Texas Market Reports

Taking its Toll: How the Pandemic Is Shifting Activity Along the Dallas North Tollway

by Taylor Williams September 21, 2021

By Greg Langston, principal, managing director, Avison Young The Dallas North Tollway (DNT) is a staple thoroughfare for Dallas Fort-Worth (DFW), connecting the metroplex’s urban core in Dallas to the thriving northern suburbs. Over the past 12 years, since the recovery from the Great Recession began, much of the market’s activity and energy has occurred along this tollway. Weighing the performance of assets in submarkets that connect to the DNT versus those that don’t, those in DNT-connected submarkets have outperformed in total and in annualized averages. Centers of Action Three core submarkets — Uptown/Turtle Creek in the urban core, Upper Tollway/West Plano and Frisco/The Colony in the far north region — have driven much of this growth. The northern suburbs have done a great job attracting massive corporate headquarters and relocations deals, while Uptown/Turtle Creek has created a unique identity as a thriving urban hub full of walkable amenities, mixed-use developments and more. Beyond the DNT, major developments like Cypress Waters have helped drive strong interest and activity to the center of the region. To the west, Tarrant and Denton counties have seen robust growth along State Highway 114, with several major institutional employers like Deloitte, Charles Schwab and Fidelity …

September 21, 2021

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Dallas Multifamily Market Sets Pace for National Recovery

by Taylor Williams September 14, 2021

By Jon Krebbs, managing director, The Multifamily Group The COVID-19 crisis has certainly had a heavy impact on many sectors of the economy; however, the multifamily sector still has had a triumphant year. The Dallas apartment sector has maintained healthy occupancy in 2021, and the investment side of the market is picking up due to buyers having constrained capital during the height of the public health crisis in 2020. Dallas-Fort Worth (DFW) has benefited from major corporate relocations since the 1980s. Over the last decade, corporate interest has expanded and that brought multiple Fortune 500 companies’ headquarters to the region due to its pro-business conditions. It is no wonder why the market is on the radar of C-suite leaders and governing boards — its favorable workforce, affordable cost of housing, lack of state income tax and steady supply of new apartment buildings are all factors. Simply put, apartment investors regard DFW as an opportunity for growth. Between 2019 to 2020, approximately 120,000 people from outside the metroplex have been added to the local population. This number has substantially increased over the last two years due to COVID-19. Market Overview The Dallas multifamily market has been hot for the last seven …

September 14, 2021

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Dallas Office Market: Do We Need, Want or Have to Return?

by Taylor Williams September 7, 2021

By Cynthia Cowen, managing director, Cushman & Wakefield Throughout the past 18 months, there has been an ongoing discussion about returning to the office. Culturally, financially, production-wise — does it make sense to return? There is so much that goes into making these decisions, and there isn’t a simple yes or no answer. It might depend on the industry, the generational differences among employees, the job functions being performed and more. Baby boomers tend to be critical of millennials’ desire to have greater balance and their preference for working at home, but what about recent college grads? They need to absorb as much as information as they can, but how do they achieve that at home? What about those in child-bearing years? They may want to stay home to juggle it all under one roof. In 25-plus years in the commercial real estate industry, our team has never witnessed employees possess so much control. In speaking with tenant representation brokers and their clients, the message remains that employers are struggling to figure out how to get their employees to come back to the office. According to Cushman & Wakefield’s “Workplace Ecosystems of the Future” report, there is a strong consensus …

September 7, 2021

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Supply of Capital Exceeds Available Deals in Texas

by Taylor Williams August 24, 2021

By Taylor Williams There is a pronounced imbalance between the amount of capital looking for placement in commercial real estate in Texas and the number of available deals on the market, making it a good time to be a borrower or seller. In addition to the time-tested fundamentals that have fueled growth in Texas over the last decade — exceptional job and population growth, corporate relocations, a low-regulation business environment — the state has seen elevated capital flows over the last nine months as a leader in reopening and supporting its economy in response to COVID-19. The fact that the state’s economy never really had a prolonged, major shutdown during the pandemic means that investors have had more reliable data about cash flows and other key metrics for Texas real estate assets than in many other markets. Access to that data has reduced some of the uncertainty that investors despise but which has been rampant over the last 17 months. As a result of these factors, more capital sources are targeting deals in Texas. “The inflow of capital to Texas from all parts of the country has been tremendous, dating back to the late third and early fourth quarters of …

August 24, 2021

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Austin Multifamily Market Continues Meteoric Rise as Investors Target Central Texas

by Taylor Williams August 20, 2021

By Andrew Dickson, managing director, Newmark Almost daily, Newmark’s Central Texas multifamily capital markets group speaks with investors looking to enter the Austin multifamily market. With headlines aplenty about corporate relocations to the city, investors are often looking to trade tax-burdensome environments for business-friendly ones like Texas. What is driving the interest, and what is it actually like buying multifamily assets in Central Texas today? Economic Synopsis According to data from Opportunity Austin, the economic initiative of the Greater Austin Chamber of Commerce, more than 100 companies have made relocation or expansion announcements in Austin, resulting in over 15,000 jobs pledged through June 2021. Opportunity Austin tracked 22,114 new jobs announced in 2020 — a record-breaking year — and the city is presumably on its way to another record-setting year in 2021. It is worth noting that many of the jobs announced in 2019 and 2020 are still forthcoming. Like many industries, tech firms often cluster together. Whether relocation announcements are due to existing synergies with other firms or cost-reduction strategies, we anticipate the trend of tech or tech-adjacent companies moving to Central Texas to continue. Due to these local shifts, as well as macroeconomic housing impacts, the single-family housing …

