CRE Markets in DFW Experience Slowed Growth in Q1

 In BLOG

Quarter after quarter, year after year, we’ve heard about all the crazy growth across Dallas-Fort Worth. But for the first time in years, several real estate markets across the metroplex have slowed. So, what do the numbers look like for office, multifamily, retail and industrial? Bisnow reported on each market in DFW and we’ve provided a quick snapshot below. As you’ll see, industrial is still booming and is the exception. While the markets have cooled slightly, experts stress that DFW’s outlook is not negative; rather, we’re settling into a more normal pattern.

OFFICE

  • Vacancy is up to 20.5%
  • Asking rents have decreased to $24.25/SF
  • Absorption was negative for the first time in 31 consecutive quarters (loss of 470K SF)
  • DFW still boasts one of the most robust pipelines in the country – 4.9M SF under construction, 20 projects, 16/20 projects are spec, 34% of spec is pre-leased
  • Continued job growth has created continued optimism – 2.7% growth rate in DFW compared to national average of 1.6% (DFW is second in nation) 

RETAIL

  • Vacancy has leveled at 20.5%
  • Occupancy remains at an all-time high
  • Construction costs and time are hindering development
  • Slide in asking rents from $15.83/SF in Q4 to $15.73/SF in Q1

MULTIFAMILY

  • Vacancy is up to 5.6%
  • Demand fell short of deliveries
  • Class-A product in Frisco, Allen and McKinney is taking it especially hard as thousands of luxury units are being delivered (7.5% vacancy in these cities)
  • Job growth should bail this market out of its overbuilt pockets
  • 4% increase in rent this quarter, compared to an average of 6.5% or higher the last three years
  • Investor interest is still strong in Farmers Branch, Addison, Carrollton and Arlington
  • Average price per unit appraised increased by 10% over the last three years to $98K per door in 2017
  • Investors will be most interested in Class-B and C product

INDUSTRIAL

  • Vacancydroppedto a razor-thin 5.8%
  • Consumer goods, logistics companies and e-commerce drove an incredible 3.9M SF of absorption in Q1
  • Completions fell to 2.3M SF in Q1
  • Pipeline of 19.3M SF remains flat
  • Demand is strong with 45% of construction pre-committed – well above historic 30% pre-committed level

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