Welcome back everybody for another deep dive into commercial real estate and retail. This week, uh, well, it’s a whirlwind news from Blackstone’s global strategy to the resurgence of bin stores. Yeah. You heard that right? Bin stores. Bin stores. Our primary source this week is CoStar News, commercial real estate news week of December 6th, 2024, and a few related articles as always.

So let’s dive in. Let’s start with the big players. Blackstone has been on an acquisition spree, dropping a cool 50 billion in real estate in just the last year. 50 billion? 50 billion with a B. Wow. That’s a lot of properties. It is. And what’s interesting is they’re not just focusing on the U. S. market.

They’re snapping up properties in Europe, particularly logistics facilities. Which might seem counterintuitive with the global economy, like, Slowing down. So why Europe? Well, Europe currently offers lower borrowing rates and higher capitalization rates compared to the us. For those unfamiliar with capitalization rates or as they’re often called cap rates cap, they’re used to estimate the potential return on a real estate investment.

So a higher cap rate generally suggests a better potential return. So Blackstone is strategically positioning itself to capitalize on what they see as favorable conditions in Europe. Makes sense. And speaking of smart moves, they’re also heavily investing in data centers. Both in Europe and the booming Asian market.

This is a trend that Nadeem Medjie, Blackstone’s head of real estate America’s highlighted in a recent interview, he said, and I quote, data is the new oil and it’s clear the black zone believes that controlling the infrastructure for that data is key. Absolutely. And to illustrate just how rapidly the sector is growing, consider this.

Phoenix, Arizona, a city with a significantly smaller population than Detroit, Michigan, actually has more data center space. Wow. So it’s not just the where, it’s the when and the why. Yeah. All right. Let’s switch gears from global power plays to a company facing some tough decisions closer to home. Dollar Tree, the parent company of FamilyDollar.

Seems to be struggling with their family dynamic. They certainly are. They’ve already closed over 670 underperforming family dollar stores, and may shut down another 25. Back in June, they even announced they were exploring options for the chain, including a potential sale or spin off. They purchased Family Dollar back in 2015, but the chain has been grappling with profitability, facing fierce competition from other discount retailers, and feeling the pressure of inflation’s impact on their target customer.

Yeah, and to make matters worse, analyst Neil Saunders is skeptical that Dollar Tree will find a buyer willing to pay their asking price. So it’s a tough spot to be in. All right, now on a completely different note. We have the curious rise of bin stores. Bin stores? Yeah, bin stores. Yes, you heard that right.

Bin stores are essentially discount havens, where merchandise is literally piled high in bins, offering deep discounts on everything from clothing to electronics. So it’s a treasure hunt for bargain hunters. Exactly. What’s driving this trend? It’s all about a perfect storm of factors. Surging merchandise returns a tough economic climate squeezing consumer spending, and retailers desperate to liquidate excess inventory.

Just to give you an idea of the scale of this, the return rate for online purchases in the U. S. hit a record 17. 6 percent in 2023. Wow, 17. 6%. That’s a mountain of merchandise looking for a new home. It is. So these bin stores are like the ultimate recycling centers for unwanted goods. It’s a clever business model, but is it sustainable in the long run?

That’s the big question. On the one hand, they have low overhead, they’re quick to set up, and there’s clearly a demand for deeply discounted goods. But on the other hand, the competition is fierce. Inventory can be unpredictable, and there’s a potential for them to cannibalize sales from the very retailers they’re buying from.

It’s like a delicate balancing act, then. Speaking of balancing acts, Black Friday just wrapped up, and the reports are coming in. It seems like we’re seeing a mixed bag of results this year. Yeah, there are some positive signs. Foot traffic at malls was surprisingly strong, particularly at higher end properties.

And several major retailers are reporting double digit sales increases. Yeah, I’m hearing that American dream. That mega mall in New Jersey saw a foot traffic surge 25 percent compared to the last two Black Fridays. But there’s a catch, right? Online sales were down. Exactly. It seems consumers are rediscovering the appeal of in person shopping.

As one retail expert put it, Shopping online is convenient, but it can be lonely. People are craving that in person experience, the thrill of the hunt, the instant gratification of walking out with their purchases. Plus no waiting for deliveries. So it’s back to brick and mortar, but with a twist. So what’s the overall verdict on holiday spending?

Are the experts feeling optimistic? Well, it depends who you ask. Rudolph Million of Woodcliffe Realty Advisors is encouraged by the strong foot traffic and in store sales he’s seeing. But Neil Saunders of Global Data is less enthusiastic, citing high consumer debt, and the fact that the holiday shopping season is shorter this year due to a late Thanksgiving.

So the jury’s still out on holiday spending. Now let’s head south, where we’re seeing a different kind of retail boom. Dallas Fort Worth is experiencing a surge in demand for luxury retail space. What’s driving this trend? Well, it’s a combination of factors. The Dallas Fort Worth region is experiencing significant population growth, particularly in the outermost suburbs, and there’s a growing demand for luxury experiences and high end brands.

So it’s not just about buying things. It’s about a certain lifestyle. Yeah. How is this demand translating into real estate numbers? Well, there’s over 116 million square feet of total space in these higher end retail properties. And they’re commanding premium prices around 387 per square foot. 387 per square foot, yeah.

That’s significantly higher than other areas. But retailers are clearly willing to pay for the prime locations and the affluent customer base. It seems so. It’s a testament to the power of location and a discerning clientele. Now, before we move on, I have to ask about a blast from the past. Didn’t TGI Fridays just file for bankruptcy?

Yes, they did last month. Last month. But here’s where it gets interesting. The former CEO, Ray Blanchett, has just acquired nine company owned TGI Fridays locations out of bankruptcy court. So, he’s betting on a comeback. It seems so. What’s the story there? Well, the deal, which costs 30. 5 million, includes locations in both Maryland and Texas, some of which are among the most profitable in the chain, like those at the Dallas Fort Worth International Airport.

BFW. DFW. Okay. It’s a bold move, considering the challenges facing the casual dining industry, but he clearly sees potential in the brand and its ability to adapt. So we’ll have to wait and see if nostalgia and a revised menu are enough to lure diners back. We will. Now let’s switch gears to the office market.

What’s the latest in the Dallas Fort Worth region? We’re seeing a tail of two cities. In Fort Worth, there are some encouraging signs of stability in the office market, with an average vacancy rate of 18%. 18%? That sounds relatively healthy. What about Dallas? Dallas is facing a tougher time with higher office vacancy rates.

It seems businesses are still hesitant about making long term commitments, even as the pandemic’s impact fades. This is leading to a lot of uncertainty for office landlords and developers. It’s a reminder that even within a single region, you can have very different micro markets. So who’s making moves in this uncertain landscape?

Well, in Fort Worth, we have Wilkes Development, a local real estate investor showing confidence in the market. They recently acquired one Ridgeman Center, a 10 story office tower, and plan to invest 9 million in upgrades. 9 million? Yeah. That’s a pretty significant investment. They must see potential there.

Now let’s turn our attention to the workforce. We keep hearing about a strong job market, but worker satisfaction seems to be lagging. That’s right. Despite the strong job market, recent data from Gallup paints a concerning picture. Only 18 percent of workers report being extremely satisfied with their jobs.

So what’s going on here? Are people just being picky? It’s more nuanced than that. Companies are increasingly focused on efficiency and cost cutting measures, which often translates into heavier workloads and restructured teams for employees. As a result, As a result, many workers feel stuck, overworked, and disempowered.

That doesn’t sound like a recipe for a happy workforce. What are the potential consequences of this trend? If it continues, we could see an increase in both burnout and turnover. It could also negatively impact productivity and company culture. This is a critical issue that businesses need to address if they want to retain top talent and maintain a positive and productive work environment.

