Welcome to the Deep Dive. Today we’re waiting into a pretty complex situation. The US real estate market. Yeah, it’s definitely in a period of flux that’s putting it mildly. Yeah. We’ve got sources looking at the big picture for a commercial real estate, but also a specific snapshot of retail from Q1 2025.

Quite a mix. Our mission here is to pull out the key insights. For you, the learner. We’re especially looking at the distressed side, like office buildings, multi-family housing, trying to help you see the landscape, maybe spot some opportunities without getting totally overwhelmed. Okay. Sounds good.

And it really is a tale of different sectors right now, as you said, commercial office that’s facing some serious headwinds nationally. Yeah, that seems like the big story. But then multifamily housing, it’s much more, varied, depends heavily on where you look and all this is happening while interest rates are still, stubbornly high, even with those Fed adjustments last year.

Let’s dive into the office buildings first. It seems like ground zero for a lot of the turbulence, the whole shift to remote and hybrid work since the pandemic I. That’s really the catalyst, isn’t it? Oh, absolutely. It’s fundamental. Companies are realizing they just don’t need the same amount of space, and frankly, they’re being drawn to newer buildings.

Better amenities. Yeah, maybe better deals too. Exactly. With so much space available, tenants have leverage, especially when looking at, say, class A buildings versus older stock. We saw the national office vacancy rate hit, what was it, 19.8% by the end of 2024, almost 20%. Wow. Nearly one in five offices just sitting empty.

That’s stark. It is stark. And it’s not just older buildings or suburban locations, so they’re often hit harder. It points towards a potential, long-term reshaping of what the office market even looks like. And it’s more than just empty space, right? Yeah. The financial pressure on the landlords must be immense.

Oh, it is. Because even though the Fed cut rates a bit in 24, commercial mortgage rates didn’t really follow suit in a big way. They’re still elevated, still expensive to borrow. Very, and landlords are also facing rising operating costs, utilities, maintenance, taxes, you name it. We’re hearing cases where the rent coming in barely covers those costs before they even think about paying the mortgage.

Oof. So that’s crushed property values. It does. It puts clear downward pressure, which then makes refinancing a massive challenge when those loans mature. So logic would say wave of foreclosures, distressed sales, hitting the market. But the sources suggest that hasn’t really happened. Not on a huge scale anyway.

What’s going on there? It’s this weird kind of standoff, a lot of owners are just holding on, maybe hoping the market turns around, hoping values recover. Buyers meanwhile might be waiting, thinking prices could fall further, and the banks and the lenders. Yeah. They’re often hesitant. Foreclosing is messy.

Managing these properties is costly complex, especially when you’re competing with brand new buildings. So they’re reluctant to officially recognize those losses on their books, so everyone’s waiting each other out. A delicate balance, very delicate, but it means that when deals do happen, they’re often these highly distressed situations or forced sales, and that unfortunately can pull overall pricing down even more.

It’s a tough cycle. But it’s not all doom and gloom everywhere. I think One source mentioned New York City seeing a big jump in office leasing. That’s right. A really significant increase, actually, almost 50% from October 23 to October 24. It really highlights that you can’t paint the whole country with the same brush.

So why NYC? Just a stronger return to office push there. Different industries. It could be a mix of things, certain sectors demanding in-person work, maybe the sheer scale and draw of New York. It shows that strong urban cores, especially for top tier properties, might have a different trajectory. That’s a crucial point.

Location, property class. It all matters. Yeah. And you mentioned the return to office push. Some employers are getting stricter about that, aren’t they? They are. That trend is definitely growing, wanting people back full time, that could certainly help absorb some of that vacant space over time. And there’s another angle too, converting offices to apartments.

I saw New York is looking at rezoning for that. Yes. That’s a really interesting development given how incredibly tight New York’s housing market is. I think the source said vacancy was just 1.4% in October 24. Wow. 1.4%. Yeah. And a shortage of something like half a million homes. So you’ve got this massive oversupply of office space potentially, and this huge undersupply of housing.

The logic for conversion seems pretty compelling there. So for you, the learner listening, yeah, maybe there’s a real opportunity there. Taking empty offices and turning them into needed homes. If you can navigate the complexities, of course, it’s definitely an area smart investors are looking at closely.

Now, if we switch gears to multifamily housing, the picture gets well fuzzier, less uniform distress than an office, right? More regional variation. The sources said. The Northeast seems to be holding up pretty well. Yeah. Rank growth there has been quite strong. Actually. New York City, again, median asking rent was up 2.1% year over year, as of October 24.

What’s keeping it strong there? Just not enough building. Steady demand. Probably a combination. Limited new supply coming online and some of those established markets. Stable local economies and just persistent demand for rental units, but other places. Not so rosy. There was talk about potential rent declines because of a construction boom that started during the pandemic.

Sounds like some cities might get swamped with new apartments. Exactly. And where that new supply is concentrated is key. Austin, Texas is the example. Given median rent there dropped significantly from about oh $4,480 in August 24 down to $1,394. By December 24, that’s a year over year drop of nearly 18%.

Almost unheard of previously. 18% drop. Okay, so that really shows how localized this can be. Too much building in one spot can really hit rents hard. Absolutely supply and demand right down to the neighborhood level sometimes. Yet, despite those headwinds in places like Austin, the sources suggest investors are still buying multifamily, and it might even be a preferred asset in 2025.

How does that square, it suggests investors are being selective. They see the fundamental need for housing long term, but they’re likely focusing on specific markets, maybe specific property types, workforce housing, for example, that seem more stable or have better growth prospects than say. Luxury high rises in an overbuilt area.

Okay. So diligence and local knowledge are absolutely critical there. Always. But especially now, let’s talk about the lenders again for a second. Yeah. Banks and other lenders. What’s their general strategy in this market? The sense is they’re trying to reduce their overall commercial real estate holdings where they can, the old playbook of foreclosing and trying to fix up a struggling property.

It’s just less attractive. Now, why is that More expensive? More expensive? Definitely more complicated. You’re competing with newer buildings. Tenant demand might be lower. It’s harder to turn those assets around successfully. So frankly, they’d rather just avoid having these underperforming loans on their books if possible.

Okay. So if banks are maybe reluctant to foreclose, how do investors actually get into these distressed deals? What are the main ways. There are a few key routes. You can buy the property directly from an owner who’s in trouble maybe before it even gets to foreclosure. You can buy at a foreclosure auction if one does happen, or through a bankruptcy sale.

And another really significant way, as mentioned the source I. Is buying the loan itself from the lender, usually at a discount buying the debt. Okay. Why would an investor do that? What’s the advantage? The big advantage is you get to reset the basis. If you buy the loan for, say, 70 cents on the dollar, your investment is based on that lower amount, which reflects the properties current reality.

Not the inflated value from years ago. Precisely, and then you have options. You can try to work with the existing borrower, negotiate new terms, maybe provide some flexibility that’s a loan workout, or if that doesn’t work, you can proceed with foreclosure yourself, but from a much stronger financial position because you bought the debt cheap.

Got it. Now foreclosure and bankruptcy. They sound legally complex. The source breaks down a few types. Mortgage, foreclosure, UCC, foreclosure, bankruptcy, sales. Can you give us the quick version of the differences? Sure. So mortgage foreclosure is what most people think of the lender. Takes back the actual real estate because the mortgage wasn’t paid.

The process varies by state. Some are faster. Non-judicial states, maybe a few months. Others like New York are judicial, meaning it involves lawsuits and courts and can take, a year or even two. Okay. Quite a difference. What about UCC? UCC foreclosure is a bit different. It targets the ownership interest in the company that owns the property, like the shares and the LLC.

It’s governed by the Uniform Commercial Code, hence UCC. It’s typically much faster, maybe 30 to 90 days faster. Okay. Any catches? A key thing is the lender can credit bid. Basically bid using the debt, the owed. But importantly, whoever buys through a UCC sale usually takes on all the debts tied to that ownership entity, the mortgage, any other liens, taxes, everything.

Ah, so you inherit all the problems potentially, and bankruptcy sales. Those happen within a bankruptcy case. Overseen by a judge can be voluntary, where the borrower agrees or involuntary. A big potential plus for buyers here is the chance to get the property free and clear of existing linen, which the court can approve.

Sometimes faster timelines too. Free and clear. That sounds appealing. It can be. But bankruptcy has its own complexities, of course. So lots of different paths, each with its own rules and risks. If you’re buying the actual property through one of these methods, what are the big legal things to watch out for?

Number one, properties are almost always sold as is where is right. Very limited promises or warranties from the seller. So your own due diligence is absolutely crucial. Meaning, meaning thorough inspections, environmental checks, and especially getting good title insurance and doing a full title search to uncover any leens or claims against the property.

You don’t want surprises later, right? No hidden problems. Exactly. Also, be aware that the current owner or other creditors might try to fight or delay the sale in court. And don’t forget potential real estate transfer taxes, which can be significant depending on the location. Okay? That’s for buying the property.

What if you’re buying the loan instead? What are the key legal checks there? There? Your focus is heavily on the loan documents themselves. The note, the mortgage, any guarantees are they correctly drafted, enforceable. You also still need thorough lien and title searches on the underlying property, even though you’re just buying the paper.

Absolutely, because the property is the collateral securing that paper. You need to know what you’d be getting if you eventually had to foreclose. A challenge can be getting physical access to inspect the property before buying the loan. That’s often limited. Makes sense. So you need protection in the deal itself.

Yes. You want strong protections in your loan purchase agreement. Things like representations and warranties from the selling lender about the loan status, maybe an indemnification clause to cover you if certain things turn out not to be true. It definitely sounds like you need good advisors, lawyers, financial experts, to navigate this.

100%. This is not a DIY space. The source even lays out some key rules for investing here. What are the main takeaways from those rules? First really understand the local market. National trends are one thing, but real estate is local. Analyze how the specific property is doing compared to its competitors.

Second exhaustive due diligence. Look for over-leverage, bad management, hidden liabilities, regulatory issues. Dig deep. Don’t just look at the surface, never. Third. Know what you don’t know. Get experienced professional advice. And finally, understand the nuts and bolts of these distressed transactions. How they work, what can go wrong, what your worst case scenario might be.

Solid advice. Okay, so that covers the distressed commercial side pretty well, but we also have that other report, the one on the retail real estate market for Q1 2025. Sounds like a different story altogether. It is, yeah. A contrasting picture. While office has these deep structural shifts happening, retail seems to be more softening, facing, broader economic headwinds, softening how, what did the Q1 data show?

It showed negative net absorption, meaning more space became vacant than was leased up about 5.9 million square feet nationally. That’s actually the weakest quarter for retail since the start of the pandemic negative absorption. So demand actually shrank in Q1. What’s driving that? A big factor highlighted is tariffs on imported goods.

The expectation is that these will raise costs for retailers, which they might pass on to consumers, exactly, which could lead to higher prices, maybe dampen consumer spending. It also just creates uncertainty for retailers trying to plan inventory, staffing, and investment. The report notes, consumer sentiment, actually dipped pretty low in early April 25 because of these tariff war.

Okay, so tariffs are casting a shadow. Is that showing up in vacancy rates too? Yes, the national retail vacancy rate ticked up slightly to 5.5% in Q1. Still relatively low historically, but up a bit year over year it seems. Neighborhood shopping centers saw the biggest hit in terms of occupancy loss and rents.

Are landlords having to cut rents in retail asking rents were still up slightly year over year, about 2.3% on average nationally, but that growth rate has definitely slowed down, so the upward momentum is fading. It seems so with stores closing the report expects closures to outpace openings and tenants facing those higher costs.

You’d expect more pressure on rent growth going forward. Landlords might have less pricing power, so maybe a tougher time for retail landlords. But does that mean opportunities for tenants? Potentially, yes. If you’re a retailer negotiating a new lease or a renewal, you might find landlords are a bit more flexible, offering better terms or concessions.

Interesting. So the dynamic is shifting. What’s the overall outlook for retail then? According to this report, the outlook is cautious. The market was already cooling a bit before the tariff news, which adds another layer of risk. Retailers themselves are maybe better prepared for disruption after dealing with the pandemic, but it’s still a headwind and vacancy.

Will it keep climbing? It might tick up further. The forecast mentioned potentially reaching 6.0% to 6.5% by early 2026. But one thing limiting a huge spike is that new construction is pretty constrained because building costs are so high so not a flood of new supply coming online to make things worse, right?

That could help stabilize things. Beyond early 2026. If the economy strengthens, maybe things pick up again, but near term it’s a cooler environment. And like with multifamily, I assume retail performance varies a lot by region and type of center too. Oh, definitely. The report likely breaks down those differences.

Some markets doing better, some worse power centers versus malls versus. Neighborhood strips. They all have slightly different dynamics. Granular data is key there too. Okay. This has been incredibly insightful, so let’s try to wrap this up. The US real estate market, definitely a mixed bag right now. That’s the main theme.

Yes, we’ve got major distress in commercial office. Driven by remote work and financial pressures, but that distress might create opportunities, especially these office tour conversion, right? A sector undergoing a real transformation. Then multi-family, much more varied. Some areas strong. Others facing oversupply issues from recent construction requires that a very local focus, very regional, very sub-market specific.

And finally, retail is softening. Not the same structural shift as office, but feeling the pinch from economic factors like tariffs leading to slower rent growth, and maybe some opportunities for tenants, a more cyclical downturn, perhaps exacerbated by current policy and economic conditions. Each sector really dancing to its own tune.

So as we finish this deep dive, here’s a thought to leave you with. The learner. We see these diverging paths. Office and distress, retail, softening office to residential, gaining traction. Looking ahead, what other maybe unforeseen real estate adaptations might emerge as work shopping and living patterns keep shifting.

Could we see completely new types of hybrid spaces or maybe totally different ways of repurposing buildings we haven’t even thought of yet. What’s the next big adaptation? Something to ponder. Definitely a space to watch. The only constant seems to be change. Indeed. Thanks for joining us on the deep dive.

 Okay. So you’ve handed us a really interesting collection of commercial real estate news this time, all from mid-April 2025. Yeah. Quite a snapshot, and as I’m looking through it, the, the big picture that emerges for me is one of a market that’s definitely it’s in flux. Flux is a good word, dynamic.

Maybe even a bit uncertain dynamic feels like an understatement, right? There’s a real sense of things shifting, retail office spaces even how lending is happening and all against this backdrop of, potential tariff changes and these inflation worries that just won’t quit. Exactly. So our mission here, is to try and pull out the crucial bits, connect these dots, and hopefully give you the listener a clearer picture of what’s actually going on, and importantly, why it matters.

Okay, let’s dive in. Starting with retail, it’s always so visible, good places to start. What really jumped out at me was this contrast. In the department store world, you’ve got the ongoing story, Macy’s, JCPenney, closing stores. We’ve seen that for a while. Yeah, that’s not exactly new news.

But then you have Boscovs, this chain from Pennsylvania. They’re actually going the other way. Expanding, opening their 51st store. Is it up near Rochester, New York? Yeah. The mall at Grease Ridge and creating 250 jobs. That feels like a pretty significant statement when so many others are pulling back.

It really is, and it makes you wonder what are they doing differently? What’s their strategy? The articles point to a few things. First, this real emphasis on like actual customer service on the floor with a large staff. They mentioned hiring over a hundred experienced people just for this new location.

Yeah. Which signals a real belief in that, human touch and retail in an age where everything’s pushing online. That commitment to the in-store experience. It could be a key differentiator. Maybe it shows that focusing on that physical experience can still work. Totally. And it seems like they’re not afraid to lean into some of that older retail charm either.

Like they kept their candy section. I saw that. Apparently it’s a genuine draw for people. Bit of nostalgia Maybe I. Could be, plus being smaller, private family owned it. It seems to give them more agility. They can micro-target their marketing locally. That nimbleness is huge and that local focus really shows up in things like their sports apparel sections.

Oh yeah, the article mentioned their Deford Mall store stocking specific gear for Philly teams, Penn State. Temple, Villanova, Penns, even local high schools. Ah, so really embedding themselves in the community that builds loyalty. Exactly. Deep local connection. And it seems to be paying off. They had that bankruptcy back in oh eight, right?

I remember reading about that. But they seem to have turned it around by focusing on these core suburban markets and they, strategically offloaded some smaller spots owned by Macy’s Smart, and now they’re doing what, $1.2 billion across 50 stores. Seems like they found their niche. They really seem to have, but it’s important, like you said, to contrast this with the wider picture For sure.

Yeah, because while Bosca is expanding the broader retail landscape, it’s still facing some pretty big headwinds. We’re still seeing those high profile bankruptcies, store closures. Party City, Joanne. Big Lots, Rite Aid. The list goes on. Yeah. It paints a picture of a really uneven playing field out there.

Definitely. And it’s pushing landlords, forcing them to adapt. We’re seeing reports they have to offer more concessions now what does that mean exactly? Like lower rent? Yeah, things like that. Lower initial rent, maybe rent free periods to start, help with build out costs. Basically sweetening the deal to get tenants in the door.

Okay. Some are even splitting up those big empty boxes, the old department store spaces for smaller places like quick service restaurants or turning old banks into clinics. I saw that mentioned to you. Exactly. It just shows how much that traditional retail model is being, shaken up. It really does, but even in that struggling group.

There are maybe some glimmers of hope, like big lots, right? They’re apparently on the comeback trail reopening nine stores in the south, part of a bigger plan, right? Like 55 stores by early June. Yeah, something like that. And this is after their bankruptcy in 2024. So getting new financing. Reinvesting in physical stores.

That’s significant. It suggests bankruptcy isn’t always the final chapter. Not at all. We’re seeing variety wholesalers too. They own Roses. Super 10 also reopening stores after their restructuring. I. So maybe a chance for a reset if they fix the underlying problems potentially. Yeah. And then you look at the Giants like Walmart, they’re not pulling back from physical stores, are they?

No. That deal with sign value for digital billboards at thousands of stores over 5,000. Yeah. That’s a clear investment in keeping those physical spaces relevant, engaging customers while they’re actually there. Contrast that though, with the children’s place. Okay. What do they do? They seem to be going smaller.

Focusing on smaller store formats, sometimes putting them right next to Gymboree locations. Ah, like a side-by-side strategy. And this is after they cut down their total store count quite a bit. Yeah. And they’re pushing that premium quality angle for Gymboree. So carving out a more specific niche.

