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PODCAST EDUCATION

Why is DFW a Leading Market for Corporate Headquarters

Episode 053

John Larson and the Real Estate Cowboys talk passive income real estate investing.

Hear new episodes every Sunday morning at 8 a.m. The Cowboys talk about the DFW market and how magnetic it is for corporate headquarters.

Keep the #CowboyCoffee hot while listening to John, and the Cowboys talk about how to #BeACowboy and earn passive income in real estate.

Episode Transcript

Keith Weinhold: Hey, this is Keith Weinhold from the Get Rich Education podcast. You are listening to my friend John Larson and the Real Estate Cowboys. Don’t quit your daydream. 

Robert Helms: Hey everybody, it’s Robert Helms, host of the Real Estate Guys radio show, and you are listening to the Real Estate Cowboys. 

Announcer: Have you thought about becoming financially free through real estate investing, but don’t have the time or knowledge to get started? Welcome to the Real Estate Cowboys podcast. Each week we discuss passive income investment opportunities in the red hot Texas market. John Larson and the Real Estate Cowboys will show you how to leverage their team to build wealth in real estate through passive investment opportunities. And now here’s John. 

John Larson: Hello, my real estate cowboys and cowgirls. This is your host, John Larson. Welcome back to another exciting episode of the Real Estate Cowboys podcast. This week I want to discuss why DFW is a leading market for corporate headquarters. What is it about Dallas that keeps bringing companies in and now has positioned Dallas as the market with the most corporate headquarters in America? Texas has been known for drawing in new companies because of the business friendly laws, right? There’s very…business friendly state, no state income tax, affordable real estate, lots of land available to develop. But Dallas wins the metal for attracting top corporations from around the world like a magnet. Since 2012 over 75 companies have moved their operational hubs to the Dallas-Fort Worth region from both the US and abroad, so not just domestically. Worldwide people are moving their corporate headquarters here, the tens of thousands of Dallas area jobs created by this influx of business positively impacts the residential real estate market; multifamily, single family. You see so many new single family developments popping up. New apartment buildings are being popped up, I feel like daily; and it’s to keep up with the growth. All the businesses that are moving here are driving people into the market. Okay. As a real estate investor, I like to be where the jobs are because you know there’s always going to be people moving in. Those type of markets are really resilient during recessions. Those types of markets are also really good about, uh, capturing appreciation year over year and once you get year property leased, in many cases, it’s pretty easy to keep the property leased over time. You don’t have as much turnover. And I think that’s why you see the apartment business out here is just booming. Dallas is only second to New York City for the most new apartment buildings being developed in the nation. That’s extremely impressive. 

But new companies moving into Dallas, it also drives up demand for commercial space, which those of you who know through our private lending opportunities, we’re building two class A buildings in South Lake, Texas, a very high end area of DFW. Also, we just purchased a through another private lending opportunity, a 30,000 square foot office building in Carrollton. So we’re also seeing those trends leaning toward demand for commercial space as well. And we wanted to capture that market also. But you’ll see new office parks and entire office buildings being developed, to commercial land on which to build. Corporate newcomers to the DFW area are eager to establish a solid foothold with a brick and mortar presence. Right near my home in Las Colinas, McKesson is just, looks like they’re putting the finishing touches on their brand new headquarters where they will be bringing in all their employees nationwide to come work down here in Dallas. 

And McKesson is a huge fortune 500 company. So we’re going to talk a little bit more about that in a second. But this really presents opportunities for commercial real estate investors interested in leasing, building and or private lending, syndicating funds to take down some of these maybe class B buildings and turning them into a class A building, right? Driving up rents, adding value to these buildings and holding them or potentially flipping them back on the market and selling them. So now I’m going to discuss three impressive corporations and organizations that have recently moved headquarters to DFW or planning to do so, along with the estimated job creation and financial impact figures. 

One is Core-Mark holdings. It’s a company that provides fresh and frozen merchandise and tobacco products to convenience stores such as Seven-11 which has also started here in Dallas. Core-Mark is a Fortune 500 company and is the second largest convenience store distributor in the U.S. The previous headquarters was located in San Francisco and moving to the Westlake area of Dallas. So kind of near the South Lake area where we’re developing our two class A buildings. And this was just done in early 2019. The CEO, Scott MacPherson says that Dallas offers more favorable operating costs, lower taxes and a central location for Core-Markets, nationwide business, right. Being out there in San Francisco, you’re operating in the Pacific time zone. Obviously real estate is a lot more expensive there, you have to pay your employees more, their cost of living is a lot higher in that market, which translates into a lower return on life, I would say for those investors. Whereas moving to Dallas with more affordable real estate, no state tax, your employees are saving money on taxes and also moving into much larger properties for a fraction of the price. 

