Over the last decade, increased demand has strained core urban assets in major markets such as New York, Miami and Washington, D.C., and has driven investors to emerging “New World Cities.” The Dallas-Fort Worth-Arlington MSA has risen to be one of top property investment markets in this category. This is corroborated by CMBS data, as the Dallas MSA ranks seventh among all market areas in outstanding private-label loan balance, and fourth in total outstanding loan count.
Per an Xceligent report, total vacancy for the Dallas MSA has trended downward for both the office and industrial sectors since Q4 2015. Net absorption for area office space totaled roughly six million square feet in 2016, while industrial net absorption tallied over 19 million square feet. Trepp data confirms these trends as average loan occupancy has consistently increased since 2010. Average loan occupancy clocked in at 90.6% in February 2017, with the multifamily and industrial sectors posting the highest rates of 94.7% and 94.3%, respectively.
According to Xceligent, Class A office properties underwent the highest growth in net absorption within the office sector. In particular, those properties located in submarkets with low vacancies and minimal construction activity in particular are expected to receive increased rents throughout 2017. Some of those submarkets include Preston Center, Denton/ Lewisville, and South Irving/Grand Prairie. Conversely, Far North Dallas has the highest amount of office construction in the pipeline by far at 3.03 million square feet. As for the industrial sector, the Great Southwest submarket leads with 4.43 million square feet in construction.
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April 3, 2017