Maybe feels like it. Yeah. Okay. So yeah, you’ve got expansion, attempted comebacks, and then this kind of strategic retrenching. Lots of different plays happening. Definitely not a one size fits all situation in retail. Not even close. Now, one result of all this churn is more empty storefronts. Yeah. And it seems like old bank branches are growing.

Part of that problem makes sense with digital banking taking over. The article said it takes, what, six to 12 months on average to lease out a vacant bank space. That’s a long time for a space to sit empty. It is, and it’s leading to some well interesting potential policy ideas like this California proposal Senate Bill 7 89.

The idea to tax landlords for vacant storefronts like $5 per square foot per year, if it’s empty for more than half the year. Yeah. 182 days or more. Okay. So the goal is pretty clear. Push landlords to fill those spaces, reduce blight, maybe raise some funds for things like housing. That’s the argument for it.

Yeah. But there are definitely counter arguments like penalizing landlords for things maybe outside their control market downturns or. Just legitimately needing time to find the right tenant. Not just any tenant. Exactly. And the concern that landlords might just pass that tax cost onto their existing tenants in other properties through higher rents, which doesn’t really solve the vacancy problem, does it?

Not directly. And didn’t San Francisco try something similar already? Yeah. The article mentions that a vacancy tax that apparently didn’t have a huge impact. So these kinds of policies, even if they sound good, can have complex results. Depends a lot on the local market. It’s a tough balance, revitalizing areas without hurting property owners unfairly.

And speaking of struggling areas, that contest in San Francisco. Oh yeah. For ideas to fix up Market Street, it sounds like despite past efforts banning cars, tax breaks, they’re still dealing with high vacancies, low foot traffic. It really highlights that fixing these areas isn’t just about the buildings themselves.

It’s tied to the whole economic vibe, yeah. Attracting businesses, shoppers. It’s a bigger challenge, especially with changing habits, which brings us neatly to those broader economic factors hanging over everything, right? This article, cooling inflation offers cold comfort for uncertain consumers.

It says the CPI actually fell slightly in March. I. First drop since May, 2020. Yeah, a tiny dip, minus 0.1% on the surface. Sounds like good news. What? But the article points out, it’s not really boosting confidence. People still expect high inflation according to those surveys from University of Michigan and the New York Fed.

Okay? And there are still big worries about tariffs, how they might hit spending down the road. So even if the official number dips, the feeling out there is still uncertain pretty much. And it’s not just consumers. The producer Price index, the PPI that tracks costs for businesses, right? It shows input costs are still rising, which could eventually mean, higher prices for us anyway.

And the article mentions construction firms specifically seeing higher costs, which feeds right back into commercial real estate, makes new, builds, big renovations, more expensive, potentially causing delays. Okay, so you’ve got inflation worries, tariff, uncertainty, and that connects to Prologis, the big industrial player.

Exactly. They’re reportedly cutting back on some growth plans, specifically citing trade policy uncertainty. I. Wow. So that uncertainty isn’t just talk. It’s actually affecting major investment decisions. Seems like it tariffs remain this big question mark. Yeah, there’s another piece here just on the impact of Trump’s tariffs on US manufacturing kind of complex, right?

Some suspended, but maybe more action later. Total uncertainty for businesses trying to plan long term and there’s no consensus on whether they even help or hurt manufacturing overall. Some companies holding back investment because they just don’t know what’s coming. Makes sense, but. The flip side is if terrorists do encourage more domestic production, then you need more industrial space warehouses.

Factories, precisely. It sounds like Prologis, despite being cautious overall, is still seeing pretty strong demand from tenants. So maybe link to companies thinking about reshoring or nearshoring could be part of it. Fundamental need for logistics space seems strong even with the broader caution. I. Okay, let’s pivot to office space.

That’s been such a huge story since the pandemic. Definitely. We’ve got an article saying, office attendance, nears post pandemic. High average around 54%, maybe a bit higher in places like Chicago, Houston, Dallas, Austin. Yeah. Seeing higher rates in some of those Sunbelt cities, it seems, and it feels like more companies are pushing for more in-office time.

Amazon, Starbucks. At and t Dell. Yeah. All mentioned as increasing requirements. That’s definitely the trend. A gradual pushback towards the office, which could mean demand for office space starts to stabilize, maybe even tick up in some markets. But then there’s the cost issue again, that piece on construction materials costs climb a 9.7% annualized jump in the first quarter.

Yeah. Driven by lumber, steel, copper. That’s significant has to impact new office builds or major refits, right? Absolutely. Higher costs can mean delays, cancellations, or just rethinking plans altogether. So companies want people back, but building or upgrading the space is getting more expensive. Creates tension.

And we even saw that Caterpillar is calling workers back five days a week. Seems like a broad push across different industries. And it’s not just private companies shaping the office market. The federal government’s making big moves too. Oh yeah. Over 15 million square feet of federal property coming to the market.

That’s huge. That is a massive amount of space. And the key details seems to be where it’s coming from. Mostly lower quality buildings, like two and three star properties. Yeah, a disproportionate share. Which suggests landlords owning those types of buildings might feel the pain more, more vacancy pressure on rents, especially in the DC area where a lot of these cancellations are concentrated.

I. Big impact potentially for that specific market segment. And then there’s this other twist, a new directive telling federal agencies to prioritize suburban locations for new office space. Whoa. Okay. That’s a shift. Real estate pros look for signs of federal offices heading to suburbs. It’s basically reversing the old guidelines that favor downtowns that could really reshuffle the deck.

The federal government is such a huge tenant. Shifting demand out to the suburbs could be a big boost for suburban office markets. May less so for some downtown, potentially very significant, could affect property values, vacancy rates, the whole nine yards in both areas. Okay, so retail and office. Lots of moving parts.

What about the money side? Lending Investment? There’s an article, CRE, lenders Banking on Deal Momentum. Sounds like lenders are feeling a bit more optimistic. Why is that? Seems driven by more deals actually happening late last year and early this year. More transaction activity. Okay, so maybe the log jam is breaking a little.

Seems like it. And the article mentions credit is available, lenders are competing. Those are generally positive signs for market health. Capitals are flowing and that positive feeling extends to multifamily, too. Multifamily buyer and seller sentiment improves in Q1. Yeah, A slight uptick in sentiment for both buyers and sellers for core and value add properties.

Although concerns about interest rates are still there, it says. Absolutely. Rate volatility is still a big factor hanging over things. The piece probably digs into how IRR targets and cap rates are shifting in different markets. The financial metrics investors watch closely. Yeah. And there’s also a piece focusing on Freddie Mac’s small balance loans, emphasizing how important smooth financing is for those smaller multifamily investors.

Crucial part of the housing market. Those smaller landlords definitely. So yeah, pockets of optimism and lending and multifamily. Even with caution elsewhere shows how segmented the market is. It really does. And finally, just to add one more interesting wrinkle, let me guess. The pickleball quartz you saw too why new warehouses include pickleball, quartz, and food halls Uhhuh.

Yeah. It really shows how even industrial real estate is changing, trying to attract and keep tenants by offering amenities just like modern offices do. Exactly. It’s becoming a more competitive market, so landlords are thinking about the employee experience, even in warehouses, making them more than just boxes, pickleball, courts, and warehouses.

Definitely a sign of the time. It really is. Yeah. Reflects that need to make these places desirable work environments. After digging through all this, it’s it’s crystal clear, like you said at the start. The commercial real estate market right now is incredibly complex, deeply interconnected too. Resilience like with boscov’s and retail, but alongside those broader retail struggles and adaptations and huge shifts in office space driven by company policies and government moves.

Then cautious optimism in lending, despite those background worries about inflation and tariffs. A real mix. So as we wrap this up for you, the listener, here’s something to maybe mull over considering all these different paths, retail office lending, industrial amenities. Where might the unexpected opportunities pop up or the unexpected challenges say, in the next year and a half?

Yeah. How does this complicated mix of consumer choices, government actions, and global economics actually play out on the ground in our local economies? Definitely a lot to keep watching. I.

 Welcome to the deep dive. If you’re here, it’s because you wanna cut through all the noise, the endless information, and just get to what matters. Exactly. No endless scrolling needed. We we extract the key insights for you, and this week we’ve got a really interesting mix. It’s all commercial real estate news, focusing on the week of April 11th, 2025.

And our mission, as always is to make sense of it all. Connect the dots between these headlines for you. Give you that clear understanding fast, right? Think of it as, sifting through everything, the tariff talk, economic indicators, big property deals, highlighting the connections. Yeah, the key takeaways.

We’ll touch on potential tariff hikes consumer confidence, some major deals, specific company moves the whole picture. Okay? So let’s dive right in then. Tariffs definitely a huge topic this week. Me too. China reportedly raising tariffs on some US goods to 125%. That’s significant. It really is. And it’s not just a number in a trade report, is it?

No, exactly. How does something like that actually. Hit the commercial real estate world here. What was fascinating potentially is how this could speed up a trend. We’re already seeing companies rethinking global supply chains, right? The whole reshoring or French shoring idea, bringing manufacturing closer.

Precisely. And for our listeners, that could mean more demand for industrial real estate. Factories, warehouses, yeah. Especially in certain areas. Areas with good infrastructure. Transport links. Exactly. But. There’s a flip side to, it could create vulnerabilities if those new supply chains aren’t quite robust yet.

Logistics challenges. Okay, that makes sense. So it’s not just prices going up, it’s potentially reshaping where things get made, stored, moved, yeah. Affecting warehouses, factories, hubs, definitely. And then there was, trump’s proposal about undocumented workers in farming and hotels. That feels quite different.

But I guess it connects back to real estate too. Absolutely. It does. Think about those sectors, agriculture, hospitality, they rely heavily on this workforce. Sure. So if labor availability changes drastically, it hits operational costs, profitability even. So for farms, maybe it changes how land is used or invested in, could do.

And for hotels, especially in certain markets, you might see pressure on wages, maybe even service levels, impacting occupancy if they can’t staff properly. It really shows how policy decisions over here can ripple into property values and operations. Over there. It’s all interconnected. And speaking of hospitality, we also caught wind of the Marriott, CEO.

Sounding pretty bullish. Yeah, that was interesting. Especially with these, potential economic clouds gathering. So what should we make of that confidence? Is it just Marriott or a major player like Marriott, seeing strong demand is definitely positive for hotel owners, for investors, shows, travel’s holding up for now at least.

Sure. But you have to ask, is that optimism across the board or is it. Maybe concentrated like luxury travel, doing well while budget options feel the pinch if inflation keeps biting. Good point. The hotel market isn’t just one thing and need to look deeper. Okay, let’s shift gears some specific deals.

The Sheridan, Dallas, huge hotel here in Texas looking to refinance about $300 million. That’s a big number. It is. What does that refinancing tell us? The scale itself, 300 million for what? Over 1800 rooms. It just highlights the massive financial weight behind these big hotels. So getting the loan is good news.

Yeah. Shows confidence. It could suggest lender confidence. Yeah. Yeah. In that property, it’s management. But it also points to the significant debt loads many large hotels are carrying, which raises questions exactly with economic uncertainty. How sustainable is that? If travel dips or rates stay high, it might maybe create opportunities later if some properties face distress, something for investors to watch.

Interesting perspective. Okay. On the buying side, Singapore’s SE capital, they picked up a hotel in Kagoshima Japan. Always interesting seeing that international capital flow. What’s the significance? Cross-border investment like this often signals where investors see value or potential growth globally.

So SE capital sees something in Japan’s hotel market. Apparently so could be rising tourism or recovering economy. There maybe just better risk adjusted returns compared to elsewhere. Right now it shows how linked these global markets are. Got it. Okay. Back stateside, retail news, big lots. Ah, yes. The comeback story seems like it.

New ownership planning to reopen over 200 stores. That sounds. Bold for brick and mortar these days is bold, but it’s a great example of how established brands, even in discount retail can find new energy. They must see unmet demand. That’s the bet, right? That they’ve found a niche, a strategy to capture shoppers in their sector.

It reminds us the physical retail story isn’t just doom and gloom. There are opportunities if you adapt. And speaking of adapting Ikea finally opening in Dallas proper. Yeah. At the shops at Park Lane, but a smaller concept store that feels key. The smaller format for a giant like Ikea to do that and finally be in the city.

It’s really interesting. It could be a strategic shift, reaching urban consumers who won’t trek out to the huge suburban stores or maybe testing the waters. Offering easier access could be both testing markets, complimenting the big boxes. It shows how major retailers are playing with formats to fit changing habits.

Urban living. That could influence what kind of retail spaces are needed in cities. Definitely could. And sticking with North Texas seems like there’s a real push for transit oriented projects. 2D Yeah. Richardson, Garland, Addison. All promoting sites near the Dart Light rail. I. Using that existing infrastructure seems smart.

It’s a big trend in growing metro areas. Build homes, offices, shops around transit hubs, makes things more walkable, sustainable, and boosts property values nearby. Generally, yes. People in businesses pay for that convenience, that access. It’s a long-term play shaping how the area grows. Okay, let’s zoom out a bit.

Broader economy inflation looks like it cooled slightly. March CPI at 2.4% annually, yes, down a bit from February. That’s, generally seen as good news. People are watching that closely, but there are caveats, right? Always. Housing costs are still sticky, keeping overall inflation up and analysts warned those new tariffs we talked about could push prices back up again.

Encouraging, but potential headwinds remain. Okay. And employment jobless claims actually ticked up. They did 223,000 for the week ending April 5th. A slight increase after things were pretty stable. Not worrying sign well when week isn’t a trend, but it’s something to watch. Could be an early sign of softening.

Oxford economics noted. The labor market’s still okay for the Fed’s current stance, but if claims keep rising, they might rethink things possibly. And they also mentioned a potential link again between tariffs in a weaker job market, which could delay any rate cuts. It’s all tangled together. Trade jobs, fed policy.

We also saw US manufacturing activity dipped in March. Fell back below that expansion line, right? The ISM index back below 50. Yeah. After a couple months above it, that could be another sign of cooling. Maybe some reaction to trade uncertainty. So manufacturers seeing less demand. That’s what an ISM below 50 usually suggests, and that can ripple out.

Affect demand for industrial space. Transport the whole supply chain. Okay, one more broad indicator. CEO turnover apparently up 11% in February, especially in tech and government, nonprofit. Yeah, that’s noteworthy. High turnover at the top can signal uncertainty about the future or big strategic shifts happening.

So maybe challenges or big changes in tech and government, nonprofit sectors could be, and that might indirectly affect their real estate needs, right? Maybe consolidation, rethinking office space. Okay. Let’s zoom back in specific companies, US cellular. Big layoffs announced thousands of jobs. Yeah. Yeah. As that T-Mobile acquisition moves ahead, that’s gotta have real estate fallout.

Oh, definitely. Big mergers often do US cellular will likely need less office space. Other facilities, especially around their Chicago HQ, where their lease is apparently up soon too, shows how corporate moves hit local CRE markets directly. Then there’s Amazon planning another what, $15 billion warehouse expansion.

15 billion. Just underscores the relentless demand for e-commerce fulfillment. It is been driving industrial growth for years and looks set to continue. Seems so though. It was interesting. They reportedly looking for capital partners for some projects, maybe sharing the risk given the huge scale. And the article mentioned potential headwinds from tariffs on construction materials too.

Yeah, another connection back to trade policy impacting costs. Okay. And Dave and Busters. Doing more sale lease backs this year. Leveraging their property assets. Can you just quickly explain what that is? Sale lease back? Sure. Basically, they sell a property, they own one of their venues to an investor.

Okay. And then immediately they lease it back. So they still operate there, but they don’t own the building anymore. Why do that? It unlocks cash tied up in the real estate. They can use that money for their main business, upgrades, expansion, whatever, and they offload being a landlord, maintenance taxes that goes to the new owner.

That gives them financial flexibility. Exactly. The fact they’re doing more suggests they like the strategy. I. Got it. Okay. Let’s look at some regional trends. Dallas-Fort Worth apartment rents, they edged up first quarter they did, but the growth rate slowed and some neighborhoods actually saw rents dip.

So a mixed picture. What’s driving that? It seems like a rebalancing. DFW is still dynamic. Rents are up overall, but slower. Growth, some declines. It suggests all the new supply, the new apartment buildings might be catching up with demand in certain spots. More competition among landlords. Starting to look that way.

Still growing, but maybe moderating a bit. Okay. Meanwhile, down in Houston, an office campus in the energy corridor found a buyer after facing foreclosure. Yeah, that’s interesting. Houston’s office market has had its challenges. So positive sign, maybe it could be a tentative sign, a stabilization, maybe renewed interest in certain parts of the market, but it’s also, a stark reminder of the pressure on some office properties, work patterns changing.

Tenant demand shifting depends on the price it’s sold for the buyer’s plans. Exactly key things to watch there and the build to rent trend. Just keeps rolling, doesn’t it? It really does hit a new high in the US in 2024. Completions, big jump here over year and Texas. DFW Houston leading the Way big time.

Texas is a hotspot. Why is it so popular now? Build to Rent single family homes. Several things. Affordability issues in buying a house. Push people to rent. Some demographics just prefer renting the flexibility and they like new homes, modern amenities, but without the ownership commitment.

Makes sense. And Texas has the population growth and relatively friendly development environment. Perfect storm for bill to rent. Okay. A unique Dallas story. Next, the Neiman Marcus downtown flagship. Ah, the saga continues. Looks like it’s staying open through the holidays, at least the city agreed to accept the land underneath as a donation.

The really interesting arrangement shows that complex interplay, doesn’t it? Iconic retailer city wanting a vibrant downtown, the value of the actual land. So the city taking the land donation means they’re committed to keeping it open. It suggests a commitment from both sides to find a way. Yeah, short term fix, maybe paves the way for something longer term.

Very unique situation. Definitely. Okay. Lastly, infrastructure. North Texas. Moving ahead with Lake Ralph Hall, new Reservoir. Crucial project. Fanning County seems essential for a region growing like North Texas. Absolutely long-term growth needs reliable water. It’s fundamental for housing, for businesses.

Big infrastructure like this supports the future real estate landscape. Make sure the resources are there. Wow. So you really see it when you lay it all out. Even just one week’s news. So many connections. It’s not just isolated deals, is it? It’s the economy policy, consumer shifts, all shaving the market terrorists influencing manufacturing locations impacting industrial space, right?

