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A national survey from Black's Guide, which compiles data for commercial real estate brokers, owners, developers, property managers and tenants, reveals trends about the Texas commercial real estate market:

  • Most popular amenity. Food service is the most popular building amenity requested by Texas tenants today, with WiFi coming in second.
  • Challenges to leasing. Houston and Dallas respondents cite "excess inventory" as their greatest challenge in leasing space today. "Creating product differentiation" is the second-greatest challenge.
  • Industry leasing most space. "Banking/finance" leads as the industry leasing the most commercial space in Houston and Dallas. The medical industry and oil/energy industries also have a strong presence in leasing commercial space in Texas .
  • Industry outlook. Respondents in both Houston and Dallas say they feel confident that business will be as good or better in the next six months as in the prior six months (93 percent for Houston , 89 percent for Dallas ).
  • Space requirements. The majority of Houston respondents (71 percent) and Dallas respondents (75 percent) cite 1,000 to 10,000 square feet as the average space requirement over the past six months.
  • Deal value. Nearly one-third (33 percent) of Houston respondents had average leasing deals in 2005 worth between $100,000 and $500,000; 15 percent, between $500,001 and $1 million; and 10 percent, between $1 million and $2 million. In Dallas , 49 percent put their average deal between $100,000 and $500,000; 17 percent, between $500,001 and $1 million; 2.9 percent, between $1 million and $2 million; and 5.8 percent, between $2 million and $3 million.
  • Deal length. Three- to five-year leases dominate the market in Houston (69 percent) and Dallas (62 percent).
  • Greatest challenge to new development. Open-ended responses include:

"City of Houston permitting department" -- Houston property manager.

"An excess of current construction in far north Dallas and a looming presence of construction in Uptown. Feels like the '80s all over again!" -- Dallas broker

"Erratic Dallas marketplace. Equity Office is pulling out of Dallas/Fort Worth for this reason." -- Dallas broker

Feeling confident

Nationwide, 89 percent of commercial real estate professionals participating in the survey say they feel confident that business will be as good or better in the next six months as in the prior six months. This confidence follows a half-decade slump in the commercial real estate industry.

"The results of our first CRE Trends Survey demonstrate that the commercial real estate industry is experiencing signs of consistent growth after a sluggish five years," says Ed Barnes, vice president and general manager of Black's Guide. "Commercial real estate professionals are back into problem-solving mode ... looking for the kind of creative solutions and high-quality information that gets deals done."

The survey found that certain markets had a decidedly more optimistic industry outlook than others. Orlando , Fla. , is the most optimistic city of those surveyed: 51 percent of Orlando 's respondents anticipated their average current space requirement to increase in the coming six months

Denver had the second most positive outlook with 50 percent anticipating an increase. In third place was Tampa , Fla. , with 45 percent of respondents predicting an increase. The two Florida cities both also cited an increase in average space requirements over the past six months.

Amenities and challenges

Rather than focusing on where tenants will come from, industry professionals are focusing on the increased demands of new tenants such as WiFi and food services and the challenges of accelerating development such as traffic issues and delays in construction permits, the survey shows.

WiFi was cited as the most popular amenity being requested by tenants today. Coming in at No. 2 was food services. Health clubs came in third. Some interesting amenities being asked for are:

  • "24/7 air conditioning for computers" ( South Florida ).
  • "Sustainable/green practices within the facility" ( New Jersey ).
  • "High-end restaurants" ( Dallas ).

Lack of parking topped the list nationwide as the biggest challenge to leasing commercial space today, but naturally certain markets differed on this question, pointing to the unique challenges that influence or afflict individual markets.

Nearly 1,000 commercial real estate professionals nationwide participated in the survey. This respondent pool was drawn from the Black's Guide online registered-user database which consists of over 18,000 commercial real estate professionals -- largely brokers, property managers and developers -- in 19 markets the company serves around the country.

Tel: 713-896-0888 Fax: 281-564-8499 2005 PR Associates Commercial

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