Seems like companies need to find a way to balance their focus on efficiency. with the well being of their employees. Absolutely. It’s a delicate balance, but finding that sweet spot is essential for long term success. Well said. Now let’s shift gears again and talk about something a little more, uh, well, fun.

Pizza Hut is trying out a new drive thru concept. Pizza Hut, along with other restaurant chains, are trying to keep pace with changing consumer preferences. And declining dine in traffic, so they’re exploring drive thru and other innovative design concepts that emphasize convenience. Okay, so what’s so special about their drive thru concept?

Are we talking pizza drones here? Not quite drones yet, but they’re definitely thinking outside the pizza box. Their parent company, Yum Brands, recently opened a drive thru only Pizza Hut. In Plano, Texas, with a dedicated menu featuring items that are easy to eat on the go. This is actually Pizza Hut’s first ever drive thru centric menu.

That’s a pretty savvy move. It caters to our on the go lifestyles. Exactly. They’ve already been incorporating elements like online ordering and curbside pickup. So this drive thru concept is a natural next step. It’ll be interesting to see how this new format performs and if it’s rolled out to other locations.

Speaking of comebacks, get ready for this one. Chi Chi’s is making a return. I thought this chain was gone for good. It was until now. Michael McDermott, son of the co founder of Chi Chi’s, just announced an agreement with Hormel Foods to revive the brand. They’re aiming to open a yet to be disclosed number of restaurants in 2025.

Wow, that’s unexpected. What’s driving this blast from the past? Are they banking on nostalgia alone? Nostalgia might play a part, But McDermott believes there’s still a strong appetite for casual dining experiences, especially those that evoke a sense of family and tradition. He’s updating the menu to appeal to modern tastes while still maintaining the essence of the Chi Chi’s brand.

I have to admit I’m curious to see how they pull it off. Okay, last but not least, we have the National Restaurant Association’s latest survey. What are the key takeaways? The survey reveals a growing sense of optimism among restaurant operators about their future prospects. This is despite the many challenges they’ve faced in recent years.

That’s encouraging. What’s fueling this newfound optimism? Well, the trade group’s monthly performance index actually climbed 1. 6 points in November, surpassing 100 for the first time in seven months. A majority of the survey respondents reported that they anticipate same store sales and overall conditions to improve within the next six months.

So there’s a glimmer of hope for the restaurant industry after all. It certainly appears so. But it’s important to remember that we’re looking at a national trend here. Specific markets and segments may vary, so it’s always wise to consider the local context. That’s a great point. Now before we wrap things up completely, are there any other interesting tidbits of information that you think our listeners should know?

There is one more thing. Earlier we discussed those bin stores and the surge in merchandise returns. Well, a striking statistic that didn’t make it into our earlier conversation is that the total value of online purchases returned in the U. S. last year reached a record 247 billion. Wow, that’s an astronomical figure.

It really underscores the scale of this phenomenon and how it’s fueling the rise of alternative retail models like DIN stores. Exactly. It’s a clear sign of the times. And it will be fascinating to observe how this trend develops in the coming years. Alright, I think that’s a perfect stopping point for part one of this week’s Deep Dive.

We’ve covered a lot of ground from Blackstone’s billion dollar bets to the return of Chi Chi’s and the rise of Binz stores. It’s been a fascinating journey through the world of commercial real estate and retail so far. Absolutely, and we’re not done yet. There are a couple more interesting stories from this week’s news that I think our listener will find insightful.

Let’s talk about the office market, specifically how the dynamics of vacancy rates are playing out differently in Fort Worth and Dallas. It’s a classic tale of two cities. Fort Worth is showing some promising signs of stability with an average office vacancy rate hovering around 18%. This suggests a healthy balance between supply and demand.

That sounds fairly optimistic. What’s the situation like in Dallas? Dallas, unfortunately, is facing a tougher time with higher office vacancy rates. Businesses there seem to be more hesitant about committing to long term leases, even as the impact of the pandemic recedes. It’s creating a lot of uncertainty for landlords and developers who are trying to navigate this shifting economy.

Landscape. So even within a single region, we’re seeing very different micro markets at play. It really highlights the importance of understanding local dynamics. Now let’s shift our focus to something that impacts everyone, regardless of industry workers, satisfaction. We’ve talked about this strong job market.

But is everyone actually happy with their work? That’s a great question, and the answer is surprisingly complex. Despite the robust job market, recent data from Gallup reveals a concerning trend. Only 18 percent of workers report feeling extremely satisfied with their jobs. This marks a significant drop from previous years and points to a growing disconnect between employment rates and overall job satisfaction.

That’s a pretty startling statistic. What’s contributing to this decline in satisfaction? It seems to be a confluence of factors. Companies are increasingly prioritizing efficiency and cost cutting measures, often leading to heavier workloads and restructured teams for employees. This can leave workers feeling overburdened, undervalued, and lacking control over their work.

So it’s not just about having a job. It’s about feeling valued and empowered within that job. What are the potential long term consequences if this trend continues? Well, if companies don’t address this issue, we could see an increase in employee burnout, higher turnover rates, and a decline in overall productivity.

It could also negatively impact company culture, and make it more challenging to attract and retain top talent. It sounds like companies need to find a better balance between their pursuit of efficiency and the well being of their employees. I couldn’t agree more. Fostering a positive and supportive work environment where employees feel valued and empowered is crucial for both individual and organizational success.

Well said. Okay, let’s take a break from the serious stuff and talk about something a bit more lighthearted. Pizza Hut is trying out a new drive thru concept. What can you tell us about it? Pizza Hut, like many other restaurant chains, is trying to adapt to changing consumer preferences, particularly the desire for convenience.

They’re experimenting with drive thru formats and other innovative designs to cater to those who are looking for a quick and easy dining experience. So what’s unique about Pizza Hut’s drive thru concept? Their parent company, Yum Brands, recently launched a drive thru only Pizza Hut in Plano, Texas.

What’s particularly noteworthy is that they’ve created a dedicated menu specifically for this format, featuring items that are designed for on the go consumption. This marks Pizza Hut’s first ever drive thru centric menu. That’s a clever strategy. It acknowledges that people are increasingly pressed for time and want their food fast and hassle free.

Precisely. They’ve already been incorporating elements like online ordering and curbside pickup, so this drive thru concept is a logical next step in their evolution. It’ll be interesting to see how it performs and if they decide to expand it to other locations. Now get ready for this. Chi Chi is the beloved Tex Mex chain that many thought was gone for good, Yes, you heard that right.

Michael McDermott, the son of Chi Chi’s co founder, recently announced a partnership with Hormel Foods to revive the brand. They’re planning to open a series of restaurants in 2025, though the exact number and locations are still under wraps. This is quite a surprise. What’s the rationale behind bringing back a brand that’s been dormant for so long?

Are they just banking on nostalgia? While nostalgia undoubtedly plays a role, McDermott believes there’s still a strong demand for casual dining experiences, especially those that evoke a sense of family and shared traditions. He’s revamping the menu to appeal to contemporary tastes, but intends to preserve the core essence of what made Chi Chi so popular in its heyday, I’m curious to see how they re imagine the brand for a modern audience.

It’ll be interesting to see if they can capture the magic that made Chi Chi’s such a beloved dining destination. Absolutely. Speaking of the restaurant industry, the National Restaurant Association just released its latest survey. And the results are quite encouraging. Yeah, that’s good to hear. What’s the overall sentiment from restaurant operators?

Despite the myriad challenges the industry has faced in recent years, the survey reveals a growing sense of optimism among restaurant operators. They’re feeling increasingly positive about their future prospects. That’s a welcome change. What’s driving this renewed sense of optimism? Well, the trade group’s monthly performance index, which tracks key industry metrics, actually rose by 1.

6 points in November, exceeding 100 for the first time in seven months. This suggests a positive shift in momentum. Furthermore, the majority of the respondents reported that they expect same store sales and overall business conditions to improve over the next six months. So it seems like there’s light at the end of the tunnel for the restaurant industry after all.