Economic signals pointing to shifts that affect investment everywhere from hotels to shops, infrastructure paving the way for what comes next. It all weaves together. It really does. Yeah. Underscores why you need to see that bigger picture. Which kind of brings us to the final point. Something for you, our listener, to think about.

Given all this, the tariff uncertainties, the mixed economic signals. Some strength, some weakness. The busy real estate activity like hotel refinancing, retail adapting, TOD focus, build to rent, booming. What are the big opportunities or maybe the biggest challenges for businesses, for communities in the next few months?

Yeah. What do you see emerging from this mix? I. Think about how these trends might connect with things you follow. Tech advancements, changing work and shopping. Consumer shifts maybe towards sustainability. What’s happening specifically where you are. Keep these connections in mind as you navigate your own world.

Thanks for taking this deep dive with us.

 Welcome to the Deep Dive. This week we’re taking a look at the really dynamic world of commercial real estate, specifically the news that broke, during the week of April 4th, 2025. Ah, and what’s really interesting this week is how we’re seeing signs of both continued investment and maybe some potential headwinds on the horizon, right?

We’ve got a collection of reports looking at everything from where investors are putting their money. Despite some well interesting bond market activity to how shifts in consumer spending and new tariffs could impact the retail landscape and even where job growth is actually happening across the country.

Yeah. And plus we’ll explore how some like. Iconic buildings are being reimagined. A few notable shifts in the office space, market, and even the ripple effects of rising insurance costs. Exactly. Our goal here is really to go beyond just the headlines. We wanna connect the dots between these seemingly disparate pieces of information and really understand the underlying trends.

Shaping commercial real estate, and maybe more importantly, we wanna give you a clearer picture of what these developments mean for the broader economy and your understanding of it. Okay. So let’s dive right into where the smart money seems to be going. The investment landscape. It’s, a little counterintuitive perhaps.

How since the Federal Reserve started lowering short-term interest rates last September, the 10 year treasury yield has actually climbed right by early January. It had jumped by over a percentage point from that September high, even though the Fed had cut those short-term rates by the same amount.

What’s going on there? Yeah. It’s a fascinating situation, isn’t it? Yeah. Typically, you might expect long-term rates to follow the trend of short-term rates. But the fact that the 10 year treasury yield has risen despite the Fed’s easing. It suggests a couple of key things.

The market is anticipating. Like what? It often signals an expectation of stronger economic growth in the future. Potentially leading to increased borrowing and thus pushing long-term rates higher, almost independent of the immediate short-term rate adjustments. Okay. So despite this like slightly unusual bond market behavior, the reports we’re looking at indicate that we can still anticipate increased investment in commercial real estate.

What’s fueling that confidence then? The underlying expectation of continued relatively strong economic growth is a pretty significant driver. Uhhuh. Despite some of the challenges we’ll probably touch on later, many investors still see positive momentum in the overall economy. Okay. And additionally, the prospect of ongoing large government budget deficits.

That can sometimes make real estate, particularly income generating properties seem like an attractive investment, maybe as a potential hedge against inflation, right? So for many. These fundamental economic factors seem to be outweighing the concerns related to, bond market fluctuations.

Okay, that makes sense. Let’s move to something that hits a bit closer to home for all of us, how we’re spending our money and what that means for the retail sector. Yeah. The National Retail Federation, the NRF is forecasting retail sales growth for 2025 to be somewhere between 2.7% and 3.7%. Now on the surface, that sounds like growth, which is good, right?

Yeah, it does. But how does that compare to what we’ve seen in recent years? That’s a really crucial question to ask. While you know any growth is generally welcome, this projected range does indicate a potentially more moderate pace of growth compared to the well. Often stronger figures we saw in the immediate post pandemic period.

Okay. Several factors are contributing to this more cautious outlook, and one of the big clouds on the horizon seems to be tariffs. There’s talk of new tariffs potentially leading to higher prices and creating more general economic uncertainty. How significant of an impact could these tariffs really have on what we pay for goods?

Yeah. The expectation is that these tariffs will indeed translate to price increases for. A wide array of consumer goods. And when you combine that with existing inflationary pressures and the fact that many consumers have already started being more selective, kind of trading down to less expensive options, right?

We’ve seen that these new tariffs could really put a squeeze on household budgets and further limit overall consumer spending power, even with a relatively healthy job market. These tariffs are definitely posing a challenge for both consumers and businesses. And we’re hearing about a new set of tariffs announced by President Trump targeting products from China, Canada, and Mexico.

That sounds like it could really disrupt things for retailers, doesn’t it? It certainly could. The retail industry operates on these really complex global supply chains. Yeah. And these tariffs are expected to create disruptions in those established networks. The most immediate effect will likely be an increase in the cost of goods imported from these countries.

Now whether retailers absorb those costs or pass ’em on to consumers, in the form of higher prices, that remains to be seen, but either way, it puts pressure on the industry. Yeah, it sounds like the retail folks aren’t exactly celebrating this news. The NRF and other retail associations have apparently voiced some strong concerns.

What are they particularly worried about? Their primary worry centers on the potential negative consequences for businesses, particularly smaller retailers who often have less leverage in their supply chains compared to, the larger corporations. Makes sense. They anticipate that these tariffs could lead to a decrease in overall sales growth as consumers become more hesitant to make purchases because of rising prices.

And there’s also concern about retaliatory tariffs from other countries, which could further complicate international trade. That knock on effect. It’s interesting though, to note that some retailers seem to have been anticipating this to some extent. The reports mentioned companies like Target and Macy’s have already been taking steps to reduce the reliance on imports from China, so they saw the writing on the wall.

That’s a keen observation. Yeah. Recognizing the potential for increased tariffs, particularly on goods from China. Some of the larger retailers have been proactively diversifying their sourcing strategies. They’ve been exploring alternative suppliers in other countries to lessen their exposure and, mitigate the potential cost increases associated with tariffs on Chinese imports.

Yeah, it’s a strategic move really to try and build more resilient supply chains. Smart. Okay. Let’s switch gears now and talk about where people are finding work. We’ve heard a lot about the Sunbelt being a major hub for job growth since the pandemic began. Is that still the dominant trend? The data definitely confirms that initial trend.

Yeah. The Sunbelt region, states like Texas, Florida, North Carolina, Georgia, they did experience the most significant surge in job creation in the five years following the start of the COVID-19 pandemic. Remarkably, these four states alone accounted for almost half of all the new jobs added across the entire nation between February, 2020 and February, 2025.

Wow. Almost half. That’s a pretty significant concentration of job growth in just one region, but the reports suggest that this growth might be starting to spread out a bit more now precisely. While the Southern and Western states continued to show strong job growth in 2024, the rate of that growth has moderated somewhat.

Okay. And what’s interesting is that. We’re seeing more widespread job creation across other regions of the country too. So including the Northeast, the Midwest, and even states like Louisiana. It suggests a broader recovery and expansion across different economic areas. That’s good to see other parts of the country participating more in job growth.

The report specifically highlights New York’s job market recovery as being quite notable. What’s behind that? Positive trend there. Yeah. New York’s recovery has indeed been impressive. It ranked sixth nationally in terms of the percentage increase in jobs, and second in just the sheer number of net new jobs added.

Wow. A key engine driving this resurgence has been the professional services sector that’s seen significant growth in hiring within the state, so areas like finance. Tech consulting, legal services. Okay. On the other hand though, it seems like the federal government job market has seen a bit of a downturn.

Federal government payrolls are down and the District of Columbia has been particularly affected. What’s the story there? Since February of last year, federal government payrolls have decreased. By about 1.5% nationwide. And the District of Columbia, with its, high concentration of federal agencies and employees has experienced a more pronounced impact from these job cuts.

Yeah. This could be attributed to various factors, maybe budget adjustments. Shifts in government priorities, or even the sort of long-term effects of remote work policies that were put in place during the pandemic. Okay. Let’s move on to something a little different, the realm of experiential retail.

There’s this company called Level 99 that’s expanding nationally, and it sounds like it offers a pretty unique entertainment experience. What can you tell us about them? Yeah. Level 99 is an intriguing newcomer in the entertainment industry. They’re focused on creating these immersive social entertainment experiences that go beyond, traditional offerings like movie theaters or arcades.

Their concept centers around really large venues. We’re talking over 45,000 square feet, ah, capacity for over a thousand players at a time. Wow. Filled with interactive challenge rooms, and it’s all complimented by a full service bar and restaurant. They have ambitious plans looking to open around four new locations annually.

Their fifth location is actually set to open at Disney Springs in Florida, interactive challenge rooms in a massive space. That sounds like a significant departure from the usual entertainment options. What kind of demand are they hoping to tap into? They’re aiming to capitalize on the increasing consumer desire for more active and engaging entertainment experiences.

Instead of just passively consuming entertainment. Guests at level 99 pay for a block of time to explore the venue and participate in a really wide range of mental and physical challenges. It’s designed to be very social and interactive, encouraging, collaboration, and a bit of friendly competition.

Interesting concept. Now let’s take a look at the office space market. We’re seeing some notable moves from some major companies. Wells Fargo, for instance, is planning to vacate its downtown Fort Worth Power. Where are they planning to relocate? So Wells Fargo’s plan is to move into a new mixed use development called the offices at Clear Fork.

The move is anticipated in 2026 when the project’s finished. Okay? But interestingly, they are also in the process of building a really substantial office campus out in Irving, Texas that’s expected to house around 4,000 employees. 4,000. Wow. Yeah. So it appears they’re strategically shifting their office footprint within the Dallas-Fort Worth metro area.

Okay. And we’re also seeing that LegalZoom is looking to sublease its office space in Austin, Texas. That seems like a pretty significant change for them. What’s driven that decision? LegalZoom’s move to sublease their Austin office space. It’s part of a broader strategic realignment of their operations.

This includes closing a regional hub in Texas and opening a new facility out in California. So it’s really clear illustration of how companies are reevaluating their office space needs and adopting more flexible work models in the post pandemic environment. Many are just finding they need less traditional office space than they did before.

Yeah, that trend continues. Speaking of Austin, there’s some interesting data emerging about the apartment market there, and also in San Antonio, it seems like the demand for new apartments is currently strongest in the suburban areas. That’s right in the central Texas region. So covering both Austin and San Antonio, new apartment buildings located in suburban areas are experiencing faster lease up rates compared to those in the downtown course.

Downtown Austin, despite often featuring, high-end amenities and premium pricing is actually seeing slower absorption rates and increasing vacancy in its newly constructed apartment inventory. But it sounds like downtown San Antonio’s apartment market is performing differently. Yes.

Interestingly, the multifamily market in downtown San Antonio is actually demonstrating stronger performance in terms of how quickly new units are being leased compared to its suburban areas. Oh, interesting. This suggests maybe a different dynamic in renter preferences there with downtown living, holding a stronger appeal in San Antonio than perhaps in Austin right now.

San Antonio is also undergoing a significant surge in high-rise construction, primarily concentrated downtown. That suggests a long-term belief in the revitalization of the city’s urban center, doesn’t it? Absolutely. The current wave of high-rise development in downtown San Antonio represents the second largest such boom in the city’s history.

Wow. This focus construction activity really reflects a sustained trend of investment and revitalization efforts aimed at enhancing the downtown area as a vibrant destination for residents, workers, and visitors. Okay. We also saw that Foot Locker is making a pretty significant move, leaving its New York City headquarters and heading south to Tampa Bay, Florida.

It sounds like cost considerations are a major factor in that decision. Yeah, foot Lockers specifically cited cost benefits and a desire to refocus on their core retail business as the primary reasons behind their decision to relocate their corporate headquarters from New York City to a smaller and presumably more cost effective space in Tampa Bay.

Ah, it’s another example of a company’s strategically evaluating its real estate needs and making choices based on operational efficiency and, financial. Considerations Right now let’s explore how existing retail properties are adapting to the changing landscape. We’re seeing some really fascinating transformations of historic department store buildings.

The Mazen Blanche in New Orleans is one example. What’s become of that iconic structure? The Mazen Blanche Building. Yeah. A historically significant department story in New Orleans. It’s undergone a remarkable adaptive reuse project. It’s been beautifully restored and reopened as a Ritz-Carlton hotel.

Oh wow. Yeah. It’s a prime example of how these large, often architecturally significant retail spaces can be creatively reimagined and given a new purpose in a completely different sector, really contributing to the revitalization of urban areas. That’s great to see On a well, somewhat less positive note for a longstanding brand, Huns has filed for bankruptcy.

What are their plans for the future? Yeah. Hooters has indeed filed for bankruptcy protection and is planning to transition towards a franchise focused business model. Okay. The strategic shift is intended to address their current financial challenges and also to adapt to evolving consumer preferences within the casual dining sector.

By emphasizing franchising, they likely aim to reduce their direct operational costs and leverage the local market knowledge and investment of franchisees. Makes sense. It seems like even convenience stores are evolving beyond just being a quick stop for gas and snacks. They’re increasingly expanding their food service offerings and even their store sizes.

That’s a key trend we’re observing. Yeah. Convenience stores are increasingly positioning themselves as a kind of go-to destination for fresh ready-made meals. They’re investing in expanding their kitchen facilities and store layouts to accommodate more extensive food preparation and offerings.

They’re really aiming to capture the growing consumer demand for convenient and maybe higher quality food options on the go. And even a retail giant like Walmart is getting more involved in this space with plans to open or remodel a significant number of fuel centers across its network. That sounds like it could create some serious competition for traditional convenience stores.

It doesn’t need. Walmart’s increased focus on its fuel centers, including both developing new locations and renovating existing ones. It signals a growing level of competition within the convenience retail sector. I. Particularly in areas like fuel and potentially prepared food and convenience items too, right?

Their scale and existing customer base give them a pretty significant competitive advantage there. No doubt. We’re also seeing a shift in the amount of available retail space, particularly in those large like anchor size locations. It sounds like there’s been a noticeable increase in vacant big box stores.

What’s driving that trend? Yeah. The amount of available retail space in those larger anchor tenant size boxes has definitely increased over the past year. This is largely a result of recent store closures by several major retailers. Okay. Currently, neighborhood and power centers, which typically rely on these larger anchor stores to draw traffic, are experiencing the most significant impact from these closures and the resulting decrease in demand for those large bases.

Let’s touch on some of the new development projects that are in the pipeline. Collin County and North Texas continues to experience significant growth and there’s a 42 acre mixed use development planned in Lucas. What can you tell us about that? Yeah. This development in Lucas really underscores the ongoing expansion in the suburban areas of North Texas, right?

The 42 acre project is planned to be anchored by a Tom Thumb grocery store, and it’ll also include a mix of restaurant and retail spaces as well as a community park. With construction slated to begin later this year. It’s a clear indicator of the continued investment in growth in these rapidly developing communities north of Dallas.

Okay. Fort Worth is also seeing its share of new development activity. Transwestern is planning a 10 acre mixed use project there. What are the details on that one? Transwestern’s plans for a 10 acre mixed use development in Fort Worth, which will incorporate both residential and retail components. It signifies continued development momentum in that part of the Dallas-Fort Worth Metroplex, Uhhuh.

These types of projects aim to create more dynamic and walkable, urban or suburban environments, combining living and commercial spaces. And even with some of the potential economic uncertainties we’ve discussed, San Antonio seems to have a number of significant development projects underway. Still that’s accurate.

Yeah. San Antonio is currently experiencing considerable development activity across various sectors, so industrial facilities, multifamily residential complexes, mixed use developments. This suggests a sustained level of confidence in the region’s long-term growth prospects, and a continued flow of investment despite potential broader economic headwinds.

Okay, finally, let’s discuss an issue that’s directly impacting commercial property owners. The rising cost of insurance. It sounds like lenders are increasingly requiring what’s called force placed insurance. What exactly does that entail? Yeah. The increasing cost of insurance are becoming a really significant concern for commercial real estate owners Nationwide.

Lenders are increasingly requiring this force placed insurance right, which is coverage. The lender purchases on behalf of the borrower when the borrower’s own insurance coverage lapses. Or maybe doesn’t meet the lender’s specific requirements. Yeah. The critical issue here is that this forced placed insurance can be significantly more expensive, sometimes several times the cost than the insurance a borrower could get independently on the open market.

Oh, yeah. So this adds another layer of financial strain for property owners, particularly those already dealing with debt service and other rising operating expenses. So to bring it all together, you’ve seen this week how we have this interesting duality, strong investment activity persisting alongside growing concerns about consumer spending, especially with the potential impact of new tariffs.

Uhhuh Joe growth, while still robust in the Sun, bill is showing signs of broader distribution across the country, and the retail and office sectors are clearly in a state of. Constant evolution. Yeah. From the emergence of these immersive entertainment concepts to the creative reuse of historic buildings and even the transformation of your local convenience store, and we can’t overlook the added financial pressures coming from tariffs and escalating insurance costs.

And what’s particularly striking is how interconnected all these factors really are. The investment landscape is influenced by expectations of economic growth. Which in turn is heavily reliant on consumer spending. Yeah. Shifts in job markets, impact where people live and work, which then affects the demand for both residential and commercial real estate.

And these large scale economic trends are playing out in very tangible ways. From the closure of a major retailer to the opening of a new mixed use development in a growing suburb. Considering these really diverse and sometimes well contradictory trends from massive institutional investments to individual store closures and the impact of both national economic policies and very local development projects.

What do you think is the single most significant force that will shape the future of commercial real estate in the coming year? That’s a big question. It is, and perhaps more importantly for us as individuals. How might these ongoing shifts ultimately reshape the communities we live in and the daily lives we experience?

It certainly gives you a lot to consider. Thanks for taking this deep drive with us.

 Hey. Yes. Welcome back. Today we’re gonna be, uh, taking a pretty deep look in the US commercial real estate market. Mm-hmm. Uh, using the MSCI real assets. Okay. US Capital Trends report Yeah. For February, 2025. Um, and we’re gonna be looking at it kind of through the lens of some analysis done by JP Morgan.

Okay, great. So, sounds good. Um, yeah, our, our sort of mission for this deep dive is to, uh, yeah, really pull out the key insights from this report, uh, so you can get a really clear understanding of what’s going on in the market, uh, um, without having to like wade through a lot of data. Yeah. Makes sense. So, uh, yeah, think of it as your, uh, your quick route to being really informed That’s cool.

