Texas Market Reports

As Return to Office Stalls, Return to Medical Offices Sees a Boost Throughout Texas

by Taylor Williams November 19, 2024

By Ben Reinberg, CEO, Alliance Consolidated Group of Cos. In late September, Texas-based software company Dell became one of the latest major companies to announce a full return-to-office (RTO) mandate. In a leaked memo to employees, Bill Scannell, the company president, wrote, “As we enter a new AI world, in-person human interaction will be more important than ever.” Just a few weeks later, Amazon announced a full RTO policy. And over the summer, Meta, the parent company of Facebook, informed employees that remote team members would not be eligible for promotions. These RTO announcements from major organizations have dotted the web for years following the pandemic, leading many investors to hope for a slow-but-steady march back to busy office buildings and revitalized downtowns throughout the Lone Star State. The actual data, however, tells a much different story. Reports on Texas’ commercial real estate markets indicate that nearly a quarter of all office space is vacant nearly four years after the pandemic. According to CommercialEdge, Dallas’ office vacancy rate is 22.9 percent, and Austin’s is 27.8 percent. Workforce trends reflect a similar situation. Austin was named the No. 1 metro for remote workers in 2023 by Coworking Mag, with nearly a …

November 19, 2024

Industrial Market Reports Texas Texas Market Reports

Dallas-Fort Worth: A Leading Industrial Powerhouse in 2024

by Taylor Williams November 12, 2024

By Josh Wheeler, senior vice president of development & acquisitions, Stonemont Financial Group The Dallas-Fort Worth (DFW) metroplex remains at the forefront of industrial growth in the United States. According to CommercialEdge, the market boasts a pipeline of 15.7 million square feet under construction as of June 2024 after several large deliveries were completed in the first half of the year. Following several years of explosive growth caused largely by the rise in e-commerce during the pandemic, the market has cooled due to economic headwinds. Tenants are taking longer to make decisions about their spatial needs. Construction has slowed after almost 18 million square feet of space was delivered in the first half of the year, including Stonemont’s 565,000-square-foot industrial park in Wilmer, just outside the metro area. As a result, vacancy rose to 11 percent in the third quarter of 2024. The market has continued its 14-year-long trend of positive absorption, though 2024’s year-to-date absorption is 6.5 million square feet below last year’s number. However, there is ample reason to remain bullish on DFW and to view the market as well-positioned to maintain its status as one of the country’s leading industrial powerhouses. Trends remain favorable for the market, …

November 12, 2024

Conference Coverage Market Reports Multifamily Texas Texas Market Reports

Sweet Spot: The Ideal Cap Rate Range for Buying Multifamily Assets in Texas Today

by Taylor Williams November 6, 2024

By Taylor Williams The concept of cap rates is an interesting phenomenon when you stop to think about it. Short for “capitalization rate” and calculated as net operating income (NOI) divided by sales price, this all-important real estate metric represents a page borrowed from Wall Street’s playbook, a savvy maneuver by investors to create a vehicle of asset valuation and apply it to select securities on a widespread basis. The circumstances of the metric’s inception are largely unknown, but all that matters is that the real estate industry has successfully propagated the use of cap rates as a crucial mechanism to underwriting and pricing transactions for these assets. And the most basic thing to know is that to a point, sellers like low cap rates because they reflect high purchase prices, and buyers prefer high cap rates for the opposite reason. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. Yet for all their ubiquity, cap rates are fluid, representing snapshots of valuations at random points in time. Tenants move out, leaving spaces vacant, and a property’s …

November 6, 2024

Conference Coverage Market Reports Multifamily Texas Texas Market Reports

InterFace Panel: Institutional Capital’s Return Signifies Long-Term Strength of Austin Multifamily Market

by Taylor Williams October 17, 2024

By Taylor Williams AUSTIN, TEXAS — Sources of institutional capital are slowly trickling back into buyer pools of deals for multifamily properties in Austin, a move that marks an inflection point within the sector as a whole and speaks to investors’ long-term faith in that market’s fundamentals. And faith is perhaps just what the doctor ordered. In some ways, Austin has become a victim of its own success over the past decade, a sort of cautionary tale of growth gone too heavy too fast. The feverish attempts of multifamily developers to keep pace with demand during that time have come to a head, and the market now languishes in a state of oversupply. With rents softening and interest rates only just now showing concrete signs of decreasing, institutional capital has been more than content to sit on the sidelines of this market for the past 18 or so months. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. But that is starting to change, at least according to a panel of multifamily investment sales professionals who spoke …

October 17, 2024

Conference Coverage Industrial Market Reports Texas Texas Market Reports

Tenant Activity Has Slowed in DFW Industrial Market, But That’s Not Necessarily a Bad Thing, Say InterFace Panelists

by Taylor Williams October 10, 2024

By Taylor Williams In the eyes of some commercial brokers, especially those who represent tenants, there actually is such a thing as too little vacancy. When markets are running super-hot, meaning demand is far outstripping supply, tenants have minimal options and often end up paying premiums just to be able to secure space. That’s great for landlords — to a point — because markets can only bear so much rent growth in so much time before tenants start looking for workarounds to physical occupancy. Enter the Dallas-Fort Worth (DFW) industrial sector, which has been on fire for the past seven-plus years. Explosive volumes of new deliveries, frenetic paces of absorption, stiff competition for space, record levels of rent growth and a national coming-out party as an undeniable Tier 1 market have all been hallmarks of this activity. But such torrid paces of growth were never really sustainable in perpetuity, and although both the supply and demand sides of the market have cooled, the slowdown in some ways reflects a return to healthier dynamics. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements …

