Welcome back to the Deep Dive. Today we’re we’re really gonna cut through the noise in commercial real estate. We’ll be zeroing in on the most important headlines, specifically from June 19th through the 27th, 2025. I’m quite curious myself to see what patterns emerge this week. Yeah, me too. Our mission today, like always, is to pull out those vital insights, maybe some surprising facts.

Basically give you a shortcut to being really well-informed about the critical dynamics shaping commercial real estate right now. Absolutely. And we’ve sifted through quite a stack of diverse sources for this deep dive. Primarily the top 50 commercial real estate headlines, but also some really interesting, very granular Texas focused retail news popped up.

So the goal is to give you a clear, concise picture of where commercial real estate stands today, highlighting key trends. The challenges definitely, but also the opportunities. And we’ll put a special emphasis on the Texas market, which is well thriving and specifically the retail sector There.

Okay, so before we get too deep, is there one big picture takeaway that really jumps out from this latest data? There is, it’s pretty significant. Dallas has officially been ranked the number one commercial real estate market for 2025. And this isn’t just about growth. It’s it’s a powerful signal, really shows how strong economic fundamentals and maybe pro-business policies can reshape market leadership pretty quickly.

Almost like a blueprint for other areas. Wow. Number one, for Dallas. That is a significant shift. Okay, so let’s unpack this further. Let’s dive into the current market dynamics because it feels like we’re seeing a landscape in, active transition. The executive summary from our sources really seems to emphasize that major shifts, clear differences between sectors and certain regions.

Definitely showing strength. Exactly. And what’s fascinating is the contrast. On one side we’re seeing some pretty serious challenges. Commercial mortgage backed security, CMBS delinquencies. They’ve climbed to 11%. That’s the highest since what, 2013? 11%. Wow. Yeah. And then you have these aggressive retail closures.

9,900 business shutdowns reported just in 2024. Plus there’s that that looming $1.5 trillion maturity wall. Essentially, a huge wave of commercial mortgages coming due soon. That’s creating some intense refinancing pressure for property owners. Okay. That 11% delinquency rate and the $1.5 trillion maturity ball that sounds.

Pretty daunting. Is there any genuine counter narrative here? I. Or are we really looking at widespread paint ahead? It’s definitely not a uniform picture of gloom. If you dig a bit deeper, you find some very strong positive indicators too. We’re seeing major transactions like Google committing to that huge 804,000 square foot lease done in Austin.

And there are substantial refinancing deals happening, like $1.2 billion deals. That signals clear institutional confidence, in parts of the market, it’s not a blanket crisis. It’s very specific. Yeah. I see. So despite those significant headwinds, you’re saying there’s still clear institutional appetite in certain segments.

Exactly. While some sectors are definitely struggling, others like industrial are showing incredible resilience. Warehouse lease rates are up. Get this 75.7% over the expiring contracts, 75%. That’s huge. It’s staggering. And the multifamily market seems to be stabilizing. Class A properties hit 95.7% occupancy.

This resilience is an isolated, it’s a key factor driving that stronger performance in certain regions. And speaking of strong performance and resilience, Texas really seems to be leading the charge across all its major metros, doesn’t it? Strong economic fundamentals, the business friendly environment.

It’s clearly supporting that market leadership, but how is Texas managing the statewide trend so consistently, even with all these national pressures? It’s multifaceted, and this brings up an important point about financial pressures and maybe where we might find some. Unexpected recovery signs.

The headline, US commercial real estate credit Pain really caught my eye Distress has reached $116 billion. That’s a 23% increase year over year. Marks the highest level of distress in over a decade. A 23% jump year over year to $116 billion. That’s a massive increase, but does that mean. Entirely new problems are popping up, or is it more like a backlog finally coming into the light?

It’s probably a combination, but the research also suggests a moderation in the rate of delinquency increases. So even as the total numbers keep climbing, the pace might be slowing down just a bit. And what’s really surprising actually, is that. Commercial property deal making seemed to pick up after those Trump tariff announcements.

Interesting. Yeah. We saw a Texas apartment complex financing restart after just a brief pause that really shows the underlying resilience of property owners. They seem to be finding ways to adapt. Push forward even with volatility, right? That’s the bifurcation we keep hearing about, isn’t it? I think CNBC pointed that out.

There’s this clear split in commercial real estate. Some property types, some quality levels are just significantly outperforming others. It’s definitely not one single market. Precisely and reinforcing this kind of selective positive outlook is the Fed’s senior loan officer opinion survey. It showed only 9% of banks actually tightened lending standards back in April, 2025.

That suggests maybe a high probability for property value increases in 2025 despite that tariff volatility. Okay. But we can’t ignore that CMBS delinquency rate still climbing to 11% and the office sector is particularly hard hit accounting for over half of those delinquencies. You mentioned maturity defaults driving a lot of this.

Borrowers struggling to refinance at these higher rates. So if I’m getting this right, it’s not just about empty offices, it’s critically about the financial structure of these properties hitting a wall. That feels like a different, maybe more insidious challenge. Indeed it is. Now, let’s zoom in a bit on the evolving retail sector, because this area is seeing some really dramatic shifts.

That headline, retail closures hit Cyclical High, tells a big story. 9,900 business shutdowns in 2024, and for the first time in several years, closures actually outpaced openings. 9,900 shutdowns. That’s a stark figure. What does this really mean for the overall health of the retail sector? I. It signals a major period of consolidation.

Strategic repositioning, major chains leading the way. JON closing 800 stores. Macy’s, planning 150 closures over three years. Lots of discount retailers scaling back too, yet it’s not all negative. The sources also highlight 7,700 new retail openings announced for 20 24, 20 25. That’s gonna return about 140 million square feet of space to the market.

So while some close others are definitely expanding, or new concepts are emerging to fill those gaps. And we’re seeing a lot of strategic moves too, like consolidations, Kirkland’s, for instance, consolidating its real estate after being bought by Beyond Inc. Some of its locations are even converting into Bed, bath and Beyond home stores.

And other chains like Harris Teeter, Jack in the Box. They’re closing locations, but framing it as part of optimization strategies, it feels like a very dynamic period for retail driven by, consumer behavior shifts and the need for operational efficiency. Exactly. And this leads us right to a crucial focus.

I. The remarkable strength of retail right here in Texas, especially in the Dallas-Fort Worth area. Weitzman’s Shopping Center Review. It gives excellent insight here. It shows Austin, Dallas-Fort Worth, Houston, San Antonio, all maintaining healthy retail occupancy above 90%. Austin’s actually leading the state.

This really highlights how robust local economies are supporting consumer spending down there. What’s truly powerful I think, is that these cities seem positioned to weather any potential economic softening, and they’re doing it from positions of real financial strength, and there was that critical local win that really underscores this resilience.

Texas Governor Greg Abbott vetoed Senate Bill three. That preserved over 8,500 hemp businesses, occupying millions of square feet of retail space. Yeah. Protecting an $8 billion industry in Texas, that feels like a huge save for the retail economy there directly impacting property owners and occupancy.

Absolutely. It’s a perfect example of how local policy can directly shape the commercial real estate landscape, particularly in retail. And we’re also seeing this surging trend of. Service-based tenants in the Texas retail market, these businesses are taking up a larger share of newly leased space. The highest level since 2019, actually, we’re talking fitness centers, healthcare providers, diverse dining options, experiential retail.

It’s a clear shift away from just traditional goods. That shift to service-based retail is absolute vital for property owners to understand, isn’t it for long-term viability. Now, while retail is clearly transforming. Let’s widen our lens again. Let’s quickly touch on some broader market trends that still have significant Texas relevance.

The office market, while still facing those headwinds, is showing some maybe early recovery signs like Trump’s $114 million payoff for his 40 Wall Street mortgage and that San Francisco $177 million office deal. It’s most expensive in three years. Do these scattered winds mean a turning point, or are they just outliers for now?

Probably not a full turning point just yet, but they do signal that high quality, located office assets can still command interest and investment even as the sector as a whole continues to rebalance. We’re also seeing substantial financing and investment activity elsewhere. That $1.2 billion refinancing for the massive DC waterfront development that signals strong institutional appetite for large scale quality projects.

And yeah, $8.6 billion in. CMBS loans are maturing in January, 2025, but extensions are being sought for 85% of them. That shows efforts to avoid default rather than just immediate distress hitting. Okay, so institutions are still willing to commit significant capital when the underlying assets are strong and borrowers are actively trying to manage their debt.

The overall investment outlook seems pretty positive then. Bels is forecasting $542 billion in total US commercial real estate investment for 2025. That’s a massive 39% annual increase, and the US expected to capture the bulk of global CRE investment. That’s a lot of capital potentially flowing in. It is indeed and the multifamily sector.

It continues to benefit from rising demand and falling supply. High mortgage rates are also pushing more people towards renting, which boost the apartment market strength. Plus you have these crucial policy, Vic. Like increased funding for L-I-H-T-C. The low income housing tax credit, which is key for affordable housing and the opportunity zone program renewal, incentivizing investment in distressed communities.

