In a recent report by MSCI Inc., Dallas-Fort Worth has emerged as the undisputed leader in commercial real estate investment in the United States this year. With $13.2 billion in commercial transactions so far, Dallas-Fort Worth has outperformed all other metro areas.
While D-FW is up, it important to note that overall, the market is down 64% from last year! But, this decline is also relative to the record-high transaction levels of the first half of 2022.
On a national level, all commercial property sectors have experienced annual price declines, with the commercial property price index for all sectors down 9% since September 2022. Distressed commercial real estate in the United States has reached a 10-year high, primarily driven by rising interest rates and weakened office demand. Office properties account for half of the $80 billion in distress, highlighting the impact of remote work on the sector.
Surprisingly, the multi-family apartment sector has seen the steepest decrease, with a 12.8% fall in prices and a 70% drop in sales volume compared to last year. Dallas-Fort Worth, although still experiencing high demand for apartments, faces an oversupply situation, leading to a 1% decrease in rents from 2022 and a 6.7% vacancy rate.
In the industrial sector, Dallas-Fort Worth maintains its position as the nation’s top spot for industrial construction, although there has been a slowdown in 2023.
Then, the crowning jewel is the retail market in Dallas-Fort Worth. It is currently at a low 5% vacancy rate, with increased leasing and construction activity driving higher rents, which are increasing faster than the national average.
Despite these challenges, the data indicates that the rate of price declines has slowed in recent months, and debt is still available for most property types, albeit with stricter terms. Dallas-Fort Worth remains a strong market for commercial real estate, and as buyers and sellers adjust to the new interest rates, market activity is expected to pick up.
If you’re considering investing in commercial real estate, contact M&D Commercial Group, where our knowledgeable agents can guide you through the local market and help you make sound investment decisions.
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