It certainly appears that way. However, it’s important to remember that this is a national trend, and specific markets and segments within the industry might experience different outcomes. So while there’s reason for optimism, it’s also wise to consider the local context and specific challenges facing individual businesses.

That’s a great point. Now before we move on to our final thoughts, are there any other interesting nuggets of information? that you think our listeners should know. There’s one more thing I’d like to highlight. Remember our earlier conversation about bin stores and the surge in merchandise returns? Well, here’s a statistic that really underscores the magnitude of this trend.

The total value of online purchases returned in the U. S. last year reached a staggering 247 billion. Wow, that’s an astronomical figure. It really puts the scale of this phenomenon into perspective. It’s no wonder that alternative retail models like BIM stores are gaining traction. Exactly. It reflects a significant shift in consumer behavior and the retail landscape as a whole.

It’ll be fascinating to observe how this trend evolves in the coming years and what innovations it sparks. Okay, I think it’s time to wrap up this part of our deep dive. We’ve explored a wide range of topics, from the contrasting office markets of Fort Worth and Dallas, to the surprising comeback of Chi Chis and the rise of BIM stores.

It’s amazing how much ground we’ve covered in this week’s Deep Dive. It really speaks to the dynamic nature of the commercial real estate and retail industries. You know, there’s always something new happening. Always a trend to analyze a story unfolding. Yeah. It’s like we’ve taken a whirlwind tour of the entire market.

From billion dollar deals to struggling chains, innovative concepts and the surprising return of brands we thought were gone forever. Absolutely. Absolutely. Absolutely. And. Amidst all this change, there’s a common thread that connects it all adaptation, whether it’s Blackstone strategically positioning itself in global markets, or former CEOs betting on the revival of beloved brands.

Everyone is trying to find their footing in this evolving landscape, right? And even consumers are adapting. We’re seeing shifts in shopping https: otter. ai And consumers shaping those forces through their choices makes you wonder what the future holds for these industries. Absolutely. What trends will emerge next?

What innovations will disrupt the status quo? And how will consumers and businesses continue to adapt to the ever changing realities of the market? Those are the questions that keep us on our toes and make this such a captivating field to follow. But we don’t want to just leave you with questions. We want to leave you with a challenge.

Yes, a challenge to take what we’ve discussed today and apply it to your own world. Think about the trends we’ve explored and consider how they might be playing out in your own industry, your community. Or even your own life. So are you seeing similar shifts in consumer behavior? Are businesses in your area adapting in innovative ways?

And how are you personally navigating these changes as both a consumer and perhaps as a business professional? We believe that true understanding comes from connecting these broad trends to our own individual experiences. It’s about recognizing the patterns the force is at play, and using that knowledge to make informed decisions.

So as you head back into your world, we encourage you to keep these trends in mind. Observe, analyze, and adapt, because in a market as dynamic as this one, the ability to adapt is the key to thriving. And remember, we’re always here to guide you through the ever changing landscape of commercial real estate and retail, so stay curious, stay informed, and stay ahead of the curve.

Thanks for joining us on this week’s Deep Dive.

 Welcome back to the Deep Dive. This week, we’re going to take a deep dive into commercial real estate. Oh, should be interesting. Yeah, we’ve got a whole stack of news articles and reports and analyses, uh, you know, everything you sent over. Great. Really focusing on, you know, what’s going on in this last quarter of 2024, especially here in DFW.

Yeah, you picked a really interesting time to do this. Oh! Yeah, because we’ve got like this weird puzzle going on. Okay. On the one hand, investment in commercial real estate is down significantly this year. Right. I mean, transaction volume in Q3 hit its lowest point since 2011. Yeah, I saw that 2011 number.

Whoa! And I was like, wait a minute. Yeah. But you know me, always looking for the silver lining. Yeah. And there are signs pointing to a possible rebound in 2025. Yeah. 2025. True. So what’s making everyone so optimistic? Well, just think about it. The 2024 election just wrapped up. Right. And that alone injects, like, a dose of certainty back into the market.

Yeah, that makes sense. Investors don’t like uncertainty. Election years, they tend to kind of hold back and wait and see what happens. So is that what’s driving up the uncertainty? Commercial property prices. I was looking at the costar data for October and their repeat sales transactions. So, you know, properties being sold again totaled over 10 billion higher than the same time last year.

Yeah. That’s a big jump. Yeah. Yeah. You’re exactly right. That is a key indicator that investors are feeling more confident. Yeah. They’re willing to make those big purchases again. Yeah. And it’s not just the election results. Okay. The Federal Reserve cutting interest rates plays a big role too. Right. Of course.

Makes borrowing more attractive. So investors are more comfortable taking on debt. to do deals. So it’s like a chain reaction. Exactly. Lower rates, more borrowing, more deals. Exactly. More activity. Yeah. Okay. So where are investors focusing their attention these days? Are they playing it safe or are they, you know, branching out a little?

That’s what’s really interesting. We’re seeing a wider range of opportunities pulling investors in. Data centers are hot right now, driven by You know, our constant need for more data storage and processing. And then you’ve got investors looking at distressed assets, office buildings, shopping malls, looking for bargains, and a potential turnaround.

So like there’s opportunity in the uncertainty. Exactly. Yeah, I like that. They’re seeing the potential. Okay, well, I definitely want to dive deeper into the performance of those specific sectors, DFW. Let’s do it. Okay, let’s start with industrial real estate. All right. I mean, it’s booming, especially here in DFW.

Well, booming. It’s actually leading the nation in industrial sales. That’s right. Even surpassing the Bay Area with over 3. 3 billion dollars in sales in just the first three quarters of this year. Yeah, through Q3. Yeah. Crazy numbers. Yeah, it’s huge. I remember reading about Stone Peak buying that massive 1.

1 million square foot industrial property in Fort Worth. Oh, yeah. for 11 million. Wow. It just shows the confidence investors have in this area. That’s a huge vote of confidence for sure. Yeah. DFW’s location is great, strong economy, access to major transportation hubs. Right in the middle of everything.

Yeah. Makes it perfect for logistics and distribution. Yeah. Can’t beat it. And all that high demand is pushing vacancy rates lower than the national average. True. But I did notice that they’re slightly higher than last year. Yeah, that’s true. Exceeding both national and historical averages for our region.

Yeah, you gotta look at those nuances, right? Yeah, so even in a strong sector like industrial, you gotta, you know, pay attention to the details. Yeah, it’s not a one size fits all situation. All right, well let’s shift gears to office real estate. Okay. This sector is facing some serious challenges right now.

Okay. Definitely some headwinds. Yeah, and it’s currently almost half of all distressed assets in the commercial real estate market. Yeah, almost half. It’s a lot. That’s a pretty big number. Yeah, it is. What’s causing all this distress in the office sector? Is it all because of work from home? Work from home is definitely a factor, but it’s not the whole story.

Okay. Rising interest rates are hitting this sector hard. Right. A lot of companies are downsizing, re evaluating their office space needs. Yeah. And that leads to more empty offices. Makes sense. And Nathan Things, he’s a senior VP at Kidder and Matthews. Okay. He pointed out some really alarming signs. Oh, like an increase in unpaid vendor invoices and property liens.

It’s not good. So those are like red flag, definitely red flag that a property might be in trouble. Yeah. Early warning signs that they’re struggling financially, but are there any bright spots in the office sector? There are some glimmers of hope. Okay. Fester, they’re a real estate firm focused on retail.

Okay. But they’re seeing strong leasing activity in some markets, like Denver. Really? Yeah. So it’s not all doom and gloom. Okay. Certain office spaces are still in demand. Right. Especially those catering to specific industries or offering really desirable amenities. So it sounds like adaptability is key.

