NATIONAL AND INTERNATIONAL

Our “friend”, Saudi King Abdullah has declared that the American presence in Iraq is “illegitimate”. But he also criticized Arab leaders for infighting which he said has caused nations to drift further from unity than they have been since the founding of the Arab League, the 22 member body created in 1945.

Will we ever get our sailors, soldiers, airmen and Marines out of that part of the world? Who knows? But I know I would rather be fighting there than here.

For the first time, China passed Mexico as the United States’ No. 2 trade partner and Texas companies are playing a big part in the shift. Last year total trade with China soared to $343 billion compared with Mexico at $332.5 billion. Canada still ranks first but Mark Zandi, chief economist for Moody’s Economy.com, expects China to overtake Canada in 10 years.

Speaking of China, Intel just announced that it will build a chip plant in China. The factory will be the latest in technology and the first “chip fab” for Intel in Asia. The $2.5 billion plant will be in Dalian and should be operational in 2010.

And, look at this recent quote from China’s Prime Minister Win Jiabao:
"The speed of the fleet is not determined by the vessel with the fastest speed but by the vessel traveling the slowest. The well being of the whole society cannot be improved unless the lives of the most vulnerable groups are improved."

The Consumer Confidence Index took another downturn this quarter.

Chart taken from the Conference Board Website

New home sales continue to decline. Existing home sales slipped again. Immigrants are being hurt by foreclosures, especially in adjustable, sub-prime loans. Many expect there to be far fewer home builders in 2008 than exist now because of mergers. Higher inventories slice the GDP to 2.5%. And crude oil prices ended the quarter at a six month high. But with all this bad news, 30 year mortgage rates are steady and Texas jobs increased. And the Dow ended the quarter at 12,354. Not a record but still quite acceptable. What is the old saying, “What - me worry”?

ENERGY

The price of crude oil has gone up in recent days because of the British troops captured by Iran. The latest craze to sweep the nation is global warming. It is not that I do not believe that human activity causes environmental issues because common sense tells me that it does. But the reactions of millions of US citizens, many times without thinking, sometimes cause big issues in our economy. How long has it been since we have built a refinery or nuclear power plant in the US? Decades!

RETAIL & OTHER NATIONAL NEWS

• Ford Motor Company had its worst year ever when losses hit $12.75 billion, an average loss of $1,925 for every new car and truck it sold.
• Costco plans 14 new stores this fiscal year ending in September.
• Cabela’s plans to open another 8 units this year. That will bring the company stores to all but 21 states.
• Buffalo Wild Wings is in the news again. The chain of 435 locations plans to grow by 15% yearly in new stores and by 20% in revenues over the next three years.
• Best Buy is planning for a continued expansion by growing by 90 units this year in the US and another 40 in Canada and China.
• Safeway continues to grow its Lifestyle Stores. The supermarket expects to open 25 new Lifestyle stores this year and to remodel 275 existing stores into the new format.
• There is activity on the hospitality front also. Dallas-based Ashford is buying 51 hotels in a $2.4 billion deal and will become the second largest lodging REIT in the nation. Las Colinas’ La Quinta is also looking for ways to grow. But it is going to build its way to other parts of the nation. The growth mode was started a year ago when Blackstone bought the network of 587 hotels, mostly in the southwest US.
• And speaking of Blackstone, the big buy-out firm has filed for a $4 billion IPO. It expects to be listed on the New York Stock Exchange.
• Trammell Crow, now a part of CB Richard Ellis, has teamed up with MetLife to develop retail projects across the country. GlobeSt.com reported that there is no ceiling on the amount of money or number of deals. Their first project is just south of Disney World in Orlando, FL.
• The Texas job growth continues to be good and the unemployment rate is even better. The state continues to create jobs, registering positive job growth in every month of 2006 and in the first two months of 2007. The unemployment rate fell from 5.2% in July to about 4.5% in December. The economy added 213,200 jobs in 2006 according to the Texas Workforce Commission and the jobless rate has fallen to a 5 year low.
• Trade abroad continues to be a major factor in Texas and North Texas in particular. Cargo traffic soared 14% from Fort Worth’s Alliance Airport in 2006, mainly because of new Asia routes by FedEx.
• Corsicana was chosen by Northrop Grumman Corp as the first small city in which to locate a “national work center”. Mainly because of the high cost of living in California, Northrop is exploring setting up offices in smaller venues throughout the US to house some its high-tech employees. Corsicana center could ultimately employ 200. Its next stop – Helena, MT. Northrop says that this strategy could save it up to $15 million per year.