Together, those are driving development of over half a million housing units. Those policy wins are critical for tackling housing supply. Definitely. Now let’s really hammer home Texas’s authority in all this because it’s not just general growth, it’s specific strengths. Dallas’ number one, ranking for 2025, for instance, it highlights that post pandemic retail demand search, sure.

But also an incredible economic recovery, 11.2% employment growth since February, 2020. That’s phenomenal. Shows how quickly a strong market can bounce back. The Texas multifamily market is showing really strong stabilization, occupancy, and stabilized class. A apartments hit 95.7% in May, 2025. That’s the highest since June, 2022.

Very healthy, very attractive for investors on the industrial side. Lone Star electric supply, expanding to Perlin, 114,000 square feet, 75 jobs. Phoenix investors acquired a 1.5 million square foot warehouse in Texas, and maybe more impactful for existing owners. Industrial tenants are facing those substantial rate increases.

We mentioned about 75.7% higher than expiring leases. I. That reflects immense demand and really tight supply. Yeah, absolutely. For office and tech, Google taking the full 804,000 square feet at Sale Tower in Austin is just a massive vote of confidence, both for Austin’s downtown office market and the tech sectors continued presence.

Although it’s worth noting, the federal government did cancel over 35 leases across Texas. That signals some broader space reduction initiatives that even strong markets aren’t totally immune to. A bit of nuance there. Mixed use developments are also thriving. Kaizen starting a $370 million project in Dallas and the construction boom across Texas is just incredible to watch.

Yeah, that $17 billion Samsung semiconductor facility in Taylor, major data center construction all over Dallas-Fort Worth, jcbs, huge 720,000 square foot plant in San Antonio, creating over 1500 jobs. The infrastructure investment supporting all this growth is immense. It really sets the stage for future economic expansion.

Definitely and looking at national trends that still have relevance for Texas, we’re seeing, interestingly, more office space being removed than added first time in over 25 years, about 23.3 million square feet slated for a demolition or conversion versus only 12.7 million of new construction. This net reduction could potentially help future vacancy rates improve by taking older, less desirable inventory offline.

Makes sense. The industrial sector, as we’ve said, continues to be the strongest CRE performer nationally. Benefiting from E-commerce logistics, and alongside that, data centers are seeing just exceptional growth fueled by all the demand for AI computing power. Clear, bright spots. Absolutely. And despite the challenges we discuss in retail, prime space availability remains quite limited nationally.

This is leading to higher asking rents and persistent high demand for those prime locations, which, really highlights the ongoing need for expert local knowledge, like what we focus on in Dallas Fort Worth, to identify and navigate these opportunities where competition is fierce. That’s where local expertise truly shines, doesn’t it?

Knowing exactly where those prime spots are and how demand is shifting on the ground, but on a more challenging note. Nationally record high insurance costs are hitting the entire CRE sector up 40% year over year and 120% since October, 2020. That’s a significant added cost pressure that can really eat into profitability for developers and owners.

It really is, and it’s important to remember too. Small banks hold about 70% of all CRE loans outstanding, so they face continued pressure. Although the Fed stress test indicated they could survive a pretty substantial drop in CRE values. Still, it underscores how systemically important commercial real estate is to the banking sector, particularly those community banks.

And we keep circling back to that $1.5 trillion maturity wall approaching through 2025. It’s just such a massive hurdle out there. However, the data showed retail loans while making up about 26% of newly special service loans are actually showing more resilience. Within the office sector. That’s a key distinction for investors looking for relative stability.

And finally, experts are really emphasizing the critical need for significant investment in climate resilience and cybersecurity for sustained CRE recovery. These aren’t just, nice to haves anymore. They’re becoming essential for long-term viability, for regulatory compliance, and frankly for attracting modern tenants and investors.

So to wrap up this deep dive, it feels abundantly clear that the commercial real estate market is in a period of really active but very differentiated transition. We’ve seen clear winners, especially the Texas markets with Dallas, firmly grabbing that number one national ranking thanks to its unique economic strength.

And it seems proactive policies. Yes, but the challenges are still undeniable, particularly with those CMBS delinquencies and that looming maturity wall. But as we discussed, it’s not really a story of widespread distress across the board. Instead, you have strong institutional capital flows. You have policy support for things like housing and clear sector differentiation, all providing significant opportunities for strategic investors and developers, particularly in high growth markets like Texas.

Absolutely. The picture is definitely nuanced, but the potential is clearly there for those who understand where to look and how to adapt to these evolving trends. So as you, our listener, consider all of this, think about how these macro trends and these micro trends, especially that shifting landscape of retail and the sustained growth here in Texas, how will that shape investment and development decisions in the coming months?

What stands out to you about the unique resilience and the evolving nature of the retail sector, specifically in Dallas-Fort Worth? And how might that inform your next move?

 Welcome to the Deep Dive. We’re your shortcut really to getting smart on the latest in commercial real estate news for this week, June 20, 20, 25. Today we’re aiming to cut through all the noise. We want to distill the really critical insights and just deliver them straight to you. And we’ve got a laser focus today on the incredibly dynamic commercial real estate market right here in Texas.

That’s right. Specifically, we’re diving deep into Dallas-Fort Worth retail. And this deep dive, just so you know, is brought to you by Eureka Business Group. You’re your trusted authority in commercial real estate brokerage, especially. In the DFW market and we’ve carefully curated quite a selection of top tier articles and some cutting edge research.

The goal here is really to ensure you get a comprehensive but still concise view of the current market conditions. Saves you hours of sifting through stuff yourself. Exactly. It’s about getting to the, the real essence of what’s actually happening on the ground. Okay. Let’s really unpack this then, because what we’re seeing in Texas retail, it isn’t just resilience.

It’s a fascinating study in adaptation. How is a sector that’s facing these national headwinds, closures, rising costs, how is it not just surviving, but in places like DFW actually thriving? That’s really the core question we’re digging into today. So let’s kick off with something genuinely compelling, this remarkable resilience of the Texas retail market.

Despite all the macroeconomic uncertainty we’ve been tracking it really seems to be defying gravity somehow. It does. We’re seeing distinct growth patterns, investor opportunities emerging across key cities. Austin, Dallas, Macallan, Houston. It’s clear Texas continues to stand out. That’s a really crucial observation.

When you hear someone like Kylie Hiller from Cushman and Wakefield highlighting Austin’s retail market a sub 4% vacancy rate. Yeah, that’s more than just a number. It’s basically a flashing neon. Sign for investors, it says, this isn’t just strong, it’s fiercely competitive. Every available square foot is getting snapped up.

It signals well a landlord’s dream, really, and a market that’s ripe for new strategic development. A landlord’s dream. Exactly. And this robust demand, this low vacancy, it isn’t just Austin. This general Texas trend is, I’d say, very much amplified in the Dallas-Fort Worth market. It shows these powerful underlying fundamentals for retail.

That sub 4% in Austin certainly catches the eye. So building on that Texas resilience theme, let’s drill down into Dallas-Fort Worth, the retail landscape there. It seems to have its own unique set of challenges and well triumphs. Are the challenges truly unique or are they mirroring national trends? What’s the real impact of tariffs on DFW retailers?

Is it just noise or are we seeing actual shifts? One key development we are seeing in DFW is retailers getting a clear line of sight on tariffs. Mark Masser, new Mark Chairman mentioned this at Biz Knows DFW Retail Summit. It means businesses can now make more informed decisions sourcing pricing that’s crucial for stability in their supply chain.

Okay, so more clarity there? Yes. But Bob Young of Weitzman also acknowledges there’s still significant uncertainty hanging around. And we’ve even seen some consumer pullback. Remember those US retail sales falling in May, right? I saw there. Yeah. So for retail properties, this adds a layer of complexity.

Reduced consumer spending directly impacts tenant performance, and that in turn hits lease negotiations. Consumer pullback is definitely a worry. But how are DFW retailers specifically? Mitigating that. It feels like despite these headwinds, DFW retail isn’t just surviving, it seems to be capitalizing on some massive opportunities, especially in mixed use.

Look at that huge legacy west acquisition. Oh, absolutely. That legacy West deal, it truly underscores the market’s confidence. The scale of it, 1.15 million square feet mixed use. In DFW, it was acquired for a staggering $785 million Kite Realty and GIC. Wow. And this wasn’t just any deal. It reportedly commanded the highest price ever paid for a mixed use property in the region, highest ever.

That’s the report. So this isn’t just strong investor confidence, it’s like a thunderous vote of confidence in DFWs top tier retail destinations. And these, highly sought after integrated mixed use environments. The fact that a deal like this still commands such a premium. It really speaks volumes about DFWs perceived stability, especially when you consider nationally.

So many CRE loans for just a few years back are now facing refi at much higher rates, a staggering $785 million. So it’s just an eye popping number. But this legacy West deal, it’s not just an isolated event. It feels like part of a much larger DFW growth story unfolding. Definitely. How much of this confidence do you think is fundamentally tied to those big population shifts We’ve been seeing?

