Commercial Real Estate News – Week of February 14, 2025

Commercial Real Estate News – Week of February 14, 2025

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Transcript:

 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.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of February 07, 2025

Commercial Real Estate News – Week of February 07, 2025

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Transcript:

 Welcome to the deep dive where we really try to get into some of the more interesting trends that are shaping the commercial real estate world, right? And today, we are laser focused on retail, what’s happening right now in early 2025. Yeah. And everything from, the surprising resilience of brick and mortar to the rise of the resale market.

We’re gonna touch on a few notable things happening right here in the DFW Metroplex, of course. Absolutely. And ultimately we’re going to try to explore how these trends could impact you. Whether you’re, a potential investor, or a business owner, or just somebody who’s, interested in this kind of stuff.

One of the things that I think is really fascinating is that, despite the pandemic’s push toward e commerce, physical retail is proving it’s far from dead. Yeah, it’s really interesting to see, we all thought, or a lot of people thought, that, the retail apocalypse was upon us, that everybody was going to be buying everything online.

But what’s fascinating is that, as people have come out of their COVID cocoons they’re wanting to get back out. They’re wanting to go into stores. They want to have that experience again. Those retail apocalypse pronouncements we’re hearing, a few years back, a bit premature for sure.

While the pandemic certainly accelerated online shopping, we’re now seeing, a return. to in person retail. Yeah. And and even expansion in some sectors. Absolutely. And it’s it’s like a reversion to the mean, people tried the online thing exclusively and they’re missing that in person experience.

Yeah. Yeah, for sure. For sure. Take Jim shark, for example, this this UK based. activewear brand that started online is now strategically expanding into physical stores. They recently opened a permanent location in New York City after a successful pop up. Yeah. And now they’re setting their sights on new markets like Dubai.

This move by Gymshark really highlights, I think, a growing trend of online brands recognizing the value of a physical presence. Yeah, they’re looking for that brand building and that customer experience. It’s not just about selling goods anymore. It’s about creating a Tangible brand experience that really resonates with customers and, even established retailers are adapting as well.

Lululemon, for instance, aims to strike a balance between their physical and their online sales, recognizing the importance of both channels for reaching different customer segments. And then Footlocker is another great example. They’re focusing on transforming their stores into community hubs, right?

By offering unique experiences that go beyond just browsing merchandise, so this evolution of brick and mortar retail. I think presents an interesting opportunity for investors. Absolutely. It’s no longer just about investing in a property. It’s about understanding which retailers have the right strategies.

To really thrive in this new landscape. Yeah. Identifying those retailers who are successfully blending online and offline experiences and catering to those evolving customer preferences that’s crucial for making smart investments these days. Absolutely. Absolutely. So let’s shift gears to another trend that’s reshaping retail.

And that’s the remarkable rise of resale. Yes. Particularly the apparel market. Yeah. Secondhand clothing is booming. Driven by Millennials and Gen Z. Yeah. The younger generations. They’re drawn to its sustainability. And the thrill of finding unique items. And this isn’t, this isn’t just a passing fad, right?

Yeah. The resale market is projected to reach a staggering 53 billion by 2025. That’s right. And this growth is impacting, You know, the real estate landscape as well. Resale chains like Plato’s Closet, Once Upon a Child are expanding rapidly, often taking up space in, what we call Class B shopping centers.

Yeah. And landlords are really welcoming these tenants. They’re recognizing their ability to attract that consistent foot traffic and revitalize spaces that might have been struggling in the past. And what’s really intriguing is that even traditional retailers are taking notice of this resale boom.

Yeah. Many are launching their own resale programs or partnering with existing platforms to tap into this growing market. Yeah they’re seeing the writing on the wall. A recent survey by ThredUp, that’s a popular online resale platform, found that nearly three quarters of traditional retail executives Feel the pressure from the growth of resale.

Wow. So brands like American Eagle, Levi, Banana Republic they’re either launching or have already launched their own resale programs. Wow. Wow. So this blurring of lines between traditional and resale. Retail raises an interesting question. Will there be room? for both models in the long run?

I think the answer is likely yes. Okay. But the relationship between the two is going to continue to evolve. We can probably expect to see a more dynamic and perhaps even collaborative retail landscape Okay. in the future. And really what that means is that both the traditional retailers and the resale businesses, they need to be adaptable.

And they need to be innovative. Yeah. to stay ahead of the curve. Now let’s turn our attention to a region that’s really standing out. In the retail sector, and that’s Texas, specifically the four largest metros, Dallas Fort Worth, Austin, Houston, and San Antonio. These markets are demonstrating strong retail performance, bucking some of those national trends.

Yeah. And a key factor that contributes to their success is what we call right sized retail inventory. Okay. What that means is that there’s a healthy balance between supply and demand. Okay. Unlike some areas that experienced overbuilding in the past. So this balance, it helps to maintain a vibrant retail sector.

Yeah. Where businesses can thrive and investors can find some promising opportunities. Okay, so grocery stores, particularly H E B, are playing a significant role in driving new construction in Texas. This really aligns with the broader trend of grocery anchored retail remaining resilient, even during those times of economic uncertainty.

Okay. People still need to eat. They still prioritize those essential shopping needs. And those grocery stores, they serve as anchors that attract other businesses to the shopping center. Yeah, for sure. For sure. And DFW is a prime example of this. We’re seeing a surge in in new. grocery store openings with H E B expanding its footprint alongside those, established players like Sprout and Trader Joe’s.

Yeah. So this influx of grocery stores, not only does it benefit the retailers themselves, but it also creates these opportunities for complementary businesses to, to flourish in their shopping centers. It’s a positive ripple effect that strengthens the overall retail landscape. Now this brings us to a crucial consideration for any. Real estate project. And that’s the capital stacks. Yes. Essentially the financing behind these developments. And it’s interesting to note that even with those higher interest rates we’ve seen in early 2025 there’s still liquidity available.

for commercial real estate projects. That’s right, and you know what’s even more positive is that borrowers are finding that they have more options because of that increased competition among lenders. So this competition is actually driving more favorable terms and deals for those who are seeking financing.

So we’re seeing private equity step in. to fill the gap. Yeah. In cash neutral refinance. Which I think indicates a shift in the lending landscape. Yeah. New players are emerging and potentially changing the dynamics of CRE finance. Okay. Okay. So This influx of capital coupled with predictions of declining interest rates later in the year could create a window of opportunity for investors.

It’s a great time to be thinking about getting into the market. Yeah. Yeah. And it highlights the importance of planning ahead and building relationships with those lenders to be ready to capitalize when market conditions are favorable. Yeah. Speaking of opportunities let’s let’s zoom in on a specific city within the DFW or Metroplex that’s experiencing exceptional growth.

And that’s Frisco, Texas. Frisco is booming. Yeah. This city is witnessing. Like a remarkable surge in development driven by, this thriving innovation ecosystem and major corporate relocations. And their strategic planning and focus on attracting those high quality employers is really paying off.

They’re attracting both businesses and residents leading to a really booming real estate market. Yeah. The numbers are truly impressive in 2024 alone. Frisco saw the equivalent of the Empire State Building’s worth of space leased. Wow. That’s incredible. This speaks volumes about the city’s attractiveness for both businesses and residents.

If you connect this to the bigger picture, Frisco’s growth really reflects a broader trend of population and economic activity shifting to the Sunbelt. This region’s experiencing this really dynamic growth and cities like Frisco are at the forefront. Now before we move on to some of the other fascinating developments in the retail landscape.

Let’s take a closer look at the changing world of malls and shopping centers. Yeah, that’s a big one. It is, and what’s particularly interesting is how some of the traditional like retail giants are adapting to evolving consumer behavior. Walmart, for example, known for its, vast big box stores is making a That’s a kind of surprising move that they’re acquiring a mall near Pittsburgh. They are. They purchased the Monroeville Mall, an annex, and there’s speculation that they might open one of their, signature big box stores within the mall itself.

So it’ll be fascinating to see how they re imagine this space and what this means for the future of malls. This bold move by Walmart really demonstrates that even the largest retailers are recognizing that they need to experiment, they need to adapt. The future of retail might lie in creating these mixed use destinations that offer a diverse range of experiences, not just shopping.

Imagine a mall that seamlessly combines the convenience of a Walmart super center. With specialty shops, restaurants, entertainment venues, and perhaps even residential spaces. Yeah. It’s a compelling vision. It is. And it’s not just Walmart making waves in the in the mall space.

Canadian retail REIT Primaris recently closed two major deals, acquiring full ownership of a mall in Ontario and 50 percent ownership of one in Alberta. So these acquisitions, they add. Like over 1 million square feet of retail space to their portfolio. That’s a big bet on malls. Yeah. Yeah. These strategic moves, I think they signal a strong belief in the future of, those enclosed shopping centers.

It seems investors are seeing the potential to revitalize these spaces and transform them into those vibrant community hubs. Exactly. And speaking of revitalization. Yes. We’re also witnessing a kind of resurgence of interest in brick and mortar bookstores. Really? Yeah. Barnes and Noble is planning to open like over 60 new stores this year, which is a record setting number for them.

Yeah. So this is a positive sign, I think, for the bookselling industry, which faced some challenges in recent years. Yeah. So it’s encouraging to see this. This comeback, bookstores offer like this unique browsing experience that’s simply impossible to replicate online.

You can’t smell a book online, right? And they often serve as these community gathering places, fostering a love of reading and hosting events that bring people together. So this resurgence, I think it underscores the the enduring appeal of those physical stores and the power of, creating an experience that goes beyond just purchasing a book.

A product. Absolutely. It’s about more than just the transaction. And on a slightly different note, the the children’s clothing retailer, Bye Bye Baby. Yeah. Is getting a new lease on life. Okay. After being acquired by Beyond Inc. for five million dollars. Oh, wow. Yeah. So it appears that Beyond Inc.

sees potential. Yeah. In both the online and the brick and mortar presence of of Bye Bye Baby and Bye Bye Baby. The brand has a strong future in this evolving retail landscape. So this is, positive news, I think, for parents and fans of the brand who are, concerned about its future.

It highlights the resilience, I think, of well established brands that adapt to changing market dynamics. And speaking of international retail South Korea’s CJ Olive Young. Okay. Is making its debut in the U. S. market. Okay. With its first store opening in Los Angeles. This expansion is fueled by the, the growing popularity of Korean beauty products here in the U.

S. So it’ll be interesting to, to observe how American consumers respond to this new retail concept. Yeah. And whether it sparks a broader trend of international brands entering the U. S. market. The entry of international brands like C. J. Olive Young really adds to the diversity of the retail landscape, and it introduces consumers to these new products and new experiences.

And, while some retailers are expanding, others, unfortunately are facing challenges. The discount retailer, Bargain Hunt, recently filed for bankruptcy, and is shutting down all 92 of its stores. That’s a shame. Yeah. This serves as a reminder of, The competitive nature, I think, of the retail industry and how some businesses struggle to, to adapt to evolving consumer preferences and and economic conditions.

Yeah. It really underscores the importance, I think, of. Of staying ahead of the curve and constantly innovating to, to remain relevant in the eyes of of those consumers. Absolutely. The closure of Bargain Hunt is a loss for its employees and customers, who enjoyed its unique treasure hunt shopping experience.

Yeah. But it also presents an opportunity potentially for other retailers to fill the void and cater to the needs of Bargain Hunt’s former customer base. Yeah. Yeah. One retailer’s Misfortune is another one’s opportunity. So the retail landscape is in constant flux, with both, successes and challenges.

Yeah. And those who can adapt and innovate and understand those nuances of the market are more likely to thrive. Absolutely. As we move deeper into 2025 we’ll continue to track these trends and analyze their impact on the market. Definitely. So speaking of of the market, let’s let’s take a closer look at some recent trends.

data on single pennant retail sales volume and and cap rates. These metrics provide valuable insights, I think, into the current state of the market and can inform investment decisions. And I’m always interested to see, how these figures are fluctuating because they can indicate emerging trends and and potential opportunities.

Absolutely. According to a recent report from Northmark, the single tenant net lease retail sector, it experienced both highs and lows in 2024 in terms of investment volume. Interesting. Interesting. So let’s break down those fluctuations a bit. What were the specific ups and downs that characterize the market?

The third quarter of 2024, we saw a significant jump in investment volume, reaching 2. 4 billion in transactions. Okay. So that represented a notable increase from the previous quarter. However, Okay. This momentum didn’t carry over. into the fourth quarter. So what happened in the fourth quarter that led to this change in momentum?

Investment activity just slowed down considerably. Okay. Total deal value for the year, it came in at 8. 6 billion. Okay. Making 2024 the slowest year for this sector in over a decade. Wow. So this slowdown, it can be attributed to several factors. Okay. Including rising interest rates. Yeah, that makes sense.

Higher borrowing costs can certainly make investors more cautious, because it affects their potential returns. Exactly. Rising interest rates make financing more expensive, which, which impacts an investor’s profitability. Yeah. And this leads to, greater selectivity in the deals they pursue.

And it’s not just interest rates that are influencing the market. Cap rates, which essentially, represent the rate of return an investor can. can expect on a property are also rising. Yeah. And the single tenant net lease sector cap rates have been steadily climbing in, in recent quarters.

Okay. And as of early 2025, they sit at 6. 74 percent on average. Okay. So this is a significant increase from the 6 percent mark. They hit earlier in 2024. So what does this rise in? And cap rates signify for investors? Essentially it means that properties are becoming relatively more expensive Okay.

Compared to their net operating income. Okay. So investors are having to pay more Okay. For that same level of income. So it, it appears that the the single tenant retail market is facing some headwinds right now. Yeah. With both, rising interest rates and cap rates. Yeah. Contributing to a slowdown in Yeah.

Investment activity. Yeah. That’s a fair assessment. However, it’s important to remember that single tenant net lease properties still offer several advantages that make them attractive to certain investors. So what are some of those inherent advantages that continue to draw investors to this asset class?

Single tenant net lease properties they often come with long term leases with stable tenants. They typically involve minimal landlord responsibilities and they offer predictable cash flow. Which can be really appealing to investors seeking stability and lower risk.

Okay. Okay, so despite those challenges, these inherent advantages of single tenant retail, they continue to attract certain investors. Absolutely. And it’s worth noting that the market is also being driven by positive trends, such as the ongoing expansion of those popular retailers Dollar General, Starbucks, Walmart.

These companies are investing in new store formats, technology and omni channel strategies to stay ahead of the curve. It’s interesting to see how those major players are adapting to this evolving retail landscape and their continued investment in, new store formats, technology and omni channel strategies.

I think it. It indicates a positive outlook for the future of retail. They understand that consumers still value Convenience, affordability, and a seamless shopping experience, whether it’s online or in store. And speaking of convenience and affordability let’s touch on another trend that’s gaining traction in the retail world.

And that’s the success of of dollar stores. Dollar stores are doing really well. Yeah. Dollar General, in particular is experiencing impressive growth. Yeah, they recently appointed a new executive vice president to oversee their expansion efforts. Okay. That really solidifies their commitment to growth.

Can you elaborate on, on, on Dollar General’s expansion plans? Yeah. And the strategy behind their their growth. Sure. Their focus is on national store expansion developing processes to improve efficiency and implementing initiatives to enhance their overall operations. So they’re also actively remodeling existing stores and relocating those underperforming locations.

So they’re not just focused on. Opening new stores. But also optimizing their existing footprint. Yeah. To maximize profitability. Exactly. And their efforts seem to be yielding positive results. Their latest earnings report. Yeah. Announced a 5 percent increase in net sales year over year.

Wow. Which is a very positive sign in the current retail environment. Yeah, for sure. For sure. Dollar General’s success, I think, it underscores that persistent demand for, those affordable and convenient shopping options, particularly in rural areas and smaller communities.

And this demand is likely to continue, especially if economic conditions remain uncertain. Consumers tend to prioritize those. of value oriented retailers when they’re, facing economic challenges. Absolutely. Now let’s turn our attention to another crucial aspect of the retail landscape, and that’s the transformative role of technology.

Technology is huge. Yeah. Technology is becoming, Increasingly essential for retailers of all sources. It’s no longer just about, having an online presence. Yeah. It’s about leveraging data. Artificial intelligence and automation. Yeah. Yeah. To create those personalized.

And seamless shopping experiences. Yeah. So many retailers are are investing heavily in these areas. What are some of the the key technological trends that you’re observing? Okay. In the in the retail sector? One, one major trend is the use of artificial intelligence to, to personalize product recommendations, optimize pricing, and improve inventory management.

Okay. Okay. AI’s ability to, analyze these vast amounts of data to understand consumer behavior and predict future trends it’s really quite remarkable. It is. Another, significant trend is the rise of cashierless checkout technology. Oh, yeah. This innovation allows shoppers to, to simply walk out of a store with their purchases without waiting in line.

And I’ve personally experienced this technology in a few stores. Yep. And it’s incredibly convenient. Yeah. It definitely enhances the shopping experience by, Streamlining the checkout process and from a retailer’s perspective, yeah. It can help to reduce labor costs, and improve operational efficiency. Yeah, no it’s evident that technology is playing a transformative role. It is in the in the retail industry and. Alongside this technological evolution, another exciting trend is the growing emphasis on experiential retail. Yeah, consumers are increasingly seeking experiences that that engage their senses and create these lasting memories rather than, simply purchasing products.

Many retailers are incorporating entertainment, dining, and social elements into their store designs. To create these immersive experiences. Yeah, they’re recognizing that they need to offer something, unique and engaging to draw those shoppers away from their screens and into their stores.

It’s fascinating to see how retailers are getting creative with their store concepts, creating spaces that are inviting, interactive, and memorable. This trend is likely to continue as retailers strive to, differentiate themselves and foster a loyal customer base. Yeah. Yeah.

Seems like the future of retail lies in, in finding the right balance between online and offline experiences, leveraging technology and providing both value and convenience to consumers. That’s it. That’s a great summation. The retail landscape is dynamic and constantly evolving, and those who can adapt, innovate, and understand the nuances of the market will be the ones who thrive.