About the CRE landscape. Cool. Um, jumping right into it, uh, the total sales volume. Okay. In US commercial real estate for February, 2025, hit $26 billion. Okay. Um, that’s, you know, pretty, pretty notable. 23% increase compared to, uh, the 21.1 billion that we saw in February of last year. Big jump. So, um, yeah. You know, at first glance it looks like kind of a big jump, right?

It does. Uh, but maybe we should dig into a little bit about what makes up Yeah. That 26 billion, let’s unpack that a little bit. Yeah. Because, uh, you know, a big thing that the report points out is, uh, these things called entity deals. Okay. Um, which totaled $4 billion in February, 2025. Mm-hmm. Um, and what’s interesting is there weren’t any in the same month last year.

Entity deals. Yeah. Yeah. Um, so for those of us who maybe aren’t super familiar with, uh, all the ins and outs of CRE Sure. Uh, why should we be paying attention to these when we’re trying to kind of gauge the temperature, right? Of like the commercial real estate asset market? Yeah. So, you know, that’s a really good question and it’s a really important distinction because when we’re typically talking about CRE transactions, we’re talking about.

Uh, individual properties like office buildings, right. Retail centers being bought and sold. Right. Um, but entity deals, um, often involve the sale of like a whole company or a large collection of properties. Yeah. Under like a single corporate structure. And these can happen, you know, as a result of, uh, you know, company strategies mm-hmm.

Mergers and acquisitions. Ooh. So, um, you know, whereas a regular sale Yeah. Would tell us about demand for like a certain type of building. Yeah. You know, entity deals might just reflect a company like restructuring its holdings. Okay. Which doesn’t necessarily mean that more people wanna buy office buildings.

I see. So to really get a clear picture of how individual properties are trading. Right. You know, analysts often separate these out. Okay. That makes a lot of sense. Yeah. It’s like a, yeah. Like the difference between looking at how many individual cars were sold versus the sale of a whole like rental car company.

Right. Exactly. Right. Yeah. Yeah. So if we take that $4 billion in entity deals out of that February 20, 25 figure, yeah. What does the year over year growth and transaction volume look like then? Yeah, so when you exclude those entity deals, uh, the year over year growth comes down to a more modest. Okay. But still positive.

Yeah. 4.1%. So this really highlights for you. Yeah. You know, why it’s so important to look beyond just the, you know, the top line numbers to understand the real kind of, uh, dynamics that are happening. Yeah, absolutely. It’s about kind of like peeling back the layers and seeing what’s really happening under there.

Yeah. Um, so the report also mentions, uh, something that’s maybe not always the most, uh. You know, eye catching headline, but Right. Important nonetheless, which is revisions Yeah. To data from previous months. Yeah. Um, it seems like those initial numbers we see aren’t always totally set in stone. That’s right.

And that’s actually a pretty normal part Yeah. Of how market data gets reported. Okay. You know, initial figures are often based on early information mm-hmm. And they get refined as more complete data becomes available. Yeah. So what this report shows is like. Modest upward revisions for recent months. Okay.

Which generally suggests that the initial picture was maybe a little bit understated. Okay. Uh, are there any specific revisions that sort of jump out at us? Yeah, so the transaction volume for January, 2025. Uh, again excluding entity deals. Right. Saw a pretty big upward revision of 12.6%. Wow. Um, so that brings the total for January to $32.6 billion, which is a pretty robust 20.3% increase.

Yeah. Compared to January of last year. Wow. Okay. Um, interestingly, the figures for December and November, 2024 are now pretty much finalized with less than a 1% upward revision. Okay. So it seems like the more recent the data Yeah, the more it’s subject to change. For sure. For sure. Um. Okay. So let’s take a step back and look at kind of the bigger picture.

Okay. Um, how does what we’re seeing in February and the beginning of 2025 sort of stack up against Yeah. The trends we saw? Yeah, good. Quickly at the end of last year, um, so according to MSCI, real assets, uh, the fourth quarter of 2024 showed a really, really strong Okay. Surge in US transaction volume, excluding entity deals.

Okay. Um, with a notable 47.5% year over year growth. Wow. That’s a, the big jump. That’s a huge jump. Yeah. Um, and the report mentions that. This aligns with what some of the big CRE service companies were reporting. That’s right. Like, does that Yeah. Yeah. Yeah. JP Morgan highlights that revenue reports from companies like JLL Okay.

Indicated a similar, uh, strong performance in their business segment. Yeah. Uh, with JLL reporting a plus 51% year over year increase. Okay. So it sounds like. And so that kind of agreement across different sources makes the data seem Yeah. It really strengthens the credibility Yeah. Of the MSCI data. Okay, cool.

So a strong finish to 2024. Yeah. Um, now bringing it back to the start of this year. Yeah. Um, the report gives us an initial year to date growth figure. Right. For January and February of 2025. Right. What’s that looking like? So based on the data we have for the first two months, uh, the initial year to date growth comes in at plus 13.2%.

Okay. Um, so that’s a positive start, but yeah, it is important to keep in mind those historical upward revisions. Right, right. Those adjustments. Yeah. Um, I think the report mentioned a, a potential 30% upward swing between the initial and the finalized figures. Yeah, that could, I’m really, that could really change things.

Yeah. Yeah. If we just apply like a 1.3 x multiplier mm-hmm. Like the report suggests based on historical patterns. Yeah. Um, the year to date growth for January and February could potentially jump to around plus 37.3%. Wow. Okay. Year over year. Um, and similarly, February’s growth excluding entity deals might have been closer to plus 35.3%.

Yep. Year over year. Yeah. Now this is just a projection, right. Based on past trends. Got it. So it’s something to watch. Yeah, for sure. As more finalized data comes out. Okay. So the, the initial 13.2 is good news, but the reality could be, could be even better. Much, much stronger. Yeah. Um, now JP Morgan also offers their own kind of take on this, right.

Um, mentioning their internal models Yeah. For revenue growth in CRE service companies. Right. Um, what are they anticipating? So their internal models are projecting a more conservative plus 12% year over year growth. Yeah. In global capital markets revenue for those companies. Okay. In the first quarter.

Right. Um, they point out that this is a global figure, right? So it could be affected by slower activity in regions outside the US Yeah. And also by some, you know, one-off items in the financial reporting. Right. But, uh, it’s like a slightly more cautious. Outlook, but Yeah. Still in positive territory. Yeah.

Yeah. The report specifically says that they’re no less encouraged. Okay. By the initial US transaction data. Yeah. Even though they have that more, you know, tempered global forecast. Yeah. It sounds like they’re acknowledging the strong US data. Yeah. But they’re also kind of tempering it with the broader global picture.

Exactly. Exactly. And they also include, yeah, a really interesting real world anecdote. Yeah. Um. About a recent breakfast with C-B-E-C-E-O, Bob Tic. Oh, okay. That sounds like it could offer some Yeah. Interesting. On the ground. Yeah, exactly. Insights. Yeah. So he indicated that he’s seeing a narrowing of the bid ask spread in the capital markets.

Okay. Which basically means that the difference between the price sellers want for properties, right. And what buyers are willing to pay is getting smaller. Okay. Um, and this is often a sign that, you know. More deals are likely to happen. Think so because buyers and sellers are kind of finding common ground.

Yeah. That’s a really positive sign. Yeah. Suggesting that some of that uncertainty that we’ve been seeing, right. Is starting to maybe resolve a little bit. Absolutely. And maybe even more noteworthy was his comment about interest rates. Okay. He suggested that interest rates are appearing to be less of an obstacle to transactions.

Okay. And he even indicated that the market could potentially absorb. Wow. A 10 year treasury yield. Okay. Climbing up to 5%. That’s pretty significant. Yeah. That’s a big statement. Yeah. You know, it implies that there’s a greater willingness and ability for both buyers and sellers, right, to make deals. Even if rates are a bit higher than we’ve seen recently.

It seems like the market might be. Kind of adjusting Yeah. Finding its footing in this new rate environment. Yeah, for sure. And you know, hearing this kind of sentiment from someone like A-C-B-E-C-E-O Right. Who has, you know, direct insight into the market Right. Really adds a valuable like qualitative layer Yeah.

To all the quantitative data we’re seeing in the report. Yeah, for sure. Okay. So we’re seeing some generally positive signs in the overall transaction. Volumes. Yeah. Um, we’re hearing some encouraging things from industry leaders. Yeah. Uh, but let’s break down that February, 2025 transaction volume by specific.

Property sector. Okay. Um, were there any surprises in terms of like, which property types saw the most activity? Yeah, there were definitely some interesting dynamics at play. Okay. And likely some surprises. All right. Let’s go through ’em one by one. Okay. Uh, which one saw the biggest jumps in transaction volume?

So leading the way by a pretty big margin was the retail sector. Yep. Uh, which. Posted a pretty remarkable plus 105% year over year growth. Wow. Okay. Um, and then following that, uh, maybe surprisingly, was the office sector with a substantial plus 55.2% increase. Wow. You know, this really challenges the narrative Yeah.

Around these sectors. Yeah. You know, it suggests that there’s still considerable activity Yeah. And maybe even some renewed interest in these areas. Wow. So retail more than doubled. Yeah. And office, which has kind of been, you know, really scrutinized lately. Yeah. Saw a huge jump. Huge jump. That’s, that’s pretty unexpected I think.

Yeah. For a lot of people, for sure. Um, what about the other property types? Yeah, so hotels also showed really healthy growth at plus 20.2%. Okay. Um, apartments saw more modest increase of 6.7%. Okay. Um, and then bringing up the rear was the industrial sector. Okay. With a very, very slight. Plus 0.5%. It’s a real mix there.

Yeah. Um, it seems like the story of struggling retail and office Yeah. Might be shifting. It might be, at least in terms of transaction activity. Yeah. Um, and industrial, which has been, uh, you know, such a strong performer. Right. Uh, you know, really didn’t grow that much, not so much in February. Yeah. Um, so that’s kind of a.

You know. Interesting. Yeah. It underscores the nuanced Yeah. Nature of the market. Yeah. You know, we can talk about broad trends in CRE, but the actual performance mm-hmm. Can be very different. Yeah. Depending on the specific type of property. Right. Okay. So we’ve looked at the volume of transactions. Yeah.

Let’s turn our attention to pricing, specifically cap rates. Okay. Uh, what did the report tell us about? Average cap rates in February, 2025. So the average cap rate for all CRE transactions in February was 6.53%. Okay. Um, and that’s a very, very slight increase. Yeah. Of three basis points compared to the previous month.

Okay. And remind us again what a basis point is. Yeah. So one basis point is one, 100th of a percentage point. Okay. So it’s a very small change. Tiny, tiny change. Yeah. Um, and what about the cap rates for assets that actually traded in February? Yeah. Broken down by those individual property sectors. Sure. So looking at the average cap rates specific for assets transacted in February.

Yeah. We see, um, office cap rates average 7.72% Okay. Which was an increase of 12 basis points month over month. Okay? Um, industrial cap rates came in at 6.15%, showing a tiny decrease of three basis points from January. Right? Uh, retail cap rates. Average 7.16% up by five basis points month over month. Okay. Um, apartment cap rates were at 5.3 B percent.

Okay. Reflecting a decrease of 10 basis points compared to the previous month. Okay. And finally, hotel cap rates averaged 8.44%. Okay. Which was an increase of 18 basis points month over month. Wow. So we’re seeing some movement in both directions here. Yeah, for sure. Um, you know, the increases in office and hotel Yeah.

Along with the decreases in apartment and industrial mm-hmm. Uh, seem to kind of reflect those, you know, differing levels of demand. Yeah, yeah. Risk in those markets. Yeah. And that jump in hotel cap rates is pretty notable. Yeah, it is. Yeah. And the slight increase in retail cap rates mm-hmm. Despite the strong transaction volume growth in that sector.

Yeah. Is another interesting thing to think about. Yeah, for sure. You know, it suggests that while more retail properties are trading Yep. Pricing might be adjusting a bit. Okay. And then on the other hand, the continued compression Yeah. In apartment cap rates mm-hmm. Could signal, you know, continued strong investor demand in that sector.

Okay. Great. Um, so to kinda summarize everything we’ve covered today, yeah. February, 2025 saw a big overall increase Yeah. In commercial real estate sales volume. It did. Um, but that was really driven by. Those entity deals. Yeah. When we look at just the transactions of individual assets, right. Uh, the growth was more.

Modest, but still positive. Yeah. Um, and I think what’s really fascinating is that the revisions of the data from previous months Yeah. Suggest that those positive trends might actually be even stronger. That’s than what was initially reported. It’s very possible. Um, and then we saw a real mix across the different property sectors.

Yeah, for sure. Uh, retail and office led the way. Yeah. In terms of that year over year transaction volume growth. Yeah. Which is a surprise to some. Yeah, I think so. Given, you know, the recent conversation around those sectors. Yeah, for sure. And then cap rates showed, you know, yeah. Some adjustments, varying adjustments across the different sectors.

Yeah. Which gives us kind of a glimpse into how investors are, right. Viewing those different property types. Exactly. Um. I guess, you know, taking all of this together and considering these trends. Yeah. Um, especially that narrowing bid ask spread, and the suggestion that interest rates might be less of a barrier than we thought.

Right. Um, what does this tell us about where the US commercial real estate market is headed? Yeah, that’s the big question. Yeah. Right. What should we all be thinking about? You know, this data, along with the insights from industry leaders makes you wonder, are we seeing a real shift? Yeah. In market sentiment and activity.

Yeah. You know, that increased willingness to transact, even with some adjustments in cap rates, right. Suggests that maybe there’s a rise in confidence. Okay. Um, but you know, you have to look beyond. Yeah. Just. Transaction volume and cap rates. Right. To really understand what’s going on. Mm-hmm. You have to look at like the underlying health of each sector.

Yeah. Things like occupancy rates. Okay. Rent growth. Mm-hmm. And the overall economic conditions Yeah. That are driving demand for different types of commercial space. Yeah. Um, you know, so. What other unexpected factors might emerge Yeah. In the coming months. Yeah. That could either boost or, you know, slow down this apparent increase in activity.

Right. That’s the big picture to keep in mind. Yeah. Some things to think about. Yeah. Awesome. Well thanks for, uh, walking us through all that. Yeah, of course. Really appreciate it. Happy to do it. And uh, yeah, we’ll be back next week with another deep dive. Sounds good.

 Welcome to the deep dive. Everyone we’re here with a fresh look at the commercial real estate market brought to you, of course, by Eureka business group. And we’re kicking things off with, well, some really exciting news, especially for those of you keeping an eye on retail in the DFW area. Of course, you’ve got it.

We’re really diving deep today into the CBRE 2025 global investor intention survey. It’s a March, 2025 report, and it’s really insightful, really gives us a valuable look at the global picture of where’s the money going. And commercial real estate that is. And for us here at Eureka Business Group, we love to use these global insights.

to really get a good grasp on what’s happening locally, right here in our DFW market, when it comes to opportunities and trends. You know, I completely agree. I mean, this survey is pretty comprehensive, right? They polled over 1, 400 investors all across the globe, the US, Europe, Asia Pacific, back in late 2024.

That’s a pretty broad view of what investors are thinking and feeling. And of course, that has major implications for what we can expect. Right here in Dallas Fort Worth. So today our goal is simple. We want to take all these global insights and boil them down to what matters most for you, if you’re looking at investing in DFW commercial real estate, with a special lens, of course, on the retail sector.

Sounds good to be. So let’s start big picture, big picture stuff. What’s the overall sentiment? Well, across the board, the US, Europe, Asia Pacific, we see a clear majority, clear majority of investors planning to at least maintain, if not increase. The real estate acquisitions going into 2025 compared to last year.

Now, what does that tell us? It tells us there’s this underlying confidence globally in real estate as an asset class. Yeah. I mean, that’s a pretty strong endorsement, wouldn’t you say? And you know, the report does point out that there has been a little bit of an increase in caution among us and European investors since they took the survey probably has something to do with.

Expectations around interest rate cuts, maybe not as many people were hoping for, but it’s super important to remember that capital is still flowing into U. S. real estate. We’re seeing it. CBRE is seeing it. More bidder activity. You know, it’s something we’re definitely observing here in DFW. It’s happening.

Absolutely. And if we, if we turn our attention to Asia Pacific, we see an even rosier outlook. Investors there are pretty convinced that interest rates have peaked. And they’re, they’re ready to jump back in, ready to deploy capital after things were a little slower. And, and you know what, Japan, Japan is a really interesting case.

The report highlights how they’re actually anticipating. Rising rents, even though monetary policy is still pretty tight. So what does that tell us? Strong demand. Very strong underlying demand for real estate in Japan. I love how these regional nuances come into play. It’s fascinating. But let’s, let’s shift gears a bit.

Talk about what’s driving these investment decisions. The survey reveals some interesting regional differences. For instance, U. S. and European investors, their top reason for upping their capital allocation is favorable pricing. So how does this actually play out, especially for someone looking at acquisitions here in Dallas Fort Worth?

Well, in the DFW market, that phrase, favorable pricing, often boils down to cap rates, black rates or capitalization rates, shifting and certain, retail subsectors. This metric essentially tells us. About the potential return on an investment and what we’ve observed is these rates going up in some pockets of the market meaning Acquisition prices are looking more appealing compared to the income those properties are bringing in so for investors Looking for specific yields in our local retail market.

Well, this creates some pretty compelling opportunities It’s all about understanding those local dynamics and that’s what makes this so valuable now Asia Pacific. What’s fueling their investment engine? Well, for them, the big driver is expectations around lower debt costs, which of course ties into the idea of interest rates easing in that region.

But across the board, across all regions, we see stabilizing, maybe even decreasing interest rates and improved expected total returns. These are the factors really motivating investors to, well, to keep their eyes on commercial real estate. Yeah. And these economic indicators certainly suggest that it might just be the right time.

To think about strategic investments, don’t you think? I’d agree with that. Okay, so let’s dig into preferred investment strategies now. The report, it clearly shows a strong preference for value add across all three regions. Now, for some of our listeners, they might not be as familiar with this term. So can you unpack it a bit?

What does value add actually mean? And why is it so hot right now, especially in the DFW retail world? Sure, happy to. So think of it this way, value add. It’s all about finding properties that aren’t living up to their full potential. Maybe they’ve got management issues. Maybe the design is outdated. Maybe the tenant mix just isn’t right.

