Fort Worth, Texas, is already America’s fastest-growing major city. Now, it is becoming a new commercial real estate boomtown.
Texas developer John Goff is planning to open this year a $275 million mixed-use development known as Crescent Fort Worth. The project includes 168,000 square feet of office space, 175 upscale rental apartments and a 200-room luxury hotel.
Texas A&M University System, meanwhile, broke ground this month on the first of three buildings in a planned urban research campus in southeast Fort Worth. The school also announced a tentative deal with aerospace company Lockheed Martin, which has a large presence in the region, to jointly operate training and research facilities on the new campus.
Overall, $2.3 billion of projects are under construction or in the pipeline for Fort Worth, including 5,000 new apartments, said Todd Burnette, a managing director at commercial real-estate-services firm JLL.
“We’re in the early stages of what’s happened in Austin,” he said.
The new projects are testimony to how rapidly Fort Worth is expanding—even by Texas’s standards—boosted by the migration from the West and East coasts and fueled by Texas’s lower cost of living, business-friendly governments and tax incentives.
Fort Worth is the fastest-growing of the 30 most populous U.S. cities, with its population rising 4.1% since 2020 to nearly one million, according to Downtown Fort Worth Inc., a business organization. The city is drawing many of the same sort of out-of-state people and businesses heading to Dallas, which is less than 40 miles to the east.
“It’s not uncommon that when we’re competing, we’re competing with other Texas cities, not other states,” said Fort Worth Mayor Mattie Parker.
The Crescent Fort Worth development includes office space, rental apartments and a luxury hotel.
Most downtowns, including some in Texas, space because are sluggish and remote work continues to be popular. The vacancy rate in downtown Dallas is about 30%, according to JLL.
But downtown Fort Worth’s office-vacancy rate has remained at roughly 13% during most of the pandemic, JLL said. That puts Fort Worth developers in the unusual position of being able to build office space to meet the needs of businesses trying to lure workers back to offices.
Videogame company ProbablyMonsters is among the city’s new tenants, agreeing to open a second office there after the Fort Worth City Council granted the firm based in Bellevue, Wash., a $1.5 million incentive package. Charles Schwab said in 2019 that its headquarters would move from San Francisco to the Dallas-Fort Worth region.
Texas A&M is discussing public-private partnerships with local businesses in engineering, medicine and other fields to develop programs for its Fort Worth campus, which is expected to be completed by 2027. Elbit Systems of America, a defense and aviation company, and Alcon are also exploring deals with the university, according to people working on the new campus.
Most of the office space in Crescent Fort Worth has been leased at top-of-the-market rents, Goff says. Tenants include Goff’s businesses in real estate, energy, finance and hospitality as well as Satori Capital, an investment manager and Pegasus Resources, an oil and gas business.
Crescent Fort Worth is part of a surge in projects boosted by migration to Texas from the East and West coasts.
Goff learned the office-building business as the top lieutenant to Richard Rainwater. The two built an office and lodging empire named Crescent Real Estate Equities during the downturn of the late 1980s and early 1990s, selling it to Morgan Stanley for $6.5 billion just before the global financial crisis. Goff repurchased the property in 2009 for a fraction of the cost.
Other developers are also moving forward with commercial real estate plans in Fort Worth. Earlier this year, Dallas-based Dart Interests paid $18 million for the Fort Worth Central Library, a 2.5-acre property where Dart is planning a mixed-use development.
Fort Worth and the rest of Texas still face challenges to their recent breakneck growth. Goff and other developers with projects under way obtained financing before interest rates surged, but others with developments on the drawing board might be delayed by today’s high rates.
Earlier this month, the operator of the state’s power grid asked residents to voluntarily cut back on electricity, anticipating record demand during a heat wave. The temperature during the Texas A&M groundbreaking ceremony last week was over 100 degrees.
“You don’t even know what heat is until you come to Texas today,” said John Sharp, chancellor of Texas A&M.
But people have been migrating to Sunbelt cities with lower housing costs.
“You can buy quite a spread [in Fort Worth] for what you’re selling your 2,000-square-foot house for in another locale and getting a pool and two-car garage on half an acre,” JLL’s Burnette said.