Now as we delve deeper into the retail sector. Let’s let’s take a closer look at some of the specific challenges and opportunities that are shaping the industry in in 2025. All right. One of the most significant challenges as we’ve already discussed is the the rising cost of capital.

Interest rates, they remain relatively high. Yeah. Which makes it more expensive for retailers to, to finance their operations. You’re right. And expansion plans. And this is particularly challenging for smaller retailers. Yeah. Who may not have the same access to capital.

As their larger counterparts. Another challenge is the ongoing labor shortage. Oh, yeah. Retailers are finding it increasingly difficult to find and retain qualified employees, especially in a tight labor market. And this shortage is leading to higher wages and increased competition for talent, which can put pressure on retailers profit margins.

Absolutely. And on the consumer side, inflation continues to be a concern. And, consumers are becoming more, more prepared. price sensitive and are seeking ways to, to stretch their budgets. Yeah. And this puts pressure on retailers to maintain those competitive prices, which can be difficult in an environment of rising costs.

So it, it seems like retailers are facing a confluence of challenges, rising costs, labor shortages and inflationary pressures. A lot to juggle. Yeah. Yeah. But it’s important to remember, I think that amidst these challenges, there are also significant opportunities for retailers who can who can adapt and innovate.

Absolutely. So let’s shift our focus to those opportunities. What are some of the the bright spots on the horizon for the for the retail sector? One of the biggest opportunities, I think, is the continued growth of e commerce. Okay. Online sales are still on the rise.

And this trend is projected to continue. So retailers who can create a seamless and personalized online shopping experience. Are well positioned for success. Absolutely. Another opportunity lies in the increasing demand for convenience. Okay. Consumers are busier than ever and are looking for ways to save time and simplify their lives.

So retailers who offer convenient shopping options such as curbside pickup, home delivery and mobile ordering. Yeah. are meeting this demand head on. And finally, there’s a growing trend towards sustainability. Consumers are becoming more, more environmentally conscious.

Yeah. And are seeking brands that, that align with their values. Okay. So retailers who can embrace sustainable practices and offer those eco friendly products are likely to resonate with this growing segment of consumers. Absolutely. The retail landscape is constantly evolving and it presents a dynamic and exciting environment for both businesses and investors.

Now, as we wrap up. Part one of our deep dive into retail real estate. Yeah. Let’s contemplate a question that’s relevant to, to both investors and consumers. Okay. What does the future hold for malls and shopping centers? That’s the million dollar question. It is, yeah. This question has been debated for years, especially with with the rise of online shopping.

But malls and shopping centers they’re not going away anytime soon. No. They’re simply evolving. To meet the changing needs and expectations of of consumers. They’re having to adapt. Yeah I agree. They’re transforming to provide a more, more holistic experience.

Beyond just shopping. Exactly. We’re seeing a shift towards these mixed use developments that combine retail, residential, office, and entertainment spaces. And these developments are creating vibrant community hubs that offer a diverse range of options for everyone. And they’re attracting a new generation of consumers who are looking for those experiences that go beyond just purchasing products.

Yeah it’s fascinating to witness. It is. How these spaces are being reimagined. Yeah. To create, more, more engaging. Yeah. And interactive experiences. Absolutely. As we continue our deep dive in part two. Okay. We’ll explore the specific trends shaping the future of malls and shopping centers.

So we’ll delve into topics like. Experiential retail, the rise of food halls, the integration of technology. Looking forward to it. So stay tuned for more insights and analysis as we continue to unpack the world of of retail real estate. Welcome back to the final part of our deep dive into retail real estate.

We’ve we cover a lot of ground, from the the surprising resilience of brick and mortar stores to the exciting rise of experiential retail and the transformative power of technology. And we’ve also explored how crucial it is to adapt to change, understand those local market dynamics, like the healthy balance of retail inventory we see in Texas and really just sees the many opportunities that this ever evolving sector offers.

Let’s zero in on a few. Key takeaways and strategies to help you navigate this dynamic market. First it’s clear that the lines between physical and digital retail are becoming increasingly blurred. Yeah. And successful retailers today, they’re really embracing that, omni channel approach creating a seamless experience for consumers, whether they’re shopping online in store or, through mobile apps. So for investors, this means seeking out those retailers who truly understand their target audience and are investing in technology to create those Personalized and engaging shopping experiences across all channels.

Yeah. And for business owners it’s about finding those innovative ways to integrate those online and offline operations, to build that cohesive brand experience. Think about leveraging technology to personalize offers, provide those convenient. Pick up and delivery options and gather that valuable customer data to improve your strategy.

Another crucial takeaway is the rising importance of of experience. Yeah. Consumers are no longer just looking to. to buy products. They’re seeking those immersive experiences that engage their senses, create lasting memories, and foster a sense of connection. So some malls and shopping centers, they’re responding to this shift by transforming into destinations that offer that diverse mix of retail, dining, entertainment, and even residential spaces.

And this trend toward mixed use developments. This is creating vibrant community hubs. It is. That attract a wide range of tenants and shoppers and it creates a more dynamic and engaging environment. So for investors this means seeking out properties that are well positioned to benefit from this trend.

Consider those locations with Strong demographics, a mix of existing and planned amenities, and a developer with a proven track record of success. And for business owners, it’s about finding creative ways to enhance the customer experience within your space. Think about incorporating those elements of entertainment, personalization, and community engagement into your into your store design and marketing efforts.

Now let’s let’s talk about a critical aspect that often gets overlooked in real estate discussions, and that’s the human element. Ultimately, the success of any retail venture depends on people. So we’re talking about, attracting the right tenants for your property, cultivating a positive work environment for your employees and building those genuine relationships with your customers.

Exactly. As an investor, carefully evaluate the tenant mix of a potential property. Yeah. Look for businesses that complement each other and create that synergistic environment that attracts that diverse customer base. And enhances the overall appeal of The property and as a business owner, remember that your employees, they’re your brand ambassadors investing in training and development programs, empowers them to provide that exceptional customer service and create a welcoming atmosphere for your customers.

And never never underestimate the power of community engagement, right? Get involved in local events, support local charities and create those opportunities for your for your customers to connect with each other and your brand on a deeper level. Building those strong relationships within the community, can lead to increased customer loyalty and generate those valuable word of mouth referrals, which are essential for success in today’s competitive market.

As we as we wrap up our deep dive into retail real estate, remember that the key to success lies in, in understanding the trends, adapting to change and focusing on creating value for both investors and and consumers. And if you’re looking for expert guidance to navigate the complexities of the DFW retail market.

Yeah. Eureka Business Group is here to help. We are. We have a deep understanding of the local landscape. Yeah. And a passion for helping our clients achieve their, they’re real estate goals. We specialize in connecting businesses with the perfect retail spaces and assisting investors in finding those profitable opportunities that align with their investment strategies.

So contact us today and let’s let’s explore the possibilities together. Thanks for joining us on the deep dive. We we look forward to exploring more fascinating insights with you in our upcoming episodes.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of January 31, 2025

Commercial Real Estate News – Week of January 31, 2025

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Transcript:

 Welcome to this week’s deep dive into commercial real estate brought to you by Eureka business group, where you’re a retail specialist here in the Dallas Fort Worth market. And, uh, we’re excited to break down, you know, some of the latest news impacting you as a potential investor, at least. Yeah, we’ve got, uh, quite a bit to cover today from the national landscape to what’s happening.

You know, right here in DFW. So, uh, let’s just jump right in. Okay, great. So first let’s zoom out, right? Let’s take a look at the overall health of the U. S. commercial property market. How are things looking nationally? Well, I think despite some ongoing challenges, you know, there are definitely some signs, some potential signs of recovery.

I mean, prices, for example, prices are on the rise and that’s fueled by, you know, an increase in large. Scale deals and, um, an expansion of economic activity across various sectors, right? So this suggests that there’s, you know, growing confidence in commercial real estate at least. Yeah, that’s, that’s encouraging to hear for sure.

Yeah. But you know, on the other hand, it’s important to stay informed about potential challenges too, right? Yeah. And, and I understand there’s some concerns about rising CMBS delinquency rates. Yeah. Particularly, I think this is in the office sector. Yes. Yeah. So CMBS stands for Commercial Mortgage Backed Securities, which are essentially, you know, bundles of loans tied to commercial properties.

So rising delinquency rate in this area, you know, particularly in the office sector. Kind of suggests that, well, while some sectors are, you know, bouncing back nicely, others are still, you know, facing some headwinds. Okay. So we’ve got kind of a mixed bag, right? At the national level. I mean, with some, some positive signs of recovery, but, but also some areas that, that might require, you know, a more cautious approach.

Now let’s, let’s kind of shift our focus a little bit. Let’s shift our focus to the DFW market, you know, or where, where we are. What’s the, what’s the latest on the office market here? What are you seeing? Okay. Thanks. Well, the DFW office market is, is finally showing some signs of life, which is great. Uh, for the first time since 2022, we’re seeing positive net absorption.

And that means, you know, more office space is being leased than vacated. So this is a significant turnaround really after years of stagnation. And it, and it really does suggest a growing demand for office space in the region. Wow. That’s, that’s great news really for, for anyone considering investing in office properties here.

What’s driving this? This renewed demand for office space in DFW, do you think? Well, North Texas, and Collin County in particular, is experiencing this sort of, uh, population boom, right? And this influx of people is attracting major corporations, who are setting up their headquarters here. And that’s, you know, bringing new jobs.

So this population and job growth is fueling demand for various commercial real estate sectors, including retail. You know, more people means more need for places to work, places to shop, places to dine, which is, you know, good news, for investors at least. Yeah, it’s all connected. And speaking of retail, um, I understand there’s been this kind of surprising shift in Texas rent prices.

You know, we always hear about Austin being so expensive, but, but it looks like Dallas is kind of taking the lead there. Yeah. For the first time since 2015, Dallas has overtaken Austin as the Texas Metro with the highest rent prices. So this is interesting because it suggests It’s this kind of shift, right, in the dynamics of the Texas real estate market, and it may, you know, create opportunities for savvy investors.

It’s something to watch closely, you know, if you’re considering retail properties in both Dallas and the wider DFW area. Yeah, definitely. Definitely something to keep in mind for sure. Now, let’s, let’s dive into the world of retail, right? I mean, this is, this is our specialty here at Eureka Business Group.

What, what are some of the key trends that you’re seeing, um, you know, in this sector in particular? Yeah. Well, one of the most interesting trends, I think, is the explosive growth of, uh, you know, the second hand market. Um, I mean, it’s become a 53 billion industry, and it’s driven by, you know, a growing preference for, you know, sustainable and unique finds, especially among, you know, younger generations.

So this signifies a shift in consumer preferences towards, you know, more conscious consumption, and, you know, creates opportunities for retailers who can You know, tap into this market. Yeah, for someone looking to invest in retail, I mean, this secondhand market trend seems, seems like a significant development.

Are there any specific examples of how this trend is playing out in the DFW market, you know, locally? Absolutely. Companies like Plato’s Closet and Uptown Cheapskate, for example, Which specialize in, you know, secondhand clothing and accessories. They’re seeing success with, um, you know, large store footprints, often in, in class B shopping centers.

So this suggests that there’s, you know, there’s a growing demand for these types of businesses and that they can be successful in, in a variety of locations. That’s a, that’s a valuable insight for sure, you know, for potential investors looking at retail properties. Yeah. Um, and it’s, it’s also interesting to see that even traditional retailers are kind of, they’re catching onto this trend, right?

American Eagle, H& M, Kate Spade, they’re all incorporating resale into their businesses. It seems like a smart strategy to, you know, to adapt to these changing consumer preferences and potentially, you know, tap into a new revenue stream. It certainly is. Yeah. And while we’re on the topic of, uh, you know, retail success stories, we can’t forget about the fast casual restaurant industry, right?

Yeah. Brands like Chipotle, Kava, and Wingstop. These guys are experiencing rapid expansion, record profits. Yeah. And, you know, that makes them, you know, attractive tenants for shopping centers. Yeah. What’s, what’s driving the success of these fast casual restaurants, um, you know, in such a competitive market?

I think they’re attracting, you know, a pretty loyal customer base, honestly, by offering, you know, quality food at affordable prices, all within a, you know, convenient and efficient dining experience. So these brands are appealing to a wide range of consumers and they’re often, you know, sought after tenants, right, by landlords who are looking to attract foot traffic and create, you know, a desirable tenant mix.

Right. Yeah. A strong tenant mix can make a property more, more attractive. You know, to investors. Now, let’s, let’s kind of shift gears for a second, um, and talk about a technology that’s, you know, been making headlines across, across all industries, really artificial intelligence, AI. How is this technology impacting the retail landscape?

Do you think? Well, AI is being used in a variety of ways. To enhance, you know, the retail experience, companies like Lowe’s, for instance, they’re using AI powered digital twins of their stores to optimize layouts, optimize operations, you know, improving efficiency and potentially reducing costs. Walmart and Amazon are, you know, they’re kind of leading the charge in AI driven logistics, so, you know, streamlining their supply chains, enhancing delivery capabilities, things like that.

So AI is not just. You know, this futuristic concept, it’s already being implemented in practical ways that, you know, are impacting the retail industry. That’s fascinating. But AI’s impact, I mean, it extends beyond retail, doesn’t it? I mean, it’s going into all these different areas. Yes, yes, absolutely. The growth of AI, you know, is creating a surge in demand for data storage facilities.

And we’re seeing companies, you know, like DeepSeek, which is a, Uh, Chinese AI startup, they’re making waves in the tech world with their innovative technology that relies on, uh, you know, older generation NVIDIA chips. And this is making AI more accessible and affordable, which leads to, you know, even more increased demand for data storage.

Yeah, I can see how, I can see how that would happen. And this increased demand for data storage, I mean It seems like you would have a significant impact on, you know, the real estate market. Are there any notable developments in this area, would you say? Well, there’s the Stargate project, for example, which is a joint venture backed by, uh, you know, Oracle, SoftBank and others.

And they’re aiming to invest 500 billion in new data centers. So this massive investment highlights, you know. The scale of the AI boom and its potential impact on real estate. I mean, data centers require large amounts of space. They require specialized infrastructure. So it’s creating opportunities, you know, for developers and investors.

However, there are also some, you know, challenges associated with this as well. What kind of challenges are we, are we talking about here? Well, you know, supply chain bottlenecks and a shortage of, you know, skilled labor are making it difficult to keep up with the, the rapidly increasing demand for these data centers.

These challenges, I think, underscore the importance of, you know, careful planning, careful execution for any project in the sector. So while, while there’s, you know, potential for, for profit, investors need to be aware of the, you know, the complexities. Involved in data center development, now shifting gears to the industrial sector.

Right. We’ve seen this continued boom in e commerce and a trend toward, you know, reshoring, bringing manufacturing back to the U. S. How, how is all of this impacting the industrial real estate market? I mean, the industrial sector is experiencing, you know, really robust growth. Thanks to these trends.

Investors are drawn to. You know, industrial properties for, you know, their stability and their consistent growth. E commerce requires, you know, vast warehouse and distribution centers. Reshoring is bringing manufacturing facilities back to the U. S., all of which contribute to a strong demand, really, for industrial space.

Yeah, but even in a, even in a strong sector like industrial, you know, there’s always, there’s always a need to adapt. To evolve, right? What, what are some of the key trends that you’re, that you’re seeing kind of shaping the industrial real estate market today? One of the key trends I think Is is the rise of, you know, flex space, which allows tenants to kind of customize their industrial spaces to meet their specific needs, and this flexibility, I think, is attractive in today’s, you know, rapidly changing business environment.

Another important trend, I think, is reshoring itself. Right. Which is creating opportunities for developers and investors to cater to the needs of these manufacturers who are, you know, returning to the U. S. OK, so for someone, you know, interested in industrial real estate, I mean, understanding these trends is crucial, right, for for making those informed investment decisions.

Now, before we before we wrap up this part of our deep dive. Let’s talk about the financial landscape, which can be, you know, a bit uncertain at times. Interest rates have been a, you know, a hot topic lately. What’s, what’s the latest thinking on where rates are headed? Well, there’s a lot of, you know, discussion, right?

Yeah. About whether interest rates will stay, you know, higher for longer, or eventually return to what we might consider normal levels. It’s, it’s a key consideration for real estate investors. Because interest rates directly impact borrowing costs. Yeah. That’s a, that’s a crucial point for sure. What insights can you offer to our listeners who might be, you know, concerned about the impact of interest rates, um, on their investments?

Well, while, you know, some investors are feeling apprehensive about the potential for rates to remain high, historical data kind of suggests that, um, you know, this recent increase in rates might simply be a reversion, right, to the long term average. If that’s the case, it could, you know, signal a, a normalization of the market rather than a sustained period of, you know, high interest rates.

It’s important for investors, I think, to, to consider the bigger picture and not get caught up in, in short term, you know, market fluctuations. Yeah, that’s a, that’s a valuable perspective. So, so while it’s, while it’s essential to stay informed, you know, about interest rate movements. a long term view, you know, can help investors make, you know, more strategic decisions.

Now, besides traditional financing options, are there any, any alternative financing avenues, um, you know, emerging in the commercial real estate market? Yeah, we’re seeing this, uh, you know, surge in short term property financing from non bank lenders. And the surge, you know, indicates that borrowers are, they’re seeking those alternative financing options, especially You know, traditional banks remaining cautious in the current economic climate.

Okay. Yeah. This increased activity from non bank lenders. I mean, it seems like a positive development, right? For borrowers who, you know, who might not qualify for, you know, traditional loans. It also suggests, you know, a dynamic and evolving lending market, which could benefit, you know, those who are, those who are seeking, um, creative financing solutions.

Now, before, before we move on to the next part of our deep dive, let’s, let’s kind of recap, you know, what, what we’ve covered so far about the national commercial real estate market. And, and the trends that are, you know, shaping the, the DFW market. Sure. Yeah. I mean, the U. S. commercial real estate market is, you know, showing those signs of recovery with prices trending upwards, increased activity, you know, in, in large scale deals.