October 10, 2024

Market Reports Texas Texas Market Reports

San Antonio Suburbs Step Up Their Game

by Taylor Williams October 2, 2024

By Taylor Williams Earlier this year, data from the U.S. Census Bureau emerged stating that San Antonio had added 22,000 new residents between July 2022 and 2023, making it the nation’s fastest-growing city during that time. That figure exceeded the 18,900 new residents added between July 2021 and 2022 and brought the Alamo City’s total head count to about 1.5 million people, making it the seventh-largest U.S. city by population. With such growth comes pressure from both the anchor city and its surrounding municipalities to deliver solid employment, housing and recreation options for residents. City officials and leaders can make good on that charge by a variety of means and mechanisms, and rarely does one city or submarket’s blueprint for accommodating growth match that of another. As such, the suburbs surrounding the San Antonio area are increasingly standing on their own as unique communities that are more than capable of attracting quality housing development, national retail and restaurant users and new employment opportunities. In this story, we take a closer look at specific projects and initiatives that are helping some of these municipalities effectively and efficiently ride the wave of regional growth. Seguin: Revitalization 101 Located off I-10 on San …

October 2, 2024

Market Reports Mixed-Use Restaurant Retail Texas Texas Market Reports

Placemaking: The Secret to Success of Texas’ New Urban Retail Developments

by Taylor Williams September 25, 2024

By Burdette Huffman, executive vice president, Blue Ox Group Why are people drawn to spend money and time at certain places in a city? What makes someone want to do their shopping, stop for coffee or plan a date night at one spot versus another? Sometimes, it’s a special location or an emotional connection to a particular vendor. But in many instances, the draw is entirely by design. It’s an intentional, strategic urban planning tactic that’s been around for decades, and it’s called placemaking. What Is Placemaking?The concept of placemaking has been around since the 1960s thanks to urban planning pioneers and was bolstered in the 1990s by the smart growth agenda of organizations like the Urban Land Institute. In modern parlance across the state, it’s not much different. Put simply, placemaking is about creating a special place where people want to be. Placemaking is about imagining and then developing a place where parents might want to grab coffee after dropping their kids off at school. Or it’s a place where date nights happen because there’s a great new spot for dinner and maybe space to take a walk or grab a drink afterward. If it’s executed correctly, it’s the …

September 25, 2024

Conference Coverage Market Reports Retail Texas Texas Market Reports

InterFace Panel: Unanchored Strip Centers Make Good Opportunities for Retail Developers in Today’s Market

by Taylor Williams September 18, 2024

By Taylor Williams DALLAS — It’s an exceptionally challenging time to be developing retail space in the metroplex. Pick your poison: Interest rates that have tripled in two years, restricted proceeds from lenders, longer entitlement and permitting times, limited land for new projects. Between all these barriers to growth, the deck is seemingly stacked against brick-and-mortar retail developers these days, despite the fact that in Dallas-Fort Worth (DFW), occupancy is very high and population growth shows little sign of slowing. Of course, each of those factors is exacerbated with large-scale developments. More land and rentable square footage require the raising of more debt and equity, which translates to heftier interest and dividend payments, respectively. If the site is an assemblage, then predevelopment is more time-consuming, and with the push outward to new suburban paths of growth, those sites may not already be zoned for retail. If rents aren’t trending upward, those factors alone can kill a project in its infancy. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. For all these reasons, some owner-operators see opportunity in building smaller …

September 18, 2024

Industrial Market Reports Texas Texas Market Reports

Texas Reaps Benefits of Semiconductor Manufacturing Deals

by Taylor Williams September 4, 2024

By Taylor Williams An attractive, successful woman walks into a bar and posts up. Within minutes, multiple men have approached her, offering to buy her a drink. And while she doesn’t really need the freebie, who can blame her for accepting it? After all, nothing’s more American than having a little extra icing on your cake. To analogize this scenario to commercial real estate, think of Texas as the woman and the burgeoning semiconductor industry as the free drinks. The state’s economy was doing just fine without the mega-boost from manufacturing initiatives stemming from the 2022 CHIPS and Science Act, which has resulted in tens of billions of dollars in capital investment for North and Central Texas. But with a well-deserved reputation for welcoming businesses of all types, Texas wouldn’t be Texas if it didn’t court and embrace these manufacturers in these areas, which for many years were predominantly rural communities. Semiconductors, or computer chips, are essential elements of virtually all electronic and computing devices, including electric vehicles, phones, tablets, TVs, home appliances, solar panels and video game consoles. The CHIPS and Science Act laid the framework for the country to gain market share in terms of manufacturing these components, …

September 4, 2024

Market Reports Retail Texas Texas Market Reports

InterFace Panel: Despite Robust Demand, Houston Retail Owners Face Challenges in Adapting to New Market Conditions

by Taylor Williams August 28, 2024

By Taylor Williams HOUSTON — High occupancy rates paired with low volumes of new construction have been the prevailing narratives in many major U.S. retail markets over the past couple years, and Houston is no exception. And while that dynamic ensures healthy rent growth within stabilized properties, when paired with high construction costs and higher interest rates, the result can be growth that feels rather sluggish. According to second-quarter data from Colliers, the Houston retail market currently has a vacancy rate of 5.2 percent, a mark that has held steady for the past year. The market added about 1.1 million square feet of new product through the first six months of 2024 to go with roughly 732,000 square feet of positive absorption. The average asking rent stands at $20.38 per square foot, which represents a 3.8 percent increase relative to the second quarter of 2023. Rosy as these figures appear on the surface, they do not tell the full story of the market. Most owners cannot afford to simply sit back and let the deals come to them at rents they dictate. For although demand exceeds supply of quality space, the aforementioned macroeconomic factors are squeezing owners’ profit margins, meaning …

August 28, 2024

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