INTERNATIONAL

The US military is officially out of Iraq and the country experienced continued car bombings this week. Pakistan is threatening to use force against us. Afghanistan is still fighting. Iraq is thumbing its nose at the US. I guess we could safely state that the Middle East is officially a mess. But we continue to do the same thing and expect different results. Strange.

Europe is continuing to dodge bankruptcy filings from certain countries. Germany is probably going to have to bail out Greece – but if it is the IMF that does the job, then a huge percent of the funds will come from the USA. Standard & Poor downgraded Hungary's debt to junk status yesterday. Europe is officially in the junk heap also.

So where is a guy supposed to go for safety. A lot of international investors are still coming to the United States. But that is a miracle given the fact that our nation's leaders can't agree on anything. It is like expecting your children to be productive at school when the only thing they see at home is their parents fighting all the time.

NATIONAL

• It looks like the Republicans are finally going to get a spending bill signed into law that will include the extension of the payroll tax cut and the TransCanada Keystone Pipeline project.
• Consumer Confidence is all over the chart. Down over the last few periods and now up sharply. It remains to be seen how long this will last.
  
• The 2012 election cycle is in full swing. But like many other things in the US, the leading Republican candidates keep on rising, then falling. It has been a roller coaster ride for many. Only Mitch Romney seems to be stable but he is stuck with approximately 24% in the polls. The Republicans seem to be looking for "anyone other than Romney". I don't have a clue how this will play out in the general election. But no matter what your political affiliation is, it is hard to say that business in general is pro-Obama. And until we get to the European model of government (hopefully never), those that are anti-business are not going to do well in this country.

JOBS

Speaking of business, the economy cannot get healthy until we get the nation back to work. The official unemployment rate is about 9% but when one adds in those that are working temporary jobs and working at jobs under their skill sets (construction comes to mind), the real jobless rate is much higher. But it is good news that the initial claims for unemployment are down.

RETAIL REPORT

• Even though retail sales rose 6.6 percent on Black Friday to a record $11.4 billion, total sales for the month - including dining services -- grew only 0.2 percent, based on data from ShopperTrak, a Chicago-based research company, and the Census Bureau. The November pace was the slowest in five months and less than a forecast of 0.6 percent in a Bloomberg News survey. Cyber Monday sales rose 22% to $1.25 billion.
• Darden Restaurants, which operates over 1,900 restaurants including Olive Garden and Red Lobster, saw sales at Olive Garden, its largest brand, fall 5.7% in November, the seventh straight month of declines. The stock is down, it has revised its projections again and Darden is cutting way back on new store openings.
• While the mid-level restaurants are suffering because of the economy, the fast food providers are expanding somewhat more rapidly.

HOMEBUILDING

• The multi-family segment is downright frothy. In fact, several leading economists are calling for a bubble in the apartment markets because of the prices being paid for some of the Class A projects. Lenders are pricing loans like they were before the crash.
  
• It is an amazing time to buy a home, either previously owned or new. There is a glut of pre-owned homes in many markets that buyers can pick up for next to nothing and many times the lenders that own them will make sweetheart loans. But you still have to meet new and more reasonable loan demands. For instance, the buyer needs to show that he/she can actually make the payments – novel idea, huh. However, if you are trying to sell your existing home, the market is not kind at all.
  
• Some are stating that the huge overhang of foreclosures will push any kind of recovery in the homebuilding market and the residential real estate market out until at least 2013.
• Home loans hit an all-time low - again. But sub-four percent, 30 year loans are not even news anymore!

TEXAS

• The drought is over for most of the state. But the economic impact to Texas and the surrounding states will last for some time. It was the worst drought in my lifetime. Literally mesquite and cedar trees died from lack of water. I did not know this was possible.
  
• Texas is still creating more jobs than any other state in the country but we are having issues also. For instance, Hewlett Packard, which purchased EDS last quarter announced that it is cutting more than 26,000 jobs, many from the North Texas area.
  
• AMR, the parent company of American Airlines which supplies more than 90% of the flights out of DFW, filed for bankruptcy last month. Although we have not experienced a lot of effect from this action as of today, we will. AMR is asking that many leases around the country, mostly on planes it is not using and on vacant facilities, be terminated as a part of the action. But it is the renegotiations of the labor contracts and the resulting layoffs that is going to hurt Texas and the DFW area.

DFW/NORTH TEXAS REGION

• Some good news came out of Spirit Airlines. After the takeover of AirTran by Southwest Airlines, and Southwest deciding to move AirTran from DFW to Dallas Love Field, Sprit has announced new destinations out of DFW to include Phoenix, Atlanta and others. That should cause American to reduce fees to compete with those flights.
  
• Something that few outside of DFW seem to know about is the issues property owners are having with squatters in DFW. Some obscure laws on the Texas books are allowing people to file fraudulent deeds in the county records, move into vacant homes, change the locks, put the contents of the real homeowners on the street curb and claim to own the property through squatters' rights. The deeds are not legal but it causes the rightful property owners a lot of trouble and expense to get the squatters evicted. The case causing the most press was a woman from Mansfield that was in Houston undergoing chemo and radiation for cancer when these guys moved in.
  
• Privately owned HEB from San Antonio, is mapping out a plan for growth for a new store concept of 30,000 square feet that they are targeting to high density urban locations. The first Central Market urban store will be near SMU in Dallas.
  
• Existing home sales in DFW rose slightly again in November for the fifth straight month but the prices were essentially flat. The market must be allowed to rid itself of all of the inventory that is in the hands of lenders.

FORT WORTH

• GE Transportation is now saying that it will bring two projects to Alliance. Not only will it manufacture locomotives, it is also bringing a 236,000 square foot mining equipment plant to the area.
• CK Technologies, an Ohio company that produces components for the trucking industry is opening a plant at Alliance Gateway to assemble, paint and sequence parts for Peterbilt.
  
• Deloitte finally opened its $300 million facility at Westlake, a part of Hillwood's Alliance project. The Deloitte University is a high-tech/high-touch, 712,000 square foot training campus.
  
• West Seventh Street continues to gain tenants and projects. Locap Holdings was approved for a 315-unit multi-family project in the area and Cypress revised its plans again and secured a $14.5 million loan to develop its last parcel into office.
  
• The Fort Worth CBD office market is reporting a Class A vacancy rate of under 10% and the Bass family has announced three new office buildings. Two of the buildings will be started very soon and the third immediately upon stabilization of the first two. The buildings will add 221,000 square feet of office to Sundance Square.
  
• With the good news comes caution. Three very important industries are experiencing issues. First, the bankruptcy filing of AMR shows just how fragile the air travel industry is. American was the last of the big airlines to get protection under the bankruptcy laws. Obviously, the defense industry is in mortal fear of Washington DC. That includes Bell Helicopter and Lockheed Martin, a very important employer near to two of our projects in NW Fort Worth. And the oil and gas industry is constantly dodging bullets by every environmental group in the world. And as the Barnett Shale formation is drilled out, we will certainly employ fewer field personal. The number of rigs running in the Barnett is at a seven-year low because a huge amount of the formation has been explored.

SUMMARY

If it wasn't for restaurants, we would not be doing anything right now. In retail, it seems that fast food, medical, oil & gas and some very limited services are the only groups expanding in the area. I believe that as the US presidential election gets closer to being over with, and hopefully business can count on a new president to be much more pro-business, we will start to recover from the worst economic collapse in my lifetime.

We remain somewhat optimistic that 2012 will bring some new opportunities and a recovery. Until then, Merry Christmas and we wish you a Happy New Year.