However, it’s important to, you know, be aware of the potential challenges like those rising CMBS delinquency rates, particularly in the office sector. Now, in the DFW market, we’re seeing some positive signs, you know, in the office sector with, with increased demand for space driven by, you know, population growth and corporate relocations.

The retail sector is also, you know, experiencing growth with the rise of, of the secondhand market and the continued success of, of fast casual restaurants. Right. And we’ve also discussed the impact of AI. Yeah. Right? On, on the retail landscape. Yeah. And the broader real estate market. Creating those opportunities in, in areas like, like data storage facilities.

The industrial sector is also, you know, quite robust thanks to that e commerce boom and that trend towards reshoring. Yeah. It’s, it’s a dynamic market really with, with opportunities and challenges and staying informed about, you know, the latest trends, working with experienced professionals like, you know, Eureka Business Group can help investors make, you know, more strategic decisions.

That’s a, that’s a great point. Understanding the nuances of, of each sector, recognizing, you know, potential challenges, working with experts. I mean, it can make a significant difference. Now, as we head into the next part of our, of our deep dive, um, I’m, I’m curious to explore some, you know, specific examples of, of successful projects and developments in the DFW market.

Um, you know, stay with us as we, as we delve deeper into the, you know, the exciting opportunities available in this, Yeah. We’ll get into some of those specifics next. Yeah. But before we, uh, move on to those specific projects, I, uh, I’d like to add that this surge in short term property financing from, you know, non bank lenders, it, it really signifies a dynamic and evolving lending market.

And, um, you know, that can benefit borrowers who are seeking alternative financing options. You know, it’s about finding the right fit for, for your specific needs and circumstances. That’s a, that’s an excellent point. Having options is always a, is always a good thing, especially in in today’s market. Now, you mentioned some exciting projects and developments that are happening in the DFW market.

Can you share some, some specific examples that that illustrate these trends that we’ve been discussing? Absolutely. Um, let’s start with the industrial sector. There’s this, uh, massive project underway in, uh, Rockdale, Texas. It’s a 5, 300 acre advanced manufacturing site being developed on a former aluminum smelter site.

So it’s a, it’s a testament to the reshoring trend that we talked about earlier. And it really demonstrates the scale of investment that’s flowing into, into the sector. Wow. That, that’s a huge project. Yeah. What makes this site particularly attractive for, for manufacturers? Well, it boasts abundant power, water rail, and interstate access, essential infrastructure for, for large scale manufacturing operations, but it’s not just an industrial park.

It’s being marketed as a mixed use super site with plans for residential, retail, office, hospitality, and leader facilities. That’s, that’s fascinating. Integrating those. those different elements into, into a single development creates a more, a more holistic environment for, for businesses and their employees.

It’s a smart move that recognizes the, the interconnectedness of, of various aspects of life and, and work. Exactly. And, and this type of, you know, integrated development can be a real draw for companies looking to relocate or expand. You know, it offers convenience, a sense of community and, and the potential for, for increased productivity.

It’s a win win for, for everyone involved. And, and speaking of, you know, strategic moves, another company making headlines in the, in the industrial sector is EQT Exeter. We touched on their, on their decision to shift their focus entirely to industrial real estate earlier. Can you elaborate on, on why this move is, is so significant?

Well, EQT Exeter is a, is a major player in the, in the real estate industry. And uh, Their decision to pull out of multifamily investments and go all in on industrial underscores the confidence that that institutional investors have in the long term growth potential of industrial property. So it sends a strong signal to other investors that that this sector is is a smart bet in in today’s dynamic market.

So for someone looking to, you know, diversify their portfolio or enter the commercial real estate market, I mean, industrial properties seem like a very attractive option. Now, let’s shift gears again and talk about the financial landscape. We talked earlier about the uncertainty surrounding interest rates and, um, you know, some investors are concerned about the possibility of rates staying higher for longer.

How can investors navigate this uncertainty and make, you know, informed decisions? It’s understandable that that investors are feeling a bit apprehensive. The recent run up in U. S. Treasury bond yields has has certainly added to the to the uncertainty. However, it’s it’s essential to to consider the historical context.

The data suggests that this recent increase in bond yields may simply be a reversion to the long term average. And this perspective encourages, you know, informed decision making rather than reacting to to short term fluctuations. So while While it’s important to stay informed, you know, about interest rate movements, a, a long term perspective can help investors make, you know, more strategic decisions.

Now we’ve, we’ve talked a lot about the, the industrial sector. What about retail? What are some of the opportunities and trends that you’re seeing in the, in the DFW retail market? Well, the, the DFW retail sector remains strong, you know, the population demand for, for convenient and high quality retail experiences and the adaptability of, of businesses to meet those demands all point to a, to a positive future.

And don’t forget the role of technology in shaping the retail landscape. AI is already revolutionizing, you know, supply chains, store layouts, and, and customer experiences. You, you’re right, keeping up with, with these technological advancements is, is crucial for, for retailers and, and investors alike. Now, earlier you mentioned the rise of, of non bank lenders in, in the commercial real estate market.

Can, can you elaborate on the, on the benefits that they, that they offer to, to borrowers? Yeah, non bank lenders are often more willing to take on, on risk, which can be, you know, beneficial for developers and investors looking for, you know, creative financing solutions. And their flexibility can be a real asset in a, in a market that’s, that’s constantly evolving.

You know, they provide alternative financing options for, for borrowers who may not qualify for traditional bank loans, which increases liquidity in the market and provides more options for, for borrowers. That’s, that’s great for, for borrowers seeking, seeking funding for their projects. Yeah. Now, let’s, let’s zoom back in on the, on the DFW retail scene.

We talked about the success of, of fast casual restaurants and, and resale concepts. What are some other trends that are, that are catching your attention? One trend I find particularly interesting is the, the growing popularity of, of food halls. These curated culinary destinations offer a. A diverse mix of dining options, often with a focus on on local and artisanal vendors.

And they’re, they’re becoming social hubs, drawing crowds with their, their vibrant atmosphere and, and unique culinary experiences. It’s like a, like a modern take on the, on the traditional shopping mall food court, but, but with a much more elevated and sophisticated vibe. Precisely. And, and these food halls are often strategically located in high traffic areas like, like mixed use developments and, and revitalized urban districts.

So they’re becoming anchors for, for these developments, attracting foot traffic and creating a sense of community. It sounds like a, like a smart strategy for developers who are, you know, looking to create, create vibrant and, and, and attractive destinations. Yeah. It’s a great example of how, you know, creative retail concepts can, can revitalize areas and, and.

drive economic growth. Now, we’ve all heard about the, the challenges that, that brick and mortar bookstores are facing with the rise of, of online retailers. I mean, is, is there any, is there any hope for these, for these traditional bookstores? Absolutely. Brick and mortar bookstores are, are making a comeback.

There’s, there’s something special about the, the experience of browsing a physical bookstore, discovering new authors and, and connecting with. fellow book lovers and smart retailers are capitalizing on this resurgence of interest in physical bookstores. Look, what are these, what are these bookstores doing to, to adapt and thrive in the, in the digital age?

Well, they’re creating, you know, welcoming and engaging spaces. They’re, they’re hosting events and, and offering a carefully curated selection of books that appeal to their target audience. They’re incorporating cafes, co working spaces, and, and other amenities to enhance the digital It’s the, the customer experience.

So they’re, they’re becoming community gathering spots, blurring the lines between, between retail and, and lifestyle destinations. So it’s a great example of how, you know, brick and mortar retailers can, can adapt and thrive in the digital age by, by offering a unique and valuable experience that, that online retailers simply can’t replicate.

And it’s, it’s encouraging to see these, these traditional businesses adapt and find, you know, new ways to, to connect with, with customers. Now, before, before we move to the, to the final part of our, of our deep dive, I think it would be helpful to, to recap some of the, the key takeaways from our, from our discussion so far.

Sure. Yeah. I mean, we’ve, we’ve covered a lot of ground from the, the overall health of the, uh, the commercial real estate market to the, the specific trends that are shaping the retail and industrial sectors in, in DFW we’ve, we’ve seen how factors like population growth, technological advancements, and shifting consumer preferences are, are driving change in the market.

We’ve also highlighted the importance of, you know, adaptability, innovation, and, and strategic decision making for, for both businesses and, And investors, the commercial real estate landscape is, is constantly arriving and staying ahead of the curve is, is essential for, for success. We’ve also seen examples of how, how different sectors are converging, creating, creating exciting new opportunities for investors who are willing to, you know, think outside the box.

The, the 5, 300 acre mixed use development in, in Rockdale and, and the resurgence of food halls are, are just two examples of, of this trend. Now, as, as we move into the, into the final part of our deep dive, let’s shift our focus to the, the future of commercial real estate and explore some of the emerging trends that, that will shape the industry in the, in the years to come.

Welcome back to the final part of our deep dive into commercial real estate. You know, with Eureka Business Group, we’ve covered a lot of ground today from, you know, national trends to specific developments right here in DFW. Now let’s, let’s kind of look ahead a little bit, right. And consider what the future holds for.

for commercial real estate. What do you, what are you thinking about? Well, one of the most fascinating and potentially disruptive trends I’m seeing is, is the convergence of various real estate sectors. You know, the lines are blurring between traditional categories like, like retail office and industrial.

Uh, we’re seeing these, you know, mixed use developments that, that seamlessly integrate these sectors and it’s creating, you know, these vibrant and dynamic communities. Yeah, we, we discussed that, uh, that 5, 300 acre advanced manufacturing site in, in Rockdale, Texas, right? Yeah. Which, which is a great example of this trend.

It’s not just an industrial park, but a, you know, a mixed use super site with plans for, for residential retail office, hospitality, and, and leisure facilities. And this kind of, you know, integrated development is, is becoming increasingly common. What’s driving this convergence, do you think? Well, it’s a, it’s a combination of factors, really.

Uh, the rise of e commerce, for instance, that’s blurred the lines between, between retail and industrial, creating a need for, you know, logistics and distribution hubs that are integrated with, with retail spaces. Um, the shift towards, you know, remote work and flexible work arrangements, that’s prompting companies to rethink their office needs.

So that’s leading to the development of, you know, co working spaces and mixed use environments that cater to, you know, a more, a more mobile workforce. And, and let’s not forget You know, the, the growing demand for experiences, people, people want to live, work and play in vibrant communities that, you know, offer a mix of amenities and opportunities and these integrated developments cater to that demand, right?

Creating a sense of place and fostering a strong community spirit. I mean, this all sounds very promising for the future of, of real estate, but I imagine this convergence also creates new challenges for, for investors. Absolutely. It requires a more, a more holistic and integrated approach, I think, to, to real estate investment.

One that considers the interconnectedness of, of different sectors and the evolving needs of, of businesses and consumers. It’s no longer enough to specialize in, in just one type of property, you know, successful investors will need to understand the broader market dynamics, the interplay between different sectors and, and the factors that are driving demand in, in specific locations.

So, for someone looking to, to invest in commercial real estate, a, a deep understanding of the market and a willingness to adapt to these emerging trends are, are pretty crucial it sounds like. It seems like working with, with experienced professionals who can provide guidance and insights would be, would be invaluable in, in this, in this kind of evolving landscape.

Absolutely. Navigating the complexities of, of the commercial real estate market. requires, you know, expertise, requires market knowledge, a network of trusted professionals. That’s, that’s where, you know, Eureka Business Group comes in as, as your retail specialists in the, in the DFW market, we, we offer, you know, a wealth of experience and knowledge to guide you through, you know, every step of the investment process.

That’s right. Our team at Eureka Business Group is dedicated to helping you, you know, find the right opportunities, navigate the complexities of the market, and, and achieve your investment goals. Whether you’re interested in, in retail, industrial, office, or, or mixed use developments, we, we have the expertise and, and the resources to, to support you.

You know, this, this deep dive has provided a, a, A comprehensive overview, I think, of the current state of the, of the commercial real estate market, both nationally and here in DFW. But but as you consider your, your investment strategies, we encourage you to think beyond traditional categories and explore the exciting opportunities that are emerging at the intersection of these sectors.

You know, the future of real estate is about connectivity. It’s about adaptability. And creating spaces that, that foster a sense of community and, and enhance the, the human experience. So if, if you’re looking for, you know, expert guidance and tailored solutions for, for your real estate needs in, in the DFW market, don’t hesitate to, to reach out to us at Eureka Business Group.

We’re here to help you navigate this, you know, exciting and dynamic industry and, and make informed decisions that, that align with your, you know, investment goals. Thank you for joining us for this deep dive into the world of commercial real estate. We look forward to connecting with you and helping you unlock the potential of the DFW market.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of January 24, 2025

Commercial Real Estate News – Week of January 24, 2025

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Transcript:

 Welcome back to our deep dive into commercial real estate. We’re going to take a look at the latest news with a focus on the Dallas Fort Worth market, especially for those of you out there interested in the retail sector. We’ve got some fresh insights from CoStar and JLL. Yeah, we’ve got quite a bit to cover today.

Data centers, construction trends. Even a peek into the world of steel mergers. Right. And these reports offer a fascinating snapshot of the market’s direction. You know where things are heading. We’ll break it all down. What it means for your investments. Let’s jump right in with the JLO report on data center financing.

Predicts a pretty massive surge. Driven by AI. Exactly. Reaching a huge 170 billion globally by 2025. It’s fascinating. Uh, AI workloads are still a pretty small percentage of the total capacity in data centers. Right. But they have a huge impact on development. It’s kind of like AI demands a lot more powerful data centers, more efficient ones, too.

So that pushes development into new markets, really stretching the limits of the current tech. And the report specifically mentions DFW, saying it’s pretty tapped out on data center space, for the next couple of years at least. Yeah, limited availability definitely has some interesting implications for investors, especially local ones.

For sure. So when supply is tight, demand is high. Exactly. That can lead to some higher rental rates and property values. So for those who already own data centers based in DFW, this could be good news. Yeah, I’d say so. The report also mentions a comeback for nuclear power. Interesting. As a sustainable energy source for data centers, looks like those tech companies are serious about their commitment to net zero emissions.

Yeah, there were a good amount of notable nuclear deals in 2024. Seems to be a potential shift in how we power data centers, something to keep an eye on. Could really change the landscape of energy consumption for the entire tech industry. Alright, let’s switch gears a little bit. To the DFW market as a whole, CoStar is reporting a construction slowdown across all the major property types in the area.

Yeah, and that slowdown, you know, it might seem like bad news, but it could actually be an opportunity for the right investor. Okay, I see where you’re going with this. Less construction means Tighter supply eventually, right? Exactly. Which could drive up those rental rates and property value. This is especially important for anyone thinking about the retail sector.

Absolutely. Because despite a national slowdown in retail construction, Dallas is still strong. It’s still a top market for new retail construction starts. Exactly. The DFW retail sector is proving to be resilient. It’s a testament to the region’s strong fundamentals. Population growth, diversified economy, and a business friendly environment.

That’s attracting retailers. And shoppers, of course. Alright, let’s move on to the industrial sector. CoStar data shows a notable change in who’s buying. Private capital is overtaking institutional investors in the industrial market. There are a few factors at play here. Private capital is becoming increasingly available.

These investors are looking for higher yields, they’re perhaps a little bit more comfortable with risk than institutional investors. The shifts suggest that the industrial sector is viewed as having strong potential for attractive returns. So even though we are seeing a slowdown in construction overall, there’s still a lot of activity happening in specific sectors like industrial and retail.

For sure. It’s a dynamic market, requires a keen understanding of the trends if you want to make smart decisions. You always have to keep an eye on those national trends, too. For example, office occupancy rates are still struggling nationwide. Yeah. Major cities, like Los Angeles, are showing a lot of vacancies.

Right. And then there’s this new law in California protecting commercial tenants. Right, lots of changes. Expanding those notice requirements for rent increases, limiting how much landlords can pass through in operating expenses, even mandates translations of lease agreements. It makes you wonder if other states might follow suit.

Potentially, it shows how the legal landscape in commercial real estate is constantly changing. You always got to stay informed. Then you’ve got those devastating wildfires in California having a major impact on insurance rates for multifamily properties. Yeah. CoStar reported that the fires cost something like 1.

9 billion in damages to commercial properties. Wow. It just goes to show how important it is to consider those environmental risks when you’re making real estate investments. Definitely. And even though Texas doesn’t have the same wildfire risks as California. Right. We’ve got our own environmental things to consider.

For sure. Always got to factor those into your due diligence. Absolutely. Now let’s zoom back in on DFW. There was a family owned investment firm that just bought a prime retail center in Uptown Dallas. Seems like a positive indicator for the retail sector. Definitely a good sign. Uptown Dallas is a highly sought after area.

This acquisition shows the lasting value of well located, high quality retail space. And the fact that it’s a family office making the purchase. Known for their long term investment approach. Exactly. Suggests that they have faith in the continued strength of Uptown Dallas. For sure. And then on the other side of the spectrum, you have the container store filing for bankruptcy protection.

It’s a good reminder of the challenges faced by brick and mortar retailers. Yeah, highlights the importance of adaptability, you know, the container store was known for their organizational products. But maybe they didn’t evolve quickly enough to keep up with e commerce and those shifting consumer behaviors.

It’s a good lesson for anyone looking at retail investments. Absolutely. It’s not enough to just have a good product anymore. Nope. Gotta stay ahead of the trends and Anticipate the changing needs of your customers. That’s where understanding the local market comes in. Absolutely. Combined with a good awareness of national trends, the DFW retail sector is full of opportunities.

It is dynamic. But you gotta have a strategic approach to navigate all the complexities. And speaking of complexities, the Department of Justice is suing six big landlords. Yeah, I heard about that. Raises questions about the practices of large multifamily owners. Yeah. You know, even though this case isn’t in DFW, it reminds us how important ethical business practices are.

Definitely. And having a good understanding of those fair housing regulations. That’s important across the entire real estate industry. For sure. Now, let’s look at some good news in DFW. Alright, what do you have? There’s been an increase in demand for industrial space. Especially from logistics and e commerce companies.