DALLAS AREA

• Existing home prices fell nearly 4% in the final months of 2006, the first time in more than ten years since DFW home prices have slipped that much.
• Cushman and Wakefield reports that during the first quarter of 2007 office leasing dropped significantly in DFW. Last year’s first quarter numbers showed a strong demand of nearly 1.15 million square feet compared to 265,000 square feet in the first quarter of 2007. Most of the demand has been in far North Dallas including Frisco and West Plano.
• Dallas got good news from Motown last month. Banking giant Comerica is moving its headquarters from Detroit to the Dallas CBD. The $58.5 billion bank seems to be distancing itself from the failing US auto makers.
• Fort Worth continues to be the region’s fastest growing city and Tarrant County is the region’s fastest growing county. The population was up 22,750 to 686,850 in Fort Worth last year and the county was up 38,750 to 1.745 million in the same time period.
• Many of the new arrivals are from California but it is surprising how many new Tarrant County citizens are coming from 30 miles east – Dallas. Evidently the Dallas folks seem to like the more laid back calmness of Fort Worth compared to the more cosmopolitan atmosphere of Big D.
• Foreclosures topped 1,000 for the 8th month in a row in Tarrant County for the April auction. There are 20% more homes posted for foreclosures in April 2007 than in the same month in 2006. A large amount of these are the result of sub-prime loans.
• The medical industry continues to expand in Tarrant County. Over the last 5 years Tarrant facilities have spent $1.2 billion on expansions and upgrades.
• XTO Energy has purchased another block in the Fort Worth CBD. The land, once considered for a 60 story skyscraper, and then for a mid-rise office building, will become a parking lot for XTO employees for now.
• The first rooms in the CBD hotel expansion are now available. Embassy Suites Fort Worth, located at Fifth and Commerce, has been made into single suites with a living room, bedroom and a wet bar. The current supply of rooms in downtown is tight with just 1,040 rooms available but almost 1,200 new rooms will be added over the next 20 months.
• Bing Thom, the famous architect from Canada, has submitted the first designs for the bridges crossing the Trinity River along the Trinity Vision development. The curvilinear bridge supports seem to just sweep out of the landscape and are very Cowtown in their design.

ALLIANCE AREA

• The North Fort Worth, Keller & Keller ISD and Northwest ISD area is still booming. Keller ISD expects to grow to 38,000 students by 2014. Northwest ISD, now at 10,500 students, is expected to be at 44,000 by 2022. Even with the sub-prime issues, this area continues to grow rapidly.
• In off-market deals, Transpacific Development of Torrance, CA has picked up 720,000 square feet of fully leased distribution centers in Alliance from Magoon Estate Ltd. of Honolulu. The buildings, leased to UPS Supply Chain Solutions, Inc., include a sublease to Motorola, Inc.

NORTHWEST FORT WORTH

• The Industrial Group, Inc. of Dallas is breaking ground on its Northern Crossing Development project, an 80-acre business park slated for the NEC of I35W and Loop 820.
• Mansfield’s population topped 50,000 for the first time in late 2006. And it has more to go. Mansfield is the third largest city in Tarrant County in area (land) and it is no where close to being built out. Mansfield grew at 5.23% in 2006, by far the fastest growth of the larger cities in Tarrant County.
• The Arlington Highlands has announced more of its line up for the 80-acre hybrid lifestyle center located west of the Parks Mall on I20. The 850,000 acre development has leased up at a record rate.

SOUTHLAKE, KELLER, NE TARRANT AREA

• Fidelity Investment is adding 1,500 new jobs in Westlake at its regional headquarters. This is in addition to the existing 2,800 employees there now.
• Grapevine is getting the largest Great Wolf Lodge in the company’s history. At $100 million, the resort and indoor water park will be the brand’s most elaborate location. It is scheduled for opening in late 2007.

LAS COLINAS

• Las Colinas lost 178,435 square feet of occupancy in the first quarter of 2007 according to Cushman and Wakefield. But the park was hot in 2006 gaining 1.15 million square feet.
• There are several new retail, office and industrial projects underway in the DFW Airport area. And sales of office buildings continue to escalate in the area. Someone thinks that there is something good about to happen.

SUMMARY

I remain cautions yet optimistic about our area at this point. The second quarter will give us a better indicator of what to expect. If the residential market does not pull us down too much, I expect another good year.