So for me, if I was an employee that worked for this company and I was in San Francisco and I came over to Dallas, it would be a complete culture shock. You don’t have the beach or anything like that, but hey, if you’re saving money on, on housing, you can always take vacations and go to the beach. Right? So this company, Core-Mark currently employs over 9,000 people all over the country. And Core-Mark has advertised for over 150 jobs for its new Westlake location, including jobs in finance, human resource, IT and purchasing. So they’re going to be hiring another 150 people out here in the Westlake area and the DFW area. So awesome. The next company I want to talk about is one I just mentioned that’s right near my home. I’ve pretty much observed the construction from its infancy to where it is now. 

It looks like it’s just about done, but McKesson is a public company and they provide pharmaceuticals and medical supplies to hospitals, pharmacies, and clinics around the world. The annual revenue in 2018 reached 208 billion. It ranks number six on the Fortune 500 list. In November of 2018 McKesson announced plans to move the headquarters, their main headquarters from San Francisco to Irving Las Colinas, like I mentioned. The CEO John Hammergren, said he was excited to strengthen his presence in Texas. They were already here, but it wasn’t their main headquarters and made Las Colinas, uh, their official global headquarters. Governor Abbott and the Las Colinas community have provided tremendous support since we opened our Las Colinas campus last May. Making this move will improve efficiency, collaboration, and cost effectiveness while providing an exceptional work environment for our employees.” The company employs over 75,000 people worldwide. And recently, McKesson’s job posting in the DFW area, uh, hit nearly 180 people with positions in IT, six sigma, human resources, finance, marketing, admin roles and many more. So I’ve been watching this building, like I said, right near my house. It’s a really, really large impressive building and uh, excited to bring in a company like McKesson into the DFW area in Las Colinas/Irving, which is also where our current private money lending opportunity is. It’s located right in Irving, only about 12 minutes from Las Colinas/Las Colinas area where I actually live. 

The third corporation I want to talk about is the PGA Professional Golfers Association of America. It’s the largest sports organization in the world. It has almost 29,000 members and hosts the Ryder Cup PGA Championship, women’s PGA Championship as well as numerous other golf championships. Which one was the Byron Nelson that was played right at the TPS Las Colinas where that Four Seasons is as well. Uh, in early December of 2018 PGA announced plans to move its headquarters from Palm Beach Gardens, Florida to Frisco, Texas, uh, part of the DFW region obviously, and officially the move will take place in 2020 but space has already been chosen on a 600-acre complex in Frisco where a luxury hotel and convention center and supporting infrastructure and facilities will also be constructed. The new headquarters will employ at least a hundred people and is already set to host two of the most famous PGA championships, the Ryder Cup and two KPMG Women’s PGA Championships. PGA is also teaming up in a joint venture with Omni Hotels & Resorts, the City of Frisco and the Frisco Independent School District for a weekly golf program. Says Seth Waugh, CEO, “Everything great starts with a dream. This is the beginning of a bold, new journey as we bring together world-class partners in a world-class location – to deliver innovative and differentiated experiences for our nearly 29,000 PGA Golf Professionals, golfers of all abilities and our staff.” Estimates on the economic impact of this historical move are $2.5 billion for North Texas over a 20 year span. 

This is the kind of stuff that, me as a real estate investor and developer, that I salivate over this. Right? And so what’s exciting about this kind of growth in the Dallas area is the prestige of the companies and the quality and diversity of the job creation. Okay. That’s one thing about Dallas that makes it so resilient is, not only is it home to the most corporate headquarters, but that provides a lot of economic diversity. If there’s a downturn in one specific source of business of the financial sector or whatever it may be, if there’s a downturn in that, there’s so many other employers that are located here to where one downturn in one source of industry is not going to cripple a market like DFW. It’s a really good way to kind of stack your chips in a market that’s overall going to be safe. 