If we connect this to the bigger picture, DFWs population growth has notably shifted northward. And that’s fueling the emergence of these billion dollar mixed use projects in suburbs like Frisco and also down in Southern Dallas. These are essentially mini cities that combine. Residential retail office space, all designed to create vibrant communities, right?

We’re talking major developments like a universal resort in Frisco, a $200 million surf resort up in McKinney, a $950 million Kalahari waterpark in Allen, the surf resort in McKinney. Okay? Yeah. And don’t forget, over $8 billion in developments. Planned way up at leak Texoma. Now this rapid expansion, it presents opportunities obviously, but GFFS, Evan Beatty raises a crucial point, which is, can these new greenfield developments, building on previously undeveloped land, can they truly replicate the, let’s say.

The street grid and walkability of older established urban cores like downtown Dallas. That’s a real challenge, creating truly integrated, walkable communities from scratch. That’s a really interesting point. A nearly billion dollar waterpark. It does make you wonder what that says about. Where people are choosing to live and spend their leisure time, doesn’t it, that these huge entertainment anchors are popping up?

Speaking of vibrant communities, we can’t talk DFW growth without highlighting the redbird redevelopment in Southern Dallas. That area of faced disinvestment for years, but Redbird seems to be genuinely transforming it. Oh, it was a remarkable turnaround story for Southern Dallas. Absolutely. The redevelopment of the old 1970s Redbird Mall into the shops at Redbird, that’s been pivotal, changed the whole narrative for the area.

Peter Brodsky’s project exactly. His decision back in 2015 to buy and redevelop that 1 million square foot mall. It truly anchored the area’s revitalization, and now we’re seeing new mixed use. Projects like the $1 billion University Hills development breaking ground nearby a billion dollars there too.

Yeah. This single project alone, 270 acres of homes, 1500 apartments, one and a half million square feet of commercial space. They’re even considering a potential sports stadium. And beyond that specific project, Southern Dallas has seen almost. 50 million square feet of industrial space added since 2020 and a 59% jump in multifamily units.

Wow. 59% development officials in Dallas confirmed there are over 20 projects in the pipeline just for Southern Dallas, as Brodsky himself put it with the right policies and investment. Southern Dallas is becoming a real growth fi for the city, a growth engine. For commercial real estate pros, this area represents a significant opportunity for strategic investment and development right within the DFW market.

Indeed, and this strategic adaptation is clearly vital. Now, while Df W’s story is compelling, it is crucial we understand it within the broader national retail narrative. Absolutely. Because what’s happening nationwide could, either amplify or potentially challenge the local success we’ve just discussed.

Right, and a key development there is the prediction from CoreSite research. They’re forecasting what some are calling a retail apocalypse 2025. They’re predicting up to 15,000 store closures nationally. 15,000. 15,000. That’s a significant 55% increase over 20, 20 figures. This isn’t just a headline about closures.

It’s a profound market reset. Think about it, 15,000 national store closures, a 55% jump from 2020. That forces landlords to rethink every single retail space. It presents a massive opportunity. Sure. For repurposing or retenanting with innovative concepts. Concepts that via the apocalypse narrative. So opportunity within the challenge.

Exactly. We’re seeing major chains like Party City, Joanne, big Lots, Macy’s. They’re. All pursuing substantial closures, and that obviously has major implications for retail, real estate markets everywhere. It creates both challenges and these new opportunities for strategic repositioning and kind of hand in hand with those closures.

We’re also seeing rising retail occupancy costs, right? Yeah. Putting a direct squeeze on both the retailers and the landlords, that’s a critical point for the sector. Yes, retailers are definitely feeling the pinch. National average occupancy costs hit 7.73%. Now compare that to 5.83% in 2023. That’s nearly two full percentage points higher.

That’s significant. It really is. For a retailer, that kind of jump can be the difference between profit and loss on every square foot. It forces tough decisions on expansion, even survival, and at the same time, average rental rates have climbed to $16 and 59 cents per square foot. That’s a 9% increase over 2022.

So this upward pressure on costs for retailers and simultaneously for landlords trying to maintain margins, it’s creating a very dynamic environment, requires careful management, strategic insight. And in terms of navigating these costs, dollar tree’s, tariff strategy offers maybe a potential playbook for other value focused retailers.

Oh there’s strategically shifting, sourcing, optimizing their logistics, adjusting their product mix, and all of that in turn has implications for their real estate demand and the types of spaces they’re looking for. Interesting playbook, and it begs the question, how are technology and fresh capital reshaping not just retail, but the broader commercial real estate landscape?

Yeah we’re definitely observing a significant and growing trend towards investing in alternative real estate sectors. Institutional investors are increasingly targeting niche. Areas experiential retail is a key sector that seems to be leading the recovery, moving beyond just traditional models.

Experiential, yeah. And this aligns with broader trends where industrial data centers, multifamily assets, they’re also attracting substantial investment. And the general prop tech market property technology is just absolutely booming. It’s a uptick. Yeah. It’s projected to reach $88.37 billion by 2032.

That’s a massive leap from today’s roughly 36.55. Billion dollars. Huge growth. Projected huge. We’re talking AI powered analytics, virtual reality tours, smart building management. All these tools are transforming how commercial real estate is developed, managed, even transacted. And a huge part of this is just the adoption.

82% of PropTech companies are now using or planning to use AI based technology that indicates a truly transformational shift across the industry. 82% using or planning on ai. Yeah, that’s quite something. Now let’s take a quick glance at the DFW residential market, which certainly impacts retail demand. We have that CoStar chart.

Yes. The chart titled Monthly Rent gain Stall during Peak Leasing season in Dallas-Fort Worth. It’s quite insightful actually. It shows that month over month rent growth in DFW, while it’s seen periods of both positive and negative movement since January, 2023. Ups and downs. Exactly. But critically it experienced a stall in May, 2025, and that’s during what’s typically a peak leasing season.

Okay. A stall. Yeah. This indicates a flattening of rent growth and that can directly affect household budgets and consequently consumer spending and retail environments. Makes sense. So we focused heavily on retail, but how are other key CRE sectors responding to these broader economic currents? Let’s quickly scan the landscape for maybe some more headwinds and tailwinds.

Sure. In the office market, for instance, we’re seeing mixed signals. DFWs Class A buildings, the top tier, they’re outperforming, vacancy, actually fell in Q1, 2025. There’s that flight to quality trend companies wanting the newest, most amenity rich spaces, flight to quality. Uptown is leading construction with pretty high rents, around $37 and 84 cents per square foot.

However, the overall DFW office market remains weak and city center is lagging. Now compare that to Manhattan, which is showing some. Early signs of stabilization, but nationally, we’re seeing real pressure in the lending market. The lending side, yeah. The CMVS delinquency rate, that’s commercial mortgage backed securities.

Basically bonds backed by commercial property loans. It’s soared to an 11 year high of 11% in June, 2025. 11% delinquent. Wow. It signals significant distress, especially for older office and retail properties. Struggling to find tenants and crucially to refinance their expiring loans. In today’s higher interest rate environment, in multifamily Texas apartment construction is actually resuming after that tariff pause, which shows some market resilience.

However, world Cup hosts, cities like Houston face risks to affordable housing. You might see surges in hotel and short-term rental demand, possibly leading landlords to convert traditional rentals into vacation units for higher profit the World Cup effect potentially economically. The Federal Reserve paused rates again, their fourth consecutive pause in 2025.

The benchmark rate is holding at 4.25 4.5%. This signals possible future rate cuts, which the market wants to see. Definitely, and it’s crucial because so many CRE loans from the 3.755% range are now facing refinancing at much higher rates, maybe 6.5, 7.5%. This is a significant challenge, especially since two thirds of outstanding CRE debt is held by small banks.

That poses a bit of a systemic risk to the financial system. Small banks holding most of it. And just quickly on the policy front, there is a Senate proposal to extend key commercial real estate tax provisions that would offer some relief and continued support for the sector if it passes. Okay. Lots of moving parts there.

So to summarize our deep dive today, the Dallas-Fort Worth commercial real estate market is well incredibly dynamic. We’ve seen the retail sector in particular demonstrating this ongoing adaptation and resilience even amidst both national challenges and really significant local growth.

Absolutely, and if we connect these insights back to the larger strategic picture, DFW, especially in retail, continues to be a market of well significant activity and opportunity. For those who understand its unique trends, the population shifts, the aggressive mixed use development. We talked about the localized responses to broader economic factors.

There are clear paths for strategic investment and growth. This is precisely why having a deep. Nuanced understanding of the local DFW retail market isn’t just an advantage, it’s really a necessity for making informed decisions. So what does this all mean for you as you navigate this commercial real estate landscape?

It means that while the national headlines might paint a mixed, maybe even uncertain picture, understanding the local market specifics, especially in a vibrant growing region like DFW, it reveals these areas of really robust activity in strategic investment. It highlights where the real opportunities lie, and frankly.