August 20, 2021

Industrial Market Reports Texas Texas Market Reports

Austin’s Industrial Market Reaches New Heights — But Will It Stay There?

by Taylor Williams August 16, 2021

By Bob Mohr, chairman, Mohr Capital When people talk about Austin, they call it one of the best places in the country to live. They talk about the live music scene, the die-hard fans who flock to The University of Texas football games and the hills sprouting bluebonnets. They talk about Austin attracting California residents and companies during the pandemic, bolstering the city’s tech base and positioning it as a significant Silicon Valley rival. They talk about office demand and the increasing costs of single-family housing. Few people mention Austin’s industrial market, but they really should, because there’s a heck of lot to talk about. At 55 million square feet, Austin’s industrial market is still fairly small, especially compared with the Lone Star State’s big three metros of Dallas-Fort Worth (DFW), Houston and San Antonio. Despite its size, the Austin industrial market is experiencing significant demand from various companies, particularly e-commerce and service-related tenants. And even though Austin tends to be a bit of a bubble market, money is flowing in the form of new construction and investor interest. Absorption Pushes Occupancy Historically, Austin has not been a big box warehouse market. Most industrial inventory is smaller, developed to cater …

August 16, 2021

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Three Trends That Are Influencing Commercial Real Estate Design in Austin

by Taylor Williams August 10, 2021

By Travis Albrecht, design director, AIA, Gensler Austin is bursting at the seams — just ask anyone who is currently trying to buy a home here. According to the latest U.S. Census Bureau figures, the city’s population has increased by 22 percent since 2010. The city will continue to grow and evolve, but people are attracted to its longstanding welcoming and laid-back culture. How does that translate into design and urban planning for this expanding, vibrant metropolis? Here are the major trends impacting design across commercial real estate in Austin that we have seen in our work as architects and designers, as well as insights gleaned from clients. Experiential Office Buildings As we adapt to a hybrid lifestyle where the workforce is split between the office and home, the role of the workplace and the office building will be to strengthen relationships, teach others and build community, culture and purpose. People want to work in dynamic, activated environments, which is why today’s successful office buildings and workplaces are now included within mixed-use developments, rather than as standalone campuses or office parks. Ground floors must be activated with retail space, service amenities, artwork, community or public gathering areas, even when workers …

August 10, 2021

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How Multifamily Investors Can Find Success in the Competitive Dallas-Fort Worth Market

by Taylor Williams July 30, 2021

By Ryan Mueller and Mitch Faccio, vice presidents of acquisitions, MLG Capital There’s no end in sight for the rising competition among multifamily investors in the desirable Dallas-Fort Worth (DFW) market. These days, it’s common for a fully marketed multifamily property in the DFW metroplex to receive upwards of 50 offers during the first round of the sale process alone. This sheer competitiveness in acquisitions has forced sellers to pursue several rounds of bidding and buyers to differentiate themselves through pricing and terms. In addition, the level of competition has made it difficult for new buyers to participate in the market at all. The metroplex has been, and continues to be, the top transactional market in the country for multifamily. In the last 12 months, sales volume across Texas has exceeded $19.2 billion, with DFW accounting for $9.6 billion, or approximately 50 percent of the Lone Star State’s total sales volume. DFW has outpaced both Atlanta and New York City by more than $1 billion in sales volume in the last year, with those markets seeing $8.6 and $8.4 billion in multifamily sales, respectively. At the same time, we are seeing capitalization rates compress across the metroplex. In the last …

July 30, 2021

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Return of Urban Renters Fuels Multifamily Demand in Houston

by Taylor Williams July 27, 2021

By Chris Curry and Todd Marix, senior managing directors of investment sales, Berkadia Things are looking up in Houston, and that rings especially true for the city’s growing multifamily sector. In-migration, a rebounding labor market and a high concentration of Fortune 500 firms and talent have made the Bayou City an attractive place for investors and residents alike. Recently, a slowdown in deliveries of new apartments has coupled with strong demand to bring rent levels to historical highs and elevate absorption across all asset classes. Part of this trend can be attributed to the continuing return of urban renters — those who left for suburban submarkets but are making a comeback into dense city centers. Houston has earned a reputation for being a compelling market in the Sun Belt region. Aside from basic fundamentals that have buttressed its apartment market, the city’s low cost of living and outward expansion have historically offered developers and investors plenty of room to operate while increasing returns in the process. Now, with demand easily surpassing supply, occupancy rates are over 90 percent for the first time in two years, which is truly remarkable considering how much more supply exists today. Even more resounding is …

July 27, 2021

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Texas Affordable Housing Developers Find Creative Ways to Secure Gap Financing

by Taylor Williams July 23, 2021

By Taylor Williams In an era in which land and construction costs are perpetually on the rise, developers of affordable housing must be able to navigate a complex web of federal, state and local programs in order to secure gap financing — the capital that covers the delta between total development costs and those covered by tax credit equity, municipal bonds or other types of subsidies. Understanding and effectively utilizing the various initiatives and incentives — density bonuses, private activity bonds, tax increment reinvestment zones, energy efficiency compliance — is no easy task. Time and manpower aside, this process is further complicated by the fact that state and municipalities have their own laws and regulations when it comes to these programs. But successfully navigating them is key to eliminating development costs not covered by tax credits — the critical piece of financing that lies at the heart of virtually every affordable housing project in Texas. For without these subsidies, the economics of paying market-rate land prices and record-high construction costs to develop housing in which rent levels are capped simply doesn’t work. “As developers that want to build high-quality affordable housing that’s basically indistinguishable from market-rate product, what we need …

July 23, 2021

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