Developers and investors are looking for opportunities to get the most flexible bang for their buck, either in real estate zoning and use or in location aligned with a variety of amenities and attractions. They are steering clear of developments that focus on just one class or type in order to reduce volatility long-term.
The Dallas/Fort Worth area is part of this flexible multi-use communities trend. The Central Business District population is predicted to grow to 59,337 by 2030. Young people and some Baby Boomers are choosing city cores in Dallas, Atlanta, Charlotte, Nashville and Portland, according to a 2016 report co-published by the Urban Land Institute and PwC US. Young people are waiting longer to get married and have families. Boomers want an active cultural and social life. Both lend themselves to vibrant, downtown or uptown neighborhoods with smaller, maintenance-free residences. They want to be close to work, dining, recreation and shopping with the option to walk, bike or use public transit. Housing types tailored to demographics are becoming a necessity to match these evolving lifestyle and environmental demands.
NAIOP, the national commercial real estate association, considers what they call walkable mixed use or flexible multi-use communities as “the future of commercial real estate development.” In a spring 2015 article, NAIOP defined “walkability” as a relationship between people and the streetscape. It must be inviting, comfortable, fun and safe, which means that the buildings aren’t the main focal point, but are instead designed to shape the pedestrian experience.
NAIOP predicts this type of mixed use will be in high demand with “appreciation in land values and rents.” You may see this playing out in West Dallas at Trinity Groves, where 1,000 new apartments are in development in the midst of a foodie’s haven of restaurants along the Trinity River.
Large corporate clients are re-imagining the amenities and design of large-scale campuses, too, moving away from traditionally closed and secure fortresses to a still-secure design that makes the campus look like part of a community. CityLine’s deal with State Farm makes it an anchor tenant for 186 acres of development in Richardson that includes retail, grocery, a movie theater, restaurants and upscale apartments.
In Frisco, plans for a new headquarters and training facility for the Dallas Cowboys has prompted investment interest from around the world. Estimates are more than $5 billion in development along a one-mile stretch between Warren Parkway and Lebanon Road. The area will be a community in itself with entertainment, retail, restaurants, hotels, industrial and office complexes and residential options.
And finally, the industrial market has grown legs, thanks in no small part to e-commerce and retail distribution trends. Foreign investors are very keen on retail-affiliated industrial real estate for distribution of perishable and non-perishable goods. All you have to do is look at consumer options for two-day or same-day delivery through e-commerce sites to realize the potential for distribution center development. NAIOP even cites expansion of the Panama Canal in 2016 as a key indicator of service delivery shaping real estate development.
Fort Worth is home to an Amazon distribution center with another center opening in Dallas, the fourth in the state. The 500,000-square-foot Dallas distribution center will handle small retail items and is slated to open in 2016 along Interstates 45 and 20.
Interiors Must Be Flexible, Too
Focusing on how people work rather than title or tenure at a company is also influencing the layout of interior spaces for collaboration, private focus time and “touching down.” Remote office workers who only visit the office occasionally, for example, as well as the speedy expansion/contraction of labor pools dictate this move toward flexible space.
The traditional big box office space lined with private offices and filled in the center with cubicle workspaces is losing its attraction in favor of open concept and loft interiors that combine work and “play” areas. Employers recognize the need for collaboration as well as focus time throughout the day among different work groups that a traditional office setting no longer accommodates.
Quality pre-builds that anticipate the desires of tech-minded, collaborative tenants are still a valuable investment. This is especially true if they are willing to bank on high-end finishes that attract tenants who prefer move-in-ready, modern spaces.
In residential spaces, city dwellers are opting for less square footage in favor of more amenities, ranging from pool houses and workout facilities to on-site bike repair and community rooms.
The sharing economy is influencing an interest in communal spaces that encourage face-to-face interaction as well as fewer individual parking spaces and more secure bike storage and proximity to transit.
These trends pose a challenge for remote real estate management arrangements. Management companies anticipate not only a move toward on-site management in some cases, but also new methods of staff training and oversight for building exterior and amenity maintenance.
Want more real estate trends? Download the full Whitepaper or read this post: Techy Options Go Beyond ‘Nice to Have’ to ‘Must Have’
If you would like to learn more about how this topic might affect your business, please contact Gary Jackson, CPA atGary.Jackson@cornwelljackson.com or call 
972.202.8000.
