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There's a lot of commercial real estate out there

By Maxine Shapiro, KERA 90.1 commentator

Dallas, TX – It is no surprise to anyone that commercial real estate is at a premium in the Metroplex. Builders must have anticipated that North Texas would grow faster then the speed of light. They were badly mistaken. I'm Maxine Shapiro with KERA Marketplace Middays.

The truth is, none of us could have foreseen the end of the dot-coms in 2000 or the current plummet of the telecom industry. Builders, prior to 2000, were aggressively developing shinier, more modern buildings and complexes in hopes of "build it and they will come." The average vacancy rate in the Metroplex for the first quarter of 2000 was 15%. Landlords like it below 10%. Compare that to today's vacancy rate for Dallas alone, almost 27%. Lewisville is the highest, at almost 44%.

So now landlords are desperate to fill the empty office spaces. Get this: according to the June 14th Dallas Business Journal, landlords are paying real estate brokers just to "tour their space." Bonus commissions are 2% higher than the industry standard. One distressed company is offering bonuses that triple the standard at 15% commission.

That's nothing. The Frisco Economic Development Corporation is offering four-night, five-day trips to a four-star hotel in the Bahamas - or a luxury resort in Pebble Beach, California - to tenant reps whose clients lease 50,000 square feet or bring 150 jobs to the city. All-inclusive. And this week, the Dallas Business Journal reports this practice by Frisco's EDC is being challenged by other local cities and now some other local landlords. See, Frisco, by law, may take a half-cent sales tax and use it for economic development. They have 4A status. Now, if your city is a member of DART, you lose 4A status, therefore you can't charge that extra sales tax for economic development which pays for these lavish bonuses. Hey, it's the law. It's not supposed to make sense.

It can sometime get ugly when competition is fierce. Keep it transparent and may the best building win. For KERA Marketplace Middays, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 P.M.