Why that local market expertise is so vital. Now, for a final, provocative thought to leave you with, considering those predictions for increased store closures nationally and the shifting consumer behaviors being driven by ai, how might DFWs unique growth engines and its commitment to developing these walkable mixed use communities, how might that allow its retail sector to not just survive, but actually redefine the physical shopping experience and truly thrive in the years ahead?

Interesting question. Something to mull over as you explore these market nuances. Further, thank you for joining us for the deep dive. We encourage you to continue exploring these market nuances and always seek to add deeper understanding. Join us next time for another deep dive into the insights that matter most.

 Welcome to the Deep Dive. This week we’re cutting through the commercial real estate news for the week ending June 13th, 2025. Our goal here is simple, pull out the key insights, the nuggets you need from recent reports and analysis so you can really understand the market. We’ll be focusing particularly on trends relevant to Dallas Fort Worth and, the retail sector.

Yeah, we’ve sifted through quite a bit, Reuters. G Globalist, CRE Daily Modern Retail, the Texas Business Journals, local profile Biz O, commercial Property Executive. The whole gamut. We wanna give you the essentials without you having to wade through everything yourself. Okay. Let’s get into it. You really have to start with the the big economic picture, right?

That sets the stage for everything in CRE. What’s the word from the Federal Reserve? The expectation based on the reports is that they’re likely holding steady. I. Keeping that key interest rate, in the 4.25% to 4.5 u percent range holding steady. And is that purely because inflation looks a bit better?

Not entirely, no. While inflation readings have eased somewhat, the main reason being floated is this ongoing uncertainty around tariffs and trade. That seems to be the big factor, right? That’s right. Issues, exactly. It leads to what they’re calling. Cautious patience, and of course stable. But still elevated rates mean financing costs for commercial real estate remain high.

That impacts deal flow, values everything. And speaking of caution, Jamie Diamond had some pretty strong words, didn’t he? He did. Jamie Diamond over at JP Morgan Chase gave a clear warning. He basically said the boost from pandemic stimulus is wearing off and the real impact of these recent tariffs, he thinks that’s gonna start hitting the actual economic numbers soon.

Soon. Did he give any indication of why we haven’t seen the full impact yet? Something about job growth maybe? Yeah. He pointed out the US labor force has grown quite fast recently, which might have masked some underlying softness, but the really interesting point he made was about stockpiling companies apparently spent about a billion dollars a day stockpiling goods to beat terrors a billion a day.

Wow. Yeah, so that stockpiling has essentially, kicked the can down the road. It’s delayed the visible hit from tariffs, making the timing of this potential deterioration he mentioned, pretty hard to nail down. Okay, so tariffs are a known pressure, but the timing of the fallout is still uncertain because of that stockpiling.

Let’s look at the actual job numbers then Bureau of Labor Statistics from May, 2025. What did that show? May’s job growth was stable but definitely slower than previous months. And interestingly, there were also downward revisions to the job numbers from earlier months, so the pace might not have been quite as strong as first reported.

And did any particular sector stand out in that may report? Yes, and this ties directly into our retail focus today. While overall jobs grew, the retail trade sector actually lost jobs. The report specifically mentioned about a 7,000 job decrease in retail employment compared to April a drop in retail jobs.

Wow. As we’re talking about tariffs potentially hitting soon seems connected. It really does. There is a study mentioned that found tariffs are finally starting to show up in consumer prices for things like furniture and apparel. Prices for those goods are up several percent compared to 20, 24 levels after months of companies trying to absorb it.

It seems they’re passing it on now and higher prices for shoppers. That could mean less foot traffic eventually hitting retail landlords. Exactly. If you’re paying more, you might buy less or shop less often. That squeezes retailers, they face higher costs from tariffs and potentially softer demand.

It makes ’em cautious. Maybe they delay opening a new store. Maybe they try to renegotiate leases. It creates pressure. Okay, so the macro picture is. Cautious tariffs are a big factor. Maybe still playing out and retail is already showing some stress. Let’s shift gears a bit. What about national commercial real estate trends more broadly?

Across different property types. Looking back over the long term, like the last 25 years, from 99 to 2024, it’s fascinating. The median deal size, just the dollar amount, not adjusted for inflation has actually tripled. Tripled in price doc, but are the deals for bigger properties. That’s a surprising part.

No, the actual physical size of the properties in those median deals has gone down. Retail spaces and deals were about 11% smaller, industrial down around 14%, so paying way more per square foot for smaller buildings. Precisely. The average price per square foot jumps something like 200% to 250% for both retail and industrial over that time.

The reasons cited are. Tighter supply of good assets, higher construction costs, making new builds pricey, and investors really focusing on smaller, top tier trophy assets instead of big portfolios. Okay. That’s the long view. What about recent activity, like Q1 of this year, 2025? Q1 showed signs of a rebound median deal volume nationally was up about 30% year over year, and the average price per square foot also climbed up around 15% compared to last year.

So activities picking up and values for what is trading are rising. Yeah, it suggests the market’s finding some traction even with the headwinds is the way deals are getting done changing. Especially thinking about foreign investment. That’s a really keen observation from the reports. International investors are still interested, especially in growth markets, but how they invest is shifting.

Instead of just buying properties outright, we’re seeing more complex deal structures. Things like joint ventures, preferred equity, mezzanine debt. Even rescue capital. Can you break those down a bit? Why the shift? Sure. Think of it like different ways to slice the funding pie JVs are partnerships, share the risk, share the reward.

Preferred equity and Mez debt are in between layers of financing riskier than a standard mortgage, but less risky than pure ownership equity. They offer potentially higher returns. And Rescue Capital is basically funding for projects and trouble that can’t get traditional loans. Investors are using these because while prices are high, rates are high, these structures let them put money to work maybe with less cash upfront or a different risk profile, especially when chasing yield in popular spots like the Sunbelt, or in hot sectors like beta centers.

It’s about managing risk in a pricing market. Got it. So overall, the story for U-S-C-R-E is a gradual comeback from the reason sum. Yeah. That seems to be the narrative. Transaction volumes are definitely up from the bottom. One report. Put the total through May, 2025 at around $30 billion. Still down a bit, maybe 7% from last year’s pace, but nearly tripled the volume we saw during the trough in 2023.

And retail and multifamily sales are leading that pickup. Particularly in those Sunbelt cities. Any other quick sector trends that caught your eye nationally? Yeah, a couple. Medical office construction seems pretty steady, unlike traditional office, which is lagging. There’s also a lot more interest in logistics and especially secure data centers, partly due to supply chain worries, things like.

The Colonial Pipeline hack really woke people up to infrastructure needs. Texas gets mentioned a lot there, and PropTech funding seems to be bouncing back too. Focusing on sustainability data, AI for managing properties. Okay, good overview. Now let’s really zero in on retail specifically. I. Then bring it home to Dallas-Fort Worth.

How are the sources describing the national retail outlook Right now, the phrase that sticks out is resilient and fragile captures the split personality of the sector. Perfectly resilient, but fragile. How does that actually play out? The resilience is in necessity based retail. Grocery stores, fast food chains, gyms, beauty salons, things people use regularly.

Demand there is pretty steady. Okay? The fragility is more in the discretionary categories. Drug stores, dollar stores, certain apparel or home goods retailers, they’re much more sensitive to people cutting back spending due to inflation or those tariff price hikes we talked about. So it really depends on what kind of store we’re talking about.

Exactly. And overall, despite some slower leasing here and there, retail rents and occupancy are generally holding up. Okay. Nationally, a big reason is just a lack of new high quality space being built in many desirable areas. Scarcity helps support values, though you do see more weakness in areas that lost a lot of office workers, that daytime traffic.

Makes sense. Are any specific types of retail properties really hot right now for investors? Oh yeah. Grocery anchored centers, they are absolutely the darling of the retail investment world right now. Sales hit around $7 billion nationally in 2024, and they’re trading at record prices average of $209 per square foot.

Investors love the stability. Grocers sign long leases. They’re reliable tenants and they bring consistent foot traffic that helps the smaller shops in the center too highly sought after. Let’s talk specific retailer news impacting real estate, Walmart and their drones. That sounds pretty futuristic.

It’s happening now though. Walmart is really scaling up drone delivery. They’re adding a hundred new stores to the program, including some right here in Texas, Houston and Dallas specifically. That’s millions more households they can reach. It’s a big move in automating that last mile delivery. And Texas is clearly a key state for them.

And back to apparel, retailers and tariffs. What’s the mood there? It’s definitely cautious. You look at recent earnings calls from Gap, Abercrombie, American Eagle. They’re all talking about rising costs from tariffs and seeing maybe softer demand. For close Gap mentioned like a 200 $300 million hit from tariffs this year.

A EO said $40 million annually. Wow, that pressure on margins, plus maybe people spending less on fashion, it makes them hesitant about opening new stores, maybe even pushes them to renegotiate existing leases. Creates real uncertainty for their physical footprint. But not all apparel is struggling, right?

Boot Barn seems to be doing well. Boot Barn is a great panel example. They’re expanding rapidly, aiming for over 500 stores by 2030, often in smaller markets, not just the big coastal cities. And fun fact, their HQ is right here in Plano, Texas shows there’s still room for growth with the right concept, even with Texas roots.