Whatever the reason, you see an opportunity to step in. Make some strategic improvements. Change things up operationally. And boost the value, boost the returns. Now in the DFW retail scene, this could mean buying a shopping center, great location, but it needs some love. Maybe modernize it, bring in some fresh tenants that really resonate with the local community.

Or even, you know, reconfigure the space to create something new, something experiential, or cater to those service based businesses that are in high demand. And the current climate, well, with prices adjusting, it makes these value add projects. Really, really appealing. The potential for returns is strong.

So essentially, an investor here in DFW might come across a shopping center. High vacancy rate, but it’s in a growing suburb. They see that potential, invest in renovations, attract a big anchor tenant, and boom, the whole property is revitalized. Value skyrockets. That’s the idea. It’s happening all over DFW.

Strategic repositioning. Now, the report also highlights Core Plus As, a popular strategy. In the DFW retail context, think of Core Plus As, taking a stable shopping center. Good location. And then, you make some tweaks, maybe a few upgrades. Attract a couple of key tenants, just to give it a little boost, in terms of income and appeal.

You know, it’s pretty remarkable that even with the, you know, the perceived risk being a bit higher in Europe, Value added still king really shows you that active management, it’s a powerful tool for driving returns and the fact that Asia Pacific investors, they’re also looking at core and core plus after the price corrections.

It just reinforces the idea that real estate fundamentals are solid. Yeah, there’s this underlying belief that well located properties, they’ll, they’ll continue to appreciate. So let’s talk sectors, preferred investment sectors. This is where it gets really interesting, especially for our DFW retail folks.

Yeah, absolutely. This is the juicy stuff. Now, globally, multifamily and industrial and logistics are leading the pack, that we get it, right? Demographics, housing affordability, e commerce, it’s all playing a role. But what about retail? How does retail fit into this picture, especially for U. S. investors? Well, this is a big one.

A big takeaway for anyone interested in the DFW market, the CBRE report, it specifically points out an uptick, a noticeable uptick in us investor interest in retail assets. And this, this surge in interest is directly tied to. Increased leasing activity that CBRE has been seeing. So for us here in Dallas, Fort Worth, this is a major positive signal.

It tells us that confidence in the retail sector is coming back. Tenants are actively looking for space and they’re signing leases. I mean, that is. Fantastic news for the DFW retail market, increased leasing activity. It means businesses want to be here. They want to set up shop. They want to grow. And that translates into more investment opportunities, potentially higher property values.

It’s a good sign. And, you know, the report also mentions an uptick in us investor interest in office properties. Yeah, they did. However, you know, office it’s a bit more complicated, it’s more nuanced. It really depends as a specific market. And the class of property you’re looking at. True. It’s something we’re keeping a close eye on here at Eureka Business Group and DFW.

Yeah, makes sense. Now for Europe, residential. Residential is actually the top dog now. It’s overtaken industrial and logistics, reflecting their own unique market dynamics. And in Asia Pacific, well, industrial logistics still reign supreme. But there’s a growing appetite for multifamily. It’s on the rise.

So we see these global preferences and they give us this broader context. But for our listeners here in DFW, the key takeaway is this. The U. S. market, and potentially our local area, is witnessing a resurgence of interest in retail from investors. So let’s talk about some of the differences, the divergent views that the report highlighted, especially when it comes to the office sector.

Yeah, there’s a definite contrast in how investors are viewing office. You know, U. S. investors are a bit less enthusiastic compared to their counterparts in Europe and Asia Pacific, and this likely stems from those high office vacancy rates that we’ve been seeing. Yeah. It’s definitely a trend we’re tracking closely here in DFW.

Makes sense. Now, European investors, when they are considering office, they’re laser focused, on prime. High quality properties, it’s all about quality over quantity, it seems. And in Asia Pacific, well, even though some areas have high vacancy, investment in office It’s actually picking up. Why? Well, a few factors are at play.

More people returning to the office, steady leasing demand in certain segments, and some price adjustments. Really highlights how crucial it is to understand those local market nuances, even when we’re analyzing global trends, right? Now, let’s touch on alternatives, alternative investments. The report had some interesting insights there.

It did. And what’s interesting is there wasn’t this clear consensus on the most sought after alternative sectors. It really varied by region. U. S. investors, they’re still showing love for niche areas like self storage and industrial outdoor storage, which weren’t really top picks elsewhere. What’s even more interesting is over half Over half of U.

S. investors said, nope, not interested in alternatives this year. So maybe there’s this refocusing happening back to the core asset classes, like you guessed it, retail. It’s a really intriguing point. Maybe a shift back to the familiar, the core sectors in the U. S., so Europe and Asia Pacific. What about their alternative preferences?

Well, European investors, they’re really into data centers. No AI boom happening. And also student living. Makes sense. And Asia Pacific, similar story, data centers are hot and health care related assets are getting a lot of attention, reflecting the growth of the digital economy and demographic shifts in those regions.

So diverse landscape for alternative investments, but with a potential refocus on core sectors. Like retail in the U. S. So let’s talk rivers and challenges. What are investors keeping an eye on? What are they worried about? Well, for U. S. investors, the big elephant in the room is interest rates. Long term interest rates.

They’re high. They’re volatile. And that creates a lot of uncertainty, especially when it comes to financing commercial real estate deals. Definitely something we’re monitoring closely here at Eureka Business Group. Financing is a critical part of the equation. So Europe and Asia Pacific, what are their main concerns?

They’re more worried about geopolitical risks. Understandably so. Given what’s happening in the world, but the report also it mentioned some other potential challenges things that could impact investment activity across all regions like mismatches in pricing expectations between buyers and sellers Operating expenses are going up labor and construction costs are rising and then there’s that lingering uncertainty About interest rates and the possibility of an economic slowdown A lot to think about for anyone’s considering an investment.

So let’s tie it all together. What’s the overall market outlook according to CBRE? And what does it all mean for our DFW retail market? Well, CBRE, they’re predicting a continued recovery for U. S. investment sales volume in 2025. They’re projecting an 8 percent increase, and they emphasize that it’s the strong U.

S. economy, especially job growth. That’s driving these positive real estate fundamentals. And this is particularly relevant for DFW. Our economy is robust. It’s attracting businesses. It’s attracting people. No doubt about it. DFW’s economic and job growth has been a huge factor in the success of our commercial real estate market.

Exactly. Now the report also forecasts growth in investment activity in Europe. They’re looking at 15, 20 percent and Asia Pacific. So it’s important to keep that global context in mind. And I love this quote from Kevin Ossoff. He’s the America’s president of investment properties at CBRE. He said capital continues to gravitate towards real estate investment in the U.

S. Despite higher for longer interest rates, we see signs of a healthy economy, supporting improved real estate fundamentals with more bidder activity every month. So even with the interest rate concerns. There’s this positive momentum. Yeah, I mean, that quote really sums it up. It’s encouraging. And what about those value add strategies?

How do they tie into the DFW retail landscape? What are the opportunities there? Well, it tells me that there’s going to be this continued interest in acquiring and redeveloping retail spaces here in DFW. It’s about meeting the needs and preferences of today’s consumers. Investors will be looking for properties where they can make strategic improvements, reposition them and unlock that hidden value.

Right. And let’s not forget that key finding from the report, the uptick in investor interest, specifically in U. S. retail, fueled by that increased leasing activity. I mean, that’s a pretty clear positive sign for the DFW retail market, wouldn’t we say? Absolutely. I’d say so. When we look at these global trends and combine them with the U.

S. specific data, it paints a very optimistic picture for strategic investment in DFW commercial real estate. You know, it’s amazing how these global trends connect to our local market. So, let’s recap. We took a deep dive into this CBRE report. And despite some caution, due to those interest rate uncertainties, the overall sentiment among global investors that it’s commercial real estate is largely positive.

And for our listeners, here in Dallas Fort Worth, the key takeaway is this, there’s a renewed interest in the U. S. retail sector. And that has a direct impact on our local market. Positive impact. Yeah, I think that’s a great summary. The current environment, it really does present some unique benefits for those looking to invest in commercial real estate.

Especially when you consider the potential for more favorable pricing on acquisitions, the attractive opportunities that come with those value add strategies, and that encouraging uptick. In leasing activity, in the retail sector, it’s all pointing in the right direction. And that’s where Eureka Business Group comes in.

We’re here to help you navigate the Dallas Fort Worth commercial real estate market with our specialized focus on retail. So if you’re ready to explore these opportunities and leverage our expertise, don’t hesitate to reach out. We’d love to hear from you. You know, based on, I think we’ve discussed today, these global investor trends, the resurgence of interest in U.

S. retail, I really believe. That the Dallas Fort Worth commercial real estate market, especially the retail segment, it holds tremendous potential for those who are ready to make strategic investments. It’s an exciting time to be in DFW real estate. So here’s a final thought for you. As you go about your day, consider this with global investors signaling continued activity and the U.

S. retail sector regaining strength. What unique opportunities might be emerging right now within the Dallas Fort Worth landscape? For those who are ready to seize the moment, that’s something to ponder. And with that, thank you for joining us for this commercial real estate briefing. Brought to you by Eureka Business Group.

 Welcome back everyone to another deep dive into commercial real estate news. Yeah, yeah. Curated, especially for our retail investors here in the DFW market. And as always, we’re brought to you by Eureka Business Group, DFWs Retail CRE Specialists. So let’s jump right into it. Um, you know, recent articles and research are painting a pretty vibrant picture for retail and DFW.

Yeah. You know, it’s interesting to see DFW kind of buck some of those national trends. You know, while some areas are seeing a bit of a slowdown, DFW multifamily sales actually picked up steam in late 2024, even exceeding the previous year’s numbers according to CoStar data. That’s right. And you know, this strength is really concentrated in areas like East Dallas, Arlington and the Uptown Park Cities area.

Yeah. And for retail investors, this is great news because more multifamily development equals more rooftops. Right. And more rooftops equals more potential customers for those retail businesses. Exactly. And you can really see this connection playing out in the construction pipeline. Yeah. The Coaster data shows that suburban retail construction is really leading the way in DFW.

You know, since the last recession. Retail construction has been steadily increasing, and these new developments are really strategically placed, you know, to serve these growing communities with a mix of kind of essential and convenient and even experiential retail options. Speaking of thriving communities, let’s head north of Dallas to Collin County.

Yeah. It’s really become a retail powerhouse and is projected to be one of the fastest growing counties in the nation in 2025. Yeah, Collin County is really interesting. You know, it’s this blend of economic opportunity and a high quality of life, right? And it’s really attracting people to areas like Plano and Frisco.

Um, and, you know, some are even calling it DFFW, uh, recognizing those suburban areas as really significant economic hubs now. And this growth isn’t just about attracting residents. It’s about attracting major employers too. Exactly. For example, Siemens recently invested 1 billion in a manufacturing facility in Fort Worth.

Wow. A project that’s expected to create 480 new jobs. That’s a great example of how a robust local economy really fuels that retail sector. So those 480 new jobs potentially mean 480 families needing goods and services. Right. Increasing demand for retail spaces and making Collin County an attractive area for retail investment.

But location is only one piece of the puzzle, right? Strategic investment is just as crucial in today’s, you know, dynamic market. Oh, absolutely. So let’s take a look at Blackstone. Okay. They’re one of the world’s largest real estate investors. Yeah. In a recent interview, Ken Kaplan Blackstone’s head of real estate really emphasized the strength of grocery anchored neighborhood retail centers.

It’s interesting why Blackstone is attracted to those centers. Right. Kaplan pointed out that people consistently need groceries. You know, regardless of the economic conditions. Yeah. It’s a fundamental need that provides a stable income stream for investors. Yeah. Especially appealing in today’s kind of uncertain economic climate.

Right. And Blackstone isn’t just talking the talk. Their walk in the walk, they acquired over $4.3 billion in grocery anchored centers. Wow. Demonstrating their strong belief in that sector. In a market like DFW with its robust population growth. Yeah. This focus on grocery anchored retail becomes particularly attractive for investors seeking stable long-term returns.

That’s a great point. You know, it’s not just about jumping on. The latest trend, it’s about understanding those underlying fundamentals that drive value in a market like DFW. But Blackstone isn’t just sticking to traditional retail models either. They’re embracing what we call experiential retail, which focuses on creating destinations that offer more than just products.

Yeah, this is where things get really interesting. Right. Experiential retail is about, you know, creating an experience. Yeah. A place where people want to spend time, not just their money. Right. Dining entertainment, immersive experiences, all rolled into one. Yeah. A great example of this is Level 99, a massive entertainment center developed by Blackstone in West Hartford, Connecticut.

That’s interesting. It’s a 50, 000 square foot complex with everything from dining and gaming to immersive art installations. Wow, I’m fascinated by how Blackstone is adapting to these changing consumer preferences. Right. You know, they’re moving beyond those traditional retail spaces and creating these dynamic and engaging environments to attract a wider audience.

Exactly. This is such a crucial strategy for success in today’s evolving retail market, and it’s something investors in DFW should be paying attention to. So what does this mean for our DFW retail investors? Well, There’s a real opportunity to incorporate these experiential elements into their retail spaces.

Right. To attract and retain customers. Absolutely. But it’s not just about replicating what’s being done elsewhere. It’s about understanding the unique needs and desires of that local DFW community. Right. It’s about creating experiences that resonate with DFW residents making them want to come out and spend time.

Yeah. Ultimately driving foot traffic and sales for those retail businesses. Exactly. This attention to local nuances is what sets successful investors apart. For sure. And let’s take a quick look at some national trends that might be on your mind. Okay. First up, inflation. Yeah. The latest report from the Labor Department is encouraging U.

S. annual inflation edged lower in February to 2. 8 percent. Okay. Down from 3 percent in January. So this moderation is primarily due to easing energy prices. Right. However, it’s worth noting that shelter costs, which include rent, are still a significant factor accounting for roughly half of the overall inflation rate.

That’s right. And while there’s no immediate recession on the horizon, many analysts are predicting a slowdown later this year. Right. And this potential slowdown is mainly attributed to ongoing trade tensions between the United States, Canada, and Europe. Right. This situation is definitely worth watching.

Yeah. On one side, we have President Trump’s negotiation strategy of imposing tariffs on various goods. Right. And on the other, Canada and Europe are retaliating with their own tariffs. This back and forth is creating uncertainty in the market. Makes sense. If these trade disputes continue to escalate, we could see a more substantial economic downturn than initially anticipated.

Right. However, it’s important to remember that DFW has a history of resilience, and has often outperformed national trends during economic downturns. Absolutely. DFW’s diversified economy. You know, it has strong job growth and robust population growth, and those all help to kind of mitigate the impact of those national and global economic fluctuations, and that underlying strength makes DFW a much more attractive market for investors compared to other areas that might be more susceptible to those fluctuations.

Let’s shift gears now and talk about office real estate. Okay. The office sector has been a hot topic with many wondering if the shift to remote work is here to stay. Right. Recent data from Coast Guard shows that office attendance has actually reached a post pandemic high. Interesting. U. S. office attendance for 10 large cities Average 54.

5 percent of pre pandemic levels for the week ending March 5th. So this recent peak comes as large companies are ramping up those in office work requirements and scaling back on those remote and hybrid arrangements. Exactly. So what does this mean for DFW? Well. It suggests that the office market is far from dead.

Right. Companies still see value in having employees work together in person. Right. At least part of the week. Yeah. And this return to the office has positive implications for that surrounding retail environment. Right. More people working in offices translates to increased demand for lunchtime eateries, coffee shops, and other retail services.

That catered to that office crowd. Let’s look at some specific examples of how this is playing out in DFW. Okay. K L N orthodontics. Okay. A digital technology firm specializing in orthodontic innovations is moving its growing North Texas headquarters to an office building in Richardson, Texas. Okay.

They’re leasing 24, 850 square feet at 1703 North Plano road. Wow. And plan to invest almost two million dollars in tenant improvements. That’s a big investment. This move is expected to create over a hundred new jobs over the next five years. That’s great. And here’s an exciting twist. The city of Richardson is offering KLON a hundred thousand dollar grant in exchange for their investment of at least 1.

4 million dollars in its new office in the innovation quarter. That’s a great example of how local governments are actively working to attract if nesses and stimulate economic growth. Yeah. Which ultimately benefits the entire DFW region, including that retail sector. Another interesting development in the DFW office market is Care.

com relocating its Texas headquarters from Austin to Dallas. Oh wow. They’ll occupy 14, 000 square feet at One West Village, an 18 story office tower at 2801 North Central Expressway. This move is significant because Dallas Fort Worth ranked number three in North America for high tech job growth between 2022 and 2023, according to CBRE.

Right. This influx of tech talent is a positive sign for the DFW economy. Yeah. And could create new opportunities for retail businesses that cater to this demographic. Absolutely. Care. com’s decision to relocate to Dallas really highlights the city’s growing reputation as a hub for tech talent and innovation.

And it’s not just tech companies making moves. Telecom companies are also expanding their footprint in DFW. Oh, interesting. 46 Labs, a telecom and connectivity company, is expanding its presence in downtown Dallas. Okay. They’re taking over part of an office previously occupied by Sam’s Club at Factory 603 on Munger Avenue.

This move will more than double 46 Labs footprint, demonstrating their commitment to growth and innovation. In the DFW market, what’s interesting about this is that 46 labs is relocating from a smaller space in the historic market street building. Also in Dallas is West End, right? This area is a turn of the century warehouse district that’s experienced a revival recently becoming a hub for technology and innovation.

Yeah, 46 labs decision to stay in the West End. Right? End shows the area’s appeal as a vibrant and creative district that’s attractive to businesses. Right. This continued investment in the West End further solidifies its position as a key area within the DFW market. And let’s not forget about the industrial sector’s connection to the broader economy and its potential influence on retail trends.

Right. Ambrose, the industrial developer we mentioned earlier, is investing significantly in Build to Suit. Properties for Amazon. Yeah, and this has a local connection. Siemens recently opened 190 million electrical equipment manufacturing facility in Fort Worth. This state of the art facility located at 7200 Harris Legacy Drive will produce electrical equipment for data centers, a rapidly growing sector.

Interesting. This project is expected to add about 480 new jobs to the Fort Worth area. That’s huge. You know, this kind of industrial growth can have a spillover effect, stimulating demand for related services and consumer goods, ultimately benefiting the retail sector. So we’ve covered a lot of ground here, from local developments to national trends.

