Tarrant County Poised to Skirt Hard Times

Fort Worth ranks sixth in the Texas line-up of cities with the hardiest job growth. The Top 5 are border towns, which most likely are in for a slowdown, said Dr. Mark Dotzour, chief economist for Texas A&M University. Equally reassuring news that Tarrant County is holding its own came from experts in retail, office and industrial sectors. Most in the room weathered economic downturns that will surely prove to have been worse than the current conditions, said those in the know.

Recession means negative output for two consecutive quarters. "Fort Worth will dodge that bullet," Dotzour assured the 250 brokers at the annual meeting in the city's botanic garden auditorium. "Fort Worth could be the Texas anomaly." Since the average post-World War II recession lasts 11 months, improvement lies on the horizon if the National Bureau of Economic Research is correct in saying that the "R" word actually started in March 2001.

Tarrant County added 14,000 jobs from November 2000 to November 2001. The bemoaning actually comes from those who are used to seeing 50,000 plus new jobs each year. "Relative to the rest of the country, it's healthy but not in comparison to the past," Dotzour said.

Pier 1 and RadioShack headquarters projects, the new Bank One Building and sundry other Tarrant County projects of all product types will provide the life jacket that's needed to ride out the year on a positive note. And certainly a co-branding initiative that will soon be unveiled by the Dallas and Fort Worth chambers can't hurt as the sister cities team to court leading employers to put their footprints in the metroplex.

Retail specialist Nick Ibarra, principal with NAI/Stoneleigh Huff Brous McDowell of Fort Worth, reported 936,000 sf of retail space was absorbed by the 2001 close. New product brought 1.25 million sf in a market where occupancy dipped slightly as the year came to a close. Tarrant County retail occupancy is now 88% and the average rent is $14.75 per sf. A 3% rent increase most likely will result this year.

Pockets of heavy retail activity such as Mansfield will keep the region bustling despite some retailers' plans to hold off on development in other corners of the county. Grocery-anchored centers will stay in the driver's seat.

The office market will test the stamina of the region's brokers, said Jack Huff, principal of NAI/Stoneleigh Huff Brous McDowell. Much of the 2002 activity will be in sublease arena, he predicted. Overall, 2001 wasn't too bad: absorbing 529,102 sf of office space. The defeat came in the last half of the year when Tarrant County posted a negative 132,285 sf.

Still, said Huff, overall occupancy and rent are at all-time highs: 93.95% and $19.36 per sf. Where there are pockets of hotspots, there are pockets of soft spots–that's the way the books balance out in Tarrant County and elsewhere.

Industrial specialist Jerry Alexander, also a principal at NAI/Stoneleigh Huff Brous McDowell, believes the slowdown is "a good purge for the system." Only the South Fort Worth submarket showed negative absorption in 2001. The positive year-end figures for the rest of the county doesn't mean that all is rosy. He predicts industrial vacancy overall will fall in the 10% to 12% range for the first half of this year. Construction costs will drop and so will spec building. "You don't have to be a rocket scientist to know you just can't build it if you can't fill it," he asserted.

There are some strong deals pending and the variable for the industrial sector is Lockheed Corp. and its Joint Strike Fighter contract that's headed this way. Still, industrial brokers will be dealing with sublease space, a rarity for the sector. "If you don't know how to do it, you better figure it out," Alexander advised. "The market has been too good for too long." And now, he says, it's time to do business like the good old days: cold calls and old-fashion friendliness to win over tenants, building owners and lenders.