But then you have the flip side. Like the Hooters closures, right? They abruptly closed dozens of locations, including several in DFW. It’s just an example that some older casual dining or specialty retail concepts are struggling to keep up with costs or changing tastes. And those closures mean vacant properties, often standalone buildings.

Hitting the market here in Texas shows that constant turn. Okay, let’s pivot fully to DFW. Now, the development scene here seems incredibly active based on the reports, what’s fueling it. A huge driver is corporate relocations. Dallas leads the nation. 100 HQ moves between 2018 and 2024. Texas overall, including Austin and Houston, got over a quarter of all USHQ moves last year.

This constant influx of companies, of people, it just fuels demand for everything. Office, industrial, apartments, and definitely retail to serve them all. Yeah. We’re seeing that translate into major projects even in areas previously overlooked, like Southern Dallas. Absolutely. The shops at Redbird, the redevelopment of that old mall is a huge success story.

It’s now a thriving mixed use center with medical and retail, and its success is attracting massive new investment nearby, like the proposed University Hills campus. That’s a billion dollar 1.5 million square foot project with commercial, residential hotel. Even a stadium next to UNT Dallas. Southern Dallas, which historically lagged is seeing explosive industrial growth, 50 million square feet and huge multi-family growth.

It’s being called a growth engine now, and retail is vital to support that and looking north up in Collin County. Huge projects there too for sure. McKinney just approved Huntington Park. That’s a 785 acre mixed use development north of three 80. That scale, residential, commercial, retail altogether is exactly what these booming north Texas suburbs need.

It shows the demand for these integrated live work play places way outside the downtown core. We’re also seeing older retail getting repurposed Aren. Oh, yes. That’s a key trend. The demolition of that old empty outlet mall north of Dallas is a prime example. They’re clearing it to build a new mixed use project, likely office housing and newer, probably smaller format retail.

It’s happening across DFW replacing dated low density retail with higher density mixed use that fits today’s needs. And the report specifically mentioned developers targeting certain fast-growing suburbs. Yeah. Places like Frisco, the Colony and Alan McKinney were highlighted. That’s where developers see a lot of the current action following the population and job growth right up the corridor.

Okay. Let’s try to wrap this up. So the big economic picture is, complex. We have the Fed holding steady, but warnings about tariffs and potential slowdowns from people like Jamie Diamond. Retail is already feeling some of that, right? Nationally. CRE is recovering in terms of deal volume, but capital is getting more creative with JVs and preferred equity, especially chasing yield in the Sunbelt and within retail.

It’s really a split story. Necessity and grocery anchored are strong, but discretionary retail is facing more pressure and bringing it back to DFW. It’s incredibly dynamic. Massive growth fueled by corporate moves is driving huge projects in places like Southern Dallas and McKinney. But we’re also seeing adaptations, old malls coming down from mixed use and some specific retailers struggling while others like boot barn expand.

It’s constant change. It really is. You’ve got this national economic uncertainty layered on top of intense local growth here. It creates a complex market, but definitely one with opportunities if you know where to look, especially in retail across different DFW Submarkets. So thinking about all these moving parts, the national economy, the shifts within retail itself, and this really intense development and demographic change happening across Dallas Fort Worth, how does that shape your perspective on where.

The specific retail real estate opportunities and maybe the challenges lie in different parts of DFW right now. That’s the key question, isn’t it? It really comes down to understanding the specific location, the tenant mix, and those local growth patterns. The details matter immensely here. Indeed, they do.

That brings us to the end of this deep dive. Thanks for joining us.

 Welcome to the Deep Dive. We’ve gathered quite a stack of sources, articles, research, various notes, and our job is to pull out the really crucial insights for you. That’s right. The mission’s pretty straightforward. Cut through all the noise, help you get well informed and do it quickly. And today we’re diving deep into the latest in commercial real estate news.

We’ll have a sharp focus on the retail sector and especially what’s developing right here in Texas, particularly the Dallas-Fort Worth market, which is seeing a lot of activity. Our sources for this cover, roughly late May through early June, 2025. Okay, so let’s start with the the big picture. The broader economy seems to be casting a bit of a shadow over commercial real estate values right now.

Yeah, the economic context is it’s really key here. City research, for instance, recently flagged housing market weakness. They called it the top threat to the US economy. And how is that playing out? We’re seeing it, with mortgage rates, they’re staying stubbornly high. You’re 7% that directly hits home sales pushes inventory up. And analysts are definitely warning that this kind of housing slowdown, historically, it’s often been a sign, a precursor to broader recessionary pressures. And those pressures are now hitting commercial real estate. They are quite visibly. What’s really notable according to MSCIs, RCA indices, is that for the first time since, 2010. We’re seeing value declines. Across all the major CRD sectors at the same time, all of them. So office retail, industrial, and multifamily. Yeah. The indices show declines both months over month and year over year. Multifamily, which had quite a strong run, is down about 12.1% year over year in these specific indices.

Wow. Yes, even retail properties are seeing value drops nationally within this broader environment. So this isn’t just, an office story we’ve been hearing about. It’s really a cross sector impact tied to those economic headwinds, and I assume higher interest rates, precisely the Federal Reserve stance on rates, which is obviously influenced by indicators like housing or, potential job market shifts.

It is a direct impact on CRE valuations, the cost of debt. And speaking of debt, are we seeing signs of strain there too? We are. It’s showing up in the delinquency data. There’s an MBA report indicating rising loan delinquencies back in Q1 2025 for commercial properties. Which sectors specifically?

Lodging and industrial saw increases, but it’s also worth noting that government backed multi-family loans. Also saw a jump. Okay. It suggests that these sustained higher rates, combined with the general uncertainty are just making it tougher for some borrowers to service their CRE debt across different property types.

Okay? So nationally values are broadly ticking down debts, showing some stress signs, but if we drill down specifically into retail. Are there maybe different dynamics happening there? Perhaps a bit of a counter story. We’ve heard reports about supply shortages in some retail areas. That’s exactly where the picture gets well more nuanced.

While that national macro data points towards overall value declines, there’s a very real supply site issue affecting certain types of retail, and that’s creating pockets of strength. Pockets of strength, yeah. Major developers like Regency Centers for example, they’re highlighting a significant shortage of new high quality neighborhood.

Community shopping centers, the kind people visit regularly. How significant is this shortage? What kind of scale are we talking about? Sources like G Globalist and other industry reports show that retail construction completions nationally from 2021 through 2023. Were incredibly low, like over 80% below the levels we saw back in the mid two thousands, 80% below.

Wow. Yeah. And this has resulted in what’s estimated to be a national deficit of roughly 200 million square feet of new retail space compared to those historical building rates, 200 million square feet that didn’t get built. That must put some serious pressure on the available space. It absolutely does.

Yeah. And developers are. Responding strategically. They’re focusing more now on partnering with masterplan communities, especially in these fast growing suburban areas. Makes sense. And they’re anchoring their centers with necessity based retailers. Think grocery stores, whole Foods, HEB here in Texas.

Places people go every week. Almost regardless of the broader economy. Building in that reliable foot traffic. Exactly. It aims to build in demand and stability and despite those economic headwinds we just talked about reports from mid-May, were still showing robust leasing activity and consistent foot traffic in these types of necessity, anchored, convenience focused retail centers.

It seems driven by basic consumer habits. That’s fascinating how that supply constraint creates opportunities even while national values are maybe softening. Overall, it suggests certain retail assets must still be pretty desirable for investors. Oh, absolutely. And the investor appetite for these specific assets really confirms it.

We just saw Nuveen real estate close on, what was it, $320 million for? Its US City’s retail fund. Okay. And its specific goal is targeting grocery anchored centers. Their head of retail actually described the current market as a great vintage moment for buying these types of necessity based assets. A great vintage moment.

That’s quite a statement. It is that level of capital formation specifically for this niche within retail. It just underscores the perceived resilience and attractiveness of these daily needs centers, even in a, let’s say, more challenging environment. Okay, so there’s definite strong demand in capital chasing certain kinds of retail, especially necessity based, but.

If we look at the broader national leasing picture, across all types of retail space, what’s the story there? Is that also showing strength? The broader national leasing picture, that’s where those macro factors we discussed earlier really bite and it creates more of a mixed bag. Frankly, I.

Data from Cushman and Wakefield, for instance, points to shrinking US retail, net absorption. Net absorption, meaning the overall change in occupied space. Exactly. And Q1 2024 actually saw retailers vacate nearly 6 million square feet more than they leased nationally. That was the worst quarter since 2020.

Oh and Q1 2025 also showed negative net absorption around negative 5.9 million square feet. So nationwide, more space is being given back than is being taken up by new tenants. That’s the trend. Correct. And that negative absorption is partly driven by, retailer distress and bankruptcies.

Companies like Joanne Party City, their closures contribute. But there’s another significant factor impacting leasing activity right now and may be a less obvious one. Tariffs. Tariffs, really. How do trade tariffs directly affect a retailer’s decision to sign a new lease? It mainly creates uncertainty and impacts their costs.

