Friday, December 16, 2016

Dallas Takes Down Large Trades

Boosted by strong office and industrial tenant demand, which shows few signs of slowing, Dallas/Fort Worth has captured more than half of the region’s largest trades thus far in 2016, followed by Austin, says the CBRE MarketFlash. According to data from Real Capital Analytics, demand for DFW office product is high and attracting a good deal of buyer attention in the region.
Much like office leasing throughout the region, office sales outlooks are divided. Cap rates throughout the region’s markets saw increases of less than 15 basis points, except Dallas/Fort Worth, which is reported to decline further.
Across the region, retail continues to be one of the strongest product types both in leasing and capital markets. Most Texas metros, including Dallas/Fort Worth, Austin and San Antonio, had notable cap rate compression in stabilized properties throughout the first half of the year, says CBRE.
After several years of strong rent growth and an active construction market, multifamily remains an attractive property type for buyers. The majority of the region’s metros are forecasting stable cap rates through the end of the year.
The weakest commercial property type in the region is hotels, which had cap rate appreciation in almost every market except Dallas, says CBRE. While new supply and market fundamentals are in play, this national trend presented itself across various hotel asset classes.
In preparation for the RealShare Dallas Fort Worth conference on Wednesday, Steve Pumper, executive managing partner of Transwestern and moderator of the “Institutional Investments: A DFW Deep Dive” session gave his perspective on what is driving the demand.
“The pro-business environment in Texas is behind the state’s economic growth,” says Pumper. “With our high-quality labor force, relatively low cost of business and lifestyle, central location, a major international hub in DFW airport and excellent universities located here (Rice, Baylor, Texas A&M, SMU, UT, Texas Tech), talent is drawn to the area from other areas of the country. This creates a wonderful opportunity for millennials and provides the live work play CBD they are seeking. We’ve really evolved based on plans put in place 10 years ago. Our roads are excellent and DART is progressing in the right direction. With this proactivity in recruiting companies to come to Texas and providing incentives to them, this gives a global competition advantage. We have achieved highs on pricing, for example, $400 per square foot at Legacy and $500 per square foot with recent Victory/Uptown acquisitions. Some of that came from international money placing bets on the DFW area. It’s a corporate city with a diversification of industries that bodes well for sustainability and economic growth, as we have the ability to withstand downturns. We’ve evolved over the last five years and some of the regional hubs that have entered Dallas include Toyota, State Farm, Liberty Mutual, JP Morgan (consolidating), Schwab and FedEx.”

See Full Article Here
Lisa Brown/GlobeSt