JLL Managing Director Todd Burnette on where Fort Worth's office market is heading
See full Dallas Business Journal article by Spencer Brewer here.
A lot has changed in Fort Worth real estate since Todd Burnette came to town.
“I started here in February of 1986,” he said. “The market had been crazy, and right then it just died… In 1986, my first year, the top broker in the CB office in Fort Worth made $35,000.”
Today, Burnette is the managing director of JLL’s Fort Worth office, which he started. He’s represented some of Fort Worth’s biggest names over the years, including Lockheed Martin, Bell, BNSF Railway and the city of Fort Worth.
Burnette was part of the team that negotiated the sale of the former Pier 1 Imports headquarters to the city of Fort Worth, on behalf of Southern California-based Hertz Investment Group, which had owned it since 2018.
Over the years, he’s gained some insight into where the market’s been, and where it might be going.
Burnette spent 16 years at Coldwell Banker, now CBRE, before moving to Trammell Crow Company. From there, he was hired to open an office for The Staubach Co. in 2002. In 2008, The Staubach Co. and JLL announced a merger.
“It’s just amazing, the amount of wealth and opportunities that have been created in Dallas-Fort Worth for young folks that are coming out of school that want to work hard in the real estate business,” he said. “There’s nothing else like it.”
Burnette spoke with the Dallas Business Journal about some of the insight he’s gathered over his career in Fort Worth commercial real estate.
Overall, how has the Fort Worth real estate community changed since you started?
There is more and more institutional money outside of Fort Worth being attracted, because it’s in the Metroplex and they see Fort Worth as a real gem.
How did we get to this moment in the Fort Worth office market? How has the corporate user base changed over the years?
I’ll give you three examples. One is Pier 1. We started working with Pier 1 in the early ‘90s. They were in this tower downtown (Wells Fargo Tower), and we helped them buy the land on the west side where they built their headquarters. And RadioShack did theirs... Those were two companies that were blowing and going, I mean killing it…
The brakes just stopped on both of them and RadioShack started going down. Now Tarrant County College has its administrative building and classrooms in the old RadioShack headquarters...
Pier 1 and RadioShack were tremendous supporters of the community. They were doing the parades, and they were funding the Christmas tree, they were doing all kinds of things to help all the different local charities. United Way, you name it, they were involved in it. Those went away.
Then you have XTO, which started here in Fort Worth. That was bought by Exxon. They used to have seven office buildings downtown. We’ve sold all of those and they’ve moved almost all their employees to Houston, to the Exxon campus.
What’s really neat about what’s happened there is when they made the announcement they were going to move, we had office developers calling and saying, ‘Oh my God, this is going to crater the office market, all that square footage coming back to the market.’ But our position was no, we don’t think so.
Now, fast forward, we’ve sold all those buildings downtown and none of them are being reused as office buildings. They’ve all been that downtown conversion that you’re seeing over in Dallas. This old class B, these guys spent so much money making those buildings really cool, but, let’s face it, you’ve got a 10,000-square-foot floor plate. You have a coffee bar and a restroom on every one of those, it’s not really good office space because office tenants want to be where they can have their employees in a bigger environment.
Every one of those is being redeveloped or has been redeveloped into a hotel or residential type structure. I think that’s a tremendous opportunity for downtown because more and more people want to be downtown and we just don’t have the residential units. You now have a (residential) high rise being built, that’s really cool. Those are three corporations that have really changed, and XTO was a really good corporate citizen in Fort Worth as well. What’s backfilling that? Well, you’ve got other companies now that are here that have picked up some of that slack.
What’s the biggest challenge the Fort Worth office market is facing?
The challenge is we have limited class A options for large users. If you get 50,000 feet, you’re only going to have a handful of options you can look at, and there’s not a whole lot of square footage that’s under construction right now. It’s not much, it’s 500,000 feet. One of them is the Crescent and that’s already fairly pre-leased as well.
And if you look at the Tarrant County market, there’s very little space being developed. I think that one key thing we’re going to need to see going forward is more office product. We really need it, and if COVID told us one thing, it’s that’s that a lot of these companies are in a flight to quality. You’ve heard that, you’ve seen it in our reports, but that’s what leasing is the new spaces.
Have any industries been leading the charge with leasing lately?
If you look at it nationwide, it’s really the financial services companies that are taking advantage of getting cool office spaces so they can out-hire other folks and competitors. That’s a big one. I think some of the Fortune 500 companies that are tech companies, they’re still trying to figure out how to get their employees back to the office. But the banks and the financial institutions, they’ve kind of taken control of that…
I think if we had this conversation a year from now, the environment will be different. There will always be some people that will work from home or part-time work from home, but I think that the pendulum will swing back next year.
What does the Fort Worth real estate community need to be paying attention to right now?
If you talk to the mayor and some other prominent people around town, they think economic development is the key going forward as they try to attract corporations and other folks to move to Fort Worth. I think part of that is not just having office space and other amenities around, but also the school district. We’ve got a new school superintendent that’s from Midland that’s just started and I think there’s work to be done with the school district…
I think you’re going to see a lot of attention focused on economic development and also schools, so folks coming to Fort Worth can say it’s a place I want to raise a family, and the quality of life is just amazing here in Fort Worth. I think those are going the driving forces going forward.