Texas Job Growth Returns — With Serious Caveats
The Dallas Fed upgraded its Texas jobs forecast, then immediately explained why it might not hold.
Together with
Good morning. Texas is adding jobs again, but the Dallas Fed wants you to read the fine print.
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Market Snapshot
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Jobs Report
Texas Job Growth Returns — With Serious Caveats
Texas jobs are back, but the Dallas Fed is already walking the headline number back.
The headline number: The Dallas Fed projects Texas will add 280,000 jobs in 2026 — a 1.9% growth rate and a meaningful upgrade from February's forecast. Two strong months drove the revision: annualized growth of 2.3% in January and 2.2% in December, with Dallas clocking 4.8% in January alone.
The asterisk is doing a lot of work: That 1.9% is a midpoint, and the bank's own economists expect growth to land closer to the low end of a 1.1%-to-2.7% range. Senior economist Luis Torres cited four structural drags: declining immigration, higher productivity suppressing labor demand, softening business activity, and elevated geopolitical uncertainty.
What the surveys are saying: Dallas Fed surveys of Texas manufacturing and service executives back up the caution. Manufacturing growth slowed in March, service revenue came in nearly flat, and forward-looking outlooks dimmed, with many executives pointing to the war in Iran.
The national backdrop: U.S. employers added 178,000 jobs in March — about three times the consensus estimate — but Capital Economics' Stephen Brown cautioned the print "mainly reflects a reversal of strike and weather effects" from a weak February, not genuine momentum.
➥ THE TAKEAWAY
Read the fine print: Texas hiring is real, but the structural story hasn't changed. Strip out the optimism and 1.1% is the number that matters for Sun Belt CRE. Immigration constraints, geopolitical uncertainty, and softening business sentiment haven't budged.
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Around Texas
➥ Texas is losing over $1B a year to data center tax breaks, now under scrutiny as costs soar with AI-driven growth.
➥ Austin’s pandemic housing boom fueled a surge in luxury towers downtown while pushing more affordable single-family growth into far-flung suburbs.
➥ Austin is reviving corporate tax breaks and incentives to combat slowing growth, budget shortfalls, and rising suburban competition.
➥ Houston’s development surge is being fueled by walkable, mixed-use projects as strong demand and available capital reshape the urban core.
➥ DFW rents are falling as supply outpaces demand, even as occupancy and job growth remain relatively stable.
➥ Lurin Capital filed for Chapter 11 amid mounting defaults, lawsuits, and a rapid unraveling of its multifamily portfolio.
➥ Dallas leads the U.S. in retail construction with nearly 7M SF underway, driven by suburban growth and strong pre-leasing.
Follow the Money
| INDUSTRIALBRYAN Texas A&M broke ground on a $226M semiconductor R&D hub to boost workforce training and anchor future chip investment. |
| INDUSTRIALAUSTIN Developers are finalizing a $78M–$108M space industry campus near Austin to support aerospace R&D, defense tech, and education initiatives. |
| OFFICEHOUSTON Interra acquired Houston’s 4.5M SF Greenway Plaza out of receivership, betting on value-add upside despite office market headwinds. |
| INDUSTRIALNORTH TEXAS Dalfen bought a 1.4M SF industrial portfolio for $207M, doubling down on last-mile logistics in supply-constrained markets. |
| RETAILDALLAS DFW saw a wave of deals led by the 851K SF Village at Allen sale, alongside new leases, industrial starts, and asset trades. |
| ENTERTAINMENTHOUSTON Houston’s Toyota Center will undergo a $180M renovation to modernize amenities and enhance premium fan experiences. |
| RETAILDALLAS Crow Holdings acquired a 76K SF Dallas shopping center near Love Field, capitalizing on strong leasing and location fundamentals. |
| RETAILDALLAS Highland Park Village owners are planning an $11M expansion to add space at the iconic Dallas retail center. |
📈 CHART OF THE WEEK
Houston’s multifamily construction pipeline has dropped to a 14-year low as high capital costs and tighter financing are stalling new development.
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