Market Feasibility Analysis

DFW Population Information:

• During the 12-month period from July 2008 to July 2009, the Dallas–Fort Worth–Arlington metropolitan area gained 146,530 new residents, more than any other metropolitan area in the United States.

• Texas “had eight of the 15 fastest-growing large cities and six of the 15 cities with the largest numeric increases between April 1, 2010, and July 1, 2011, according to census figures released” in June 2012.  Dallas recorded the 6th-largest numeric increase and Fort Worth ranked 12th.  Read more here: http://www.star-telegram.com/2012/06/28/4067408/population-in-fort-worth-rest.html#storylink=cpy

• From the North Central Texas Council of Governments – North Texas Regional Population Total: growth of 56,160 from January 1 - Decembr 31, 2011.
  

   
• DFW had an estimated population of 6,603,870 on Jan. 15, 2012, according to a computer analysis by On Numbers, showing the metro area as 4th most-populated in the nation.(On Numbers is a feature of American City Business Journals, the parent company of the Dallas Business Journal.)

• According to the Dallas Regional Chamber, "The Dallas-Fort Worth region is expected to grow to a population of 10.5 million people and employ more than 6.6 million by the year 2040.  Growth is likely to occur in almost all parts of the region."

DFW Employment Information:

According to Principal Real Estate Investors' 2012 Dallas-Fort Worth Metro Outlook, the Employment % Change for DFW has fared better than the nation.  The study stated, "Over the past 5 years, Dallas/Ft. Worth added 65,400 jobs.  This ranks 4th out of 86 markets.  The metro is projected to add 462,437 total jobs over the five-year forecast period.  Job growth at this level ranks 2nd among the markets covered by PrinREI." 

According to the U.S. Bureau of Labor Statistics (above), the three industry supersectors that have grown the most over the past year are leisure & hospitality, professional & business services, and education & health services.

The below employment trends data is from PrinREI.  Their study suggests that the Office Using sector is projected to create the largest number of jobs over their five year forcast period.  As well, it is interesting to note the chart of Top Ten Employers.  Four out of the ten are in the healthcare industry.

Below is a breakdown of the top North Texas employers, public versus private, from the Real Estate Center's 2012 Texas Metro Market Overview.
 

 

 

Real Estate Trends:

Considering office using employment sectors are projected by PrinREI to add the most jobs over the next five years, I decided to take a closer look at trends in office properties.

 

 

According to LoopNet (below), the sale trends and lease trends indicate a fairly recent decline in average time on market and supply available.  This would lend to an increase in prices/rents, especially when looking at the steady rise in demand for office property for sale and for rent over the last two years.   

 



 

Office Property Absorption:

• According to the report on the local office market by PM Realty Group, demand for office space continued to grow across the region over the second quarter of this year (2012). More than 587,000 square feet of positive direct net office space was absorbed over the three-month period ending in June, bringing the area’s total net absorption to more than 1 million square feet this year.  Six months into 2012, that’s 360,000 square feet more net absorption than in all of 2011, according to the report.
• Below is from Marcus & Millichap’s National Office Property Index (2012), published in D Magazine.  Construction on new office space slowed last year and is expected to rise in 2012, as absorption is expected to double in 2012.  Vacancy has been on the decline.  Here, it is shown that vacancy is currently around 22%; however, CoStar Research suggests DFW office vacancy has decreased to 16.1% in second quarter 2012.  Either way, trends show that vacancy is on the decline.

 

 

 

 

DFW Healthcare Information:

• From Marcus & Millichap’s National Office Property Index (2012): “Fort Worth is seeing strong activity and will lead the market in occupancy rates; the growth of the local healthcare sector is helping to drive activity. USHealth Group, AHC Management Co., and HCA Patient Account Services are among those taking down space.”

 

 

Conclusion:

Due to the current and projected rise in population, employment growth in the healthcare industry, expected growth in office using employment sectors, the steadily rising demand of office space, decline in office space available to buy/rent, and the rising recognition and positive reputation of the health-related organizations in the Dallas/Fort Worth area, I come to the conclusion that medical office should be pursued for investment in DFW.