Texas Market Reports

By Cody Payne, senior vice president, Colliers International. As strong job growth over the past decade has brought more and more investors to Texas, many of these buyers have looked to office product due to the appealing going-in returns that the property type offers. In addition, many cross-product owners look at office investing to make higher returns outside of their current portfolios. As buyers look toward the office market, there are many factors that need to be considered before making an informed decision. Along with these basic considerations, the impacts of COVID-19 on real estate investing are also important to understand when looking at an office deal. The Dallas-Fort Worth (DFW) market in particular has experienced an influx of cross-product buyers from other asset types such as retail, multifamily and self-storage during this cycle. The higher rate of return is the primary catalyst behind their motivation to purchase office investments. All asset classes are different and so are their opportunities, whether immediate or long-term. Understanding what sets office apart from other types of commercial investments is key to a successful operating strategy. Hidden Costs of Ownership  One important factor to consider when buying office properties is that there are many …

It’s still too early to pinpoint how long and how severe the disruption caused by the outbreak of COVID-19, the disease caused by the novel coronavirus, will be to the major office markets of Texas. But brokers in Dallas, Houston and Austin are already seeing their markets display short-term adjustments with regard to deal velocity and structure. As commercial brokers know all too well, every deal is different. Companies are making decisions on whether to delay or pursue office lease consolidations, renewals or expansions based on their unique cash-flow situations, sales outlooks and current positions in their business cycles. In addition, because many office-using jobs don’t qualify as essential services, the uncertainty about how long employees will have to continue to shelter in place and work from home is leading many companies to reassess their short-term needs in terms of size, location and density. Lastly, there are the office users whose businesses have already been walloped by reduced consumer spending. For these companies, decisions about future leasing activity may very well be taking a backseat to a more pressing short-term need to escape an existing lease with minimal bloodshed. Office brokers have their hands full addressing the unexpected and unforeseen …