It’s not going to provide you the greatest cash flow on single family. Even on commercial and multifamily, the cap rates are a bit lower than what you can, what you can find in other areas across the country. But I believe that this market provides the most stability from an economic standpoint and a population growth standpoint. And I say this many times, you need people that live in your residence paying rent in order for the investments to work. So a lot of times, even with myself, I will take a lower rate of return for a more passive or safe experience with my investments. Okay. And it’s all about diversity as well. Purchasing any class properties in a market that’s strong like DFW and then if you want to go gamble in some other markets that don’t have the solid economy that Dallas does, the solid population growth at Dallas does, but it’s more affordable real estate and can provide some more, some better cash loan, better returns on rental income, well that’s good. Do that, but don’t put all your eggs in one basket. Don’t go out and buy all C and D class properties, because you won’t have a passive experience. There’s a good chance that those investments can fail down the road because they just don’t, they’re not located in the markets that have the economic structure to continuously bring in new blood, you know, consistently keep your properties occupied. Okay, so it’s very important. Coming from a city like Detroit, which relies mainly and solely on one type of business, which is the automotive industry, when things are not going good at the big three, usually things are not going good for Detroit. Right? And you start to see people up and leaving and moving to other areas across the country. But I want to discuss a little bit more about this when we come back, but I want to take a quick commercial break and we’ll talk more about why DFW is such a great, great market for corporations and why in turn, it’s a great market to investment in. 

And welcome back from the commercial break. This is your host, John Larson. We are talking Dallas and why it is a leading market for corporate headquarters. So I kind of want to finish up by saying that what’s most exciting about this kind of growth in Dallas is the prestige of the companies and the quality and the diversity of the job creation, right? These are good, good, good, solid corporate corporations that are moving into the DFW market. Okay. These are companies with a proven track record that are on the Fortune 500, Fortune 1000 list. Currently 22 Fortune 500 companies are headquartered in DFW alone. The jobs these companies provide to current transferred and new employees are high quality, a lot of white collar jobs. This offers a stable and lucrative employment to residents of DFW. The companies support and bolster the local residential real estate market and inject even more diversity into an already growing strong economy. 

As more companies see the tremendous value in the Dallas area and what Dallas can offer to these business, it’s likely that this growth will continue into the next decade. And by all accounts, the predictions out there are saying that DFW is going to reach 9 million people within the next 10 years. We’re sitting at about seven and a half right now. We’re expecting another million and a half people within the next 10 years, and we’ve been growing by an average of about 150,000 people each year. And they’re coming here for the jobs. They’re coming here for the opportunity. They’re coming for the no state tax, the central location to the nation. Uh, many, many things I believe play into why people are moving to Dallas Fort Worth. And you know, there’s a lot of young business professionals here as well, a lot of millennials, and I think that that’s attracting other millennials to want to move into the area. 

Also, I’m going to offer a couple of maps because I’d like to show you where these corporations are and seven of them alone are in Irving, right where I live in the Irving, Las Colinas area, which is only a stone’s throw away of the current private money lending opportunity that we have on these 4-fourplexes. Um, 14 of the 16 units are already leased. But the idea is we want to get out, remove the old tenants, take over property management, get a real good professional property management solution in place with our property management team. American Real PM, definitely add in some nice features, granite, new cabinets. You know, really kind of deck out these apartments. So we can raise the rents up to where they should be, which I believe is about $1350 a month. These are going to be some great cash flow monsters. 

And so for all of our investors who have been listening to the podcast that really want multifamily, these can be a great option for you. And I think our action strategy will be to, if we don‘t hold them ourselves, which is tempting, sell them to the AREI Real Estate Cowboys community. So you can kind of get first right of refusal on these opportunities. If you just contact us, we’ll get you out of the list and we’ll let you know when the properties are available for sale. Uh, but these are really, really good solid cash flow performers for our investors. And you’re also in a super strong market. Um, being out in the Irving/Las Colinas area, which is like, I said, home to seven Fortune 500 companies alone, not to mention all the other corporate headquarters that are located in the area. So tons of tons of jobs out there. 

If you go to Real Estate Cowboys DFW, I will make sure we’re offering these maps that you can download and it will show you where all of the Fortune 500 companies are located in the DFW area. And so you’ll see Exxon Mobil, which is number two on the Fortune 500 list. Toyota Motors, AT&T, Energy Transfer, uh, American Airlines, Southwest Airlines, Tenant Healthcare, Kimberly Clark, Texas Instruments is just right near our office here and in the Richardson area. Dr. Horton, JC Penny, GameStop, Dean Foods, Alliance Data Systems, you know, Pioneer Natural Resources, so many Fortune 500 companies. So we’ll show you where all those are located on the map and that could kind of give you a good understanding of, of where you should possibly invest in the DFW area. Um, and then also we have 44 Fortune 1000 headquarters in the DFW area. So we also list out where all those are. 

