By Diego Arroyave, Senior Vice President
Lenders and investors increasingly see Dallas-Fort Worth as an attractive place to deploy capital, as its commercial real estate market consistently ranks at the top in national growth metrics. Last year, DFW posted record commercial property sales transaction volume of $20.5 billion, a year-over-year increase of 2 percent. This made Dallas the country’s No. 3 investment market, behind Manhattan and Los Angeles.
Investors have targeted DFW in a quest for yield not found in gateway markets, showing a willingness to take on more risk to achieve their yield goals. Along with acquisitions, investors and lenders are funding the region’s construction boom, which spans all sectors. DFW has also been a magnet for redevelopment, as investors find value in low price-per-square-foot properties in need of repositioning. According to Real Capital Analytics, the region saw a 56 percent increase in sales of sites and properties tied to future development and redevelopment in 2016. This year-over-year increase was the second-highest in the country.
Strong absorption across all product types is driving the investment activity and pricing. It’s supported by soaring population and employment growth. The DFW area is now home to more than 7 million residents, making it the fourth-largest metropolitan area in the country. The geographic location of the region is another strong selling point, as DFW offers equal accessibility to both the East and West Coasts and is in the center of the North American continent’s four major business centers: New York, Los Angeles, Toronto, and Mexico City.
The improving labor market, positive absorption, and other strong economic indicators suggest that, for the immediate future, capital will continue to target Dallas-Fort Worth, as it continues to outpace other markets across the country.
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Diego Arroyave is a Senior Vice President in Cushman & Wakefield’s Capital Markets Practice Group in Dallas. Contact him at firstname.lastname@example.org.