It’s clear the DFW retail market is dynamic and full of opportunities. But to help you navigate this landscape, let’s dive deeper into some specific insights from industry experts. That’s good. We’ll be back after a quick break. All right, we are diving back into DFW retail real estate, uh, with, you know, expert advice straight from the source.

Blackstone again, right? I mean, their moves are definitely catching everyone’s attention. Exactly. I had the chance to chat with Ken Kaplan, Blackstone’s head of real estate, uh, to get some insights into their strategy. Oh, nice. You know, it’s fascinating how a global player like Blackstone, approaches retail in this, you know, ever changing market.

Yeah. Let’s start with the basics. You know, what is driving Blackstone and other major players to be so bullish on these grocery anchored retail centers? Well, Kaplan was very clear about this. You know, he believes that the grocery anchored retail asset class is highly sought after by institutional investors like Blackstone.

Okay. And we’ve seen this play out, you know, through their recent acquisition of ROIC. Right. He attributes this to several factors. Uh, you know, people frequent grocery stores, regardless of the economic climate. They prefer to spend cash in their neighborhoods. Yeah. Uh, shopping centers are reasonably priced.

Makes sense. And the supply demand dynamics are favorable. So Blackstone sees these centers as, you know, stable investments, even during times of economic uncertainty. Yeah. He went on to say that these centers have been a solid investment for them since 1983, and that the yields during, you know, challenging economic periods, like a pandemic or high inflation.

Right. Make them particularly attractive because of their recession resistant nature. That makes a lot of sense. You know, it highlights that enduring appeal of gross re anchored centers. Right. They provide those essential goods and services, which is a key factor in their resilience. And Kaplan also emphasized the importance of strong relationships in this sector.

Yeah. And he pointed out that many individual owners prefer to hold their assets for extended periods. Right. Uh, making the sector fragmented and resulting in a limited supply of high quality product for those institutional investors. So Blackstone sees this fragmentation as an opportunity. Yes. They can leverage their expertise and network to acquire.

You know, those prime properties that might not be accessible to smaller investors. Precisely, and their track record speaks volumes. You know, they’ve transacted over 4. 3 billion dollars in grocery anchored centers. Wow. And show no signs of slowing down. Right. But with the rise of e commerce and the growing demand for experiences, how is Blackstone adapting?

Well, they’re embracing this concept of, you know, experiential retail. Right. Aiming to create those vibrant and engaging spaces that offer more than just goods. A prime example is Level 99. Yeah. The entertainment center they developed in West Hartford, Connecticut. Right. Kaplan highlighted their strategy, saying that dynamic experiential retail is key to creating thriving communities.

They stay ahead of trends, shaping how we live, work, and play, and bring in tenants who curate those captivating experiences. Okay. From food and beverage to recreational and educational activities. So it’s about crafting those destinations that draw people in, offering them something unique and memorable.

Exactly. Level 99 embodies this perfectly. It’s a sprawling 50, 000 square foot complex offering dining, gaming, immersive experiences. Wow. They even have competitive axe throwing and a speakeasy style restaurant. It’s a far cry from the traditional shopping mall, you know? Right. Blackstone is redefining the retail landscape by catering to a generation that values experiences connection and authenticity.

They’re shifting the focus from simply buying things to creating lasting memories. That raises a crucial question for DFW investors, you know? Yeah. How can they integrate these experiential elements into their own retail spaces? Well, it begins with understanding the needs and desires of That local community.

Yeah. What kind of experiences would resonate with them? Right. What would entice them to spend time in a particular space? It requires thinking outside the box and being willing to experiment. Yeah. Kaplan stressed the importance of focusing on, you know, the unique dynamics of each neighborhood and building spaces that foster a sense of community.

It’s a fascinating and evolving approach to retail. It’ll be interesting to see how these trends shape the DFW landscape in the years to come. Absolutely. Now let’s turn our attention to another trend, making waves. Uh, the rise of mini pharmacies. Mini pharmacies, that’s interesting. Yeah, CVS Health is planning to open 12 mini stores across the U.

S. These will be about half the size of a typical CVS. Okay. Focusing primarily on medication. So it seems like they’re responding to that growing demand for accessible and affordable healthcare options. Right. While also trying to compete with online giants like Amazon who are venturing into that pharmacy market.

These mini pharmacies will offer a curated selection of over the counter medications, first aid products, snacks, cosmetics, and a full service pharmacy. Interesting. The 2024 with some even located inside Target stores. This strategy could be a game changer for the pharmacy industry and could impact retail real estate as well.

Definitely. Now before we wrap up, I want to touch on property taxes. Okay. Specifically, a potential loophole in Texas that’s allowing some developers to secure substantial tax breaks. This sounds intriguing. Tell me more about it. It appears some developers are exploiting a legal provision that lets them convert market rate properties into affordable housing.

Right. In exchange for property tax exemptions. Interesting. State lawmakers have taken notice and are now considering legislation to address this practice. Okay. While these tax breaks aim to encourage affordable housing development, critics argue that they’re being misused by developers seeking to reduce their tax burden.

Without truly providing affordable housing options. It’s a complex issue with significant implications for both the real estate market and the availability of affordable housing in Texas. Absolutely. Its topic, we’ll continue to monitor closely now. Let’s wrap up our deep dive with key takeaways and a thought provoking question for you to consider.

Okay, so we’re back and ready to kind of distill some key takeaways from our deep dive into the DFW retail real estate market. Yeah, let’s recap, you know, what we’ve uncovered today. First and foremost, the DFW retail sector remains strong, despite some of those national economic uncertainties. You know, this strength is particularly evident in the suburban areas experiencing that rapid population growth, right?

DSW’s diverse economy and strong fundamentals make it a very attractive market for those retail investors. Yeah, we saw this firsthand in Collin County, which is projected to be one of the fastest growing counties in the nation in 2025. Yeah. This growth is fueling demand for all types of retail. From grocery anchored centers to those offering those unique experiences.

Right. And speaking of experiential retail, we learned from Blackstone that creating those engaging experiences that resonate with today’s consumers is key. Yeah, Blackstone’s success with gross re anchored centers and innovative developments like Level 99 offers valuable lessons for investors in DFW who are looking to adapt to this changing retail landscape.

For sure. You know, we also discussed how strong job growth driven by companies like Siemens and Ambrose can create that ripple effect that boosts the local economy and increases demand for those retail spaces. And while national trends like inflation and trade tensions require careful monitoring DFW’s diverse economy and strong demographics, position it well to navigate those potential challenges.

Absolutely. A boffice market is also showing signs of recovery with companies like KLOM on orthodontics and care. com expanding their presence in DFW, you know? Yeah. This kind of reaffirms the region’s appeal as a hub for talent. and innovation. Even the car wash industry, which is currently experiencing a slowdown, offers those valuable insights into the importance of conducting that thorough market analysis and due diligence.

So what’s the key takeaway for our listeners today? Well despite those national economic anxieties, the DFW retail market is thriving, especially in those suburban areas, experiencing that rapid population growth. Collin County, north of Dallas, stands out as a particularly attractive area for retail investment with its robust DFFW communities.

And investors should consider those benefits of investing in DFW retail, especially in light of Blackstone’s strategy of focusing on grocery anchored centers and incorporating those experiential elements into their developments. If DFW retail real estate, Eureka Business Group is here to help our team of experts can guide you through the complexities of the market.

And help you identify those promising investments that align with your goals. We’re passionate about DFW retail, and we’re confident that this market has a bright future. So if you’re ready to take the plunge, reach out to Eureka Business Group. We’d love to connect with you and discuss how we can help you achieve your investment goals until next time.

 Welcome to the deep dive. We’re diving into the latest developments in the Dallas Fort Worth commercial real estate market brought to you by Eureka business group. Of course, the DFW retail specialists. We have a really interesting mix today. Some national trends and some hyper local. DFW developments, focusing on retail real estate in our area.

Really going to be zeroing in on what’s most relevant and I think most intriguing for anyone interested in retail real estate. All right. So let’s jump right in. Sounds good. Let’s take a look at some specific news items first, and then we can analyze what they mean. You know, for the retail landscape, both now and in the long term.

All right. Let’s start with some exciting news for downtown Dallas. The Dallas Wings are moving to the Kay Bailey Hutchison Convention Center this year. This year. Yep. That’s a 15 year agreement, actually. Wow. A great sign for the revitalization of downtown. I mean, that’s just a huge vote of confidence for downtown.

That’s really perfect timing, too, because the 2026 FIFA World Cup, right? Yep. is expected to bring a huge influx of visitors. Yeah. And investment. Yeah. To the DFW area. Exactly. It’s putting our region on the map. Yeah. You know, as a global destination. I think it’s going to create a ton of opportunities for new businesses and just a more vibrant consumer market.

Which is great for retail. Fantastic for retail. Yeah. So, Eureka Business Group. Right. We can help you navigate these exciting opportunities. And develop future proof strategies. Absolutely. To capitalize on this growth. That’s our bread and butter. All right. Let’s move on to another positive development.

Okay. For DFW retail. Sally Beauty. Oh! I saw that one. A Fortune 1000 company, by the way, is relocating its headquarters from Denton to Legacy West in Plano. This move really highlights the growing appeal of Plano as a business friendly environment with a highly skilled talent pool. It really does. And you know, Plano’s been attracting a lot of big companies lately.

Like KFC also recently moved its headquarters there. Interesting. So these corporate relocations, they bring A substantial workforce, right? Absolutely. Boosting the local economy. Driving demand. Yeah. For retail services. For sure. It means Plano is a really strong retail market right now, attracting businesses.

Yeah. And consumers. Right. So, Eureka, Business Group, we have, you know, we have the local market knowledge. Yeah. To help investors, you know, find the best locations in Plano. So now let’s shift gears a little bit. Let’s look at some broader Retail sector trends. One interesting development is the continued growth of off price retailers.

Ross, for instance, is planning to open like 90 new stores this year. Yeah, it’s really a reflection of where retail is at, you know, post pandemic. Consumers are looking for value, right? With, I mean, inflation, you know, and the economy. Off price retailers are really well positioned to take advantage of that to meet that demand.

But while some retailers are thriving, others are facing some challenges. We’ve seen reports that international brands like Mango and Uniqlo are struggling to gain traction in the U. S. market. It just goes to show you how important it is to really understand. Those local consumer preferences, you know, and trends, what works in one market doesn’t always work in another.

Yeah. So success in retail really hinges on tailoring your offerings to the specific needs and desires of your target audience. 100%. Which again is where Eureka Business Group comes in. Yeah. You know, we have a deep understanding of the DFW market. Absolutely. Can help retailers succeed in this. ever changing environment.

That’s what we do. All right, now let’s take a look at the office market in DFW. You know, we’re seeing an uptick in office construction in the Dallas Metroplex. Interesting. Which is notable because it’s actually going against the national trend. Office development is declining nationally. Why is that?

What’s going on here? I think part of it is companies are returning to the office. Ah. At least to some degree. Right. And they need updated modern workspaces. I mean, to attract and retain talent. Yeah, makes sense. Yeah, they’re looking for spaces that foster, you know, collaboration, innovation, employee well being.

Right. Exactly. This presents a great opportunity though for investors to secure prime office spaces in a growing market. For sure. For sure. And you know, Eureka Business Group, we can help with these investments, you know, leveraging our expertise in the DFW office market. Now, um, let’s turn our attention to Frisco.

Okay, which is really emerging as kind of a hub for tech startups these days. Yeah, Frisco the Frisco Economic Development Corporation Yeah, they’re actively attracting these startups, right? They’re recognizing their potential for innovation job growth Economic expansion smart move on their part. I mean tech startups, you know, they often attract a younger demographic right with disposable income and You know, that’s always a good thing for the retail sector.

Yeah, absolutely. So this focus on attracting these tech startups, this combined with the talented workforce and the business friendly environment, it makes Frisco. Pretty attractive. Super attractive. Yeah. For, for all kinds of businesses. Yeah. And it’s, it’s creating this positive feedback loop, you know.

Yeah. That benefits everybody. Absolutely. And it’s not just Frisco, right? No. It’s the entire DFW Metroplex. The whole Metroplex. Experiencing this growth in the tech and manufacturing sectors. Yup. And a prime example of that is Siemens. They decided to build a new manufacturing facility. Oh, wow. In Fort Worth.

Yeah. 190 million dollar investment, creating 800 new jobs. I mean, that just strengthens the region’s manufacturing, you know, prowess. Yeah. And we can’t forget about the ripple effect that this has on retail. Oh, for sure. Huge ripple effect. More jobs mean more people. More disposable income. Right. Which, ultimately It all, it all trickles down.

And DFW is really strategically positioned to capitalize on this growth trajectory. Speaking of understanding those local consumer preferences. We’ve seen some interesting national retail trends. Yeah. That highlight this importance, you know, of knowing your market. It all comes back to that. The retail landscape’s always evolving.

Yeah. And, and what works in one area, you know. It might not work in another. Yeah. For instance, we talked about the success of off price retailers, like Ross, right? Yeah. They’re expanding aggressively. On the other hand, some international brands, they’re struggling to gain traction here in the U. S. They are.

Yeah, CNBC reported that, um, Mango and Uniqlo, both, you know, well known international retailers, but they’ve really found the U. S. market to be A bit more challenging than they anticipated. Than they anticipated, yeah. So this underscores the need to adapt. For sure. To those local tastes, to those buying habits.

Yeah. And it really reinforces the need to partner with experts, you know. Right, yeah. People who understand the nuances of the local market. Yeah. I mean, Eureka Business Group, you know, we have deep roots here in DFW. We can help investors identify. You know, the most promising locations, the trends that align with consumer demand.

So it’s not just about square footage or, you know, right. It’s about understanding the dynamics of the DFW retail scene while we’re on the topic of dynamic markets. We can’t ignore. What’s been happening with office spaces. Oh yeah, the office sector has seen some, some big changes. It’s important to, to stay informed, you know, about the trends.

The Society of Industrial and Office Realtors, S I O R, they offer some great insight. They do, they do, yeah, and they highlight a really fascinating trend. Okay. Which is that Companies are moving away from those traditional office layouts and they’re embracing, you know, more flexible and collaborative work environment.

All that adapting. Adapting, yeah. The changing needs of the workforce. A hundred percent. So we’re seeing a shift towards spaces that promote employee well being. Creativity. Sense of community. Exactly. You know, modern office spaces are incorporating things like open floor plans, communal areas, you know, natural light, all these things that enhance the employee experience and hopefully, you know, foster productivity.

So this has significant implications for investors who are looking at office spaces in DFW. Absolutely. It’s, it’s no longer just about, you know, securing a space. It’s about investing in an environment. That aligns with right what today’s workforce wants, right? That makes total sense. So as the DFW area continues to grow, right?

The need for these updated, attractive office cases is only going to increase. It’s only going to increase. Yeah. And that creates opportunities for investors. You know, the ones who are willing to adapt. Embrace the evolving demands of the modern workplace. Well, that’s a perfect segue to another area that’s attracting a lot of attention.

Frisco’s tech scene. Frisco’s doing a great job with that. They’re really cultivating a thriving tech ecosystem. And it’s, it’s working. Yeah. From what I’ve seen in local profile. Yeah. The Frisco Economic Development Corporation is doing a fantastic job. Mm hmm of attracting these startups and it’s generating a lot of buzz.

Yeah, it’s smart tech startups You know, they bring they bring innovation. They bring job growth. They bring a younger demographic, right and that supports retail Absolutely, which drives economic expansion, and Frisco has a lot to offer, including a talented workforce and a business friendly environment.

All those factors are like magnets, you know, for businesses of all sizes. And it’s creating that positive feedback loop, you know, we talked about earlier, benefits the entire community. Yeah, and it’s not just Frisco. Again, it’s the entire DFW Metroplex experiencing this growth. Mm. In, you know, in tech, in manufacturing.

Right. I mean, Siemens deciding to build that new manufacturing facility in Fort Worth. Yeah. That’s a perfect example. 190 million investment, creating 800 new jobs. That’s, you know, that’s huge for the region. Strengthening that. Manufacturing prowess. Yeah. And again, we can’t forget the ripple effect. Huge ripple effect.

This has on retail. For sure. More jobs. More people with, you know, disposable income. Yeah. Ultimately boosts the retail sector. It’s all interconnected. Yeah. And DFW is well positioned to take advantage of this. All this news is making me even more excited. Yeah. About the future of DFW real estate. I mean, it’s a vibrant, dynamic market.

So much potential. It’s a great time to be involved in DFW real estate and understanding these trends, you know, that we’ve talked about today. Yeah. Can help you make. Smarter decisions. Absolutely. Now, we’ve covered a lot of ground today, from, you know, those exciting developments in downtown Dallas, to the rise of Frisco as a tech hub, you know, we’ve seen how national retail trends are playing out locally, how the growth in tech and manufacturing is really fueling the DFW economy.

And we can’t forget the World Cup, you know. Oh yeah, absolutely. The 2026. The 2026 World Cup coming up. Yeah, that’s going to, that’s going to boost DFW’s profile. Huge. Even more. It’s an exciting time. It is. To be invested. It is. In the Dallas Fort Worth real estate market. Absolutely. It is an exciting time.

As we wrap up our deep dive today, let’s just take a minute to summarize the key takeaways. So we’ve seen some really positive growth across different sectors in the DFW area. We’ve seen a particular strength in retail, office. Yeah, we also highlighted how important it is to really understand the DFW market, you know, knowing what consumers want, what they’re looking for, where those businesses are moving, and recognizing how, you know, those bigger trends create opportunities.

That’s key for success. And, you know, partnering with those experts like Eureka Business Group. Right. That can make navigating this dynamic market a lot easier. Much easier. Yeah. The DFW market, it has a lot of potential. Yeah. Yeah. It really does. And staying informed, you know, that’s what’s going to allow investors and businesses to capitalize on that growth and, and reach their goals.

Absolutely. So to our listeners, if you’re ready to explore those opportunities in DFW, you know, connect with Eureka Business Group. Our team can provide that guidance, you know, on the local market, help you discover the potential of retail real estate right here in DFW. Thank you for joining us. For this deep dive into DFW commercial real estate.

We look forward to bringing you more insights and analysis in future episodes. Until then happy investing.

 Welcome back everyone for today’s deep dive curated by Eureka Business Group. Uh, we’re going to be focusing on the latest DFW commercial real estate news. That’s right. We’ve been sifting through tons of reports and articles to bring you the most impactful trends and developments. Exactly. So if you’re interested in staying ahead of the curve in this market, this is the place to be.