That makes a lot of sense. DFW’s got that central location, strong infrastructure, business friendly environment. It’s a prime spot for distribution and logistics. And despite the national trend of less retail construction, Dallas Fort Worth is still a leader in new retail development. Driven by a strong economy and population growth.

Right, this continued investment in retail construction in DFW is definitely a sign of confidence in the long term prospects of the sector. Shows you how important it is to understand those local market dynamics. Now shifting gears a bit to some financing news. Harrison Street. An investment management firm out of Chicago, they just raised 600 million for their very first fund dedicated specifically to data center investments.

That’s a significant amount of capital. Just goes to show you how much interest is growing in data centers as a valuable asset class. It’s a trend we’re seeing both nationally and globally. Data centers are more and more seen as essential infrastructure. Absolutely. And there’s growing concern among those apartment developers in Los Angeles about those rising insurance costs.

Half of the wildfires. Right. It’s a big challenge for developers. Especially those focusing on affordable housing. Those rising insurance costs can really make projects much more difficult. They can make some developments totally unprofitable. It’s a factor you absolutely have to consider when you are evaluating any potential investments.

It’s been a jam packed episode. We’ve covered a lot of ground today. From data centers and retail trends to construction slowdowns and even the impact of wildfires on insurance rates, it just goes to show how much the commercial real estate market is constantly evolving. It’s full of challenges and opportunities.

Staying informed is key. Knowing these national and local trends, that’s crucial for making good investment decisions. And that’s where Eureka Business Group can really help. We specialize in guiding investors through the DFW commercial real estate market, especially in retail. Our focus is on staying ahead of the curve.

We analyze market data, identify the latest trends, understand what our clients need. We are more than just brokers. We’re your trusted advisors, here to help you make informed decisions and reach your investment goals. We’ve thrown a lot of information at you today. It can be a little overwhelming. But don’t worry.

That’s what we are here for. We’re passionate about sharing our expertise and helping our clients succeed in the DFW commercial real estate market. So let’s take a closer look at some of these news items and discuss what they could mean for your investment strategy. For example, we talked about how private capital is outperforming institutional investors in the industrial sector.

What does that mean for you? It’s really about a shift in dynamics. Private capital is getting more aggressive. They’re seeking out opportunities in a market where those institutional investors might be pulling back. This could mean higher yields, potentially, maybe a little bit more willingness to take on some risk.

Interesting. What does this mean for investors in DFW? Well, it shows that the landscape is competitive, especially in that industrial sector. You’ve got to be on your toes to get the best properties. You’ve got to understand those private capital groups, their motivations, their strategies. Alright, let’s dive into this news about the DOJ lawsuit alleging rent fixing.

Even though it’s not in DFW, it must be. It brings up an important point about transparency, ethical practices in this industry. Now, while the case focuses on specific companies, it’s a good reminder for all multifamily owners, even here in Texas. Make sure your operations are fair and compliant. So you’re saying everyone needs to double check their practices.

Exactly. Okay. That family office buying that Uptown Dallas retail center, that’s a pretty interesting story. Yeah. Kind of goes against the whole narrative of the retail apocalypse. Right. It speaks to the fact that there’s still value in well located, high quality retail space, and the fact that it was a family office making that purchase.

It suggests a long term vision for that property. They believe in the uptown Dallas market. Okay, let’s talk about the container store. Filing for bankruptcy, what can retail investors in DFW learn from this situation? Well, the container store struggled, and it really illustrates that retailers need to constantly adapt and innovate.

They were known for organizational products, but they maybe didn’t change fast enough, they didn’t keep up with those shifts to e commerce and consumer preferences. So what about that news on the California wildfires and insurance rates? Does that have any implications for the DFW market? Well, Texas doesn’t have the same wildfire risk as California, but it’s still wise to be mindful of environmental risks.

Insurance costs are rising across the country, and you’ve got to factor that into your plans, make sure you understand the specific risks tied to a property, and get enough insurance coverage. And California’s new law protecting commercial tenants, is that something Texas investors should be paying attention to?

Absolutely. Legislative changes in one state can definitely influence other states. Stay informed on how those tenant landlord laws are evolving across the country, because it could affect regulations here in Texas. Alright, so we’ve covered a lot. What does all this mean for potential investments in the DFW retail sector?

The big takeaway. DFW is still a thriving market. Tons of opportunities, especially in retail. But you’ve got to be diligent. You’ve got to understand the local market, be aware of those national trends, and really assess any potential risks. And that’s where Eureka Business Group can provide some valuable guidance.

We’ve been helping Lions succeed in the DFW commercial real estate market for years. And we specialize in retail. That’s right. Our team stays ahead of the curve. We’re always analyzing that market data, finding the new trends, and understanding our clients specific needs. So if you’re looking to make the most of the opportunities in DFW retail, we’re here to help you.

We can help you navigate all the complexities, maximize your investment potential. So it seems like there’s a lot of uncertainty. But also potential for those who really know what they’re doing. Exactly. That’s what we’re getting at the DFW market, you know, especially retail. It’s always changing. You don’t want to shy away from change.

You want to understand it and use that to your advantage. And that’s where local expertise really comes in. Reading those national reports is one thing, but having people on the ground in DFW makes a difference. Understanding those little nuances of specific neighborhoods and sub markets. Absolutely.

Boots on the ground. That’s where Eureka Business Group comes in. We live and breathe this DFW commercial real estate. We’re right here in it. Tracking all the latest changes, analyzing trends, building relationships. Knowing the local market really can be everything. Especially in a competitive market like DFW.

It’s about connecting those national trends to the opportunities right here. Finding those hidden gems that others might miss. Exactly, and it’s about personalized guidance. You know, understanding what each client wants to achieve. What are their investment goals? And then we tailor our strategies to meet those needs.

DFW retail real estate. What’s the first step they should take? Reach out to us. We love to talk to people. Share what we know. Discuss how we can help them navigate the market. Knowledge is power. And we believe in giving our clients the information they need to make smart decisions. We’ve covered a lot today.

We have. But there’s always more to learn. Commercial real estate, it’s dynamic. It’s exciting. Definitely. Full of challenges and opportunities. And Eureka Business Group is here to help you every step of the way. You know, we’re committed to giving our clients the expertise. The guidance and the support to achieve their investment goals right here in the DFW market.

So as we wrap up this deep dive into the latest news, what’s the one thing you want our listeners to remember? I’d say even with all the uncertainty, all those shifts happening nationally, DFW, especially the retail sector, is resilient. The key is to be smart. Know your risk tolerance. And work with experts who can guide you.

Speaking of expertise, we at Eureka Business Group, we’re passionate about helping our clients succeed in the DFW commercial real estate market, especially in retail. We know the local landscape, and we’re committed to giving personalized service. That’s why we’ve built a reputation for results. We’re not just brokers, we’re advisors, here to work alongside you, to reach your investment goals.

If you’re interested in what we’ve talked about today and you want to explore DFW retail real estate, reach out to Eureka Business Group. We’re here to share our knowledge and help you make informed decisions. Remember, knowledge is power. Stay informed. Stay ahead of those changes. And together, let’s unlock the potential of DFW real estate.

It sounds like you’re saying that even with all these national trends, the DFW retail market is still a good bet for investors. Yeah, it’s not about just investing anywhere, though. You got to be smart about it. Strategic, you know, that’s why we always tell people to find a local expert, someone who really understands DFW.

Someone like Eureka Business Group. Well, we do know the DFW company retail landscape pretty well. We’ve helped a lot of clients find success here. Whether they’re just starting out with their first investment, or if they’re already adding to their portfolio. What’s the biggest misconception you see investors having about retail in DFW?

I think a lot of people are still stuck on that retail apocalypse idea, you know? They see e commerce growing and think that means physical stores are done, but it’s not that simple. So you’re saying physical retail isn’t dead? It’s just changing. Exactly. People still want experiences, you know, they want to touch and feel things, try them out before buying.

And they like the convenience of shopping local. Smart retailers are adapting to all that. Blending the online and offline experiences, creating places that offer something unique and engaging. That makes sense. What advice would you give to someone brand new to commercial real estate, thinking about investing in DFW retail?

First things first, do your research, know the market, what your goals are, how much risk you’re comfortable with. Don’t be afraid to ask questions, get advice from people with experience. And that’s where Eureka Business Group can step in. Exactly. We want to see our clients succeed in DFW commercial real estate.

We offer all sorts of services. Market analysis, finding the right property, due diligence, managing the transaction. We’re there every step of the way, giving you the information and support you need to make the right decisions. So if you’re interested in what we’ve talked about today and ready to take that next step, how can they get in touch with Eureka Business Group?

Our website’s a good place to start. Give us a call or send an email. We’re always up for a chat to see how we can help you reach your commercial real estate goals. Sounds like DFW Retail has a lot to offer for the right investor. Any final thoughts before we wrap things up? Just remember, knowledge is power.

The more you know about the market, the better decisions you’ll make. And don’t be afraid to partner with experts who can guide you. That’s great advice. Thanks to everyone for listening to our deep dive into commercial real estate. We hope you found this informative and insightful. Until next time, happy investing.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of January 17, 2025

Commercial Real Estate News – Week of January 17, 2025

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Transcript:

 Hey everyone, and welcome back for another deep dive. Today, we’re taking a look at commercial real estate. Ooh, CRE. CRE, exactly. Yeah. With a special focus on the US and. Especially Texas. Yeah, Texas. We’ve got a ton of sources here. Recent news forecasts, industry analyses. The whole shebang. Yeah, the whole shebang to give us a clear view of what’s hot and what’s not.

And what savvy investors should be looking at. Right, exactly. It’s interesting, you know, while some parts of the CRE market are, you know, hitting some bumps. Yeah. We’ll get into that. We will get into that. But Texas is really standing out. It’s true. It’s like a magnet for growth. It really is. The numbers are mind blowing, honestly.

Yeah. Texas added 562, 000 new residents. Wow. Just between July 23 and July 24. Just one year. It’s the fastest growing state in the U. S. Incredible. I know. It’s not just people moving from other states though, right? No, it’s not just moving vans. Yeah. It’s, uh, there’s strong natural population growth, too.

What does that mean? More births than deaths. So you combine that with folks relocating from other states. Especially those expensive coastal areas. Exactly. You’ve got this built in long term demand for real estate of all types. Yeah. You need places to live, places to work. Places to shop. Places to shop, exactly.

Oh, that’s obvious, but it seems like a recipe for CRE success. Yeah. What does this actually look like on the ground? So what are the specific sectors that are really being impacted by this? Well, the multifamily sector is a really good example. Okay. Then on a construction tear. Just trying to keep up.

Trying to keep up, accommodate all these new Texans. Makes sense. And forecasts suggest that things might cool down a bit in 2025, but that doesn’t mean demand is going away. Okay, that’s good to know. Yeah. But, um, one article mentioned something called first generation retail space. Oh! Hopping up in Texas.

Yeah. What is that? That’s a really interesting trend. So basically it means brand new retail spaces. Like, never occupied before. Never occupied before. Built in these high growth areas. Okay. And because Texas is seeing so much growth, these first generation retail spaces are Very in demand. Very in demand.

Makes sense. Yeah. They can’t have all these new people without new places for them to shop. Right. How does this play into the bigger picture for investors and businesses in Texas? So it creates this really unique opportunity, like a fresh start, you know, a chance to shape the retail landscape in a booming market.

That’s exciting. Yeah. And because demand is so high, investors are seeing this as a way to potentially get ahead of the curve. Interesting. To capitalize on Texas’s growth. So while other markets might be tapping the brakes. Right. Texas seems to be hitting the brakes. The gas pedal. Yeah. And I read a quote from the CEO of Jamestown.

Yeah. Jamestown, which is a big real estate investment firm. And he basically said that they see the sunbelt as a whole, like from the Carolinas to Texas. Yeah. All the way to Texas as a safe bet for long term CRE investment because of those demographics and growth. That’s a pretty strong statement. It’s a really strong endorsement.

Yeah. It really emphasizes How Texas’s growth is attracting serious attention from people with money, right? It’s not just hype It’s backed by real investment dollars. It’s real. Yeah, and you know, it’s spilling over into those fun quirky cultural aspects Yeah, you know those bumper stickers. I wasn’t born in Texas.

Oh, yeah the classic I got here as fast as I could Exactly. I wonder if they have one for, I’m building first generation retail space as fast as I can. That’s a good one. But in all seriousness, it really does capture that sense of momentum and opportunity that’s driving Texas right now. Absolutely. So Texas is booming.

We’ve established that. For sure. But even within a boom, there can be, you know, variations. I noticed an article talking about a slowdown in multifamily construction. Interesting. And some of the big Texas cities, Austin, Dallas, Fort Worth, Houston. What’s going on there? Is the Texas magic fading? Not necessarily.

It’s more of a rebalancing. Okay. I think, you know, those rising interest rates, construction costs, tighter lending are definitely impacting the pace of development. Makes sense. But that underlying demand is still incredibly strong. Because of the population because of the population growth. Exactly. Okay.

And Freddie Mac is even projecting that multifamily originations will actually increase in 2025. So it’s not that people aren’t interested in Texas multifamily. It’s just that the market’s kind of adjusting. Adjusting to the new realities. Yeah. Yeah. So maybe a little less pedal to the metal and a bit more like steady cruising.

Exactly. Yeah. Investors are playing the long game here. They’re in it for the long haul. Yeah, they see potential for really solid returns down the road even with these short term adjustments. So if multifamily is adjusting. Right. What about all that shiny new first generation retail space? So what’s the reality on the ground there?

Well, the data tells an interesting story. Okay, so Co star the real estate data experts gurus the gurus Yes, they say that Texas is actually leading the entire u. s. In newly built available retail space Wow, which is pretty remarkable that is impressive and Houston is the star performer within Texas Houston All right, go Houston.

This just shows that developers are incredibly bullish on the Texas retail market. Wow. High demand can create some, you know, unique challenges as well. Absolutely. And even major players like McDonald’s are feeling the squeeze. Really? I came across this quote from their senior VP of development. Oh, yeah.

Her name is Tabassum Zalatrawala, and she was talking about how hard it is to find prime retail space for new stores. Oh, wow. They’re having to get creative, explore different location strategies to adapt to this limited supply. It really shows that even in a booming market like Texas, securing the right location is still so important.

Yeah, it’s not just about building it. It’s about building it in the right spot. That’s exactly right. And that’s why understanding those nuances. Of each market. Of each market within Texas is so important. So it’s not one size fits all. No, it’s not. Okay, so we’ve talked multifamily and retail in Texas.

Right. But what about those other CRE sectors? Where are the investors looking next? Well, one area that’s attracting a lot of buzz is data centers. Data centers. The demand for data storage is just skyrocketing. Makes sense. Thanks to the rise of AI cloud computing. And of course, our insatiable appetite for streaming everything, everything, all the time, all the time, data centers in Texas.

Now, that’s an interesting connection. I hadn’t made. Yeah. Tell me more. I will. Well, it’s really a combination of factors. First, you have that massive surge in demand for data storage and processing we talked about. Right. But Texas also offers this attractive package, you know, a business friendly environment.

Right. Relatively low energy costs and lots of land. It’s like the perfect storm. It’s like a data center developers dream. Yeah. And on top of that, the federal government’s getting involved too. Yeah. President Biden signed this executive order making federal sites available for data center development.

Oh, wow. So it’s getting support from all angles. Interesting. So it’s not just Texas being Texas. There’s like a national push behind this too. Exactly. And you can see that play out in some of the major projects in the state. Like what? So Lincoln Property is developing this billion dollar data center campus south of downtown Dallas.

Wow, a billion dollars. Yeah. That’s a lot of money. Partnered with Gigabit Fiber and Tradition Holdings, that’s a serious investment. They’re not messing around. No, they’re not. Are there other big players making moves in Texas? Oh yeah, absolutely. Provident Data Centers is another one. Okay. They’re building a hyperscale data center campus.

Wow. In Grand Prairie, Texas. I’ve heard of that. With their partner, Powerhouse Data Centers, and these projects are massive. Yeah. Not just in terms of money, but also in terms of their physical footprint. It’s interesting. These data centers are huge. Yeah, they’re like these giant buildings. Yeah. Full of servers and stuff.

Yeah, it’s a different beast than like A shopping mall or an office building. Right. It feels like a real shift. It’s an evolution. In the CRE landscape. Yeah, for sure. And while those traditional sectors are graveling with some headwinds. Yeah. We’ll get into that in a bit. Yeah. Data centers in industrial spaces are showing a ton of momentum.

Yeah, and speaking of industrial. Okay, let’s talk about that. That’s another area where Texas, particularly Dallas, is making waves. Okay. So Dallas and Phoenix are actually leading the nation in industrial building completions in 2024. Those giant warehouses we see popping up by the highway. Yes, exactly.

That’s the industrial boom. That’s it, and it’s not just about storing stuff anymore. Oh, really? No. These facilities are increasingly hubs for advanced manufacturing driven by this push for reshoring. What’s reshoring? So, it’s about bringing manufacturing back to the U. S. Oh! You know, it’s tied to those economic and demographic tailwinds that we talked about.

Okay. People moving in businesses, expanding all those goods, needing a place to be made and stored. So, it’s like this whole ecosystem developing in Texas. TikTok. TikTok. TikTok. From the people, it’s all at the top. From the businesses to the buildings. Yeah, and that 1. 2 million square foot distribution building.

Oh, wow. That was recently finished in Bulch Springs, Texas. That’s a prime example. That’s huge. Massive. Okay, so we’ve painted this picture of Texas as this CRE hotspot. Population growth, multi family retail data centers. Industrial development? It’s a lot. It’s a lot to take in. It is. But like any market, there’s got to be another side to this story.

Right. What are some of the challenges that are maybe lurking beneath the surface? Yeah, you’re right. It’s not all sunshine and roses. Yeah. The CRE sector is facing some serious headwinds. And at the top of the list, I would say, is the impact of those rising interest rates. You know, REITs, Real Estate Investment Trusts, they’re feeling the pressure and it’s just becoming more expensive for buyers to finance deals.

