During the 12-month period ending February 1999, nonagricultural wage and salary employment in the Southwest grew by 3.3 percent, exceeding the rate of growth in the previous 12-month period. The region added more than 447,100 jobs in this period. Texas led the region with a 3.7-percent increase, followed by Oklahoma at 3.2 percent. Smaller but healthy gains were recorded in Louisiana (2.5 percent) and in Arkansas and New Mexico (both 1.7 percent).

Recently, 2,700 new jobs have been announced for Tinker Air Force Base in the Oklahoma City metropolitan area. As a result, a significant increase in residential construction is anticipated in some communities in the eastern part of the metropolitan area during the next year. Tulsa-based Williams Companies, a petroleum pipeline and communications firm, announced plans to construct a 15-story office building, representing the first new office construction in downtown Tulsa in more than 15 years. The facility is being designed to handle 4,000 additional employees and will be used exclusively by Williams. Completion is set for June 2001.

As apartment completions increased in the Dallas-Fort Worth area, occupancy dropped slightly to around 92 percent by the end of 1998. In the first 3 months of 1999, the metropolitan area recorded 4,608 multifamily units permitted, a 44-percent increase compared with the same period in 1998. In Plano, Lewisville, and Southwest Fort Worth, rent concessions are common, especially in new projects, although absorption rates are still at or above expectations. In Houston, multifamily activity in the first 3 months of 1999 totaled 3,246 units, down 33 percent from the comparable period in 1998. However, developer interest remains strong and apartment occupancy is good. In the Midland-Odessa area, unemployment increases related to oil industry job losses have resulted in apartment occupancy in Odessa falling to 85 percent in recent months. The Austin area recorded permits issued for 1,642 multifamily units in the first 3 months of 1999, almost triple the number for the same period in 1998. Austin's long development approval process and the area's continued rapid growth have had the effect of regulating the production and absorption to prevent any backup in new apartments.

The Apartment Association of New Mexico reported apartment occupancy in Albuquerque in the first quarter of 1999 at 88 percent, the lowest level of the past 10 years. The low occupancy is the result of a combination of factors: the large number of apartments built in the past 5 years, a much slower rate of job growth during the past 2 years, layoffs in some major industries, and a substantial increase in renters shifting to homeownership.

The Albuquerque Metropolitan Board of REALTORS^® reported that existing home sales in 1998 totaled 7,054, up almost 10 percent from 1997 volume and the second-best year of the decade. In the first quarter of 1999, existing sales were 7 percent above first quarter 1998. The median sales price of a single-family detached home during the first quarter of this year was approximately $127,000. The Central New Mexico Homebuilders Association reported that new home construction in the Albuquerque area surged to 4,914 in 1998, surpassing the record of 4,741 set in 1995. Single-family housing permits were issued for 1,434 homes in the first 3 months of 1999, compared with 947 for the same period in 1998.

Spotlight on Downtown Housing in the Southwest

Throughout the 1980s the Southwest region saw the spread of suburban sprawl. As commute times lengthened, suburban office sites with free parking close to residences became more and more appealing. Adding to the problem, the supply of new downtown office space in the 1980s far outstripped demand in both Dallas and Houston, creating vacancy rates of 30 percent or more. Retail establishments and restaurants with no business on nights and weekends dwindled.

Over the years Fort Worth, Dallas' neighbor to the west, had been much less successful in attracting office development. Encouraged in part by two HUD Urban Development Action Grants in the late 1970s, the Bass family rehabilitated a six-block area called Sundance Square in Fort Worth, attracting a number of shops and restaurants. The area prospered in the 1980s with the completion of a multiscreen movie theater and new apartments. A mass of new development has followed, including apartments (some with low-income tax credits), shops, restaurants, and a rehabilitated hotel that had been vacant for 17 years.

Following this trend, apartments and condominiums are returning to downtown Dallas and Houston. The first new apartments in both downtowns were small office-loft conversions of 10 to 30 units, the success of which has spurred larger scale development. The city of Dallas has encouraged downtown housing through the use of HUD economic development loans, and this effort has been supported with FHA apartment mortgage insurance. The results are becoming apparent. At the beginning of the decade, only one apartment complex remained in downtown Dallas. Currently more than 2,800 units are recently completed, under construction, or planned. In Houston, 700 new units have been completed in the downtown area in the past 5 years and developers are snatching up underutilized buildings for apartments, condominiums, and offices. First-floor spaces in many of the new housing developments are devoted to retail and restaurant uses, holding out the promise of lively street life to come. Monthly rents for most of the new loft units in both downtown Houston and Dallas begin around $700.

San Antonio now has approximately 1,300 apartment units in the downtown area, more than 60 percent of which appear affordable through low-income tax credits, bond financing, Section 8 subsidies, or just relatively low rents. Through FHA mortgage insurance, the old Riata Cadillac dealership near the Riverwalk, now converted to residences, began preleasing its 153 units in December 1998; rents range from $500 to more than $1,000.

More downtown development is anticipated in Austin in the next 2 years than in the previous decade. Almost a dozen new projects could be under construction within the next year, ranging from Computer Sciences Corporation's massive campus to a retail project that will include a large multiscreen theater complex, a discount store, and 25 other restaurants and shops. A number of residential projects have been completed and nearly 700 more apartment and condominium units are planned. Rents typically exceed $1 per square foot.

Smaller cities such as Little Rock and Albuquerque are encouraging downtown housing in addition to retail and commercial uses. In some of the fast-growing, centerless cities such as Southlake (suburban Fort Worth) and Cedar Park (suburban Austin), developers are building new downtowns. The recently opened, privately planned and developed Southlake Village is a new, old-fashioned-looking commercial area populated by upscale retail stores. The Cedar Park village center will include shops, restaurants, office space, a hotel, and high-density residential uses anchored by a new city hall, justice center, and depot for the Hill Country Flyer steam train. Other possible land uses include an amphitheater and movie theater. Construction is planned to start at the end of 1999.