Dallas-Fort Worth Ranks Second for Commercial Real Estate Investment in 2019

Dallas — March 20, 2019 — A recent survey of commercial real estate investors ranked Dallas-Fort Worth as one of the top investment targets among Americas metros. Investors listed DFW the second most desirable investment market for the third year in a row, behind only Los Angeles, according to CBRE’s 2019 Americas Investor Intentions Survey.

The survey, which covers all asset types, found that, in 2019, more investors are prioritizing secondary markets that can offer greater potential for both equity and income growth. Investor interest in secondary assets increased for the fifth consecutive year (33 percent) to gain significant ground on value-add (37 percent) as the most preferred strategy.

The survey also examined how investors view each of the different asset types:

• Industrial & Logistics is still the preferred property type, cited by 39 percent of investors as the most attractive for investment in 2019.
• Multifamily closely followed in second place, with 37 percent of investors naming it as the next most attractive property type—up from 20 percent in 2018.
• Office was cited by 10 percent of investors as the most attractive for purchase in 2019.
• Retail’s share of investors (9 percent) has held essentially steady over the past three years, despite competition from e-commerce.
  

“We are seeing unprecedented investor interest for industrial and logistics properties in Dallas-Fort Worth coming not only from U.S. investors, but also global capital from Asia, primarily Singapore, Europe and the Middle East,” said Randy Baird, Executive Vice President, Industrial & Logistics.

“DFW is capturing the interest of all forms of capital because we are at a central point in the U.S. supply chain, we have a pro-business environment with a low cost of doing business and we have nation-leading population growth,” Mr. Baird added. “Investors are attracted not only by the current market fundamentals, which are stronger than ever, but by the long-term view that DFW and Texas as a whole will continue to outpace the country in population and job growth, translating to long-term asset appreciation.”

“In terms of multifamily investment, DFW has been attractive to capital due to the staggering economic growth we have seen through this cycle, resulting in strong absorption and rent growth in the multifamily space,” said Jeremy Faltys, Senior Vice President, Multifamily. “This economic growth paired with multifamily being viewed as the most recession proof asset class has led to unprecedented flows of capital into the multifamily space.”

Overall, the survey shows that investors will remain active in commercial real estate markets this year, with 98 percent of respondents intending to make acquisitions. There has been a pronounced shift toward greater caution, with the share of investors planning to either maintain or increase spending in 2019 falling to 75 percent (from 88 percent in 2018).

“Continued strong real estate fundamentals, combined with historically deep debt and equity capital markets, provide good momentum for 2019. Investors are reducing risk and protecting income streams through diversification. Pricing is at or near the previous peak for most asset types in prime locations, so investors are seeking yield in secondary markets and alternative asset types,” said Chris Ludeman, Global President, Capital Markets, CBRE.

Survey respondents and methodology

The Americas Investor Intentions Survey 2019 was conducted among CBRE clients during November and December 2018. The Americas survey is part of a larger global survey and covers the responses of nearly 300 investors who indicated the Americas is the global region that they are responsible for in their current position. The Americas respondents represent a diverse range of real estate companies and investor types. The largest investor groups in this year’s survey were developers/owners/operators and private equity, which is a change from prior years. Institutional investors—sovereign wealth funds, insurance companies and pension funds—account for 8% of respondents. Most respondents (68%) have less than $10 billion in assets under management (AUM). Eleven percent have more than $50 billion in AUM, and the remaining 21% fall somewhere in between. Institutional investors have significantly more capital to deploy—43% of institutional respondents have more than $50 billion in AUM. Nearly all Americas respondents are based in the U.S. This year’s survey included slightly fewer cross-regional investors than in previous surveys, particularly investors based in Canada.