So it’s making everyone a little more cautious. Yeah, those interest rate hikes can really throw a wrench in the works. It can. And it’s not just interest rates that are causing concern, right? No, definitely not. What else? Inflation is another big worry. Yeah, CEOs are talking about the potential for increased inflation, which could lead to higher production costs and make development projects more expensive.

Right. It’s this ripple effect that can impact the whole industry. It’s like this delicate balancing act. Yeah. Trying to keep those projects profitable with all these outside factors. It really is. Yeah. And then you add on this layer of global uncertainty. Oh, yeah. The world is kind of crazy right now.

It’s a little unpredictable. Some CEOs have even mentioned trade tensions and geopolitical risks as major concerns. That makes sense. It’s hard to predict how those will play out. Yeah. So it makes investors hesitant, right? And we can’t forget about labor shortages and rising labor costs that are affecting the entire construction industry.

It’s true. Finding skilled workers is getting tougher and more expensive, which adds another layer of complexity. Yeah. It sounds like navigating the CRE market right now requires some serious foresight and adaptability. It does. But amidst all these challenges, surely there are some opportunities emerging as well.

Yeah, absolutely. Okay, good. It’s not all doom and gloom. Phew. There are some interesting glimmers of hope. Like what? So, for example, we saw public REIT fundraising actually rebound in 2024. Oh, that’s good. Which is a signal that investors aren’t completely shying away from CRE. Okay. They’re being more selective, but they still see the potential for growth.

So maybe a bit more cautious optimism than outright exuberance. I think that’s a good way to put it. Okay. And banks are starting to feel a little bit more optimistic about lending. Good. Especially as those commercial property loan portfolios are improving. Okay. So the financing tap is maybe opening up a little bit.

Maybe a little bit. That’s encouraging. So if investors are still interested. Right. Great. And financing is becoming a little bit more accessible. Where are they focusing their attention? What are those bright spots in the CRE landscape? Well, we’ve already talked about the strength of data centers and industrial spaces.

Right. They’re doing their own thing. They seem to be doing well. Yeah. Those sectors are expected to remain strong, even with those broader economic uncertainties. But what about retail? That sector always seems to be facing an uphill battle. Yeah, it does. Is there any hope for those struggling malls and shopping centers?

I think so. Okay. It’s all about adaptation. Okay. There are these really interesting opportunities for what they call adaptive reuse. Okay. Repurposing existing retail spaces. So like turning those empty storefronts into something completely different. Exactly. Wow. And we’re seeing creative examples of this popping up everywhere.

Like what? Macy’s, for example, is shifting its strategy. Right. By focusing on these smaller format stores. Okay. And expanding its off price backstage concept. Interesting. It’s a way to stay relevant. To adapt. In a changing retail landscape. It’s not just about building new. Right. It’s about reimagining what’s already there.

Exactly. And that kind of outside the box thinking is becoming increasingly important in the CRE world. I can see that. You gotta be adaptable and willing to embrace change. Yeah. But even with those opportunities. Mm. There are still risks involved. Of course, what are some of the specific risks investors should be aware of in this environment?

Well, one example that highlights those challenges is the case of Jamison Properties. Okay. They’re facing some scrutiny over a loan on a Los Angeles office tower. Oh. And it’s causing these ripples in the CMBS market. That stands for Commercial Mortgage Backed Securities. Oh, okay. It’s a complex financial instrument, but basically it shows how one shaky loan can have this ripple effect throughout the market.

So even if things are looking up in some areas. Right. Yeah. There are still those potential pitfalls that investors need to watch out for. Yeah, it underscores the importance of thorough due diligence and careful risk assessment. Don’t just jump into any deal. Exactly. You got to understand the potential downsides.

Yes. Okay, so we’ve covered a lot of ground here, the highs and the lows. We have. For the CRE market. Yeah. What are some of the key takeaways? What do listeners really need to understand about the state of CRE today? I think the big picture is that the CRE sector is at this crossroads. Okay. There are some big challenges interest rates Right.

But there are also some really exciting opportunities emerging. That’s good. Yeah. Texas remains this hot spot. With multi family industrial and data centers showing strong momentum. Okay. But investors need to be aware of those challenges. Be smart. And approach the market with a healthy dose of caution.

So it’s a time for careful consideration. Yeah. And strategic decision making. Absolutely. A lot to digest for sure. It is. But understanding these trends and challenges is crucial. It is. For anyone involved in CRE or even just interested in the forces shaping our communities. Right. And our economy. It’s about more than just buildings and deals.

It’s the bigger picture. Exactly. Awesome. Well, I think it’s time for that thought provoking question that you mentioned earlier. Something to leave our listeners pondering as we wrap up this deep dive into commercial real estate. Okay. What’s the big question we should all be asking ourselves? So, given all these evolving economic and geopolitical factors, the question that comes to mind is this.

Okay. What strategies can CRE investors and developers adopt to navigate both the challenges and the opportunities? Yeah, it’s like we’re standing at a crossroads trying to figure out which path to take. Exactly. And there’s no single right answer, no magic formula. Right. It’s about being adaptable. Okay.

Strategic and maybe even a little bold. Right. So what did that actually look like in practice? Well, one approach that’s becoming more and more common is diversification. Instead of putting all their eggs in one basket, yeah, investors are spreading their bets across different asset classes, geographic markets, and even strategies.

So don’t just bet on Texas, bet on the whole Sunbelt. That’s the idea. Recognize that different markets will perform differently at different times. Okay. And within those markets, different sectors will have their own unique dynamics. So diversification is key. It’s a big one. What else? Another important strategy is focusing on what they call value add opportunities.

Value add. Yeah. So taking those existing properties that might be underperforming or outdated and finding ways to improve them. Like renovations and upgrades. Exactly. Renovations, upgrades, repositioning. Interesting. It’s about finding those hidden gems and unlocking their potential. So it’s like taking something old and making it new again.

That’s a great way to put it. Breathing new life into these underutilized spaces. Exactly. And this can be especially relevant In retail. In the retail sector, yeah. Where we’re seeing so much change. Makes sense. Adaptive reuse is all about transforming those spaces to meet the needs of today’s consumers.

Okay, so we’re talking about challenges, we’re talking about strategies, but I’m also curious about Yeah. Where are those potential bright spots that investors should have their eye on? Well, one area that’s really interesting is the rise of what they’re calling niche sectors. Niche sectors. Okay. Things like senior housing, student housing, self storage facilities.

Interesting. These sectors are often driven by demographic trends. And cater to very specific needs that aren’t as impacted by those broader economic swings. They offer a little bit more stability and predictability in uncertain times. So it’s like finding those pockets of resilience. Exactly. Within the market.

Yeah, it’s about recognizing. That there are always opportunities out there. That’s good. Even when the overall market is facing some headwinds, it just requires a little bit more digging. And creativity. And a willingness to think differently. Well, I think we’ve given our listeners a lot to think about today.

I hope so. It’s clear that the CRE landscape is constantly evolving. It is. Navigating it successfully requires knowledge, adaptability, and a bit of strategic vision. Absolutely. And I think The key takeaway here is that understanding the forces that are shaping the CRE market, those economic trends, demographic shifts, technological advancements, that’s crucial for making informed decisions.

It is. Whether you’re an investor, a developer, or just someone interested in the world around us. Right. These trends matter. They do. Awesome. Well, that’s a great point to end on. So, to our listeners out there, we encourage you to keep exploring, keep asking questions, keep learning. Yeah. About this crazy world of commercial real estate.

Absolutely. There’s always something new to discover, a new opportunity waiting to be unlocked. So true. The future of CRE is full of surprises. Full of possibilities for those who are ready to embrace the challenge of that. Well said. Thank you so much for joining us on this deep dive. Yeah, this was fun into commercial real estate.

Thanks for having me. Of course, we’ll be back soon with another deep dive into a new topic. So stay tuned. Sounds good.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of January 10, 2025

Commercial Real Estate News – Week of January 10, 2025

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Transcript:

 Hey everyone, ready to peek into the future. Today, we’re diving deep into the future of retail. The future of retail, exciting stuff. Yeah. And we’ve got a fantastic guide, this super in depth JLL report on global retail trends, hot off the press for January, 2025. It’s a really forward looking report. It is.

We’re talking about the forces that are shaping how we shop, where we shop. All of it. And the best part, we’re going to see how these predictions are already playing out in the real world. Real world examples, that’s key. Absolutely. So get ready for some serious ah ha moments. Because we’re going to tackle some big questions today.

Like what? Well, like, will robots be our personal stylists? Are we saying goodbye to physical stores forever? And how does sustainability fit into this whole retail evolution? Lost to unpack. There is, this JLL report is packed with insights about how technology, sustainability, and you know, what shoppers like you and me want, how it’s impacting what we buy and where we buy it.

Everything from groceries to clothes, gadgets, the whole nine yards. Exactly. Now one of the most surprising findings in this report, and I have to admit it’s surprised me. Yeah. Is that. Even with the massive growth of online shopping. I mean, everybody shops online these days. Right, but even with that, a whopping 67 percent of global shoppers still prefer to shop in person.

Wow, that’s a lot. I know, right? That’s from the JL Experience Matters 2024 survey. So those predictions about physical stores dying out might have been a little premature. Yeah, it seems like they were. So the question is, what’s driving this? Why are people still drawn to those brick and mortar stores? I think it shows that while convenience is a huge factor, people still value that sensory experience of shopping, you know?

Being able to see it. Touch it. Touching the fabric, seeing how things actually look in person, and let’s not forget that human interaction, there’s an emotional element to shopping that you just can’t fully replicate online. It’s true. Sometimes you just gotta see it to believe it. Especially with clothes.

You know? But speaking of convenience, this report dives into a future where drones are delivering everything. Even dinner and diapers. Can you imagine? Drones delivering diapers. Now that’s convenience. I know, right? Picture this, your smart fridge, it knows you’re out of milk, it orders it automatically, and boom, a drone silently delivers it in the middle of the night.

No more late night grocery runs, I’m sold. Right, it sounds like something out of a sci fi movie, but it’s actually happening now. Oh yeah, it’s already happening. Walmart is using drones for deliveries within a 10 mile radius of some stores in Dallas. And they’re planning to expand this to 75 percent of residents in that area.

It’s pretty amazing. And then there’s Starship Technologies. They’re using those six wheeled delivery robots. They’ve already made over 6 million deliveries in different countries, including the U. S. and the U. K. Wow, 6 million. So while we’re sleeping, there could be a whole fleet of drones and robots out there, quietly delivering everything we need.

It’s a pretty futuristic picture. It is. But with all these delivery robots zipping around, what does that mean for brick and mortar stores? Are we going to see fewer of them? It’s a good question. It’s possible that retailers might need smaller stores if they’re relying more on direct to consumer deliveries.

So smaller footprints. Exactly. They won’t need as much space for inventory. And then think about the infrastructure changes we’ll need. We’ll need drone landing zones and all sorts of new tech to manage these delivery networks. Grown landing zones. That’s wild. It is. It’s going to require some serious partnerships between retailers and tech companies.

It’s a whole new world, but it also makes you wonder about access. Will everyone benefit from this super convenient future? Or will we see drone deliveries primarily in wealthier neighborhoods? That’s a crucial point. And the report acknowledges that, you know, the potential disparities. Yeah. If we’re not careful, those who can afford it will be the first to experience this drone powered future while others lag behind.

And that’s something retailers and policy makers need to consider. Absolutely. We can’t leave anyone behind in this retail revolution. Now get ready because we’re about to step into a world that sounds like pure science fiction. We’re talking about the rise of digital twins and augmented reality.

Digital twins, that sounds intense. It is. Imagine a virtual version of yourself trying on clothes. Wait, a virtual me trying on clothes? Yeah, that’s your digital twin. A virtual replica of your body. And it can be used to suggest outfits. You can actually try on clothes virtually with AR glasses. You can see how they look, how they feel.

fit without even leaving your house. Wow, that would be a game changer, especially for someone like me who hates trying on clothes in stores. I hear you, but how close is all of this to reality? Is this technology actually available now? It’s closer than you might think. We already have virtual try ons on mobile devices and VR headsets.

That’s so cool. Some retailers are even using AI to give you style advice based on your style. selfies or pictures of your clothes. It’s like having a personal stylist right in your pocket. That’s amazing. But with all this high tech personalization, What about the human touch? Are robots going to take over all the jobs in retail?

Not necessarily. The report actually suggests that the role of the store associate is going to evolve. In what way? They’ll become less about ringing up sales and more about being expert advisors, offering personalized recommendations, and creating those memorable shopping experiences. So it’s not just about checking people out, it’s about creating a connection.

Exactly. They’ll be like retail superstars. I love that. Retail superstars. So instead of just folding sweaters and stocking shelves. Which, let’s be honest, can get a little boring. It can. Imagine a bookstore clerk, their live stream book review goes viral, or a clothing associate hosting an online unboxing event that drives tons of digital twin purchases.

Now that’s innovative. Right. They become content creators, influencers, brand ambassadors. That’s a cool way to think about it. Think about a cookware store associate live streaming a cooking demo. They could create a whole community around their expertise. It’s about adding value beyond just a transaction.

It’s about creating an experience. Exactly, and that’s what shoppers are looking for. Absolutely, experiences matter. They do, but with all this talk about tech savviness and online presence, what about the people who aren’t as comfortable with technology? Will they be left behind? That’s a real concern.

This shift could create a digital divide in the workforce. It’s crucial that retailers provide training and support to help associates adapt to these new roles and technologies. So upskilling is key. It is. It’s also important to ensure access to technology and training for everyone. Digital equity. We have to strive for that.

Absolutely. We can’t leave anyone behind. Right. So we’ve got drones delivering diapers, digital twins trying on clothes, retail superstars creating online communities. It’s a lot to take in. It is. And the report doesn’t stop there. It also talks about how retail spaces themselves are transforming is not just what’s happening inside the stores, but the entire retail landscape.

So like the malls, the shopping centers, all of it. All of it. So instead of those giant malls or big box stores, are we talking about. more integrated retail experiences. Like, what if those old retail parks were turned into mixed use communities with apartments, offices, maybe even medical clinics, all within walking distance of shops and restaurants.

So everything you need right there in your neighborhood. Exactly. It’s all about convenience and creating a more holistic living experience. And it’s not just a futuristic concept. It’s happening now. It is. We’re already seeing examples of this. IKEA. Known for their massive stores, they’re opening smaller locations in cities to be closer to their customers and supermarkets are testing out mini market concepts.

Even malls are being redeveloped to include apartments and other uses. It’s like retail is weaving itself into the fabric of our daily lives. It’s becoming more integrated, more accessible. Absolutely. And here’s another interesting twist. The report suggests that as the digital world expands, the value of real world, human centered experiences in physical spaces will actually increase.

That’s interesting. So it’s not one or the other, it’s both. It seems that way. It’s like a pendulum swing. We love the convenience of online shopping, but we also crave those real world connections and experiences. It’s like we need both to feel balanced. Right, and the report highlights trends we’re already seeing.

Think about the popularity of those fancy coffee shops, those restaurants with waiters, and just that basic desire to touch and feel products before we buy them. It’s a reminder that even in a digital world, we’re still human. We still crave. Those tangible experiences make sense. We’re social creatures at heart.

We are. But hold on. Didn’t the report also talk about increased automation, especially in restaurants? How does that fit in with this whole craving for human connection? It’s a good question. The report does predict more automation in those quick service and fast, casual restaurants. Robots will likely be handling those behind the scenes tasks like cooking and food prep to robot chefs.

You got it. So you might still have a waiter taking your order, but a robot could be whipping up your meal. It’s a wild world we’re heading into. So we could be looking at a future with both high tech and high touch experiences existing side by side. It’s like a balancing act. It is. It’s about finding that sweet spot between convenience and connection, efficiency and experience.

And this all ties into what the report calls retail science. It’s about using data and AI to create a more personalized shopping experience. Data driven retail. That’s the future. It seems that way. So are we talking about stores that are designed to cater to the specific needs of each community? Even more granular than that, retailers are using data to become retail scientists.

They’re analyzing things like shopper lifestyles, walking habits, even psychographics, which is the study of people’s attitudes and aspirations. It’s about really understanding their customers and creating experiences that resonate with them on a personal level. So each store location of a chain could feel unique, offering different products and services tailored to the local community.

Exactly. It’s about personalization at scale. And imagine retailers. Using digital twin replicas of their stores to optimize everything from the layout to the merchandise. It’s like taking the guesswork out of retail. Data driven decision making, it’s a game changer. And loyalty programs, they’re getting a major upgrade too.

Instead of those generic rewards programs. Imagine personalized deals based on each shopper’s preferences and perceived value. Yeah. It’s about building deeper relationships by understanding what people truly want and offering them something valuable. It’s about making loyalty programs actually feel rewarding.

Exactly. So we’ve got drones, robots, AI, data galore, but what about the bigger picture? What role will retail play in creating a more sustainable and inclusive future? That’s the million dollar question, and the report definitely addresses it. It highlights the growing importance of sustainability and inclusion, emphasizing that businesses need to contribute positively to their communities.

It’s not just about profits anymore. It’s about purpose. Exactly. And the JLL Global People Experience Survey actually found that 79 percent of respondents believe that businesses should have a positive impact on their communities. So consumers are looking for brands that align with their values. They are.

They want to feel good about where they spend their money. And the report stresses the role of retail in promoting a circular economy. Reducing waste, encouraging recycling, and incorporating sustainable practices throughout the supply chain. It’s about making sustainability a core part of the business model.

And we’re already seeing some great examples of this. H& M has a clothing recycling program. And in Sweden, there’s Ratuna. An entire shopping mall made from recycled materials. It’s pretty incredible. It is, and the report also talks about inclusive design, creating retail spaces that are accessible and welcoming to people of all abilities, ages, and backgrounds.

It’s about making sure everyone feels welcome and included. Absolutely. So the future of retail isn’t just about cool tech and fancy gadgets. It’s about using those things to create a more human centered, sustainable, and inclusive experience for everyone. It’s about using technology to enhance the human experience, not replace it.