Absolutely. The ones that can adapt are the ones that will survive. Which brings us to our next sector, retail. Right, retail. This one’s been on a wild ride for years. Yeah, no kidding. With the rise of online shopping. It’s been a roller coaster. So what are we seeing now? We’re seeing a fascinating transformation.

Okay. Companies are adapting in really creative ways. Give me an example. Okay. Burlington stores. Okay. I know Burlington. They’re strategically acquiring vacant stores, a lot of which were occupied by struggling retailers like Bed Bath Beyond. So they’re capitalizing on those closures. Exactly. Yeah.

Potentially getting prime real estate at a discount. Smart. And they’re not alone. Okay. We’re seeing physical stores. Taking on new roles in the retail ecosystem. Oh, really? Yeah. Many are now key players in reverse logistics, reverse logistics. It’s basically handling returns from online purchases. Okay. So for our listeners who might not be familiar with that term, imagine you order something online and you need to return it.

Instead of shipping it back, you can just take it to a physical store. Much easier. So much easier. And it probably saves the retailers money on those return shipping costs. And it gets people back into stores. Exactly. More foot traffic. So maybe they’ll buy something else while they’re there. You got it.

It’s a win win. It is. Retailers are getting savvy about blending the online and offline shopping experience. So retail’s not dying, it’s just evolving. That’s a great way to put it. It’s evolving. Alright, well let’s zoom in on our own backyard now, Dallas Fort Worth. Okay. What’s going on here in the commercial real estate world?

Well, one interesting trend is the rise of upscale retail. Oh, really? Yeah. Particularly in Collin County’s outer suburbs, high end brands are doing really well there. Interesting. Driven by population growth and people wanting newer, more luxurious shopping experiences. Yeah. I guess those areas are growing fast.

Yeah. And there’s a big development in the works that could make Collin County even more attractive. Oh, yeah. A 220 million amphitheater. Wow. That’s a serious investment. Yeah. They’re really aiming to make Collin County a destination. Yeah. So, not just for shopping, but for entertainment, too. Exactly. And it, it ties into this broader trend of creating vibrant, mixed use developments.

Yeah. Retail, entertainment, residential, all in one place. So we’ve got this booming industrial market, a struggling but adapting office sector. Trying to find its way. And retail is evolving. Absolutely. Changing with the times. It’s a dynamic picture, that’s for sure. Very dynamic. Lots going on. Well, to Really get the full picture.

We need to talk about those macro trends. Yeah, good point. Things like inflation, consumer spending. Those always play a big role in real estate. Alright, let’s dive into those next and see how they’re impacting things here in DFW. Let’s do it. Yeah, when we talk about macro trends, inflation’s kind of the big one.

Yeah, it’s cooled down but it’s still above what the Fed wants, right? Right above their target. Yeah. And that makes what they do next with interest rates a big deal for commercial real estate. It’s like everyone’s just waiting to see which way rates will go. Exactly. Any change there could really shake things up.

Yeah. It’s a tricky balance, isn’t it? It is. Inflation and interest rates. Mm hmm. Investors are watching carefully. Oh, yeah. For sure. There’s another macro trend we should talk about, and it’s actually looking pretty good. Oh, which one? Consumer spending. Oh, right, right. People are still out there shopping, despite all the economic uncertainty.

Yeah, they are. I bet that’s good news for the retail sector. It is. Especially for those who are adapting like we talked about with Burlington stores. Taking over those vacant retail spaces. Yes. Smart move. Strong consumer spending could really help soften the blow of rising prices and all the uncertainty.

Shows how resilient the market can be. Exactly. Especially in sectors that are, you know, meeting those everyday needs. Well, speaking of resilience and adaptation, I wanted to mention something I read about Dallas. Okay. This whole debate about getting rid of parking minimums for new developments. Oh, yeah.

Sounds like it could really change the city. It could. It’s a big shift in how cities are thinking about planning. Yeah. So, parking minimums are these rules about how many parking spaces developers have to include in new buildings. Right. They’ve been around forever, but now cities are starting to question them.

So, for those listening who maybe haven’t heard about these parking minimums before, why are they being reconsidered? Well, the argument against them is that they lead to way too many parking lots, which take up space, contribute to sprawl, and they don’t encourage walking or biking or public transit. So it’s about more than just parking.

Exactly. It’s about how we design our cities. Creating places that are less car dependent. Right. More walkable, more people friendly. So what’s going to happen in Dallas? Are they actually going to get rid of these parking minimums? Well, the City Planning Commission just reviewed a proposal to do just that.

Wow. And those potential changes are going to the City Council next. Big step. It is. It could really have a ripple effect on development across the whole city. It’s like Dallas is at a crossroads. In a way, yeah. Deciding what kind of city it wants to be. That’s right. Choosing its future. Well, let’s shift gears again.

I’m curious about that whole reverse logistics thing we were talking about earlier. Oh, yeah. Retailers seem to be getting really creative with how they use their stores these days. They are. Online shopping is booming. And that means returns have become a huge challenge. Right. Logistically. And it’s expensive.

Yeah. But some retailers are turning this challenge into an opportunity. Okay. That’s where reverse logistics comes in. So break it down for our listeners. Sure. Let’s say you buy something online. Mm hmm. It doesn’t fit quite right. Right. Instead of packing it up and shipping it back, Ugh, such a hassle. you can just take it back to a physical store.

Oh, that is way easier. Much easier. And it probably saves the retailer money on those return shipping costs. And it gets people back into the store. Exactly. More foot traffic. Which could lead to more sales. You got it. It’s a really smart way to combine online and offline shopping. It is. It’s all about adaptation.

Well, speaking of positive signs, I was reading about how CBRE is predicting a 30 percent growth in investment sales revenue for Q4. Wow, that’s a bold prediction. It is, especially with all the challenges we’ve been talking about. Yeah, what makes them so optimistic? Well, they’re pointing to a few things.

Mm hmm. Certainty after the election, falling interest rates, and a sense that asset values are stabilizing. Okay. Plus, there are just more investment opportunities out there, which is attracting new investors. So maybe not a full recovery yet. Right. But definitely some good signs. Yeah, some encouraging signs.

That seems to be the feeling among the experts. Well, that’s good to hear. Yeah. We’ve covered a lot of ground in this deep dive. We have. From overall market trends to specific sectors, the impact of the bigger economy, and even local decisions here in Dallas. Yeah. It’s a complex picture. Well, it’s been fascinating.

And now as we wrap up this deep dive, I want to leave our listeners with one final thought. We’ve talked about. You know how commercial real estate is shaping things right now, right the present, but what about its impact on the future? The big question. Yeah, how might these trends and see our e influence the way we work?

How we shop even how our cities are planned. Yeah, are we gonna see a major shift? Right in how we use physical space or is this just a temporary adaptation? That is the million dollar question, and it’s tough to say for sure. I think what’s clear is that the line between physical space and digital space is getting blurrier.

That’s true. You know, e commerce is changing retail, remote work is changing offices, and the rise of data centers is changing the landscape of our cities. Yeah, it does feel like we’re in this in between phase, trying to figure out what all this means in the long run. Right, it’s a time of experimentation, you know, adaptation, trying new things.

Yeah. Some trends I think are definitely here to stay. Like what? Like that shift toward experiential retail. Oh yeah. Where stores offer more than just products, it’s an experience. Right. And the demand for flexible office spaces, you know. Mm hmm. Catering to hybrid work. Exactly. People want options. But then you have these other trends that are still kind of up in the air.

Yes. Like what’s going to happen to the traditional shopping mall? The mall, yeah, that’s a tough one. It really is. Nobody knows for sure. It’s like we’re watching our cities evolve in real time. Yeah. It’s fascinating. The choices we make today, developers, city planners, even us as consumers. Yeah. We all play a role.

