After several quarters of strong leasing activity, DFW finally saw leasing velocity start to fall this quarter. In total, DFW saw 166,425 sq. ft. of positive absorption this quarter, with smaller leases of 15,000 sq. ft. and below driving absorption. Occupancy fell slightly to 94.2% as deliveries outpaced absorption with only 42% of new retail product leased at the end of the quarter.
Small businesses are among the retailers most affected by the rapid spread of COVID-19. Nearly half of the private workforce in Texas is employed by small businesses. Since the outbreak of coronavirus in the U.S. at the beginning of March, small businesses have seen revenue decline 15% to 80% and are coming to terms with how they will make ends meet in the months ahead.
The growing amount of COVID-19 cases in Texas, as well as an oil price crash, have caused the state’s economy to slow down in Q1 2020. After seeing a low unemployment rate of 3.5% in January, Comptroller Glenn Haggar stated that this metric is on track to double as the virus continues to spread, but the unique nature of this downturn should result in an unusually swift recovery that could begin as early as Q3 2020.
Assuming the coronavirus peaks this summer in the U.S.—mirroring China’s experience—the U.S. government’s fiscal and monetary stimulus will begin to bear fruit. This will be paired with pent-up private demand that could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.