Absolutely. Let’s jump right in and see what’s making waves. Okay. So first up, let’s talk about the data center boom that’s happening right here in Texas. Yeah, this is a big one. Data center space in Austin is expected to grow like a crazy amount. 80 percent in 2025 alone. Wow, that’s massive. And guess what?

Dallas Fort Worth already has the most data center square footage in the entire state. It’s quickly becoming a major hub for this industry, and for good reason too. So tell me, what are some of the key players driving this growth? Well, you’ve got companies like Skybox, Sabi Prologis, and Digital Bridge.

They’re all developing huge, multi million square foot projects. And where are these projects mainly concentrated? Mostly in areas like Round Rock, Pflugerville, and Hutto. Interesting. And what’s the big draw for these companies to come to this area? Well, a couple things. The availability of land that’s suitable for these massive data centers is a huge plus.

Makes sense. And then there are the competitive utility costs, which is a big factor when you think about the amount of power these facilities need. Right, because these data centers are running 24 7. Exactly. And they’re being built with 100 percent occupancy in mind too. Oh, wow. So unlike a traditional warehouse where you might have some vacancy.

Yeah, this shows just how strong the demand is in this sector. It’s pretty incredible to think about the scale of these projects, too. Like, you mentioned one project in Hutto alone could power 200, 000 homes. It really puts it into perspective, doesn’t it? It does. And with institutions like UT partnering with these developers, it seems like this trend is here to stay.

Oh, absolutely. This is not a short term blip on the radar. So for savvy investors, this sounds like a major opportunity. I’d say so. It’s definitely a sector to keep an eye on. Now let’s switch gears a bit and talk about retail. Okay, so is the traditional mall dead? That’s the big question, isn’t it? I don’t think it’s dead, but it’s definitely evolving.

Yeah, I agree. Simon Property Group, the biggest mall owner in the U. S., is actually taking a really interesting approach to revitalizing their malls. So what are they doing differently? Well, instead of just relying on traditional retail stores, they’re bringing in a whole new kind of tenant. Like who? Well, for example, they’re attracting health care facilities, hotels and even apartments to create these mixed use spaces.

So they’re basically transforming these malls into more like community hubs. Exactly. And they’re seeing some real. success with this strategy. For instance, Stony Brook Medicine just opened a huge 170, 000 square foot location in one of Simon’s malls in New York. Wow, that’s impressive. So they’re not just talking the talk, they’re actually walking the walk.

Right. And the best part is they’re not just doing this in other states. They’re actually implementing similar plans right here in DFW. Oh, really? That’s great to hear. Yeah, like they’re adding office space to the shops at Clearfork in Fort Worth. Okay, so they’re really diversifying their offerings.

Exactly. And it’s not just Simon Property Group doing this either. We’re seeing this trend of mixed use development popping up all over DFW. It makes sense. I mean, think about it. People want convenience and a sense of community. They want to be able to live, work, and play all in one place. Absolutely. And developers are responding to that demand.

But hold on, not everyone’s taking the same approach, right? You’re right. Walmart, for example, is doing things a bit differently. Yeah, how so? Well, they’re actually buying up struggling malls and completely redeveloping them. So instead of just trying to fill the existing space, they’re starting from scratch.

Pretty much. They recently bought Monroeville Mall near Pittsburgh, which had been struggling for years, and they plan to completely revitalize the whole area. That’s a bold move. It shows just how much confidence they have in the potential of these properties. Yeah, and it’ll be interesting to see how this approach plays out compared to the mixed use strategy.

Definitely. It’s like two different philosophies of how to adapt to the changing retail landscape. Exactly. And ultimately, it’ll be the consumer who decides which approach wins out. Now let’s zoom in on some other notable retail news, specifically in the DFW area. Okay, so first up, McDonald’s, they’re actually doubling down on their beverage focused concept called Cosmix.

Cosmix? I haven’t heard of that. Yeah, it’s a relatively new concept for them. They’re opening a new location in Allen. Interesting. So they’re focusing on the specialized format instead of just opening more traditional McDonald’s. It seems like it, they’ve actually closed a few underperforming McDonald’s stores in Dallas.

So it seems like they’re shifting their strategy a bit. It makes sense to adapt to the market and what consumers want. Absolutely. And speaking of adapting, we’re seeing some shifts in consumer spending that are impacting other retailers. Oh yeah, like what? Well, fabric and craft retailer Joanne is closing over half of its stores nationwide.

Wow, that’s a big deal. That says a lot about how people are spending their money these days. Yeah, it’s a sign of the times for sure. And another interesting development is happening in the restaurant industry. What’s going on there? Well, TGI Fridays is selling most of its remaining corporate owned locations to franchisees.

Including some in Dallas. Yes, including some in Dallas. So they’re moving away from the corporate ownership model. It seems that way. It’s actually a trend we’re seeing across the restaurant industry. Companies are shifting towards franchise models to expand and reduce their operational burden. It’s interesting to see how these different sectors are adapting to the changing market conditions.

Yeah, there’s definitely a lot of movement and innovation happening. Now let’s talk about what all of this means for investors. Okay, so one statistic that really jumps out at us is the vacancy rate for small industrial spaces. You mean spaces under 100, 000 square feet. Exactly. It’s incredibly low right now, sitting at just 3.

9 percent as of Q4 2024. Wow, that’s tight. So if you’re looking for a small warehouse in DFW, you’re going to have to be pretty competitive. Absolutely. There’s a lot of demand and not a lot of supply, which creates both challenges and opportunities. Right. It’s a seller’s market for sure. Yeah. But this low vacancy rate also indicates that this sector is performing really well.

Exactly. It’s a sign of a healthy and growing market. And of course, we can’t talk about investing without mentioning tax policy. Right, because tax policy can have a huge impact on investment strategies. Exactly. There are some potential changes coming down the pipeline that investors need to be aware of, like changes to the corporate tax rate and possible revisions to bonus depreciation and interest deductions.

It’s a lot to keep track of, for sure. Which is why it’s so important to have a trusted advisor who understands the nuances of the market and can guide you through these changes. Absolutely. Someone who can help you make informed decisions and maximize your returns. Now let’s step back and look at the bigger picture.

What’s driving all of this growth and activity in DFW? Well, it all comes down to the fact that DFW is a magnet for both residents and businesses. We’re seeing a lot of people moving here from other states. Right. In the past three years alone, DFW has gained almost 400, 000 new residents. That’s incredible.

And that population growth is fueling demand across all sectors of the real estate market. Exactly. From industrial space to housing to retail, it’s all interconnected. And DFW also has a lot to offer businesses. A diverse economy, a strong job market, and a pro business environment. It’s a recipe for success.

And we’re seeing proof of that with companies like Yum Brands relocating corporate employees to Plano. Yeah, they moved 190 employees from Louisville to Plano, which shows just how attractive DFW is to major corporations. It’s a testament to the strength of the region and its potential for growth.

Absolutely. DFW is a market that’s worth paying attention to. So whether you’re a seasoned investor or just starting out, there’s definitely something here for everyone. And the key is to stay informed and be prepared to adapt to the ever changing market conditions. That’s where a company like Eureka Business Group can really help.

Exactly. We have the expertise and the resources to guide you through the complexities of the DFW market and help you achieve your investment goals. But before we continue with retail trends in DFW, let’s take a quick break. Welcome back, everybody. Let’s dive a little deeper into this DFW retail market.

Yeah, it’s definitely an area we’re seeing a lot of interesting activity. Right, and it’s actually our specialty here at Eureka Business Group. Yeah, so we’re really excited to share some of our insights. Okay, so we were just talking about Simon Property Group and their innovative approach to revitalizing their malls, right?

They’re really shaking things up. They’re not just focused on those traditional retail tenants anymore. They’re bringing in a whole mix of offerings like health care facilities, entertainment venues, even residential spaces. Yeah, it’s all about creating these dynamic. Mixed use environments. Exactly right.

It’s about catering to a wider range of needs and preferences, so instead of just going to the mall to shop, you might also go there to see a doctor or catch a movie, or even live there. Right? It’s about creating a destination that offers a more well-rounded experience. And it makes sense when you think about the challenges faced by traditional department stores.

Yeah. As those anchor tenants, downsize or close malls need to find creative ways to fill those spaces. And Simon Property Group is being proactive about it. They’re not just waiting for things to happen, they’re actively seeking out alternative tenants and uses. And this shift towards mixed use development, it’s not just happening in malls either.

We’re seeing it all over DFW in retail properties of all shapes and sizes. It’s becoming a key trend in the market. It’s a reflection of how consumers are changing and how retail is evolving. Absolutely. Now, another interesting development in the retail sector is the rise of these digitally native brands.

You mean brands that started online and are now opening physical stores? Exactly. Like Warby Parker, Glossier, even Amazon. They’re all establishing a physical presence to complement their online operations. It’s an interesting strategy because it allows them to connect with customers in a more tangible way.

Right. It’s about creating a seamless omni channel experience. And for investors, this presents an opportunity because these digitally native brands are often looking for prime locations in high traffic areas. They want their physical stores to reflect the quality and aesthetic of their online brand.

Which can drive up property values and attract other desirable tenants. It’s a win win for both the brand and the property owner. Okay, so we’ve talked about retail. Let’s shift gears a bit and talk about the office market. Okay, so the office sector has definitely impacted by the rise of remote work.

Yeah, a lot of people are working from home these days. But that doesn’t mean the office is dead, right? It’s just evolving. Exactly. We’re seeing a flight to quality in the office market. Companies are looking for spaces that offer more than just a place to work. They want amenities, Collaborative spaces, a focus on employee well being.

Think fitness centers, rooftop gardens, on site cafes. It’s about creating an experience that draws employees back to the office. And this focus on quality. It’s creating opportunities for investors who are willing to upgrade their properties and cater to the evolving needs of modern businesses.

Absolutely. Now let’s talk about the industrial market, which is a sector that continues to thrive in DFW. Yeah, we’ve seen incredible growth in this sector. It’s being fueled by a number of factors like e commerce expansion, the need for efficient logistics and distribution networks and DFW’s strategic location.

Right. With its central location and excellent transportation infrastructure, DFW is a major hub for warehousing and distribution. And as e commerce continues to grow, the demand for warehouse space is only going to increase. Which means there’s a lot of potential for investors in this sector. But of course there are challenges too, like the low vacancy rate for industrial spaces.

Especially for those smaller spaces under 100, 000 square feet. Right. The competition for those spaces can be fierce. Which is why it’s so important to work with a knowledgeable broker. Who can help you navigate the market and find the right opportunities. Absolutely. Now let’s touch on a topic that’s always on the minds of investors, tax policy.

Ah, yes. The dreaded tax man. Well, it’s something we all have to deal with, and tax policy can have a big impact on real estate investment strategies. There are some potential changes coming up that investors need to be aware of. Like changes to the corporate tax rate and possible revisions. to bonus depreciation and interest deductions.

You could be a lot to keep track of. But it’s important to stay informed so you can make the best decisions for your investments. Now let’s shift back to the bigger picture for a moment. What makes DFW such an attractive market overall? Well, it’s more than just the real estate market itself. It’s the quality of life, the diverse economy, the pro business environment.

It’s a place where people want to live and work. And that’s a key factor to consider when evaluating any investment opportunity. Right. Because a strong and growing economy is going to support a healthy real estate market. And we’ve seen this in action with companies like Yum Brands. Yeah, they moved their corporate offices from Louisville to Plano, which shows just how much confidence they have in the region.

It’s a testament to the strength and potential of the DFW market. So as we’ve seen, there’s a lot happening in the DFW commercial real estate market. It’s a dynamic and exciting time to be an investor. So as we wrap up our deep dive into the DFW commercial real estate market, you know, it’s important to emphasize that.

Yeah, what’s that? Well, it’s the importance of seeking expert guidance when navigating this landscape. Yeah, it’s definitely a complex market with a lot of moving parts. Especially in a market as dynamic and as diverse as DFW. Having a trusted partner can make all the difference. Right, and at Eureka Business Group, that’s what we pride ourselves on, being that trusted partner for our clients.

Yeah, we specialize in the retail sector. And have a deep understanding of all the trends and challenges and opportunities. We’re constantly analyzing data and monitoring developments to give our clients the most relevant and insightful information. So whether you’re looking to acquire a property, or reposition an existing asset, or just stay informed about the market.

We’re here to guide you every step of the way. Because at the end of the day, knowledge is power. And we’re committed to empowering our clients with the knowledge they need to make smart decisions. So as you consider your next move in the DFW commercial real estate market, remember that Eureka Business Group is here to support you.

We’re passionate about helping our clients succeed. And we’re confident that our expertise can help you reach your real estate goals. Thanks for joining us on this deep dive into the DFW commercial real estate market. We hope you found it informative and maybe even a little bit entertaining. And if you have any questions about the retail market in DFW, or anything else real estate related, please don’t hesitate to reach out to us at Eureka Business Group.

We’re always happy to help. Until next time, happy investing everyone.

 Welcome to the deep dive where we take a look at what’s happening in DFW, commercial real estate and beyond. It’s Valentine’s day, but today we’re ditching the chocolates and roses and talking about something you really care about making smart decisions in the DFW commercial real estate market. We’ve got some big things to talk about today.

A 750 million project that’s changing Plano DFW beating out Phoenix for the number two spot in the nation for bill to rent projects. Wow. And We’re going to see if b malls are really dead or not. Here to help us understand all of this is our expert. Glad to be here. Let’s jump in. Okay, let’s get started with the huge Haggard Farms development.

Okay. This 750 million project in Plano is at Spring Creek Parkway and Parkwood Boulevard. You know where that is. Yeah, I know it. Prime location. And it’s a great example of how popular these mixed use developments are right now. Yeah, they’re 200, 000 square feet of retail space. Huge. 700 multifamily residences.

A boutique hotel. offices and even more retail. Plus they’re putting in 10 acres of green space. Sounds nice. The retail should be done in about 14 months. Okay. And the residence is in about 20. The developer, Stillwater Capital, is starting with commercial amenities this summer, early summer. Oh, wow. So that means that they’re looking at retail as like the main driver of this whole thing.

Yeah, that’s what it seems. So they’re probably gonna get All sorts of different tenants in there, which is going to bring up the value. Makes sense. And you know, this all ties in with what we’ve been seeing lately with multifamily housing doing better than other types of real estate. Absolutely.

Investors are really interested in multifamily right now. Rents are strong. There’s not a lot of new supply. It’s a good investment. Makes sense. Plus, now that interest rates are up, it’s harder to buy a house. Yeah, it’s tough. So, people are renting more, which is good news for people who own rentals. Okay, let’s switch gears and talk about something else that’s hot right now.

Build to rent, or BTR for short. Okay. Get this, DFW is now number two in the country for BTR projects, and we’re even ahead of Phoenix. Really? I did not know that. Almost 8, 500 projects under construction in DFW. Wow. And for all of Texas, there are over 22, 000 BTR projects going on. That’s like 56 percent more than Arizona.

Wow. And a lot of this is happening because mortgage rates are so high, it’s hard to buy a house, especially for first time buyers. Right. People also seem to like the flexibility of renting, especially after the pandemic. Yeah. In DFW, we see a lot of BTR in Dallas, Fort Worth, McKinney, Princeton. Makes sense.

And get this. A third of the BTR projects in DFW are all part of one development, Living Fully Orchard Farms. Wow. One development. Yeah. So this is something that investors are really thinking about. Yeah. Because with all this new supply, will rents keep going up? Some people think they will, but others think they might slow down because of things like Construction slowing down.

Yeah. Materials costing more. Yeah, it’s hard to say for sure. You’ve got to watch things closely. It’s a really interesting time. It is. Okay, let’s move on to retail. Specifically those b malls. You know, the ones that are usually anchored by a department store. They’re not doing so well these days. Yeah, not so hot.

So, the big question is, are they done for or can they come back? Hmm. Good question. Okay. So let’s talk about this mall grading system for a sec. Okay. You’ve got A malls, which are like the top tier, right? Right. The best tenants doing really well. Then you’ve got B malls. Okay. Those are kind of in the middle.

And then C malls. Okay. Those are struggling. And there’s this company called Green Street. They’re like the experts in commercial real estate. Okay. They’re saying that for most malls that are graded B or lower, The future’s not looking good. Oh, wow. Yeah. They think a lot of them are going to be changed into something else over the next ten years.

Like, maybe apartments or offices. Interesting. So, why are these b malls having such a hard time? Well, you know, department stores are closing left and right. Yeah? And when they leave, it’s like a domino effect. Other stores close. Less people come to the mall. It’s a mess. Yeah, it’s tough. And then you’ve got online shopping.

That’s not helping either. Definitely not. People are buying more and more stuff online. So it’s a tough spot for BMalls. It is. But there might be some opportunities there for investors who know what they’re doing. Yeah, potentially. Like you said, maybe converting them into something else. Right, right. Or maybe finding those emerging brands, the ones that are growing.

They might be looking for space. Yeah, could be. A malls are full, so maybe they’ll look at B malls. Maybe. And there are some signs of this happening in DFW, Simon Property Group, they own a lot of malls. Yeah, I know them. They’re investing in b malls here. They’re trying to get those up and coming brands.

That’s smart. Yeah, and they’re putting money into the malls themselves, trying to improve them, make them nicer for shoppers. Okay. So that’s a sign that maybe there’s hope for some of these b malls. Yeah, maybe so. Okay, let’s zoom out and look at the bigger picture now. Construction costs went way up in January.

They did? Yeah. And that’s because of The new Trump tariff on imports. Contractors are buying everything they can now before prices go up even more. That’s a big deal. So what’s that going to mean for consumers? You think prices are going to go up? Some economists think so. Okay. And then you have Jerome Powell, the Federal Reserve Chairman.

He said they don’t need to lower interest rates anytime soon. Oh, wow. Which means that borrowing money is going to stay expensive at least for a while. Yeah. And that affects both development and investment. It makes it more expensive to build new projects. Right. And it can make investors less likely to put money into new projects.

Yeah, definitely. So, understanding all of this is really important. For anyone who’s involved in DFW real estate, it doesn’t matter if you’re a developer, an investor, or a tenant, these things are going to affect you. You got that right. It’s a lot to keep track of. Yeah. But that’s why we’re here, right?