Those choices will shape the cities of tomorrow. It’s pretty exciting. It is exciting and a little bit scary too. Right. Big responsibility. Yeah. So as we wrap up this deep dive into the world of commercial real estate, what’s the one thing you want to do? I would say this, the future of our cities, the spaces we live and work in, it’s being shaped right now.

Yeah. And we all have a part to play in that. We do. Whether it’s through the choices we make as consumers, the investments we make, or even just by staying informed. Right. Engaging in these conversations. Yeah. I love that. So to our listeners out there. Yeah. Keep exploring these trends, challenge assumptions.

Think critically. And imagine the possibilities. The future is unwritten. Exactly. The future of commercial real estate is still being written, and your insights and actions can be a part of that story. Make your voice heard. Thanks for joining us on this deep dive, and we’ll see you next time for another one.

See you then.

 Hey, everyone ready for another deep dive today. We’re looking into some seriously interesting shifts going on in the retail world. I’m talking the unexpected comeback of urban retail. Yeah, for real, and how AI is about to become your best friend for holiday shopping. It’s kind of funny, we always focus on the huge, obvious trends, but sometimes it’s the small things.

Like, how long a retail lease is that? Tell the real story. Totally. We’ve got reports from CBRE, JLL, and the ICSC, and even some stores. super interesting survey data about AI and how everyone’s planning to shop for the holidays. By the time we’re done with this deep dive, you’ll not only be completely up to date on these trends, but you’ll also have a bunch of fun facts to bust out at your next holiday party.

So let’s kick things off with the CBRE report. Okay. They’re saying the average retail lease in the U. S. is now a whole eight years. That’s up from seven and a half just last year. Yeah, that might not seem like much, but in commercial real estate, That kind of jump really says something. Retailers are feeling a lot more confident these days, especially in those neighborhood and community malls and strip malls, too.

So it’s not just any old retail making this comeback. It’s the places people shop for everyday stuff close to home. It makes total sense that retailers want to be a part of that. But the thing that really caught my eye is that Tampa, Nashville, and San Antonio are leading this trend of longer leases.

What’s making those cities so hot right now? Honestly, it’s a whole mix of things. Those cities are all seeing massive population growth, and their economies are just booming, which brings in even more people and businesses. And that, of course, creates a natural demand for more retail space. It’s that good old supply and demand in action.

Plus, Tampa and Nashville are turning into tech hubs, so they’re drawing in all these young professionals who want convenience and walkable neighborhoods. Interesting. So you’ve got this perfect storm of economic growth and lifestyle preferences driving retail in these cities. But here’s where things get really interesting.

JLL is reporting a full blown urban retail renaissance. After the pandemic hit those areas so hard, who would have thought? It’s a bit of a twist, that’s for sure. But when you look at the bigger picture, it kind of starts to make sense. People are heading back to their offices, tourism is picking up, and consumers are craving that city vibe again.

And it’s not just any stores popping up either. JLL says luxury brands are leading the charge, snagging those prime spots in all the revitalized downtowns. Exactly. Investors are putting their money where their mouth is. They’re seeing the potential in urban retail and betting big on the future of these lively city centers.

It’s a clear shift in the post pandemic real estate scene. And the numbers are seriously impressive. Urban retail’s share of transactions shot up by 180 percent year over year in Q3. We’re talking major cities here. Boston, Chicago, Miami, New York. They’re all back in the urban retail game. It’s really changing how we experience cities these days.

Think about strolling through a vibrant downtown, popping into all these cool boutiques, grabbing some amazing food and catching a show, all within walking distance. That’s the real appeal of urban retail. Okay, so we’ve got retailers feeling optimistic, urban centers are buzzing with activity, but now let’s talk about how AI is getting ready to completely change your holiday shopping game.

This Adobe survey found that a whopping 40 percent of shoppers in the U. S. are planning to use generative AI for their holiday shopping this year. That’s almost half. I gotta admit, I’m super curious about this whole generative AI thing. Can you break that down for us? It’s a pretty fascinating new thing.

Basically, generative AI can create new content, like text, images, even code, based on what it’s learned from tons and tons of data. Think of it like having this super personalized shopping assistant in your pocket. Imagine typing in, find me unique gifts for a tech savvy teenager who’s obsessed with music, and boom.

The AI whips up a list of personalized recommendations, complete with pictures. Product descriptions, reviews, and price comparisons. That’s insane. So it’s not just about hunting down the best deals online. It’s about finding stuff you wouldn’t have even thought of. This could be huge for holiday shopping.

It definitely could. The top ways people are planning to use it, according to this survey, are from for finding those killer deals, tracking down items online super fast, getting brand recommendations and discovering similar products. And what’s even cooler is that it’s not just for the techie early adopters anymore.

People are using it for really practical stuff, especially during the holiday rush. I can totally see why. It’s like having your own personal shopper right in your pocket, guiding you through the craziness of holiday shopping. But what about Good old fashioned Thanksgiving weekend shopping. It seems like the holidays start earlier and earlier every year.

Are people still hitting the stores for Black Friday and Cyber Monday? Oh, absolutely. The ICSC predicts shoppers are going to spend almost 125 billion over Thanksgiving weekend alone. And get this, 90 percent of consumers are planning to shop during that time. So even with all the online shopping and the holidays starting earlier, it’s clear Thanksgiving weekend is still a big deal for shoppers.

It’s fascinating to see how those traditional shopping events are holding their own, even as things change. But tell me, who’s actually doing most of the shopping and spending during Thanksgiving weekend? Well, the ICSC report highlights a pretty interesting trend. It seems that while younger generations like Gen Z and Millennials are more likely to be browsing online and hitting the stores over Thanksgiving weekend, it’s actually Millennials and Gen X who are projected to spend the most.

That’s interesting. Is that a sign of a generational shift in spending power? It’s part of it for sure, but it also just reflects where these generations are in their lives. Millennials and Gen Xers are often at a stage where they have families and bigger households, which naturally leads to more spending, especially during the holidays.

That makes a lot of sense. So we’ve got these big shopping events, but the report also mentioned that deals and discounts are still the biggest motivators for shoppers, with 68 percent of them doing their research ahead of time to find the best bargains. Sounds like people are getting more strategic with their holiday shopping.

Definitely, they’re not just buying on impulse anymore, they’re planning things out to get the most bang for their buck. Especially with how the economy is right now. That means retailers really need to step up their game with those promotions, and create a sense of urgency to grab those shoppers attention.

It’s like a chess match between shoppers and retailers. Mm hmm. And speaking of which, here’s a surprising stat from the ICSC report. Despite all the online shopping, a whopping 88 percent of consumers still plan to shop in physical stores over Thanksgiving weekend. I gotta admit, I thought online shopping would have totally taken over by now.

It really shows how much people still love that in person experience. They still want to touch and feel products, chat with salespeople, and enjoy that social aspect of shopping. But it’s not just about the shopping itself, is it? Malls and shopping centers are changing. They’re becoming more like multi purpose community hubs.

They’re offering dining entertainment and experiences that go beyond just buying stuff. You got it. They’re transforming it to destinations. It’s about spending time with friends and family, grabbing a bite to eat, catching a movie, and maybe doing a little shopping while you’re there. It’s about creating an experience that’s more than just a transaction.

So it’s not just about buying things anymore. It’s about the whole experience, the social interaction, the discovery, that sense of community. It’s about creating places where people want to be. Exactly. And that’s something we’re seeing not just during the holidays, but all year round. This has been a super fascinating look at how retail is changing.

We’ve covered a lot of ground from the surprise comeback of urban retail to how AI is becoming everyone’s shopping buddy. But before we move on to part two, I’m curious. What stands out to you the most from all this? What really strikes me is how resilient and adaptable the retail industry is. Even with all the challenges in recent years, it’s finding new ways to thrive.

