Market Report: Dallas Stands Proud

Aug. 29, 2008
With strong commercial construction and a solid multi-family market, the Dallas-Fort Worth metropolitan area is more than holding its own in a tough economic climate.

Editor’s Note: The complete version of this article will appear in the September issue of Electrical Wholesaling.

With strong commercial construction and a solid multi-family market, the Dallas-Fort Worth metropolitan area is more than holding its own in a tough economic climate. Some industry folks in Dallas say strong population growth is fueling commercial construction.

“I think Dallas has continued to grow because we have a big influx of people,” says Dan McLaughlin, Dallas service leader, Summit Electric Supply, Albuquerque. “Depending on who you talk to, we’re the fourth largest metro, or we are going to be the fourth largest metro area in the United States by 2010. There are a lot of people moving here. We’re still adding jobs.”

Dallas-Fort Worth is the fastest-growing U.S. metro area and the fourth-largest, with more than 6 million residents. The area added more people in 2006-07 than any other metropolitan area in the country, according to U.S. Census Bureau statistics. The figures show that the Dallas-Fort Worth metro area increased by an estimated 162,250 in population to top 6.1 million residents. Today, the city’s central location, growing workforce, low business costs and major airport make it a top market for company relocations.

“There are a lot of people getting ready to move into this area because the energy is still somewhat cheaper than other areas,” says McLaughlin. “The cost of living is about 25 percent lower than most places in the country. So it’s very attractive for folks to move in. You can buy a lot more house here and a lot more building and facility. Plus we still have a pretty good skilled work force.”

Texas has been attracting big companies from out of state for nearly three decades, including American Airlines in 1979, and Exxon (before it bought Mobil) and J.C. Penney in the following decade.

Dallas is home to several Fortune 500 companies including Centex, Texas Instruments, Dean Foods, Southwest Airlines, Tenet Healthcare, Celanese, Affiliated Computer Systems, Blockbuster and Holly. More companies are moving to downtown Dallas than a few years ago because of available office space and revitalization efforts.

“The downton is booming right now with high-rise condominiums, apartments, hotel projects and large corporate leases,” says Craig Levering, president of Crawford Electric Supply Co. Ltd., which was recently acquired by Sonepar USA.

Adds Bob Easterlin, a principal of Electra Sales, a manufacturers’ rep in Irving, Texas, “I see six or seven cranes in downtown Dallas and three or four in Fort Worth. That’s usually a pretty good barometer.”

One of the largest projects in the Dallas/Fort Worth area is the Dallas Cowboys football stadium in Arlington, Texas. Begun almost two years ago, the $1.1 billion stadium is about 55 percent complete. The Cowboys plan to move from Texas Stadium in Irving to their new stomping grounds for the 2009-10 season and will host the Super Bowl there in 2011.

Other big projects are the Trinity River project, and the American Airlines Center, home to the NBA’s Mavericks, NHL’s Stars and Arena Football’s Desperados; a W Hotel; condos; apartments; retail stores; office space and restaurant/entertainment venues.

Like the rest of the country, the single-family housing market in Dallas has softened. Total home sales for the Dallas-Fort Worth-Arlington area are down 10 percent for June over the same period a year ago. “The single-family housing market has definitely slowed from the frantic pace of the last few years,” says CESCO’s Levering. “Texas seems to be a bit insulated from the rest of the country in drastic real estate swings and valuations. We have all been through these economic cycles before.”

But while single-family housing has softened, the multi-family housing market is very strong. Multi-family building permits for the Dallas-Fort Worth-Arlington area were up 40 percent for June 2008 over the same period a year before, according to the National Association of Home Builders.

“Even when the housing is down, there’s a tremendous amount of multi-family going on. They’re still building townhomes and condos. There’s still a tremendous amount of building of those facilities in this market,” says McLaughlin.

Herm Isenstein, president, DISC Corp., Orange, Conn., forecasts that electrical distributors in the Dallas/Fort Worth metropolitan area will sell approximately $1.9 billion in electrical products in 2008. Total sales for the metro area are expected to be up about 7 percent from last year. DISC Corp. expects the Dallas/Fort Worth metro area to see a flat year in 2009.

The rest of the year looks bright, says Summit Electric Supply’s McLaughlin. “There’s kind of a saying I have here — a bad business in Dallas-Fort Worth is better than a good business somewhere else.”