Trying to make sense of it all. Exactly. Yeah, exactly. It’s a wild ride out there. Speaking of things changing, let’s talk about how they’re designing multi family properties these days. It seems like they’re really focusing on the people who are going to live there. Yeah, it seems like a much more, uh, User centric approach.

Totally. Architects and designers are like, actually listening to what people want. So what does that mean? Like, what are they actually doing? Okay, so you see bigger community spaces with like, awesome gyms and areas just for like, wellness stuff. Interesting. And then outdoors, you’ll see more rooftop patios and stuff and courtyards with landscaping and all that.

And pet stuff is huge now, dog parks, places to wash your dog. I see. It’s all about what people want these days. They want community, they want to feel good, and that’s what these places are trying to do. Makes sense. So it’s not just about those shared spaces, right? Like, what about the individual apartments themselves?

Yeah, so there’s this big push for personalization. Like, you can actually customize your apartment. Oh, wow. Yeah. Choose your paint colors, the fixtures, maybe even the flooring. So, it feels more like your own place. Interesting. So, it’s all about that unique, personalized living experience. What about, like, the design, the look of these places?

What are the trends? Okay. So, with colors, it’s bold but warm. Like, you’ll see mustard yellow, terracotta, blues. Oh, that’s interesting. So it’s not that minimalist thing anymore. Minimalism is still there, but people want a little more warmth, so you’ll see soft colors and natural stuff like wood and metal, and then like textures, you know, with rattan and leather.

Okay. And of course, sustainability is still huge, right? Oh yeah, absolutely. Lots of recycled and eco friendly materials like countertops made from recycled glass or furniture from reclaimed wood. And the fabrics too are more eco conscious. It’s good for the environment and people like it. Speaking of changes, let’s talk about working from home and how that’s impacting commercial real estate.

Yeah, that’s a big one. There’s the study from NYU in Columbia. They looked into this whole thing and basically working from home or even just part time, it’s causing office space demand to go down. Really? That makes sense, but I wonder how much of a difference it’s making. Oh, it’s a big difference. Look at New York, for example.

Office values there went way down during the pandemic because companies just needed less space. Wow. Yeah, same thing in other cities, San Francisco, Miami, Houston. It’s like a whole new way of thinking about offices. So what does this mean for the future of office buildings? Well, this study suggests that office owners, they gotta adapt.

Like, maybe convert some of that empty space into apartments. Two birds, one stone, right? You get more housing and deal with the empty offices. That’s clever. Anything else they can do? Yeah, they gotta be more flexible with leases. Okay. Offer more amenities, make the buildings more sustainable, that kind of thing.

It’s a tough time for offices, but there are ways to make them work. Yeah. Okay, let’s switch gears again. Data centers. They’re booming right now, but that’s causing its own set of issues. Right. All those computers, they use a ton of electricity, putting a strain on the power grid. And, interestingly, more and more data centers are turning to natural gas for power.

Oh, really? Why natural gas? Well, natural gas plants are reliable. Okay. They can be built pretty quickly, and they’re better for the environment than other fossil fuels. Okay, so it’s about having enough power, but also trying to be a little more eco friendly. Yeah, exactly. Are there companies doing this right now?

Oh yeah, Vantage Data Centers, they’ve teamed up with an energy company, VoltaGrid. Okay. And they’re putting in like a gigawatt of natural gas power at their data centers. All across North America. Northern Virginia, Phoenix, Montreal, Quebec City, you name it. Wow. And there’s another company, EdgeConnex, they’re building a natural gas plant near Columbus, Ohio, just to power their data center there.

It’s pretty amazing to see how they’re solving this energy problem while trying to do it in a responsible way. Yeah. Okay, let’s bring it back to DFW. You know, we were talking about Build to Rent earlier and how DFW is number two in the country for those projects. Right, it’s huge here. So, why is that? Is it just because they’re popular everywhere, or is there something specific about DFW?

It’s a few things. First, it’s harder to buy a house now. Right, those high mortgage rates. Exactly. And then, people want more flexibility. They don’t want to be tied down. Yeah, especially younger people. Right. And then, DFW has a ton of jobs. People are moving here and they need places to live. Makes sense.

Where are we seeing the most build to rent projects? Oh, Dallas, Fort Worth, McKinney, Princeton, those areas. Okay. And remember that crazy stat, a third of the BTR projects in DFW are all in one development, living fully orchard farms. Yeah, that’s wild. So what makes these build to rent places so popular?

They’re kind of like apartments, right? They have pools, gyms, all that. But then they also have backyards. Oak. And garages and all the smart home stuff. It’s like the best of both worlds. Apartment living with the space of a house. Yeah, I can see why people like them. Okay, let’s move on to something that could be a real game changer for retail.

Okay, what’s that? Drone delivery. Oh yeah! Walmart is going to start delivering stuff by drone. No way! Really? Where? In East McKinney. They’ve got the zoning approval and everything. Wow! So they’ve got this whole system. A drone carries the package to like A drop off point. Right. And then this little robot, a delivery droid, takes over from there and brings it to your door.

Pretty cool. So what are they going to be delivering? At first, it’s going to be like the things you need right away. Groceries, medicine, stuff like that. Makes sense. This could totally change how we shop. I mean, imagine getting your stuff delivered in minutes. Crazy. Are other companies already doing drone delivery here?

Yeah, Zipline. They deliver medical supplies. They’ve been doing it in DFW for a while now. Oh, yeah. I’ve heard of them. It’s interesting to see how drone delivery is going from, like A cool idea to something real and Walmart getting involved, that’s huge. Okay. Let’s shift gears again. Let’s talk about the northern part of Collin County.

That area is really growing. Yeah, it’s booming up there. Like, Anna, Texas. They’re building this huge new community there, Liberty Hills. Oh yeah, I’ve heard of that. What’s driving all this growth up there? Well, Anna’s population is supposed to double by 2030. Wow, that’s a lot of people. So they need more houses, more businesses, everything.

And that’s where these big developments come in, like Liberty Hills. So what’s so special about Liberty Hills? What are they building there? It’s over a thousand acres, right along Highway 75. They’re going to have all sorts of houses, apartments, amenities, and retail space. It’s going to be its own little town, basically.

Wow, that’s ambitious. Yeah, and it’s not the only big project happening in Ananda. There’s also Shirley Farms. Shirley Farms. It’s a 1. 5 billion project. They’re building 3, 000 houses. Lots of green space and even a working farm a farm. Yeah, a real farm. That’s really cool It’s amazing how these places that used to be like out in the country are turning into cities.

It’s wild. Mm hmm. Speaking of wild What about the economy interest rates are up inflation all that stuff our investors worried, of course, they’re paying attention Yeah, but the market here, especially in DFW. It’s holding up pretty well Why is that? Well, the economy here is strong. Yeah. Lots of jobs.

People are still moving here. So there’s still demand for real estate. Okay. So it’s not all doom and gloom. No. Not at all. But. Investors are being smart. They’re focusing on things that are doing well, like apartments and industrial properties. They’re not just jumping into anything, they’re doing their homework.

So what would you tell someone who’s thinking about investing in DFW right now? Do your research. Okay. Know the market, understand the risks, and that’s where a company like Eureka Business Group can really help. Right, they’re the experts. Exactly, they can help you make smart decisions. Okay, let’s talk about something near and dear to Eureka Business Group.

You know, we talked about e commerce and how retail is changing, but there’s something else happening. Something big. Oh yeah, the metaverse. Yeah. It’s not just a buzzword anymore. It’s real. And it’s starting to change how we shop. I still don’t really get it. What is the metaverse exactly? It’s like a bunch of virtual worlds connected together.

You can hang out with people, go to events, shop, play games. All virtually. So how does that affect shopping? Well, stores are opening up in the metaverse. Really? Yeah, virtual stores and showrooms. You can walk around, check out the products in 3D. You can even try clothes on, see how furniture looks in your virtual house.

Sounds kind of like a video game. It is kind of like that, but it’s way more immersive than just shopping online. So are stores actually doing this? Yeah, Nike has a whole world on Roblox. It’s called Nikeland. Okay. You can play games, hear out, and buy Nike stuff. Gucci is selling Virtual handbags and shoes that you can only get in the Metaverse.

It’s pretty wild. So why is this good for businesses? Well, they can reach new customers, especially younger people who are all about the Metaverse. Okay. It’s also a cool way to build your brand, create experiences you couldn’t do in real life. Makes sense. And what about shoppers? What’s in it for them?

Well, it’s fun. It’s a totally new way to shop. You can check out products in 3D, hang out with brands, go to events, all virtually. So it’s a win win. It could be. But it’s still early days, you know. There are some things to figure out, like how to make it accessible to everyone, the technology, privacy stuff.

Right. But things are moving fast. It’s definitely something to keep an eye on. Definitely. Okay, let’s talk about another trend that’s blurring the lines between online and offline. Omni channel retail. Right. Yeah, it’s like everything is connected. Exactly. It’s about making the whole shopping experience seamless.

It doesn’t matter if you’re in the store, on their website, on their app. It should all be connected. Okay, so can you give me an example? Sure. Let’s say you’re on a store’s website. Okay. And you put some stuff in your cart. Later that day, you go to their store to actually see the stuff. With Omnichannel, you can just open your cart on your phone right there in the store.

I see. Try the stuff on, buy it right there, however you want to pay, credit card, phone, whatever. It’s all connected. That makes a lot of sense. So it’s all about the customer. Yeah, it’s about giving them what they want, when they want it. Okay, so, is this good for stores? Oh yeah, it can mean more sales, happier customers, and they get more information about you, so they can give you better recommendations and stuff.

That’s pretty cool. What about for shoppers? What are the benefits? It’s convenient, it’s flexible, and it’s more personalized. You get what you want, how you want it. Makes sense. Are there stores doing this well right now? Sephora is a good example. They’ve really nailed this omni channel thing. Oh, okay. How so?

They have a great app. Right. You can browse products, book appointments, even try on makeup virtually. Ah. And their loyalty program, it works online and in store. They’ve even connected their inventory so you can order online and pick up in store or the other way around. That’s smart. So they’ve really thought this through.

Yeah, and it’s working for them. It shows how powerful this omni channel thing can be. So for investors looking at retail, what should they keep in mind? Things are always changing in retail. Right. You gotta pay attention to the trends, like this metaverse thing, omni channel, and how the online and offline worlds are merging.

Location is still key. The mix of stores in a property and the overall experience it offers, that’s all important. Okay, good advice. Let’s talk about something that’s really changing the whole DFW landscape, the airport. Oh yeah, DFW Airport is getting a major upgrade. It’s a huge project. What’s going on there?

They’re adding a whole new terminal, Terminal F. Wow. It’s gonna cost three billion dollars, have 24 new gates, and it’ll be connected to the other terminals by that SkyLink train. That’s a lot of work. Why are they doing all this? Well, DFW is one of the busiest airports in the world. Right. They need more space for all the passengers and flights.

This will also help them compete with other airports and bring in new airlines. It’ll really solidify DFW’s place as a global airport. So what does this mean for DFW, for the people who live and work here? Jobs. Lots of jobs. Okay. It’ll boost the economy, bring in new businesses. Right. And it’ll make it easier for people to get in and out of the region.

It’s a big deal for DFW. Okay, let’s talk about another big issue for investors. Offices, right. They’ve been having a tough time. Yeah, but it seems like things might be turning around. Yeah, maybe. Companies are realizing that working in person is still important. Yeah, for collaboration, culture, all that.

Exactly. So, people are coming back to the office, at least some of the time, but it’s not the same as before the pandemic. Right. Offices are changing, they’re more about collaboration, they’re more flexible, and they have better amenities. So it’s not just rows of desks anymore. Nope. What kind of offices are doing well?

The Class A buildings? It’s the really nice ones in good locations. Those are the ones that companies want. They have all the cool stuff and a good address which helps them attract and keep good employees. Any examples of that here in DFW? The Star in Frisco is a good example. It’s a mixed use development and it’s got the Dallas Cowboys.

Headquarters there, plus other offices and a whole entertainment district. It’s a cool place. It shows how offices can work when they’re part of something bigger, where people can live, work, and play. So for investors looking at office space, what’s the advice? Be picky. Location, amenities, who’s already there, that’s all important.

And think about the future. Look for places that can adapt to how people work now. Okay, good advice. Now let’s talk about something that’s essential for any Growing region infrastructure, right? You got to have good infrastructure if you want to thrive. So what’s happening in TFW? Well, I already talked about the airport, but there’s more TxDOT the Texas Department of Transportation is spending billions to improve the roads and highways.

Okay, less traffic better flow safer roads It’s all good What about public transportation? DART, the light rail system, it’s getting bigger, connecting more places, giving people options besides driving. Makes sense. So people can get to work, go out, all that. Exactly. All this infrastructure, it’s good for the economy, and it makes DFW a better place to live.

It’s definitely an investment in the future. Speaking of the future, we’re seeing a lot of companies moving their headquarters to Texas. Oh yeah, it’s like a corporate migration. And DFW is a big winner. What’s the draw? A few things. Texas is good for business. Okay. Lower costs, great workforce. Yeah. And no state income tax, that’s a big one.

Definitely. Yeah. Any examples of companies making the move? Oh, yeah. Caterpillar, the construction equipment company, they moved to Irving from Illinois. Okay. And Charles Schwab, the financial giant, they moved from San Francisco to Westlake near Fort Worth. Wow, that’s a big move. It is. It just shows how attractive Texas and DFW are right now.

It’s exciting to see all this growth. But all these new people and companies need places to live. Exactly. There’s a housing shortage. Yeah. And developers are trying to keep up. So where are we seeing the most construction? Frisco, McKinney, prosper. They’re booming. Yeah. Those are hot areas. Good schools.

Nice communities. Close to jobs. It’s a good package. And what about the cities themselves? Dallas and Fort Worth. Oh, they’re doing well too. Lots of new apartments, condos, mixed use stuff downtown. Okay. It’s good to see growth all over the region. It means there are options for everyone. So what’s your take on the DFW real estate market right now?

It’s a good market. Okay. It’s strong. There are opportunities, but it’s not without its challenges. Right. The economy is good. People are moving here. There’s development happening, so the future looks good. Okay. But you have to stay informed. Know what’s going on and make smart decisions. That’s where Eureka Business Group can help.

Exactly. They’re the experts. They can guide you through it all. Let’s take a break, and when we come back, we’ll look at a specific development that really showcases how DFW is growing and changing. Welcome back to the Deep Dive. We’ve talked about so much today, from those big trends to what’s happening right here in DFW.

Now let’s zero in on one project that really shows how dynamic this market is, the fields in Frisco. Yeah, the fields, that’s a huge project. 2, 545 acres. It’s massive. It’s mixed use, like we’ve been talking about. Yeah, it seems like developers are all about these mixed use projects these days. Mm hmm.

Creating these destinations where you can do everything. Yeah, it’s the live work play concept. So what’s happening at the fields? What makes it so special? Well, they’re building all kinds of housing, from houses to apartments, and then there’s office space. Retail, restaurants, entertainment, parks, trails, you name it.

Wow, that’s a lot. It is. And get this, they’re putting in a 17 acre lagoon. A lagoon? Yeah, right in the middle of this whole thing. It’s going to be like a waterfront district. That’s pretty cool. So it’s like its own little city. What’s the idea behind all this? They want it to be walkable, connected, you can live there, work there, play there, everything.

Sounds like a great place to live. And Frisco’s the perfect place for something like this. It’s been growing like crazy. It has. And the fields is a big part of that growth. It’s bringing in people, businesses, everyone. Frisco’s becoming a real powerhouse. It’s amazing to see. Okay, let’s zoom back out again and talk about something that’s affecting commercial real estate everywhere, ESG.

ESG, yeah, that’s Environmental, Social, and Governance. It’s a big deal. It is. Investors are really focused on it now. It’s not just a side thing anymore. Nope. It’s front and center. Companies are being judged on it. Investment decisions are being made based on it. So what does it mean, really? What are we talking about when we say ESG?

It’s about how a company affects the environment, how it treats people, and how it’s run. Investors want to see that a company is thinking about these things, that it’s doing things the right way. Okay, and how does this apply to commercial real estate? It’s changing everything. How buildings are designed and built, how they’re managed, even how people invest in them.

So, green buildings, solar panels, that kind of thing. Exactly. People want buildings that are good for the environment, that save energy, reduce waste, and are healthy for the people inside. Makes sense. Are developers actually doing this? Oh yeah, a lot of them are getting LED certification for their buildings.

LED, okay. Yeah, it’s like a rating system for how sustainable a building is. And you see more solar panels, green roofs, that kind of stuff. It’s good for the environment, and it can save money in the long run. That’s great. Okay, let’s switch gears one more time and talk about something that always makes investors nervous.

A recession. Yeah, a recession. Are we heading for one? And if so, what’s it going to do to the commercial real estate market? Well, The economy goes up and down, that’s just how it works. So a recession is always a possibility. So are there signs that one is coming? It’s hard to say. Some things look good, some things don’t.

Right. Inflation is going down, but interest rates are still high. The job market is strong, but things are slowing down a bit. Okay, so it’s a mixed bag. But if we do have a recession, how will that affect real estate? It really depends on the type of real estate. Some sectors are more sensitive to the economy than others, like retail, that usually takes a hit when people aren’t spending as much.

Makes sense. What about offices? Offices are already dealing with people working from home. Right. So a recession could make things even tougher for them. What about industrial? That’s been doing really well. Industrial tends to hold up better during a recession. Okay. People still need warehouses and logistics, especially with all the online shopping.

So it really just depends. Yeah, it does. What should investors do? Don’t put all your eggs in one basket. Right, diversify. Exactly. Invest in different types of real estate in different places. Okay. And be smart. Do your due diligence. Make sure you understand the risks before you invest. Think long term.

Good advice. So as we wrap up this deep dive into the DFW commercial real estate market, what are the big takeaways? DFW is a strong market. It’s growing and there’s a lot of opportunity here. Okay. But it’s also complex and constantly changing. You got to stay informed, understand what’s happening locally, and be careful about where you put your money.

And that’s where Eureka Business Group can help. They’re the local experts. Exactly. They can help you make sense of it all and find the right opportunities. That’s right. Well, thanks for joining us on this Valentine’s Day edition of the deep dive. We had a lot of fun exploring the DFW commercial real estate market with you.

We’ll be back soon with another episode until then happy investing.