From the return of urban retail to embracing AI, the future of shopping is definitely not going to be boring. Couldn’t agree more. It’s a super dynamic and evolving world. And I can’t wait to see what happens next. But for now, let’s take a quick break. When we get back in part two, we’ll dig deeper into the potential challenges and opportunities that are out there for the retail industry.

And we’ll talk about how all of this could impact you as a consumer. Welcome back. It’s super interesting how these seemingly separate trends, longer retail leases, that urban retail comeback, and AI are actually all connected. You’ve definitely got my attention. Tell me more about how these trends all fit together.

Well, think about it. Longer leases tell us retailers are feeling pretty good about the future, and that confidence is partly thanks to the resurgence of urban retail. Right, because more people Living, working and hanging out in cities means a bigger pool of potential customers for those retailers.

Exactly. And this shift back to city centers is opening up all these cool opportunities for retailers to use AI in new ways, not just online, but in their physical stores, too. So we’re not just talking about AI helping us find deals online. We’re talking about it actually changing what it’s like to shop in a store.

For sure. Imagine walking into a store and the AI recognizes you right away, suggests stuff based on what you’ve bought before, and even walks you right to whatever you’re looking for. That sounds like something straight out of a sci fi movie. Yeah. It would be super convenient though. No more wandering around lost trying to find that one specific thing.

Exactly. AI has the potential to make shopping way more efficient, enjoyable, and personalized. But of course, not everyone’s going to be comfortable with that much tech. Some people might find it a bit intrusive or even creepy. That’s a good point. How do retailers find that balance between using all this cool new tech and still respecting people’s privacy?

It’s a tready one. Transparency is key. Retailers need to be upfront about how they’re using AI and give shoppers the option to opt out if they want. It’s about giving people control over their experience. But what about AI’s impact on jobs in retail? There’s a lot of talk about automation taking over from human workers.

That’s definitely a valid concern and a conversation we need to be having as AI becomes more and more a part of our lives. But I don’t think it’s a simple case of robots taking everyone’s jobs. So it’s not all doom and gloom for retail workers then? Not at all. While AI can definitely automate some tasks, it can also free up human employees to focus on things that need creativity, problem solving, and those people skills.

Things that AI just can’t do. So instead of wiping out jobs, it’s more about a shift in the types of jobs in retail? Yes. Exactly. AI can handle those repetitive tasks, like managing inventory or processing transactions, which lets human employees focus on giving amazing customer service, creating those cool in store experiences, or picking out unique products.

That makes a lot of sense. It’s about using AI to help people do What they do best, not replace them altogether. Exactly. And this shift is going to require retraining and upskilling the workforce so they’re ready for these new, more specialized roles. It’s a challenge, but it’s also a big opportunity for retail workers to learn new skills and take on more interesting roles.

Totally agree. It’s about adapting to how things are changing and recognizing that technology can be a tool to create a better future for everyone, not just for making things more efficient or profitable. Speaking of adapting, let’s dive a bit deeper into how physical retail spaces are changing. We touched on this earlier, but I think it deserves a closer look.

For sure, this is where things get really interesting. As online shopping keeps growing, physical stores have to offer more than just a place to buy stuff. They need to become destinations. You’re talking about creating experiences that go beyond just Exactly. It’s about creating that sense of community, a place where people want to hang out, connect with others, and be entertained.

Can you give us some real world examples of what that actually looks like? We’re already seeing malls and shopping centers adding things like restaurants, movie theaters, fitness centers, art installations, and even co working spaces. It’s like they’re turning into little cities within cities. In a way, yeah, they’re becoming hubs for social interaction, entertainment, and even work.

This whole blending of retail, leisure, and work is only going to keep going. Okay, I’m picturing this. I meet a friend for coffee at the mall’s super trendy cafe. Then we browse the bookstore, check out the latest art exhibit, maybe pop into a few stores. And then I head up to the co working space to get some work done.

All under one roof. It’s like a one stop shop for life. Exactly. And that’s just one scenario. Imagine farmer’s markets, live music, cooking classes, book readings, pop up shops. The possibilities are endless. It’s all about that sense of discovery and surprise. You never know what you’ll find when you step into one of these reimagined retail spaces.

But is this model actually sustainable? Can every mall and shopping center pull off this kind of transformation? That’s a great question. And the answer is probably not. Not every retail space is going to be able to do this. It takes a special mix of things. A great location, really understanding the local community, being willing to invest in new ideas, and a good dose of creativity.

So there’s no one size fits all solution for malls and shopping centers trying to adapt? Nope. Each space needs to find its own identity and cater to what its community specifically wants and needs. Those cookie cutter approaches just aren’t going to cut it. It’s all about being adaptable, flexible, and trying new things to see what works.

Exactly, and it’s about understanding that what physical retail is for is fundamentally changing. It’s not just about transactions anymore, it’s about building connections and that sense of belonging. I’m noticing a theme here, whether it’s AI or how physical retail spaces are changing. It’s all about creating a more personal and engaging experience for the shopper.

You hit the nail on the head. That focus on the customer experience is what’s going to make or break you in this ever changing retail world. So what does all this mean for the future of shopping? Any predictions? I think we’ll see even more blending between online and offline shopping. AI is going to play a much bigger role in personalizing the whole experience, both online and in stores.

And those physical stores will keep evolving into these multi purpose destinations that offer way more than just products. Exactly. The future of retail is about creating a seamless, personalized, and engaging experience that really meets the needs and wants of today’s shoppers. This has been such an insightful conversation and I feel like my brain is buzzing with new ideas.

But before we get too carried away with the future, let’s come back down to earth for a minute. When we come back for part three, we’re going to shift the focus to you, the consumer, and explore what all this means for your actual shopping experience in a real practical way. Okay, we’re back for the last part of our deep dive into the future of retail.

And this time, I’m going to talk to you about It’s all about you. What does this whole retail renaissance and the AI revolution actually mean for your shopping experience? It’s a pretty wild time to be a shopper right now. You’ve got more choices than ever before, and technology is giving you all these tools to be a smarter consumer.

Let’s break it down. We talked about this big comeback of urban retail. What are the actual benefits for everyday shoppers? Well, first off, it means more options right in your neighborhood. You can enjoy all the convenience of local shops, the energy of a revitalized downtown, and those unique experiences you just don’t get in the suburbs.

So it’s about having everything right at your fingertips. No more driving out to the burbs for every little thing. Exactly. And with all these luxury brands setting up shop in city centers, you’ve got access to a much wider range of products and services, even if you’re just window shopping. But let’s be real, luxury brands aren’t exactly known for being easy on the wallet.

Is this urban retail boom really good for everyone, or just those with a lot of cash to throw around? That’s a fair point. For this trend to really work, it needs to be inclusive and cater to a mix of incomes and needs. Hopefully, as this urban retail renaissance keeps going, we’ll see a better balance of businesses that appeal to all kinds of budgets and lifestyles.

It’s about creating a healthy retail ecosystem where everyone feels welcome and can find what they need no matter how much they can spend. Absolutely, and that’s where community engagement becomes so important. Retailers need to really listen to what their communities want and offer products and services that make sense for everyone.

Now let’s talk AI. We discussed how it can personalize your shopping and make things super efficient, but I think it’s safe to say some people are a bit uneasy about it. What are your thoughts on that? I totally get it. People are worried about their privacy, their data being safe, and AI being used in ways that feel manipulative.

And those are valid concerns. So how do we navigate this new AI powered world as shoppers? What can we do to protect ourselves? Being aware is key. Be informed about how retailers are using your data, and what AI tools they’re using. Read those privacy policies, don’t be afraid to ask questions, and be careful about what you’re sharing online.

It’s about taking control of your digital footprint and making smart choices about what you’re okay with sharing. Exactly. And you always have the option to say no to data collection or those personalized recommendations if you’re not comfortable. You have the right to control your own data. That’s good to know.