Sources like Reuters linked slower national retail sales back in April, they were almost flat. Up only 0.1% directly to the effects of higher tariffs. This added cost pressure leads some retailers to cut their financial guidance, reduce inventory orders, and that uncertainty around tariffs combined with ongoing inflation.

I. It’s cited as a reason why some tenants are just pausing decisions on new leases. Little back. Yeah. They’re in a wait and see mode about how tariff policies are gonna shake out. That makes perfect sense. If your cost for goods could change unpredictably because of tariffs committing to a long-term fixed rent payment suddenly looks.

A lot riskier. Precisely. Simon property group’s, CEO specifically mentioned this. He said tariff uncertainty is causing retailers to delay purchases and in some cases even walk away from potential lease deals they were considering. Wow. And he expressed particular concern for the smaller tenants, the less capitalized ones, who are just more vulnerable to these kinds of cost fluctuations.

Sure. Meanwhile, you see the larger players, Macy’s, target. Apple. They’re actively trying to shift parts of their supply chains away from China to mitigate future tariff risks, but that often involves short-term cost increases and logistical hurdles. Not an easy switch. Not at all. And while there’s some temporary relief for specific inputs, the White House extended certain tariff exclusions through August 31st.

The overall climate of uncertainty is still there and it’s influencing retail expansion plans nationally. Okay, so nationally values dipping some debt stress overall retail leasing negative, partly due to bankruptcies in this tariff uncertainty, making tenants cautious. But as you said, that seems to contrast pretty sharply with what we’re hearing about the Texas market.

Let’s shift our focus right here. Yeah. Let’s connect this back. If we look at Texas and DFW and Houston specifically, they really stand out as well a counterpoint to some of those national trends. The NAR Commercial Insights report had a really surprising data point. What was that? Dallas and Houston were the top two US markets for retail space absorption in the first quarter of 2025.

The top two in the whole country while the national number was negative. That is quite a contrast. It really is. And the NAR report specifically highlighted that suburban and grocery anchored retail properties in Sunbelt metros like Dallas and Houston are remaining strong, even while demand is softening in some of the, legacy gateway markets.

That fits perfectly with what you were saying about necessity retail and growing areas. Exactly, and you see this strength reflected in just the sheer scale of development happening here in DFW that integrates retail components. This is where the local story gets really interesting, especially for us focused on DFW.

Tell us about some of these multi-billion dollar developments. Particularly up in Frisco. Frisco is, yeah, arguably the prime example of this integrated growth model right now. Yeah. You have the Fields master plan, which is just immense. Multi-billion dollar Cara hand companies just broke ground on the preserve.

Okay. It’s a large gated residential community, and it’s specifically designed to provide shoppers for the adjacent $2 billion. Fields West mixed use part. Ah, building the customer base right next to precisely, and that Fields West Retail Center. It’s about 55 acres already around 70% pre-leased.

Apparently it’s planned to be 20% larger than Legacy West, if you can believe it. Wow, when is that supposed to open? They’re expecting retail elements to start opening by early 2028. So they’re not just building retail in isolation, they’re building the whole ecosystem around it. The homes, the offices, all designed to generate demand, right On site.

It’s about creating that density that built-in customer base, you mentioned. Exactly. And Fields isn’t even the only massive project up there. You’ve also got the mix. That’s a $3 billion project and Firefly Park valued somewhere between 2.5 and $4 billion. Both are adding millions of square feet of various uses, including a lot of retail, and these are all moving forward despite the national headwinds.

Yes. Which really shows the immense capital and confidence pouring into DFWs growth story. And it’s not just Frisco. McKinney also has some big plans announced recently. That’s right. Billing Z Company is planning Huntington Park. That’s a huge 800 acre master plan community in McKinney. 800 acres. Yeah, it includes thousands of new homes, but alongside that, 175 acres are specifically designated for commercial development, mixing retail and office space.

The same strategy again, integrate retail within large scale residential growth in these expanding suburbs. It confirms that strategy of securing large land tracks and planning comprehensively, but it’s not just about brand new development. Even existing centers are showing some resilience and adaptation.

The Town East Mall story in Mesquite comes to mind there. That seems like an interesting case of survival. It does. Brookfield Properties managed to avert foreclosure at a pretty large loan for Town East. The mall is reportedly still holding strong, around 90% occupied. I. That’s high occupancy these days for a traditional mall.

It is, and they’re actively adding new anchors like a Main Event Entertainment Center, going into a former Sears space. The city’s even providing support, including tax incentives to help keep the Macy’s anchor store there. So it shows that even some traditional suburban centers, which face challenges nationally, can remain viable here with solid occupancy, adaptive reuse strategies, and crucially local support.

Exactly. And we see continued investment hints across Texas too, beyond just EFW Walmart opening. Its first new US Supercenter in years down in Cyprus, near Houston. A Costco site plan approved near Austin, Amazon planning a distribution center down in Brownsville. Texas clearly remains a major target for retail and related logistics investment.

Okay. So Texas, especially DFW, showing incredible growth, resilience in retail absorption, huge integrated projects. But you mentioned a unique Texas challenge, looming something that could disrupt things. Yeah, it raises an important. Potential issue. While we see all this growth and focus on necessity retail, there’s a specific Texas legislative challenge that could potentially disrupt a significant chunk of retail space quite rapidly.

You must be referring to the Texas Hemp Bill Senate Bill three, precisely Texas Senate Bill three, which is basically designed to outlaw the sale of intoxicating hemp products. Delta eight and similar things. It’s currently sitting on the governor’s desk awaiting a decision. Okay. If it gets signed into law, analysts are estimating, it could force the closure of something like 8,500 hemp shops across the entire state.

8,500 shops potentially closing down. That is a huge number of storefronts that could suddenly become vacant. The potential footprint is, yeah, pretty substantial. The Texas hemp industry is estimated as a $5.5 billion annual business supports maybe 50,000 jobs statewide. Yeah. And what analysis suggested these shops collectively occupy maybe up to 17 million square feet of retail space across Texas 17 million square feet.

Yeah, that’s significant. To put it into perspective, just in the Houston area, analysts estimate around 407 shops could close. That could vacate somewhere between say, 600, 10,800 14,000 square feet. Yeah, that’s roughly the size of the Toyota Center arena, just in Houston. Good grief. Yeah. One source even noted there were actually more Houston area hemp shops than there were McDonald’s locations.

That really drives home the scale. It could have a very visible impact on local retail strips and centers. Absolutely. It creates what one Dallas landlord, Monte Anderson called a potential ripple effect when he was urging the governor to veto the bill. He highlighted the disruption it could cause to local leasing markets.

Sure. Now, obviously there are differing perspectives. Legislators cite concerns about youth safety. Industry advocates argue it’s become a legitimate, almost necessity based retail sector for some consumers similar to alcohol sales. But regardless of the viewpoint, landlords and the industry are.

Actively mobilizing now lobbying the governor to make sure the potential impact on potentially thousands of commercial properties across Texas, including right here in DFW is fully understood. It really is a complex mix of forces, isn’t it? You’ve got the national economic pressures, the supply constraints, creating specific opportunities, shifting retailer strategies because of things like.

Tariffs. Then this massive local growth here in DFW, side by side, with a potential very sudden regulatory shock that could create a lot of vacancy. How is the CRE industry itself, like the brokerages responding to navigate all this? The response from brokerage firms kinda reflects this split market picture we’ve been talking about.

We’re seeing firms strategically positioning themselves to capitalize on where the opportunities clearly are, particularly in these growth markets like Texas and in those resilient sectors like necessity, retail. So they’re adding resources. Yeah. Newmark, for example, has been expanding its retail teams nationally.

More relevant for our focus here, Avison Young promoted leadership specifically to target Texas retail and land development deals, and JLL recently hired a new lead specifically for development projects right here in Dallas. Okay. These kinds of moves, they signal confidence in the pipeline of retail and mixed use activity, especially in Texas, and they see the need for specialized teams to actually execute those deals effectively in this environment.

And we also see adaptation in the existing market, right? Like that. City place, office to apartment conversion in Dallas, getting city incentives. That seems like another piece of the puzzle. Exactly. That’s a great example of adaptation. Working to reposition underutilized assets and often it requires that public support, that local government collaboration, which is really key to navigating these changing demand dynamics, especially in denser urban areas like parts of DFW.

Creative approaches to existing buildings shows that need for local market knowledge and partnership. So let’s try and bring this all together for you, our listener. Trying to stay on top of what’s happening in commercial real estate, especially retail, especially here in DFW. We’ve definitely seen that nationally there are clear headwinds, right?

Macroeconomic caution tied to housing interest rates, uncertainty from tariffs. That’s all impacting overall CRE values and slowing down national retail leasing. We saw that negative absorption in Q1, but to, and it’s a big, but the story here in Texas, particularly Dallas-Fort Worth is remarkably different.