Exactly. And that’s what we’ll continue to explore as we dive deeper into this JLL report. So stay tuned for more insights into the future of retail. You know, it’s amazing how retail is becoming about so much more than just buying stuff. It’s true. It’s about experiences, values, what people actually want out of life, you know?

Absolutely. And we’ve already explored so much. I mean, drone deliveries, digital twins, those retail superstars, sustainable shopping malls. It’s mind blowing how fast the retail world is changing. It’s moving at warp speed. It is. But here’s the thing. This change isn’t just about technology, right? No, it’s not.

It’s about understanding. How shoppers like you are changing, what you’re looking for, what’s important to you. It makes you tick. Exactly. So, before we jump back into this JLL report, I want to leave you with a question and I want you to really think about this. Alright, camera ready. In a world where you can order almost anything online and have it delivered right to your door, what would make you actually choose to go shopping in person?

That’s a good question. Right. What would make you get off the couch, leave the house, go to a store, interact with products, talk to people, maybe discover something new? It would have to be something special. It would, wouldn’t it? Yeah. And it’s a question worth pondering because the future of retail, it’s not set in stone.

No, it’s not. It’s shaped by the choices we make as shoppers. Every single day. So we have the power. We do. So as you navigate this ever evolving retail landscape, be mindful of what you’re drawn to support the brands that align with your values and seek out those experiences that bring you joy because those are the experiences that will shape the future of retail.

It’s about voting with your wallet, you know? Absolutely. And speaking of shaping the future, let’s dive back into this JLL report. There’s so much more to uncover. Now, this report paints a fascinating picture of a future where retail isn’t just confined to malls or shopping centers. It’s integrated into every aspect of our lives.

Integrated retail, I like the sound of that. Right, they call it retail everywhere. Imagine a world where retail spaces are seamlessly blended with our living spaces, our workplaces, our communities. So it’s not just a place you go to shop. It’s part of your everyday life. Exactly. Imagine living in a mixed use community where everything you need is right there within walking distance.

Apartments, offices, medical clinics, restaurants, shops, all in one place. That sounds delicious. Incredibly convenient. It does, doesn’t it? Yeah. And it’s not just about convenience. It’s about creating a sense of community, a more holistic lifestyle. And it’s already happening in some places. It is. Zoning laws and market demands are actually pushing this trend in many countries.

So it’s not just a pipe dream. It’s becoming a reality. It is. And we’re already seeing examples of this. IKEA, known for their massive stores, they’re starting to open smaller locations in cities to be closer to their customers. That makes sense. It is. Supermarkets are testing out mini market concepts, and even malls are being redeveloped to include apartments and other uses.

It’s like retail is becoming part of the fabric of our daily lives. It’s becoming more accessible, more integrated. Absolutely. And here’s where things get really interesting. The report suggests that as our lives become more and more digital, the value of those authentications

So it’s not a zero sum game. It’s not digital versus physical. It’s not. It’s like a pendulum swing. We love the convenience of online shopping, but we also crave those real world connections, those tangible experiences. We need that balance. We do. And the report highlights trends that are already happening.

Think about the popularity of those high end coffee shops, those restaurants with real waiters, and just the desire to touch and feel products before we buy them. To experience them with all your senses. Exactly. It’s a reminder that even in the digital world, we’re still human. We still crave that human connection.

We’re social creatures by nature. We are. But here’s the question. The report also talks about increased automation, particularly in restaurants. So how does that fit in with this desire for human interaction? It’s a good question. And. The report does predict we’ll see more automation in those quick service and fast casual restaurants.

So like, fast food places. Exactly. And robots will likely be handling a lot of those behind the scenes tasks, like cooking and food prep. So robot chefs? Exactly. You might still have a human server taking your order. But a robot could be preparing your meal. It’s a brave new world we’re entering. It is, but I think it’s about finding the right balance, you know?

Agreed. Integrating technology to improve efficiency and explore new possibilities, while still preserving those human elements that we value. That human touch. Exactly. It’s not about robots replacing humans entirely, it’s about finding ways to work together. To create a better experience for everyone.

Exactly. And the report doesn’t stop there. It goes even further. Talking about the potential for mixed reality experiences. Mixed reality. What’s that? Imagine amusement parks that combine physical activities with augmented reality adventures, or those incredible immersive cinematic experiences offered by companies like Sandbox VR.

It sounds amazing. It is. It’s about blurring the lines between the real and virtual worlds to create something truly unique and engaging. It’s like taking entertainment to a whole new level. Exactly, and this all ties into what the report calls retail science, using data and AI to create a more personalized shopping experience.

So data driven retail, we talked about that earlier. We did, but this is about taking it to the next level. How so? Imagine retailers becoming retail scientists, using data to analyze things like shopper lifestyles, walking habits, even psychographics, which is the study of people’s attitudes and aspirations.

So they’re really getting to know their customers. They are. It’s about understanding their customers on a much deeper level and creating experiences that resonate with them. So each store location of a chain could offer different products and services based on the preferences of the local community.

Exactly. It’s like creating a unique shopping experience for each neighborhood. That’s personalization at its finest. And loyalty programs are getting a major upgrade, too. Imagine personalized deals and incentives based on each shopper’s preferences and perceived value. So it’s not just about earning points.

It’s about getting rewards that you actually want. Exactly. Building deeper relationships by understanding what people truly need and offering them something genuinely valuable. So we’ve got drones, robots, AI, data galore. Microsoft Mechanics But what about the bigger picture? What role will retail play in creating a more sustainable and inclusive future?

That’s a crucial question, and the report definitely addresses it. Good, because it’s important. It highlights the growing importance of sustainability and inclusion, emphasizing that businesses need to contribute positively to their communities. It’s not just about profits anymore. It’s about making a difference.

Exactly. And the JLL Global People Experience Survey actually found that a significant 79 percent of respondents believe businesses should contribute positively to their communities. So consumers are looking for brands that align with their values, brands that are doing good in the world. They are. They want to feel good about where they spend their money.

And the report stresses the role of retail. In promoting a circular economy, reducing waste, encouraging recycling, and incorporating sustainable practices throughout the supply chain. It’s about making sustainability a core part of the business model. And we’re already seeing some encouraging examples of this, like H& M with their clothing recycling program.

Right, and in Sweden there’s Retuna, an entire shopping mall made from recycled materials. That’s incredible. It is. And the report also emphasizes the need for inclusive design, creating retail spaces that are accessible and welcoming to people of all abilities, ages, and backgrounds. So everyone feels welcome.

Exactly. It’s about making sure that everyone has a positive and enjoyable shopping experience, no matter who they are or what their needs may be. Absolutely. So the future of retail, it’s not just about cool technology and fancy gadgets. It’s about using those things to create a more human centered, sustainable and inclusive experience for everyone.

It’s about creating a better future for retail. And for the world. Exactly. And that’s what we’ll continue to explore as we dive deeper into this GLL report. So stay tuned for more insights into the future of retail. This deep dive into the future of retail has been quite the eye opener. It really has.

We’ve explored so much. Drone deliveries, those drones. Digital twins, retail superstars, sustainable shopping malls, AI powered everything. It’s clear that we’re in the midst of a retail revolution. A retail revolution. It is. And it’s happening faster than ever before. But here’s the key takeaway. This evolution isn’t just about adopting the latest technology.

It’s about understanding what shoppers like you truly value. What matters to people. Exactly. And creating experiences that are not only convenient and personalized, but also meaningful to people. You know, experiences that align with your values. Experiences that resonate. Exactly. So as we wrap up this deep dive, I want to leave you with one final thought provoking question.

Okay, hit me. In a world where you can have almost anything delivered right to your doorstep with a click, what would make you choose to go shopping in person? That’s the question, isn’t it? It is. What kind of experience would be so compelling, so enticing, that you’d actually choose to venture out into the real world, interact with products, connect with people, maybe discover something new?

It would have to be something special. It would, wouldn’t it? And it’s a question worth thinking about because the future of retail, it’s not predetermined. It’s being shaped right now by the choices that we make as consumers and consumers. Every single day. So we have a say in this. We do. We have the power to shape the future of retail.

So as you navigate this ever evolving landscape, be mindful of your choices, support brands that align with your values, and embrace those experiences that bring you joy. Because those are the experiences that will ultimately define the future of retail. They are. And remember, this conversation is far from over.

We’d love to hear your thoughts, your predictions about the future of retail, what excites you, what concerns you, share your ideas, because this is a future that we’re creating together. One purchase, one experience, one conversation at a time. It’s an exciting time to be a shopper. It is, so until next time, happy shopping everyone.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of January 03, 2025

Commercial Real Estate News – Week of January 03, 2025

Click below to listen: 
Commercial Real Estate News – Week of January 03, 2025

Transcript:

 Welcome back to the deep dive today. We’re going to be diving deep into commercial real estate trends, shaping the industry in 2025, looking forward to it. Yeah, me too. And we’ve got some really cool articles from Bizno and the local profile to kind of help us guide the conversation. Great sources. So yeah, by the end of this deep dive you should have a really clear picture of what’s hot, what’s not, and what to watch out for in the coming year.

Absolutely. Yeah. It’s really interesting to see all the changes happening right now and kind of how dynamic this landscape has become. For sure. So let’s just jump right in. Let’s do it. Amazon. Yeah. Normally we think of them as like gobbling up real estate, you know, for all their, you know, warehouses and distribution centers.

Yeah. Makes sense. But it seems like they’re shifting gears a little bit. Yeah they’re definitely, moving away from warehouses and focusing more on data centers, which yeah, on the surface seems a little counterintuitive, but you know, when you look at the bigger picture, it starts to make a lot of sense.

So break it down for us. What’s driving this shift? Well, you know, a couple of things e commerce growth has, you know, kind of slowed down a little bit for Amazon. They’re sitting on a lot of cash. And at the same time, you have this huge demand for Cloud computing, you know, all fueled by, you know, AI and all these data heavy technologies we’re using and data centers are absolutely essential for that.

You know, they’re really putting a lot of their, you know, resources into, you know, building out these data centers. In fact, they acquired over 3000 acres. Wow. Across 14 states in 2024, primarily for data centers. That’s a lot of land. It is. What does that mean? I mean, for just the overall, you know, data center market, you know, the Amazon, like getting into it in such a big way.

Well, you know, you got to think it’s likely to increase competition. Potentially drive down prices, you know, with them kind of coming in and being such a big player, other data center providers, they’re gonna have to, you know, really step up their game to stay competitive. Yeah. And this could be really good for businesses that rely on cloud computing because it could lead to more innovation and better services.

Interesting. Okay. So it sounds like even though this might seem like a little bit of a departure for Amazon from their traditional real estate strategy, it’s actually, You know, a pretty smart move. Yeah, I think so. In a rapidly growing market. But this begs the question, you know, if Amazon is moving away from warehouses, does that mean the future of retail is completely online?

Well, not necessarily. Okay. In fact, we’re actually seeing a resurgence of a retail format that a lot of people thought was on the decline, strip malls. Strip malls? Really? Yeah. I thought those were like going away at the dinosaurs. Yeah, I know a lot of people did. Yeah. Yeah. But. You know, they’re actually outperforming indoor shopping malls in terms of occupancy and investor interest.

You know, there’s a few reasons for this. The pandemic kind of, you know, spurred this renewed interest in, you know, shopping local, supporting local businesses. Right. And strip malls, you know, they house a lot of those types of businesses. And then, you know, strip malls also offer more affordable rents.

Compared to enclosed malls, which is really attractive to smaller businesses, startups. Yeah, that makes sense. And they offer that kind of convenience factor too. Absolutely. Usually there’s like a good mix of businesses in there, like restaurants and salons, dry cleaners, gyms. Yeah, he got it. You know, you can kind of get everything you need in one place.

It’s that convenience factor and accessibility that you don’t always find in those bigger malls. For sure. And a lot of the businesses you find in strip malls are kind of Amazon proof. Right. Like you can’t, you know, Amazon can’t give you a haircut. Exactly. So fix your phone. Amazon doesn’t do manicures yet, there you go. You know. Yeah. So it seems like there’s still a place for You know, those brick and mortar stores. For sure. You know, especially the ones that cater to local needs. Yeah. Definitely. All right. So let’s shift gears a little bit and talk about a region that’s been seeing a lot of growth.

Texas. Oh yeah. Texas is a hotbed of activity right now. Lots of population growth and a lot of commercial real estate development. Right. One city that’s really standing out is Fort Worth. Interesting. They’re actually outpacing even Austin in population and job growth. Really? Fort Worth? What’s driving that?

Well, a lot of factors they’ve got a really diverse economy, strong job growth in industries like healthcare manufacturing logistics. Okay. And you know, they also have a relatively affordable cost of living compared to other major Texas cities. So it’s attractive to both businesses and residents.

Right. So it sounds like Fort Worth is doing pretty well. Yeah, they are. But we’ve also been hearing about some challenges in the Texas office market, you know, with those record high CMBS delinquencies. That’s right. CMBS loans. Those are commercial mortgage backed securities. Right. Right. They’re often used to finance, you know, these large commercial properties, including office buildings.

Right. And when these loans become delinquent, it can be a sign of trouble in the market. Yeah. And in Texas, roughly 11 percent of office buildings tied to CMBS loans were delinquent in December 2024. Wow. That’s the highest level ever recorded. Really? Even surpasses the peak of the Great Recession. That’s concerning.

It is. What’s behind those rising delinquencies? Well, it’s a combination of factors. Rising interest rates are putting a lot of pressure on borrowers. Right. And a lot of office buildings are really struggling to maintain occupancy as more companies embrace remote or hybrid work models. So it’s creating this kind of perfect storm for the office sector.

So you have these two things happening in Texas, you know, booming population growth and you know, all this development. And then you have this kind of struggling office market. So how did those two trends connect? Well, you know, it’s a complex situation. Yeah. While Fort Worth’s overall economy is strong, the future of office space in the state remains uncertain.

Right. How companies adapt to, you know, these changing work patterns and rising interest rates, that’s going to play a crucial role in shaping the, you know, long term health of the office market. Right. It sounds like we need to pay close attention to how these trends unfold. We do. On the one hand, you have these thriving cities like Fort Worth.

Yeah. Attracting all these new residents and businesses. Yeah. And on the other. You have this potential for a pretty significant shift in the office market as companies are rethinking their real estate needs. Absolutely. And this is where technology is really starting to play an interesting role. Okay.

One area where we’re seeing this is in the use of artificial intelligence for apartment rent collection. AI for rent collection. Tell me more. Yeah. So companies like Alisa AI are developing platforms that automate communication with tenants. Okay. You know, they streamline the rent collection process, which could potentially increase efficiency and reduce bias.

Okay. That sounds promising in terms of efficiency, but what about the human element? You know, could this lead to a more Impersonal or even dehumanizing experience for tenants. That’s a valid concern for sure. You know, there are some ethical implications we need to consider when we start automating these sensitive processes, especially when you’re dealing with people’s homes and their livelihoods.

Are there any like legal or regulatory discussions happening around this? Yeah, absolutely. Legal experts and tenant advocacy groups are raising concerns about the potential for bias in AI algorithms and the need for transparency in how these systems make decisions. So while it could, you know, potentially make things easier, there are some, definitely some things to consider.

There are. As this trend evolves. It’s definitely something to watch closely. Okay, well, let’s move on to something a little bit more positive. Okay. Okay. There’s a really cool development happening in Los Angeles that I think is worth highlighting. Oh, yeah. Tell me about it. So there’s a company Thrive Living.

Okay. And they’re planning to build this 800 unit apartment complex on top of a Costco. Wow. In Baldwin Village. Okay. And it’s a mixed use development, so it’s going to feature a rooftop pool. Wow. And other amenities. And they’re really aiming to reduce reliance on government subsidies. Wow, that’s really interesting, an apartment complex on top of a Costco.

Wow. Yeah, I know, right? That’s thinking outside the box. It is, at a rooftop pool, too. You know, this project really tackles a lot of challenges at once. You know, it addresses affordability, you know, density, community integration. For sure. And they’re using offsite modular construction to speed up the building process, which is also pretty innovative.

Yeah, I think it’s incredible to see, you know, these creative solutions coming out to address affordable housing challenges. Right. You know, I think this model could be replicated in other areas. Yeah, what are the possibilities? You know, imagine, you know, building these complexes on top of shopping centers, parking garages, even schools.

Absolutely. You know. It’s all about maximizing land use and creating these vibrant mixed income communities. I love it. All right, before we wrap up this part of our deep dive, I have to ask you about someone who’s been making a lot of waves in the Texas real estate market. Elon Musk. Oh, yeah. Elon Musk.

You can’t talk about Texas real estate without mentioning him. No, you can’t. So his Texas real estate portfolio is valued at 1. 6 billion. Staggering 3. 4 billion. It’s unbelievable. Yeah, he’s got everything from futuristic communities like Snail Brook and Starbase. Yeah. To industrial projects. Yeah.

Personal residences. I mean, he’s really shaping the Texas landscape with his ambitious projects. For sure. But his ventures aren’t without controversy. No, they’re not. So what are some of the concerns? Surrounding his projects, well, there are environmental concerns, you know, with his rapid development and focus on industrialization.

Some people are raising questions about sustainability and the impact on local ecosystems. So while his presence is undoubtedly a driving force. Yeah, you know, it’s important to consider. You know, the potential downsides as well, right? All right. Well, it seems like Texas is like this microcosm of all the broader trends that we’re seeing in commercial real estate.

Yeah. You know, explosive growth, shifting work patterns, the growing influence of technology, definitely all against this backdrop of economic uncertainty. Absolutely. It’s creating a lot of challenges and a lot of opportunities for, you know, investors, developers, and communities. Yeah, for sure. We’ve covered a lot of ground in this first part of our deep dive.

We talked about Amazon’s shift to data centers, the surprising resurgence of strip malls, the booming But complex Texas market, right? The ethical considerations of AI and rent collection and a glimpse into Elon Musk’s impact on the Texas landscape. We also saw some really innovative approaches to affordable housing.