It’s not about rejecting technology altogether. It’s about using it on your own terms. Precisely. And don’t forget, you can always just shop in physical stores where AI might not be as big a thing. The great thing about this retail renaissance is you have choices. You can shop online, in store, or mix it up.

You can embrace AI or choose to limit how much you use it. It’s all about finding what works best for you. And that’s what’s so exciting. This whole changing retail landscape gives you the power to be a more conscious, informed, and picky consumer. You’re the one in control. So as we wrap up this deep dive, what’s the one thing you want our listeners to take away from all of this?

The future of retail is being shaped right now, and you have the power to shape it through your choices, your preferences, and what you demand. Embrace the convenience of technology, but do it thoughtfully and critically. Support businesses that reflect your values and demand transparency and ethical practices from the companies you choose to support.

Well said. It’s about being an active part of the retail world, not just a passive consumer. Thanks for joining us on this deep dive into the future of retail. Remember, the future of shopping is what we make it.

 Welcome to the deep dive today. We’re going to take a deep dive into, um, commercial real estate. Oh, fun. It is fun. And it’s, uh, it’s interesting. It’s always changing. Yeah, definitely. And we’ve got a stack of articles here from CoStar News and CoStar Analytics. They’re really the experts on this stuff.

Yeah, they are. So we’re going to go through these and see what’s, what’s happening out there in the world of commercial real estate. So some trends, trends. Yeah. I love trends. Yeah, it’s all about the trends. Exactly. Ugh. So, let’s jump right in. The first thing I wanted to talk about was, um, Borrowing trends.

The third quarter of 2024 saw a surge in borrowing 44 percent increase over the previous quarter for commercial real estate. Wow, that’s a lot. Yeah, it is a lot. So I’m kind of curious what what was driving that? Well, one thing to consider is, um, Interest rates. And during the third quarter, the interest rate on what’s called the 10 year treasury really dropped significantly.

It actually hit 3. 72 percent in September. So how does that, like, how does a government bond rate impact commercial real estate? Right, so that actually acts as kind of a baseline for interest rates across the whole economy. So when that rate falls, mortgage rates tend to follow suit. And then suddenly, Borrowing money becomes a lot more attractive.

Oh, okay, so it’s like a domino effect then. Yeah. Lower government bond rates leads to lower mortgage rates. Buyers want to jump in and refinance or take out new loans. Exactly, and that’s exactly what we saw happen in the third quarter. Buyers and property owners wanted to lock in those lower rates before they potentially 10 year treasury yields, they climbed back up to 4.

51 percent since mid September. Right. So is that borrowing frenzy over? That is a great question, and it really shows how dynamic the real estate market is. You know, if those yields continue to rise, we could definitely see that borrowing slow down. Those lower rates are already starting to become a thing of the past.

So for anybody listening who might be thinking about investing in commercial property right now, what should they be thinking about? Well, I would definitely say pay close attention to interest rates. You know, the window for those super low rates, that could be closing. We also might start to see lenders and borrowers being more creative, um, with their financing to kind of adjust to this new environment.

That’s interesting. Yeah. It’s going to be interesting to see what happens. Okay. Well, let’s move on from this big picture of interest rates and, um, zoom in on a specific market that caught my eye, Dallas, Fort Worth. It says here that commercial property sales are up 12 percent year over year, but it looks like the real story is in one particular sector.

Industrial properties. Yeah. Whose sales are absolute booming in Dallas, up 53 percent compared to earlier this year. 53%, that’s huge. So, I mean, everyone talks about location, location, location in real estate. Yeah, right. But what else is going on there? Is it just location? Well, location is a big factor. You know, Dallas has a strategic location.

Great transportation network is becoming a prime hub for distribution. But there’s also kind of this bigger trend going on, uh, you know, changes we’re seeing in global supply chains. The pandemic really exposed weaknesses in those long, complex global supply chains. Yeah. So companies are rethinking their strategies.

They want to shorten their chains, bring production closer to their customers, and that means they need more warehouse space and they need it closer to where people actually live. Okay. Dallas Fort Worth is perfectly positioned for that. So it’s not just a physical location, it’s about positioning yourself within these evolving supply chains.

Exactly. And we’re seeing that in other places around the country too, you know, other logistics hubs. So anybody listening who’s thinking about, I don’t know, relocating or starting a business, Dallas might be a good spot to look into. Definitely. Especially if you’re in an industry that relies on, you know, fast and efficient distribution networks, Dallas is a powerhouse for that.

Awesome. Okay, let’s move on. This one, this one’s a little bit of a surprise. We all know the office market has been struggling, vacancy rates are high, lots of empty buildings, but one landlord in Plano, Texas is trying a pretty unique approach to attract tenants. What’s that? Pickleball. Pickleball. Wow. I know, right?

So this landlord is adding pickleball courts and a bunch of outdoor amenities to a vacant office campus. Like, is it a gimmick? Are they on to something? Well, you know, I think it really speaks to the changing priorities of office tenants. What people want is changing. It’s not just about square footage or fancy address anymore.

Companies are realizing they need to create a better experience, offer something more, a sense of community. So it’s less about cubicles and more about creating a workplace that people actually want to be. Exactly. And if that includes pickleball, then so be it. I love it. Yeah. But what does this mean for the future of work?

I mean, are traditional offices just going to become obsolete? That’s a big question. And honestly, I don’t think anyone really knows the answer yet. Yeah. But I think, you know, this focus on amenities and experience, that could really change the office as we know it. It’s a trend to keep an eye on. Okay.

Let’s move on to retail. Okay. Despite some, you know, some challenges, retail real estate is showing some signs of resilience. In fact, in South Florida, retail properties are actually gaining value faster than other types of real estate, even apartments, which are usually pretty hot. Yeah, that’s a great point.

It really goes to show that real estate is all about location. National trends only tell part of the story. So what’s making South Florida’s retail market so strong then? Well, a few things. They’ve got a booming tourism industry, a growing population, and, compared to other markets, a relatively limited supply of retail space.

You can’t forget about the weather, those warm, sunny winters. Right, people want to be there. Yeah, people are out and about spending money. Yeah. That translates into higher rents, higher property values for retail owners, but it’s not just about location. Retailers are also getting creative and adapting to changing consumer preferences.

And there’s some really interesting examples of that. Like what? Like the story about Arco, the convenience store chain. Oh yeah. They’re planning a major expansion, gonna open over 1, 400 new stores, renovate a lot of existing ones. And the big focus is food sales. Really? So they’re going beyond just like gas and snacks.

Yeah, they want to compete with fast food restaurants, offer quick and convenient meal options. Oh, interesting. So they’re tapping into that growing demand for like, grab and go food options. I think it’s a smart strategy. Yeah, especially as people get busier and busier, it just makes sense to have those options.

Exactly. Okay, before we move on, I want to squeeze in one more trend here. The national multifamily market, you know, apartment buildings. The data shows that the vacancy rate might have finally peaked, reached 7. 9 percent in the third quarter. Yeah, that’s right. After a pretty steep climb since 2021, it seems like it’s leveling off.

Okay, but you mentioned earlier that you know real estate is all about location and national trends don’t tell the whole story, so what’s happening on the like a regional level. Well, there are some pretty significant differences. Oh, okay. The Sun Belt, for example, is seeing disproportionately high vacancy rates.

Austin actually leads the pack with a vacancy rate of 15. 1%. Wow, that’s more than double the national average. It is, yeah. What’s going on there? You know, we can actually connect this back to something we talked about earlier, that migration trend to Texas. All those people moving from California and other states, they’re putting pressure on the housing markets.

Right. Increased demand leads to higher rents, and if there’s not enough apartments, then you get higher vacancy rates. Yeah, and that’s a big part of the story here. Some Sunbelt markets are actually seeing a slowdown in multifamily construction. Oh, wow. Which just makes the problem worse. So is this trend sustainable?