We’re actually leading the nation in retail absorption. Yeah, quite the contrast. We’re seeing these massive multi-billion dollar master plan developments. Actively integrating retail with residential to create built in demand. Existing suburban centers are finding ways to adapt and survive, even thrive sometimes, and significant capital like that.

Nuveen Fund we mentioned is flowing specifically into necessity based retail assets right here. Precisely because of their perceived stability in this market. So understanding this crucial contrast of the national challenges versus the specific drivers of resilience and frankly, booming growth here in DFW, that’s essential.

Absolutely. And then you add to that, the potential very sudden disruption from something like the Texas hemp. Bill and you have a market that really requires navigating the local specifics, not just relying on national headlines. It just underscores why understanding these really granular dynamics, the interplay of growth, resilience, potential challenges is so important.

If you’re involved in, or even just following the DFW commercial real estate market, it’s true. We’ve seen that while national retail does face those challenges from tariffs, economic uncertainty, the DFW market is demonstrating really distinct strength. It’s propelled by population growth, these huge integrated developments and very robust necessity retail.

So maybe a final thought to leave you with, yeah. Perhaps consider this. How will the sheer scale of all this planned residential growth, we talked about places like Frisco and McKinney combined with the potential for sudden widespread retail vacancy if that hemp bill passes. How will those two forces fundamentally reshape the precise balance of retail supply and demand, and even the tenant V in different sub-markets across Dallas-Fort Worth over the next few years?

There’re really dynamic interplay unfolding right now with potentially significant local impacts to watch.

 Okay, let’s dive in. If you’ve been anywhere near North Texas recently, you can definitely feel it, can’t you? That kind of buzz, the constant hum of activity. Oh, absolutely. Cranes everywhere. New projects, breaking ground, it seems every week deals getting done. It’s a really dynamic environment.

Seems like the region is just pulling in a lot of capital, a lot of development interest, even while, other places might be seeing things cool off a bit. For sure. And that’s really what we wanna untack today. We’ve gone through a whole stack of recent reports Dallas Business Journal, bno, CoStar Globes, that kind of thing from the last say, 10 days or so.

The goal here is it’s to cut through all the noise, pull out the really important bits of news and insight. We’re focusing especially on what’s happening right here in Dallas-Fort Worth commercial real estate, and we’ll spend a good amount of time on retail today too. There are some really interesting shifts happening there, but also connecting it back to the bigger picture.

Exactly, so get ready. The the climate right now, it feels like this mix of a really big development moving forward, but also some ongoing challenges and definitely some shifting dynamics in how space gets used and funded. I. Yeah, you really need to look past just the headlines to understand what’s driving things.

Dig into the actual deals, the specific trends. Okay, so let’s kick off with just the sheer amount of development and growth across DFW. It’s it’s not just downtown Dallas anymore. Is it? Big mixed use stuff, huge land deals popping up all over. That’s what strikes me too. It’s not just the core, it’s really pushing outwards, often sparked by, big employer moving in or new infrastructure. Perfect example. Sherman up north, that massive new Texas Instruments client is obviously the catalyst and right nearby that $250 million mixed use village. They’re building. Yeah. Tailored for the TI workforce. Exactly. It’s moving fast. Reports, say the infrastructure work, roads, utilities, that stuff should be done by the end of June.

Wow, that is fast. It just shows the kind of demand that a huge anchor like PI creates. It can really accelerate things in what maybe was a quieter area before. Then you go bit south Pilot Point. A really big land deal just closed there. 260 acres. And the reports connected straight to North Texas’.

Growth overall saying it could, really reshape that town with housing and commercial space. It tells you the growth wave is still spreading out. Developers are clearly betting on population boom, reaching further into those caller counties and you can’t talk DFW without mentioning Frisco Ray.

Never that, $350 million mixed use place near the PGA headquarters in the Omni. It’s hitting its final fate. Yeah, definitely benefiting from all the buzz around the PGA campus, the whole $5 billion mile thing they talk about. What’s wild though is even with all that construction, Frisco’s, EDC says something like 13% of the city’s land is still undeveloped.

And a lot of that is apparently earmarked for commercial use. There’s still a lot of runway there for future growth, plenty of potential. Okay, let’s swing down into Dallas itself. Near UNT Dallas, over in the University Hills area. A 65 acre mixed use project. Just got its initial. Okay. From the city.

Ah, interesting. What’s the plan there? Housing, retail, commercial space. The idea is really to bring, a significant investment boost to that part of South Dallas. That’s good to see spreading the investment around, not just concentrating it in the usual spots, trying to lift other areas and closer in the Cedars neighborhood just south of downtown.

It’s seen a real comeback lately. It really has. Lot of interest there. A big piece of land just hit the market there. Given the location and the interest in the Cedars, that could be pretty significant. Maybe another big mixed use or commercial project. Yeah. Large sites like that, right next to the core, they’re getting harder and harder to find, so it’s availability is definitely gonna draw Attention could be impactful.

It’s not all new construction either. We’re seeing companies expanding, taking up space, adding jobs. Denton, for example. The city is looking at incentives for several companies, planning expansions there. Could be over 200 jobs potentially. That’s a positive sign for Denton shows. Businesses are still growing and cities are, willing to step up to keep them or attract them.

And Richardson landed a really big one. At and t they signed a lease for what, 186,000 square feet? Yeah. For a call center expansion. Bringing a thousand jobs with it. That’s one of the. Biggest corporate moves in Richardson lately, according to the reports. That’s particularly interesting, isn’t it? A large physical footprint for a call center.

You hear so much about remote work, but some operations, they still need that big centralized space, and DFW is clearly attracting those. Okay. Shifting gears slightly, let’s talk major redevelopment. Taking older assets and giving them a new life. The Dallas Convention Center Overhaul, that’s a huge one.

Massive multi-billion dollar project. It keeps moving forward. Just secured more funding, more contracts signed. That’s so critical for downtown revamping the convention center. The goal is to really boost that convention and meeting business, which helps hotels, restaurants, retail, everything down there and near Uptown City Place Tower.

Getting a huge makeover. The city council just approved almost $14 million in tax incentives for that. Yeah, a $445 million project, I think to turn that office tower into more of a mixed use hub. Exactly. That’s a great example of adaptive reuse. Taking an older office building, maybe one that’s struggling a bit in the current office climate and re-imagining it, adding other uses to revitalize it and the area around it.

But these giant projects, they’re not always smooth sailing. Look at the Fort Worth stockyards that. A billion dollar redevelopment plan. The partnership between Majestic and Hickman. Yeah. Apparently they’re caught up in a legal dispute now. That highlights the risks, doesn’t it? Even in a super popular historic area, like the Stockyards, big complex projects with multiple partners can hit snags.

Sounds like some construction is still going, but a dispute like that definitely adds uncertainty. Okay. Let’s zoom in now specifically on DFW Retail. Yeah, there’s, there’s a lot happening there beyond just the retail parts of those mixed use projects. We mentioned retail is, yeah, it’s a really interesting story in DFW right now, you’ve got parts that are doing really well, expanding even, and then other parts facing, pretty significant challenges on the positive side.

Barnes and Noble, the bookstore? Yeah. What about them? They’re actually expanding here, opening a new store in a part of DFW where they didn’t have one before, which. Fits their recent national strategy of actually opening stores, not just closing them. That is interesting. It suggests that for certain retailers, maybe ones that offer more of an experience like browsing books, physical stores still make sense, especially in growing areas.

They see an opportunity and cities fighting hard for the big retail anchors. Mansfield down south, they’re offering up to $8 million in incentives to try and lure new Costco. Wow. $8 million. Yeah, for a big 150,000 square foot warehouse club. That just shows you how valuable cities think those big anchors are.

Costco brings tons of traffic jobs, tax dollars, but they can really kickstart development around them. But then on the other side of the coin, you have older formats, really struggling town, east Mall out in Mesquite. Big regional mall. It was scheduled for a foreclosure auction, but got pulled off literally at the last minute.

Oof. That’s usually a sign of distress. Getting pulled means they bought some time. The owners are likely scrambling to work something out with the lender, maybe restructure debt, or figure out how to reposition the mall for, today’s retail world. It’s a reprieve, but the pressure’s clearly on.

Maybe the biggest bet on adapting retail is that whole experiential trend, universal theme parks. They’re still moving forward with that huge $7 billion. Theme park plan for Frisco, right? The one aimed at younger kids. That’s a massive long-term gamble on experience-driven real estate. If it works, it’ll be a total game changer for all the commercial development around it.

A huge new draw for the region. Okay, so let’s pull back a bit. How does all this stuff we’re seeing in DFW, how does it line up with the bigger picture, the national retail and CRE trends? DFW is definitely influenced by what’s happening nationally, for sure. I. And the national picture right now is it’s pretty mixed.

Some good signs, some definite warning signs, like reports from the big ICSC conference in Vegas recently. The big retail real estate convention sounded surprisingly upbeat, didn’t they? Yeah, that was the chatter I. Deal making was apparently pretty strong. Even with all the economic worries floating around, retailers are still looking to expand, apparently even competing for the best spots, which suggests maybe retail real estate is finding its footing again, maybe better than some other sectors, it seems that way.