Yeah, like that project in Los Angeles where they’re building apartments on top of a Costco. Yeah, it’s amazing. It’s a good reminder that there are some really creative solutions out there. For sure. If we’re willing to Think outside the box. I love that. All right. So before we move on to the next part of our deep dive, what stood out to you the most from what we talked about so far?

Well, you know, what really struck me is just the sheer variety of forces shaping the commercial real estate landscape right now. Yeah. You know, we have these tech giants like Amazon making these strategic moves, right? You have evolving consumer preferences, driving trends like the comeback of strip malls, and then these innovative solutions are merging to tackle issues like affordable housing.

Sure. Sure. It’s a dynamic and complex industry. Yeah, it is. And I’m eager to delve a little deeper into the retail sector in our next segment. Me too. We’ll be back soon to explore what’s happening in retail, including the surprising comeback of a beloved bookstore chain and major developments in the Dallas Fort Worth area.

Yeah, it really is amazing how much the retail sector has had to, like, adapt. You know, to today’s environment, we were just talking about how, you know, strip malls are attracting investors. And now we’re going to talk about a bookstore chain that a lot of people had totally counted out. You’re talking about Barnes and Noble.

Yeah. I love it. I was one of those people. Yeah. I thought their days were numbered. Yeah. Everyone buys books online. It’s true. You know, the rise of online retailers like Amazon had a huge impact on traditional bookstores. Right. But Barnes and Noble, they’ve managed to stage like a remarkable comeback.

Their CEO, James Daunt, he implemented this strategy that focused on quality over quantity. Okay, so what exactly did they do? Well, instead of trying to be everything to everyone, they kind of curated a more selective inventory. Oh, okay. Focusing on, you know, books that appeal to their core customer base.

Right. They also embraced smaller store formats. Okay. And they returned to some of those remote markets that they had previously abandoned. So they basically downsized and, like, went back to their roots. It sounds like they were able to capitalize on, like, you know, that charm and experience of a physical bookstore.

Exactly. And it seems to be resonating with customers. Don recently said he felt pretty confident about the holiday season. Oh, wow! Which is typically make or break for the bookselling industry. It’s a good reminder that sometimes, you know, going back to basics and focusing on what you do best can be a winning strategy.

It is. It reminds me of those strip malls, you know, focusing on the things that Amazon can’t do instead of trying to compete head on. It’s a similar concept. You find your niche and you cater to a specific audience. But speaking of successful retail, let’s move from a national chain to a specific region.

That’s seen a lot of retail developments in the Dallas Fort Worth area. Yeah, DFW always seems to be booming. It does. It’s currently experiencing a surge in development activity. Okay. Particularly in Frisco. Frisco. We have these reports detailing six major projects that are shaping the city’s future.

Six. That’s a lot. It is. What kind of developments are we talking about? Well, one that really stands out is called FIELDS. FIELDS. It’s a massive 2, 500 acre master plan development. Wow. It’s going to include residential units, retail spaces, entertainment venues, restaurants, basically a mini city within a city.

2, 500 acres, that’s enormous. It is. It sounds like they’re building a whole new community from scratch. They are, and within Fields, there’s a section called Fields West, which is being designed with a more urban feel. The goal is to create a walkable environment that fosters a sense of community and caters to the needs of residents and visitors alike.

It sounds like they’re going for that, like, live work and play environment. Exactly. And speaking of play, they’re also building a universal kids resort in Frisco, which is expected to be a huge draw for families and tourists. A universal kids resort. That’s a game changer. It is. It’s projected to generate a lot of tourism revenue, create thousands of jobs.

Wow. And give local businesses a boost. It’s scheduled to open in mid 2026. Okay, so something to look forward to. It is. It’s incredible how one project can have such a ripple effect on like the entire region. Right. What other notable developments are happening in Frisco? Well, they’re revitalizing their downtown area with a 69 million project.

The focus is on making it more pedestrian friendly and creating those public gathering spaces. They’re also investing heavily in infrastructure with a major project to expand the Dallas North Tollway. So they’re not just building new things, they’re also improving the existing infrastructure and public spaces.

Exactly. It’s a very comprehensive approach to development. Yeah. They’re really Planning for the future and ensuring that Frisco remains attractive to businesses and residents. But it’s not just Frisco that’s attracting attention. McKinney, another suburb in the DFW area, is also experiencing a surge in development.

Yeah, McKinney just broke ground on a new 27 million shopping center. Wow. It’s a direct response to the city’s population boom and the increasing demand for retail and entertainment options. Development often follows population growth. It does. Are there any concerns about affordability as these areas grow so rapidly?

That’s a really good point. It’s crucial to make sure that this growth benefits everyone and doesn’t, you know, price people out of their communities. Right. We were just talking about those innovative affordable housing projects in Los Angeles. Right. DFW. Yeah. Speaking of affordable housing. We have some information here about manufactured housing communities.

MHCs? MHCs, yeah. Seems like they’re facing some challenges. Yeah, they have traditionally been an important source of affordable housing. Right. But recently there’s been this trend of private equity firms buying up these communities. Okay. Which is raising concerns about, you know, potential rent increases and displacement of residents.

That’s a tough situation because on one hand, institutional investment could bring much needed capital. Right. For improvement. For sure. But then on the other hand, you had this risk that, you know, investors might prioritize profits over the needs of the residents. Exactly. It’s a double edged sword. And this issue has become so contentious that some states are actually considering rent control measures.

Rent control. Specifically for MHCs. Wow. Okay. Which what? Well, politicians in states like New Jersey and Pennsylvania are pushing for legislation that would limit annual rent increases in MHCs. So it sounds like they’re trying to find a way to protect residents without discouraging investment in these communities.

Right. It’s a delicate balance. It’ll be interesting to see how this plays out. It will. Speaking of things to watch, earlier we talked about Amazon’s move into the data center market. Right. Are they alone in this? They are not. Data centers are a growing trend in commercial real estate. Okay, so why is that?

Well, the demand for data storage and processing power is exploding, driven by everything from cloud computing to artificial intelligence, and that means we need more data centers. So what are the implications of this trend for the real estate market? Well, data centers require massive amounts of space and power.

Yeah. Developers are scrambling to find suitable locations. Okay. That can accommodate these specialized facilities. They need to be in areas with reliable access to high speed internet infrastructure. Right. And robust power grids. It’s amazing how, you know, these technological advancements in one sector can have, you know, ripple effects in another.

It really highlights how interconnected our world is. It does. And speaking of interconnectedness, let’s bring our conversation back to the office market and those concerning CMBS delinquencies we were talking about earlier. Yeah. Are we seeing like a fundamental shift in how and where people work?

That’s the million dollar question. It is. You know, we talked about those challenges facing the office sector. Right. Especially with the rise of remote work. Yeah. Where do we go from here? Well, it’s clear that the traditional office model is evolving. We’re seeing a shift towards more flexible work arrangements.

Companies are embracing remote work hybrid models and co working spaces. So is the office market doomed? I don’t think so. Okay. I think we’ll see a more nuanced approach. Okay. Some office buildings will likely be repurposed. Okay. For other uses like residential or mixed use developments. Right. Others will be renovated to better accommodate the needs of modern workplaces.

So what kind of renovations are we talking about? Well think about things like open floor plans that encourage collaboration. Okay. Flexible workspaces that can be easily reconfigured. Right. And amenities that prioritize employee well being like fitness centers, outdoor spaces, and on site childcare. It sounds like the Office of the Future is going to be a lot different than the Office of the Past.

Yeah, it’s going to be more focused on creating a positive and productive environment for employees rather than just providing a desk and a chair. But what about those office buildings that can’t be easily adapted? That’s a good question. We might see a rise in the popularity of suburban office parks.

They often have more space and flexibility for adaptation. They also offer a less congested environment, which can be appealing to employees who are tired of long commutes. So the office market isn’t dead. No. It’s just undergoing a transformation. Exactly. And the key for investors and developers is going to be to adapt to these changing dynamics.

Right. And find those creative solutions that meet the needs of the modern workforce. Okay, so let’s shift our attention now to some specific examples of how these trends are playing out. Okay. In real world markets. We’ve got some interesting case studies to dive into. Oh. Alright, so we’ve talked about a lot of really fascinating trends.

You know, everything from the surprising comeback of strip malls and Barnes and Noble to the rise of data centers and Elon Musk’s Texas Empire. A lot. But before we wrap up this deep dive, I think it’s time to kind of, you know, address the elephant in the room, those record high CMBS delinquencies.

Yeah, you’re right. We touched on this earlier, but it’s definitely worth, you know, digging a little deeper. Okay. Just as a reminder for our listener. Yeah. CMBS loans are a type of commercial mortgage that’s often used to finance, you know, large properties like office buildings. Right. And the fact that, you know, delinquencies on these loans have surpassed even the peak of the Great Recession is definitely, you know, a cause for concern.

So are we talking about like a potential crisis in the office market? Like how bad is it really? Well, crisis might be a strong word, but the numbers are definitely alarming. As of December 2024, roughly 11 percent of office buildings tied to CMBS loans were delinquent. That’s significantly higher than the 10.

7 percent peak we saw during the Great Recession back in 2012. So what’s driving this? I mean, is it solely due to the rise of remote work or are there other factors at play? Well, remote work is definitely a major factor, but it’s not the whole story. You know, rising interest rates are also putting pressure on borrowers, making it more expensive to service those loans.

And then you have this overall, you know, economic uncertainty that’s making businesses hesitant to commit to long term leases. Right, so it’s like this combination of factors that’s creating this perfect storm. What does this mean for the future of office space? Are we all just going to be working from home?

You know, I don’t think it’s quite that simple. The office isn’t going away entirely, but it’s definitely undergoing a transformation. Okay. This traditional model of everyone working in a central office five days a week, you know, it’s becoming less and less common. So what’s replacing it? Well, we’re seeing a rise in these hybrid work model where employees are splitting their time between the office and home.

Right. And then, you know, co working spaces are becoming increasingly popular. You know, they offer that flexibility in a sense of community for. Freelancers and remote workers. So the office is becoming more of a destination, like a place for collaboration and connection rather than just a place to, you know, sit at a desk.

Exactly. And that means, you know, office buildings need to adapt. We’re already seeing this trend, you know, towards more flexible and amenity rich workspaces. Right. Think open floor plans, collaborative areas. Fitness centers, outdoor spaces, you know, things that make the office a more attractive and engaging place to be.

So if you’re going to ask people to come into the office. Right. You got to give them a reason to get out of their, you know, comfortable home offices. Yeah, for sure. But what about all the existing office buildings that weren’t designed with this new reality in mind? Wha? What happens to them? That’s a big question.

Yeah. Some will be renovated and adapted. You know, to meet the needs of the modern workforce. Okay. Others might be repurposed for different uses altogether. Okay. We might see office buildings converted into residential units. Thanks. Hotels or even data centers. Oh, wow. Okay. Like we were talking about earlier.

It sounds like the office market’s kind of in a state of flux right now. It is. Lots of uncertainty about what the future holds. Yeah. There’s definitely a lot of change happening. Yeah. But, you know, I think it’s a really exciting time to be in commercial real estate. Okay. It’s an opportunity to rethink how we work, how we live.

Yeah. Yeah. How we design the spaces that bring us together. I like that it’s not just about doom and gloom. It’s about adaptation and innovation. Exactly. Finding those new solutions. And remember, real estate is all about location. Right. The areas that can adapt to these changes and create, you know, these attractive, vibrant, and functional spaces.

Yeah. Those are going to be the ones that thrive in the long run. Well said. All right. So we’ve covered a lot of ground today. We started with Amazon’s shift to data centers. Right. Explored the surprising resilience of strip malls and Barnes Noble. Right. Took a deep dive into the booming but complex Texas market.

For sure. And grappled with this evolving nature of the office. Yeah. And we even touched on, you know, the rise of AI and rent collection and the challenges facing manufactured housing communities. It’s been quite a journey. What’s the key takeaway for our listener? You know, I think it’s that the commercial real estate landscape is dynamic and constantly changing.

Yeah. It’s not a static industry. You have to stay informed, be adaptable, and think outside the box to succeed. Exactly. And who knows what new trends and challenges are going to emerge in the years to come. Right. It’s an exciting time to be watching this industry evolve. Well, on that note, I think it’s time to wrap up this deep dive.

Thank you so much for joining me today and sharing your insights. It’s been my pleasure. And to our listener, thank you for tuning in to The Deep Dive. We hope you found this exploration of commercial real estate trends informative and thought provoking, and until next time, stay curious.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of December 27, 2024

Commercial Real Estate News – Week of December 27, 2024

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Commercial Real Estate News – Week of December 27, 2024

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 All right. Get ready. Cause we’re going deep into retail this week. Yeah. The week of December 27th, 2024. And while you’ve given me a really fascinating mix of sources for this one. Oh yeah. Yeah. We’ve got real estate reports, articles about specific companies. We’ve even got some consumer behavior analysis.

Seems like we’ve got a pretty good snapshot of where retail is right now. You’re right. With all its complexities. Definitely. Lots of contradictions too. Exactly. So what we’re going to try to do in this deep dive is help you make sense of it all. Right? Mm hmm. What are the forces shaping the future of retail?

Should you be paying attention to? And where are the surprises hiding? I think you’re right. There are definitely some surprises in this data. For sure. And I think a good place to start might be with the surprisingly resilient economy you mentioned. Yeah, okay. The U. S. economy, you know, projected to grow 2 to 4 percent in 2025.

Wow. Which makes it a global bright spot, really. Really good news for retail, right? Absolutely. Absolutely. Strong economy usually means more people spending. Yeah, more consumer spending. Exactly. Exactly. But here’s where things get interesting. Okay. The commercial real estate market is also seeing, um, really low supply levels.

Oh, wow. Which is pushing up those rental prices. So it’s a landlord’s market. It is. Across the board. Residential. Industrial. Yeah. And, yep, retail. All of them. So even before we get to specific stores. Right. Or trends even. Yes. It’s important to understand this backdrop, you know? It is. It’s crucial. It is crucial because it means retailers are operating in an environment where Costs are high.

Costs are high. But But the potential for profit is high. Yeah. If they can attract If they can attract those All those spending dollars. Yeah. Precisely. Okay. Now, there’s one sector that’s not quite as rosy, though. Office space. Okay. High vacancy rates. Yeah. And we’ve got those rising interest rates.

They’re really creating Refinancing pressures. Yeah. Refinancing pressures for a lot of companies. Yeah. Some developers are even looking at, uh, this is interesting, office to residential conversions as a way to adapt. Makes you wonder, if those conversions happen, will they create new retail opportunities in those transformed neighborhoods?

It’s a good question. It is, yeah. It’s something to think about. But for now, let’s get back to those retail hotspots. Okay. And all the data’s pointing south. Way south. Measly. Way south. The Sunbelt’s dominance in retail is undeniable. I mean, it really is. Cities like, you know. Oh yeah, hit me with them.

Phoenix, Las Vegas, Atlanta, Orlando. Huge. They’re topping the charts in terms of performance. Yeah. Strong population growth. Uh huh. Business friendly policies. For sure. And that, uh, that desirable lifestyle that everyone wants. Yeah. Drawing people in. Drawing people in. Exactly. But there was one surprise in the top 10 best performing retail markets.

Oh. What’s that? Columbus, Ohio. Interesting. The only non sunbelt city to make the cut. Hmm. Columbus seems to be benefiting from a few key factors, though. Like, well, we’ve got the growth of Ohio State University, and then also major investments from, uh, you know, big tech giants like Intel and Amgen. Meta.

Meta. Meta. Yeah. So it’s not just the sunbelt, but it is hot. It’s hot. Okay. Ready for a blast from the past. Okay. Strip malls are making a comeback. Ah, the humble strip mall. Remember those? I do. They’re experiencing a resurgence, big time, strong leasing activity and vacancy rates even lower than indoor malls.

That’s interesting. That one surprised me. Yeah, me too. So what’s driving this strip mall revival? Well, a few things. Okay. Um, first, They’re largely Amazon proof. What do you mean by that? Meaning they’re anchored by those businesses that people just need to visit in person. Okay. You know, like grocery stores or pharmacies.

Makes sense. Those everyday errands, you know? Yeah. Bring in the foot traffic, which benefits the whole center. Right. Exactly. Okay. They also tend to have a lot of, uh, local Service oriented businesses. Like, give you some examples. Mail salons, dry cleaners, restaurants. All that good stuff. Yeah. All those things that are harder to replace with online shopping.

Right. Right. And then also, from a business owner’s perspective, the rents are often more affordable in strip malls. Makes them attractive. Very attractive to both tenants. And investors. And investors, yeah. Yeah. Some are even seeing them as, um, what they call value add opportunities. What does that mean?

Meaning they can buy the property, improve it, and then increase its value. So maybe the next time I’m, you know, driving through my local strip mall, I should be thinking of it as a potential investment opportunity. It’s a great example of how what’s old can become new again. Yeah, it really is. Especially when it meets the needs of today’s consumers and businesses.

Absolutely. But strip malls aren’t the only format showing resilience, are they? No, they’re not. We’re also seeing the power of those, uh, what do they call them, dense retail clusters. Yes. Whether it’s a bustling high street in a city. Yep. Or a vibrant, you know, suburban town center. Right. People just crave that sense of place.

You know, a destination, a shopping destination. With energy. With energy, variety, that’s something you just can’t replicate online. It’s the experience. Yeah. And these dense retail areas are seeing high foot traffic. Definitely. Which is driving up those rents and attracting those investors. For sure. So, whether it’s a revitalized strip mall or a buzzing city street, you know.

Right. The takeaway is clear. What’s that? People still value those physical shopping experiences. They do. Especially when they offer something unique and engaging. For sure. Okay. You’re welcome. But, as we know, you know, consumer behavior is constantly evolving. Always changing. It is, yeah. Yep. Even with some economic uncertainty, November retail sales actually exceeded expectations.