Uh, there’s one in South Lake, one in Grapevine, couple in Fort Worth, many in Irving. It looks like one, two, three, four, five, six, seven, eight, nine, 10, 11 located in Irving, one in Arlington, many located downtown in the central business district. Obviously a couple in Richardson. Um, and, and a couple in the Dallas Lyndon B Johnson corridor, which is where our, uh, our, our headquarters American Real Estate Investments and the Real Estate Cowboys headquarters is located and Texas instruments is there, right near us, Atmos Energy. And then there’s many up in Plano as well. Toyota as you may have known, may or may not have known. Toyota just recently moved their headquarters to Plano, JC Penny, Alliance Data Systems, Dr. Pepper and Snapple. Um, so tons and then one up in McKinney, also, Torchmark corporation and in Denton, Sally Beauty Supply. So we’ll have these maps for you, uh, to show, uh, in relation where these headquarters are located. And we also give a breakdown on, you know, who is home to the most Fortune 1000 companies. Obviously New York City’s still tops there at 58, but California and Texas are tied at 49 apiece. So when you relate the costs of real estate and costs of living to the other two states in the union that have the most, Fortune 1000 headquarters, obviously it doesn’t make much sense to buy cash flowing real estate in California right now with the way that the prices are. And, same thing goes for New York. I mean, are you going to buy a apartment in Manhattan for cash flow? Uh, obviously not. So, you know, I’m just really excited about all the growth that we have here and I wanted to just drop this message to all of our investors out there. And so if any of you are interested in learning more about our current private money lending opportunity, just go to AREIUSA.com or RealEstateCowboysDFW.com to get access to these maps. 

You know, like I said, the newest private money raise opportunity is going to be located in Irving, Texas, which is a great economic hub. Uh, tons of jobs in that area. So I’m really, really excited about this new offer. I think the raise is only 2.3 million. Um, which should be easily attainable with our investor group that we work with and all you lovely people that listen to the podcast who trust us with your money, your retirement funds to invest in our great private money lending programs. But yes, if you are interested in learning more, you’d like to see the PPM. Obviously these deals are only for accredited investors but we will get that PPM out to you. You can speak to a member of our team for more information on the opportunities. I shot a great video out there that uh, shows the properties themselves and what we plan on doing to the units as they become vacant. 

And like I said, be on the lookout for those because by early next year, early 2020, those properties will be on the market and will be available to you to purchase. And the beautiful thing about four unit complexes is you can qualify for Fannie Mae finance. You can get that 80% loan to value, you know, low interest on a 30-year term. You can get that with four units, so great financing options available to you as well. If you’re interested in purchasing one of these four plexes when they’re completed. If not, I will be more than happy to hold them myself. They’re great, great, great cash flow generators. If you like what you heard on the episode and you’d like to listen to more past episodes, you can go to RealEstateCowboysDFW.com or just follow us on iTunes. Just type in The Real Estate Cowboys. You can subscribe to us on iTunes and we’re on many other podcast outlets. 

You can pretty much find us anywhere. Just type in The Real Estate Cowboys and subscribe each week. We have great, great content when it comes to earning passive income through real estate. This is not a show about going out and flipping houses and doing things on your own. We really care about ROTI return on time invested and return on life – ROL, specifically. We just want you to have your money work for you with a solid team and a solid market, and it’s all about limiting your risk and giving you a passive experience so you can still go do the things you like to do while your money’s working for you. When you go to bed at night, your money’s still working for you and we’ll show you how we can get you in the best opportunities out there in the U.S. when it comes to good commercial residential, multifamily, private money lending opportunities. 

But that’s all I’m going to leave you with this week. This is John Larson signing off. Once again, always remember, what’s your return on life. Think about that each day when you wake up and let’s start taking some action and getting that money working for you. Multiple income streams, that’s what all wealthy people have – multiple income streams. So let us show you how to do that. Visit us at our websites AREIUSA.com, RealEstateCowboysDFW.com. Have a great week everyone, and we’ll be back with some more exciting content next week on the Real Estate Cowboys podcast. This is John Larson, signing off. Have a great week. 

Announcer: All opinions expressed by the host of the show are the opinions of American Real Estate Investments LLC and do not reflect the opinions of guests or sponsors. No personal or professional advice on this program should be considered an endorsement to follow a real estate financing or investment strategy. Before acting on any information, seek advice from your financial tax, mortgage or real estate advisor, as the information is not guaranteed and investment strategies have the potential for profit or loss.