,especially in these times."

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Other than retail, the remaining sectors should pick up later inthe year. CBRE senior vice president Josh McArtor believes thelevel of shock is moving out of the market. As people understandthe reality of the new pricing realm, he points out, things shouldmove forward. "We're likely to see an uptick in volume in salesactivity during the second half of 2009, once the smoke clears andeveryone understand the new rules of the game," he comments.

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But Hendricks & Partners' senior investment adviser Jay Gunnisn't quite ready to release a positive outlook, because he doesn'tbelieve the market has hit bottom. "It's difficult to pricethings," he confesses. "The perception out there is we haven'tgotten to the bottom yet. Until we do, it will remain difficult forvaluation."

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JLL's Alvarado agrees, suggesting that bottoming out will happenwhen distressed sales start coming to the market. We're gettingcloser to that point, he notes, but it hasn't materialized justyet. When it does, some significant transactions could happen inthe latter part of 2009, with recovering happening in 2010 andbeginning in 2011.

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Meanwhile Ellerman, a self-proclaimed optimist, says he hopesthe new presidential administration and efforts by the FederalReserve and US Treasury to stimulate the new market will help. Ifthat's the case, he adds, the second half of 2009 should see thearea turning the corner.

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"It won't mean a lot of transactional activity will neatlyfollow. That's wishful thinking," Ellerman comments. "Buthopefully, by this time next year, we'll be looking back and saying'wow, I'm glad we're past all of that.'"

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Until that time, brokerage services will have to rely on otherservices to get them through. Noble of Colliers points out thatauxiliary activities such as appraisals and consulting will becalled upon in 2009 to help investors and renters work through theissues. Still, Dallas and Fort Worth are likely to be less impactedthan other regions."It's a mixed bag of feelings," he acknowledges."There is going to be a tremendous amount of economic pain in otherstates. I think locally we're in for a difficult time. But I'drather be in Dallas than elsewhere."

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