I mean, are we heading for a correction in some of these sunbelt markets? Hmm. That’s a great question. And it’s something that analysts are definitely watching very closely. All right. We’re going to take a pause here and come back to explore those questions and a lot more in part two. Welcome back to the Deep Dive.

You know, before the break, we were talking about those regional differences in multifamily market, and that got me thinking about the long term effects these, like, migration patterns can have. Yeah, it’s like a ripple effect. Exactly. It makes you wonder, like, what’s the ripple effect going to be from those hurricanes?

Oh yeah, especially since they hit some of the most popular areas on the East Coast. Definitely those hurricanes, they’re really impacted businesses, especially those that rely on tourism and entertainment. Yeah, even Disney wasn’t immune. Oh wow, they’re not exactly a small operation. What kind of impact are we talking about here?

Well, Disney estimates that, you know, all the closures and event cancellations from those East Coast hurricanes are going to cost them about 150 million in the first quarter of 2025. 150 million. Wow. It’s a big number. That’s huge. It makes you think about, you know, how important it is to have a plan. for dealing with, like, unexpected events.

Right. We talk a lot about the need for resilience and adaptation in business, but a lot of times the focus is on, you know, like, physical infrastructure, making sure buildings can withstand storms. Right. But it’s also really important to think about that resilience in terms of your business model, you know?

Your risk management strategies. How can you adapt to these kinds of disruptions and minimize the impact on your business? Okay, well let’s shift gears now and talk about a trend that seems to be Bucking the trend in a lot of ways. Okay. The power of physical locations. I mean, in an age where so much of our lives has moved online, it’s interesting to see companies actually doubling down on brick and mortar stores.

It is. You know, in a world that’s becoming increasingly digital, we’re seeing a renewed interest in physical spaces. Yeah. Almost like a pendulum swing. So one example that really stood out to me was, um, PNC Bank. Okay. They’re planning to double their branch openings over the next five years. Wow, which seems kind of counterintuitive.

Yeah, it does but you know I think it shows that even though we have all these digital options people still want those physical locations So what’s driving that demand? You know, I think for a lot of people especially when it comes to complex financial matters There’s still that desire for personal touch that face to face interaction.

There’s just a level of trust and a sense of security That’s hard to replicate online It’s like that old saying, sometimes you just need to talk to a real person. Exactly, and PNC is not the only one. Meta, Facebook’s parent company, is also experimenting with physical spaces. Oh, really? Yeah, but they’re taking a slightly different approach.

Oh, okay. They’ve opened a couple of pop up stores in a few cities. Okay. But their focus is less on selling products and more on creating these experiential retail spaces. So what are they doing? Well, they’re showcasing their VR and AI technology, giving people a chance to try it out, experience it firsthand.

So it’s less about traditional retail and more about, like, building brand awareness and generating excitement for meta. Right. They’re using these physical spaces to bridge the gap between the virtual and the real world. I see. Giving people a taste of the metaverse, I guess you could say. Yeah, it’s a smart strategy.

Makes me wonder if that’s the It’s like the future of retail, finding creative ways to blend online and offline to create a more, I don’t know, like a holistic brand experience. I think you’re right. It’s not about online versus offline anymore. It’s about finding the right balance, you know, the synergy between the two.

Consumers want options. They want convenience. They want to shop online in stores or a mix of both. And the retailers that can meet those needs, they’re the ones that will succeed. Makes sense. Yeah. Okay, before we move on, I want to circle back to something we touched on earlier. Um, the rise of convenience stores as, like, food destinations.

Yes. That story of, uh, Arco’s expansion plans. I was blown away by that. Over 1, 400 new stores. With a focus on food sales. Yeah, it’s a bold move, but I think it’s a smart one. They’re really capitalizing on the shift in how people are eating. You know, people are busy. They’re looking for quick, affordable meal options.

Yeah, and convenience stores are perfectly positioned for that. They’re already everywhere. They’re open all the time. They have a built in customer base. Right. It’s a classic example of adapting to changing consumer needs. Instead of just selling gas and snacks, they’re becoming destinations for meals.

We’re going to pause there for now and come back to wrap things up and explore what some of these trends might mean for the future. Welcome back to the Deep Dive. We’ve talked about a lot today, but before we wrap things up, there’s one more trend I wanted to make sure we discuss. Migration. It’s really changing, not just, you know, commercial real estate, but entire regions.

Yeah. And. Um, the article’s really highlighted what’s happening in Texas. Right, especially all the people and businesses moving there from California. Yeah, it’s like every day I hear about another company packing up and heading to the Lone Star State. What, what is it about Texas? And what’s it doing to commercial real estate there?

Look, Texas has a lot to offer businesses, you know, it’s a very business friendly environment, lower taxes, lower cost of living compared to a lot of places, especially California. Yeah. And for individuals, it’s, you know, often a similar appeal, especially that lower cost of living and all those people and businesses, they need places to be, right?

Yeah, driving up demand for commercial real estate, especially in cities like Austin, Dallas, San Antonio. But we talked earlier about how, you know, rapid growth isn’t always a good thing. It’s true. Can create challenges, especially with housing and infrastructure. Exactly. And, you know, we see that in Austin, those high vacancy rates we talked about earlier that suggest that, you know, the supply of housing just isn’t keeping up with all the new people moving there.

And as long as people keep moving to Texas, that pressure on Housing and commercial real estate is just going to keep building. Most likely, yeah. It’s pretty amazing how, like, a demographic shift, like this, the wave of migration, can impact so much. Yeah, the ripple effect. Really makes you think about, like, what’s the future going to look like for these places?

It does. How are they going to keep up with the growth? Yeah. You know? Accommodate all these people, but still maintain a good quality of life. That’s the question, isn’t it? Yeah, you know, it’s something that cities across the Sun Belt are facing. Right. Speaking of the future, there’s one more trend I want to touch on before we wrap up.

This one is a little bit out there. Okay. The metaverse. It seems like science fiction, but people are talking about it. Investing in it. It’s true. How does it connect to commercial real estate? That’s a good question. It does seem like a world apart from office buildings and shopping malls. Right. But there are some interesting connections starting to emerge.

Like we talked about Meta, Facebook’s parent company. Yeah. Opening those pop up stores to showcase VR and AI. Right. They weren’t really selling anything. Right. Just trying to get people excited about the Metaverse. That’s right. Trying to build a bridge between the virtual and the physical. Give people a taste of what it’s like.

What the Metaverse could be, what it has to offer, you know, beyond just games and entertainment. So these pop up stores are almost like a, like a gateway to the Metaverse. That’s a good way to put it. Make it feel a little less, I don’t know, abstract? Yeah. And, you know, as more people get used to VR and AR technology, Yeah.

the lines between the virtual and physical worlds are just gonna get blurrier. It’s kind of mind blowing to think about what we could do. Yeah, it is. Like, imagine attending a conference. in a virtual office tower, or shopping for furniture in a digitally rendered showroom. I mean, the possibilities are endless.

That’s what’s so exciting about it, right? It’s a blank canvas. Yeah. And it’s still early. But I think we’re just starting to explore what it can do. So even though people aren’t, you know, buying virtual real estate just yet. Right. It’s definitely something to watch. Absolutely. I agree. You know, just like all the trends we’ve talked about today, the commercial real estate landscape is constantly evolving.

You got to be able to adapt, to innovate, to embrace new technologies if you want to succeed in this world. That’s a great point to end on, I think. Yeah. Wow. We covered a lot today. Everything from pickleball to the metaverse. We did. Surging borrowing costs, resilient retail. It’s clear that there’s The world of commercial real estate is dynamic.

Yeah, lots going on. Full of surprises. Always changing. Exactly. Well, thanks for joining us on this deep dive into the world of commercial real estate. We hope you learned something new and maybe got you thinking about the trends that are shaping the world around us. Until next time, stay curious.