And related to that, other reports mentioned investors are starting to, cautiously put money back into retail, deploying that dry powder they’ve been sitting on, especially for centers that are well leased and well located nationally. The numbers actually look pretty decent for retail overall.

In many places, vacancy is still relatively low. Rents are holding up or growing, especially for things like neighborhood centers, grocery anchored spots, standalone buildings, right? And landlords seem to be getting creative with backfilling spaces, bringing in grocers, fitness places, medical users, those experiential concepts.

We talked about a more diverse tenant mix. Grocery anchored centers especially seem to be the real bright spot. Consistent traffic makes them feel like a safer bet for investors. Definitely they provide that essential service. So foot traffic holds up pretty well even when consumers pull back elsewhere.

Okay. But now for the the less rosy side, the headwinds, and there’s a big one specific to Texas, let me guess. The Dallas Fed survey Yep. Showed Texas retail sales actually contracted sharply in May. The report said consumers are pulling back on non-essential spending, citing uncertainty, higher costs.

That’s a really important flag for DFW. You can have all the development boom you want, but if consumers in the state aren’t spending that directly impacts retailers on the ground. Something to watch closely. And then there’s the whole tariff situation. Yeah. Trade tensions, new tariffs that could eventually hit consumer’s wallets too.

Potentially dampen spending, even if vacancy is low now. Exactly. It just adds another layer of uncertainty for retailers and for the landlords who depend on their sales. Hard to plan long term. Another Texas specific issue. That potential ban on intoxicating hemp products like Delta eight, right?

The bill moving through the legislature, if that passes reports, say it could shutter something like 8,000 retail outlets across the state, mostly vape shops, CBD stores, places like that. Yeah, that would definitely create a wave of vacancies in those smaller retail spaces. Landlords would suddenly have a lot of, specific types of spaces to fill ripple effects for sure.

And filling space isn’t always easy. We hear about competition for good spots, but some markets like LA apparently are still dealing with a lot of empty big box stores. Needs creative thinking to fill those. It really underscores how much location and local dynamics matter. In retail, you can’t just paint the whole country with one brush.

We’re also seeing specific retailers and even big projects hitting rough patches. The American Dream Mega Mall in New Jersey. Its value reportedly got slashed by $800 million. Ouch. Yeah. Shows the financial strain. Some of those massive debt heavy retail complexes are under. McDonald’s is pulling the plug on most of its cosmic spinoff locations already.

That was fast. Shows how quickly strategies can shift if the initial hype doesn’t translate into sustainable business and closer to home at home group, the home decor retailer based here in Texas. Reports say they might be preparing for chapter 11 bankruptcy. Facing cash issues from tariffs, maybe softer demand.

Yeah, that’s concerning. It just shows that even within retail, which seems resilient overall, specific companies or formats can still be under immense pressure. So given all these moving parts, how are developers, cities, retailers, adapting? I. We’re seeing moves on the policy front and with data, right? Like that new Texas zoning reform bill, the one that could let developers build housing on land that was previously zoned only for commercial uses, like maybe an old shopping center.

Yeah. In certain cities. Dallas and Houston included. I. The idea behind it is, boost Housing Supply, maybe find a new use for underperforming commercial sites. But it also raises questions, right? Does it reduce the land available for future commercial needs? It’s a complex change. And on the data side, retailers seem to be getting much more sophisticated, definitely using analytics, foot traffic data, sales numbers, all that stuff to guide where they open new stores trying to take some of the guesswork out of it, especially when the economy feels uncertain.

Makes sense. Okay. Let’s pivot to the money side of things. Financing, investment. That’s really the fuel for all this CRE activity, absolutely critical. And the picture there is it’s nuanced, some caution, but also some clear areas of activity. Industrial and multifamily seem to be the favorites right now, office and parts of retail.

Maybe facing a tougher climate. Yeah. Reports from the Mortgage Bankers Association, the Fed, they confirm banks have definitely tightened up their lending standards for CRE, especially for office and hotels, citing the uncertainty, falling values. In some cases, we even saw that news about a major German bank pulling back from U-S-C-R-E lending altogether because of the volatility.

So less traditional bank lending available makes things harder for borrowers needing new loans or refinancing for sure. Pressure, but despite that investment volume actually went up in the first quarter, year over year, about 14%. Driven mainly by industrial and multifamily. Like you said, the forecast for the full year suggests growth is possible, but it really depends on conditions.

Staying stable and the capital that is flowing seems very selective. Wow. Going for the best quality assets and definitely favoring growth markets like the Sunbelt, like DFW. Exactly. It’s not like capital has dried up completely, but investors are being much, much more careful and picky than they were a couple of years ago.

They want proven fundamentals. Which opens the door for alternative capital, right? Private equity debt funds, KKR, raising that big $850 million credit fund was mentioned precisely. These non-bank lenders are stepping into the gap left by some of the more cautious traditional banks. They can provide financing for deals that might not fit the bank’s current criteria.

Family offices too, apparently increasing their real estate focus, looking for income from necessity retail or multifamily. But at. Adjusted prices. They’re playing a really important role right now in keeping deals moving. Different risk tolerance, maybe different timelines. Definitely. So what about property values overall?

Are we seeing a bottom? With the Green Street Index, which tracks read owned properties, it was basically flat over the last year after some earlier declines. So stabilization may be, at least for the higher quality stuff that index tracks doesn’t mean everything is fine. Of course, there’s still distress in older, weaker assets.

For sure and the office sector is where you really see that valuation pain still. Yeah. Just look at some recent sales suburban office parks selling for 50% off their previous value in places like the Bay Area, that Houston Tower sale at a big loss, a building in Maryland trading for half its prior price.

Yeah, those headlines really highlight the ongoing struggle in office driven by remote and hybrid work. It stands in pretty stark contrast to the relative stability or even growth we’re seeing in parts of retail, like grocery anchored or well located neighborhood centers. And it’s driving those office tourism conversions we mentioned earlier, like that project at five Times Square and potentially more here in Texas with that new bill trying to find a viable future for those buildings.

It’s adaptation in action, born out of necessity for that sector. Okay. One last piece on the macro level. Yeah. The risk to the financial system from all this CRE stuff. There were some scary headlines, studies pointing to banks at risk. But Fetcher Powell seemed relatively calm about it recently.

Yeah. He basically said the risks seem manageable overall for the banking system, acknowledged its concentrated more in smaller banks, but didn’t sound like he saw a systemic crisis brewing. Some analysts are even predicting bank CRE loan losses might peak later this year in 2025. So the sense is, yes, there will be pain for some lenders and some properties, but hopefully not something that takes down the whole system still.

It’s definitely something regulators are watching very closely. Okay. Wow. That was a lot. Let’s try to bring this all back home. Tie it together for you, the listener, especially if you’re active or interested in the DFW commercial real estate scene. So the DFW picture, big picture, it’s still one of pretty significant growth.

Ambitious development is happening. Large scale projects moving forward. Companies are expanding here. Bringing jobs, bringing people, pushing the boundaries of the metroplex outward and looking just at DFW retail. We see clear pockets of strength. Barnes and Noble, expanding into new areas. Cities like Mansfield competing hard to land at Costco.

Huge bets being placed on experiential retail like the Universal Park and Frisco. Real demand there. But, and this is important, it’s not all smooth sailing. Older formats like maybe townie small, are clearly facing pressure and you have those broader economic factors. The dip we saw in Texas, retail sales, potential tariff impacts down the road.

Those are real headwinds to keep an eye on. Then you look nationally, the CRE market overall is a mixed bag. Financing’s definitely tighter from banks, but alternative capital sources stepping up and retail. Nationally seems to be holding up better than many predicted, especially certain types like grocery anchor plus retailers and landlords are adapting, using experiential concepts using data.

So what does this all mean for you listening? I think it means that even with economic uncertainty swirling around, and even with the obvious problems in other sectors like office, the DFW market still shows real resilience and opportunity, especially in well located retail spaces that have adapted.

It’s fundamentally driven by population growth here and supported by very specific targeted investment in development. Yeah. It’s definitely not a market where you can just throw a dart. You really need to understand the specific sub-markets, the property types, the strategies that are working now Exactly.

Requires focus. Which brings us to maybe a final thought to leave you with something to chew on, given this really unique mix, we’re seeing, strong local growth signals right here in DFW, but happening against a backdrop of national economic headwinds. And you layer on top the way retail itself is evolving new strategies, new formats.

Where are you going with this? Is it possible that this specific moment right now is actually the ideal time to identify those prime DFW retail opportunities? The ones showing that resilience maybe get in before the broader market sentiment fully catches up to how well certain segments are actually performing here.

That’s a provocative question. It’s really about balancing that that ground level optimism in specific deals in some markets here with the, the necessary caution that the bigger economic picture demands, finding that sweet spot. Definitely something to think about as you watch how things unfold.

Thanks for joining us for this deep dive into the latest CRE News.