Sunday, December 28, 2008

Real Estate Report: Industry took its share of lumps in 2008

Don't be surprised if Santa puts coal in the real estate industry stocking this season.

Between the credit crunch and the economic slide, the property market has gotten a nasty surprise in 2008.

So what's one more lump after the hail of bad news that's already hit the business this year?

While the commercial side of the real estate market kept building under control, the slowdown in business growth and lending for construction has put a pinch on builders and buyers.

And forecasts of business consolidations in the months ahead could mean more tough sledding for landlords who may see building vacancies rise.

On the housing front, analysts are warning of another year ahead with depressed sales and reduced construction.

The good news is that Dallas-Fort Worth has so far avoided big home price cuts.

But how long can that last in the face of record residential foreclosures?

Some of the standouts this year:

Victory retail

The huge Victory project northwest of downtown Dallas has received international acclaim for its mixed-use redevelopment of an old rail and industrial site. But shoppers seem unimpressed. Developers of the high-rise complex have been unable to lure enough customers to support the retail and restaurant venues. Two anchor tenants – LFT department store and Nove Italiano restaurant – went under after struggling to attract business.


While the credit crunch has quashed most new commercial projects, apartment building continues to boom in North Texas. More than 20,000 rental units were in the pipeline this year – the most in the country.


Dallas' sometimes-maligned central business district got a boost this year when some of the country's biggest businesses decided to relocate offices downtown. AT&T Corp. moved its headquarters from San Antonio, and Tenet Healthcare Corp. is relocating its head office from Far North Dallas. Insurance giant American International Group Inc. and financial firm Capital One also are shifting workers from the 'burbs to the CBD.

Job market

With all the dire news about the nation's economy, the Dallas-Fort Worth job market has been a bright spot. Close to 50,000 jobs were added in North Texas during the last year – if you can believe the numbers. Employment economists have a spotty track record in times like these.

Las Colinas

One of Texas' biggest real estate successes – the huge Las Colinas development northwest of Dallas – celebrated its 35th anniversary in 2008. When the project was started on the Carpenter family's river bottom ranch, naysayers predicted it would flop. But construction of nearby Dallas/Fort Worth International Airport helped make Las Colinas one of the top business addresses in the country.

17Seventeen McKinney

A whole flock of construction cranes has landed in Dallas' Uptown district. The $200 million 17Seventeen McKinney project includes two high-rises with offices and apartments being developed by Granite Properties and Gables Residential. The development – between Dallas' Arts District and Victory project – won't open until 2010.

Galleria towers

Fewer buildings changed hands in Big D this year because of the lack of credit to finance big buys. The largest sale in North Texas was the three-building Galleria office complex in Far North Dallas. Estimated at more than $300 million in value, the landmark office buildings were snapped up by a California investor.

Calatrava Bridge

Back in the 19th century, it took less than two and a half years to build New York's iconic Brooklyn Bridge. But it's been three years since the groundbreaking for Dallas' first landmark Calatrava Bridge across the Trinity River. And it's likely to be sometime in 2011 before it's finished. In the meantime, investors and redevelopers who wagered that the project will spur a revival on both sides of the river are in limbo.

Staubach Co.

The sale of Dallas' Staubach Co. to Chicago-based Jones Lang LaSalle for more than $725 million was one of the country's biggest real estate industry deals of 2008. While the merger of the two firms was a plus for shareholders and customers, the Staubach sale signals the passing of one of the greatest corporate names in the Dallas property business.

The housing market

Finding the bottom to the home market meltdown has proved as difficult as guessing which direction the stock market will take. Prices in the Dallas-Fort Worth area have not fallen far, but the flood of foreclosed homes on the market – more than 20,000 this year – and declining sales volumes could mean more trouble for the residential sector. Analysts don't expect a rebound until late next year.

Old Parkland

Dallas doesn't usually get high marks for historic preservation. What would you expect in a town where the motto has long been "keep the dirt flying"? Fortunately, the bulldozers were kept away from one local treasure – the historic Parkland Hospital complex on Maple Avenue. Investor Crow Holdings converted the 95-year-old former medical campus into a stunning office complex. Mr. Steve Brown - Dallas Morning News.