Wow. Yeah. So that tells us that The American consumer is Is still willing to spend. Especially heading into the holidays. Yeah. Right. Exactly. It’s like a vote of confidence for the retail sector. It is. Yeah. Exactly. Okay. And speaking of things people are spending money on Yes. Let’s talk about a trend that I think is going to make everyone’s mouth water.

Okay. Fried chicken. Oh, I love fried chicken. Visits to fried chicken restaurants are through the roof. Really? Yeah, and it’s not just those big chains. Eh. Even smaller brands are seeing strong growth. Like what? So you’ve got those established players like Raising Cane’s, Dave’s Hot Chicken, Church’s Chicken.

They’re all expanding. Right. But then you’ve also got up and comers like Urban Bird Chicken and Lane’s Chicken Fingers attracting, like, these loyal followings. That’s interesting. It is interesting. So what’s driving this fried chicken frenzy? I don’t know, is it comfort food in uncertain times? Desire for indulgence?

Maybe. It’s probably a combination of factors, you know? Yeah. But I think it also speaks to that desire for experiences we were just talking about. You could easily order delivery, but people are choosing to go to these restaurants. They are. You know, it’s about the atmosphere, the social aspect, maybe even a bit of nostalgia.

Yeah, maybe those long lines are part of the appeal. Could be. But it’s not all about comfort food. Some more traditional retail categories are making a comeback too. Oh really? Like what? Remember bookstores? Oh yeah, I love the bookstores. Well Barnes Noble is seeing a resurgence. Interesting. More customers making dedicated trips to their stores.

Wow. Showing that renewed appreciation for that, you know. That physical bookstore experience. Yeah, that physical bookstore experience. It aligns with this broader trend of the return to experiences. I love that. You know, after years of being cooped up at home, people are eager to get out, connect with others, engage with their communities.

Yeah. Whether it’s dining at a favorite restaurant or browsing through a bookstore, these experiences offer something that online shopping just can’t replace. It’s a really powerful reminder that retail is about more than just transactions. Absolutely. It’s about creating a sense of place, fostering connections, offering experiences that resonate with consumers.

Couldn’t have said it better myself. However, not all retail stories have a happy ending, right? Unfortunately not, no. We also came across a company that’s struggling, even in this relatively healthy economic environment. Yeah, the Container Store. The Container Store, oh wow. Yeah, the home organization retailer.

Filed for Chapter 11. Chapter 11, Bankruptcy Protection. Wow. They’ve been hit by, well, a combination of things. Increased competition, higher expenses. Makes sense. And, interestingly, a sluggish housing market. The housing market connection surprised me. Yeah, it’s interesting, right. So when people aren’t moving as frequently, they’re less likely to invest in Home organization products.

Home organization products, yeah. It seems intuitive, but In hindsight! Yeah, in hindsight. Yeah, but it highlights how interconnected these various sectors of the economy really are. It’s like a domino effect. It is, yeah. And In the container stores case, it’s led to some difficult decisions. Unfortunately, yeah.

What’s the plan? Well, they plan to keep their stores open, at least for now. Okay. And emerge as a private company within the next two months. Wow. This situation raises some important questions about the challenges these businesses face. Specific retailers face, even in a relatively healthy economic environment, you know.

It’s a good reminder that even in a growing economy. Yeah. Not all businesses. Are guaranteed to succeed. Yeah. Adaptability and innovation are crucial. Crucial. Yeah. Especially in a rapidly changing retail landscape. Okay. Speaking of adaptability and innovation, let’s move on to a rivalry that’s heating up.

Okay. And could have some major implications for the future of retail. All right. Me with it. Amazon versus Walmart. The battle of the Titans. It is. It really is. Here’s where it gets really interesting. I’m ready. Amazon is diving head first into online auto sales. No way. Would this be the next big disruption?

That’s the million dollar question. It is. Amazon is definitely leveraging its vast ecosystem and brand power. I mean, how could they not? Right. And they’re partnering with Hyundai to build this, uh, direct to consumer approach. That’s a key difference from Walmart’s strategy. Yeah. How so? Well, Walmart is relying on its existing infrastructure.

Okay. And that physical presence to offer those auto services through partnerships with companies like CarSaver. Yeah. So Walmart is playing to its strengths. They are. Utilizing its vast network of stores. Uh huh. And it’s already established customer base. Huge. Yeah. So what do the experts think about this developing competition?

Well, Michael Zakor from 5 New Digitals Okay. Believes that Amazon’s strategy is all about building trust and familiarity. It makes sense. He points to the fact that Amazon’s starting with, uh, A smaller selection vehicles and focusing on those customer ratings and reviews just like they do with other products on their platform.

Classic Amazon tactic. It is, yeah. Start small, build trust, and then scale rapidly. Exactly. What about Walmart’s approach? Well, Arius Webster Berry from Webster Berry Marketing. Okay. He emphasizes the power of convenience. Yeah. And that existing infrastructure. Okay. He believes that Walmart’s ability to offer, um, a more seamless integration of online and offline services like, Like what?

Financing, maintenance. Okay. Will appeal to, uh, a broad range of customers. It seems like both companies have a solid chance of success. They do. But they’re approaching the market from very different angles. Exactly. And that’s what makes this rivalry so fascinating to watch. It is. It’s this classic battle of e commerce giant versus brick and mortar behemoth.

Each with their own Their own set of advantages. Yeah. This raises an important question, though. Oh, what’s that? What does the future hold for those traditional car dealerships? That’s a good question. Will they be able to compete Yeah. with these giants, or will they become relics of the past? Only time will tell.

I think only time will tell. But one thing’s for sure. What’s that? This competition is gonna be a game changer. It is, and it’s just one example of how the retail landscape is constantly Evolving. Yeah, you’ve gotta stay nimble, adapt to changing consumer preferences, and embrace those new technologies if you want to survive.

Survive. Could not agree more. Yeah, it’s an exciting time to be following retail. It is, it really is. Yeah, it’s like, it’s almost like watching this expert speaker. Giant game of chess, you know, with, with Amazon and Walmart making their moves. Strategic moves. Yeah, strategic moves and counter moves. But while they’re battling it out for market share.

Right. There are also some broader trends at play. Oh, absolutely. That are shaping the whole retail landscape. For sure, and one of the most interesting ones. Okay. Is this shift toward. What some people are calling the calling it experiential retail. Okay, it’s this idea that people are seeking out more than just products more than just Yeah, stuff, right?

They want they want an experience. They want a sense of community. Okay, a connection with the brands. The brands they support. The brands they support, exactly. So how are we seeing this play out? Well, take the, the resurgence of bookstores, for example. Okay. People could easily buy books online. Oh, yeah, for sure.

They’re choosing to go to physical stores. They’re going to Barnes Noble. They are, they’re going to Barnes Noble. And it’s not just about buying a book. It’s about the atmosphere, the, the discovery process. Right. The joy of just browsing. Browsing the shelves. Browsing the shelves. And maybe you find something unexpected.

It’s like a treasure hunt. It is, it is. It’s an experience that online retailers just can’t replicate. And bookstores aren’t the only one. No, not at all. We’re seeing this in the food and beverage industry too. Remember that fried chicken frenzy we were talking about? Oh yeah, how could I forget? People are choosing to dine in.

Yeah. At those restaurants. Even when they could order delivery. They could order delivery, stay home, put on their comfy pants. Exactly. But they’re not. They’re not. They’re going out. They are. They’re going out. They’re waiting in line. Yeah. It’s about the social aspect. The ambiance. The feeling of being part of something.

Yeah. Bigger than yourself. Like, those lines are a part of the experience. I think you might be right. And it speaks to this deeper human need. For connection. For connection and community. Yeah. Something that’s been so important. Absolutely. After years of, of social distancing, isolation, people are craving those real world interactions.

Yeah, they want to, they want to gather with friends, share meals, share meals, experience things together. And retailers are noticing. They are. They’re designing spaces that encourage interaction. Okay. Creating those events. Experiences that draw people in and focusing on that sense of community around their brands.

It’s a smart strategy. It is. Because at the end of the day. Yeah. It’s not just about selling products. It’s about It’s about building those relationships. Yeah. And creating those lasting connections. And customers. Exactly. Which are so valuable. They are. Especially now. Yeah. In a world where consumers have more choices than ever.

More choices than ever before. But speaking of choice. Yes. Let’s circle back to e commerce. Okay. Brick and mortar retail’s evolving. Mm hmm. But online shopping. Yeah. It’s still growing. It’s not going anywhere. At a rapid pace. It’s not going anywhere anytime soon. So what’s interesting to me is. Yeah. We’re seeing this convergence.

Oh interesting. Between the online and offline world. It’s like the lines are blurring. The lines are blurring. That’s a good way to put it. So retailers are using technology to enhance that in store experience. Yeah. And then those online platforms are trying to create those more personalized. Uh huh.

engaging shopping experiences. And consumers are benefiting from this. They are. Absolutely. They have more options. Right. More convenience and more control over how they shop. Think about the strip malls we were talking about. Good. They’re benefiting from the fact that they offer that mix of, um, you know, essential services.

Groceries. Yeah. Groceries, prescriptions. Things that are hard to buy online. Things that are hard to buy online, but they’re also adapting to the digital age. How so? By offering online ordering. Okay. Curbside pickup. All those other convenient services. It’s about meeting the consumer where they are.

Exactly. Whether that’s online. Yeah. Offline. Or somewhere in between. I like that. And that’s a key takeaway for anyone who’s involved in retail. Whether you’re Whether you’re a business owner, a business owner, investor, an investor, or just a consumer. The future of retail is really about creating those seamless and engaging experiences that blend the best of both worlds.

I love that. Blending the best of both worlds. Now, speaking of blending the best of both worlds, okay, let’s talk about another trend that’s a really reshaping retail, right? The rise of the omni channel consumer. Omni channel? What is that? So the omni channel consumer is someone who seamlessly moves between online and offline channels when they shop.

So like, give me an example. So they might. Browse products online. Then go visit a store to see the product in person. Uh. And then make the purchase using their phone. Oh, okay. So they’re using all the tools. All the tools at their disposal. Exactly. To create that personalized experience. And retailers are having to adapt this.

It seems like it would be hard to keep up. It is. It is. They need to create a consistent brand experience across all channels. That’s absolutely. Throughout the website. Social media. Social media, yeah. Physical stores. It’s a tall order. It is. But the retailers who can successfully navigate this, this omni channel landscape, Yeah.

They’re the ones who are going to win over the hearts and wallets. These savvy consumers. But these savvy consumers, exactly. So it’s not just about having a presence on multiple channels. Right. It’s about creating an integrated experience. A seamless experience. Where consumers can move between those channels easily.

Without having to, you know, repeat information. Start the journey over. Right, exactly. It’s about removing those. Those friction points and making the shopping experience as smooth and enjoyable as possible. So this requires retailers to invest in technology, technology, data analytics, customer relationship management tool.

Yeah. All of that. It’s a big investment. It is. But it’s one that’s probably going to pay off in the long run. Yeah, because consumers are looking for brands that, that understand their needs. Understand their needs and make their lives. Easier. Yeah. Easier. And those brands are the ones that are going to thrive.

In the years to come. Before we move on, I want to touch on something we mentioned earlier. Yeah. The role of technology in retail. Oh yeah. Yeah. Technology seems to be playing a bigger and bigger role. It really is. In every aspect. In every aspect of retail. From managing inventory. Uh. To customer service.

Uh, trucketing. To marketing. It’s everywhere. And we’re seeing some really innovative applications of technology emerging. Oh, like what? Well, some retailers are using AI, Okay. Artificial intelligence, To do what? To personalize product recommendations, Okay. Optimize pricing, Uh huh. Even create these virtual shopping assistants.

That sounds like something straight out of a sci fi movie. I know, it’s amazing how far technology has come. And it’s only gonna get, More sophisticated. More sophisticated. So, retailers who embrace these advancements, Yeah. Yeah. Yeah. They’re going to be able to create these truly personalized and engaging shopping experiences for their customers.

Like they’ll be able to anticipate our needs before we even know what they are. Exactly. And that level of personalization is incredibly powerful. It is. It can build loyalty, drive sales, and create a truly differentiated brand experience. So technology. While it’s often seen as a disruptor, in retail, it’s also an enabler.

It is. It’s giving retailers new tools and insights. Absolutely. To better understand their customers. And create more compelling. Shopping experiences. And this is especially important in today’s competitive landscape. Consumers again have more choices than ever before, more choices than ever before. Now, speaking of competition, okay, let’s circle back to that epic battle between Amazon and Walmart.

Oh yeah. The battle of the Titans. We talked about their move into auto sales, but they’re also competing fiercely in other areas like what? Like, grocery delivery, online marketplaces. It’s a rivalry for the ages. It is, it really is. And it’s impacting the whole retail landscape. It is, they’re constantly pushing each other to innovate.

To innovate. Lower prices. And improve that customer experience. It’s like they’re raising the bar. For everyone else. For everyone else. Which, you know, can be frustrating. It can be. For a competitor. But ultimately, it’s good for us. It’s good for the consumer. It is. We get more choices. More choices. Lower prices.

Lower. More convenient services. And this constant stream of innovation. So as we move into the final part of our deep dive. Okay. What’s the one takeaway you want our listeners to remember? I want them to, I want them to be an active participant. Okay. Don’t just shop. Observe. Observe, okay. Notice what’s working.

Uh huh. What’s falling behind. What excites you as a consumer. Okay. Because those are the clues. To where retail is heading. To where retail is heading next. Ooh. I like that. Are we talking about becoming like more conscious consumers? Yeah, yeah. Maybe even spotting those retail trends? Absolutely. Before they hit the mainstream.

Exactly. It’s about, you know, being aware of the forces at play, understanding your own needs and preferences. As a shopper, and maybe even asking yourself, what’s, what’s missing? What could make my experience better? Because maybe that’s the seed of the next big retail innovation. It could be. But before we get too far ahead of ourselves, right, let’s bring it back to the concrete takeaways.

Yeah. Good ideas from all these sources. We’ve covered a lot, a lot of ground. Let’s distill it down to what’s most important. All right. First off. Those macro trends. Right. They matter. They do. That strong U. S. economy. It’s a tailwind for retail. Yeah, it is. But so, are those high commercial real estate costs?

No, they are. You as a consumer might not see those directly. Right. But they influence everything. Oh, yeah. From store locations to pricing. They do. And it’s worth noting. How’s that? Those real estate trends are playing out differently across different sectors. Oh, interesting. Office markets facing challenges.

Right. Industrial and residential are strong. Uh huh. Retail sits somewhere in the middle. With certain formats, like those strip malls. Yeah. And dense clusters outperforming others. So for investors. Yeah. Those nuances are really important. They are. It’s not just about retail is good or bad. Right. It’s about understanding which segments are poised for growth.

Okay. So you’ve got those macro forces. Right. And then layered on top of that, you’ve got. That’s Sumer behavior. That ever changing landscape of consumer behavior. It’s always changing. And one thing that stood out to me. Yeah. Is this, uh, Yeah. Yeah. This return to experiences. Oh, yeah. It explains that fried chicken frenzy, the bookstore resurgence, even the appeal of those vibrant high streets and town centers.

People are craving that connection. They are. That authenticity, that sense of community that you just can’t find online. And those smart retailers, they’re tapping into that. They are. By creating those spaces and experiences that foster connections. So think about what that means for you as a consumer.

Maybe it’s not just about finding the cheapest price. Right. Maybe it’s about supporting those businesses that align with your values. Yeah. That offer an experience that you actually enjoy. That make you feel like you’re part of something. Part of a community. Part of a community. It’s about voting with your dollars.

I like that. You’re supporting the kind of retail landscape that you want to see thrive. Okay, we can’t talk about retail without talking Oh, I know what you’re going to say. The elephant in the room. E commerce. E commerce. It’s this force that continues to reshape the industry. It does. But what’s so fascinating to me is how it’s blending It really is.

With the physical world. We talked about the omni channel consumer. Right. Who’s shopping seamlessly across All those online and offline channels. And that’s putting pressure on retailers. It is. To create these really integrated experiences. Okay. It’s not enough to just have a website. And a store. And a store.

They need to work together. Which means investing. In technology. Technology, yeah. Data. You doubt. Personalized recommendations. All those things that make shopping smoother and more tailored. To your needs. Exactly. And as technology keeps evolving. Yeah. We can expect to see even more innovation. No.

Absolutely. In this space. Think AI powered shopping assistants. Okay. Virtual reality experiences. Wow. Personalized promotions delivered right to your phone as you walk past the store. It’s, it’s mind blowing. It is. The possibilities are endless. But amidst all this change. Right. One thing remains constant.

What’s that? The battle between Amazon and Walmart. Oh, of course. Their rivalry is shaping the entire industry. It really is, in such profound ways. They’re moving to auto sales. Yeah. Just one example of how they’re constantly pushing those boundaries. They’re forcing everyone to keep up. It’s like a game of one upmanship.

It is. Which can be frustrating for their competitors. For sure. But it benefits the consumer. It does. We get more choices. More choices, lower prices. Lower prices, more convenient services. That constant stream of innovation. So, As we wrap up this deep dive into the world of retail, what’s that one key takeaway?

Be an active participant. Okay. Don’t just shop. Don’t just shop. Observe. Observe. Notice what’s working, what’s falling behind, what excites you. What excites me. As a consumer. Yeah, yeah. Because those are the clues to where retail is heading next. I love that. And maybe, just maybe, you’ll spot the next big opportunity.

Before anyone else does. It’s an exciting time to be following retail. It really is. It’s a reminder that the future of retail isn’t predetermined. It’s not. No, it’s being shaped right now. It is by the choices we make as consumers, as investors, investors, business owners. So stay curious, stay curious, stay engaged and keep your eyes peeled.

Keep my eyes peeled for that next big thing. Until next time. See you later.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of December 20, 2024

Commercial Real Estate News – Week of December 20, 2024

Click below to listen: 
Commercial Real Estate News – Week of December 20, 2024

Transcript:

 Welcome to our deep dive. We’re looking at commercial real estate trends today. You’ve given us a lot to work with news articles, economic analyses, even some interesting retail developments. Yeah, quite the mix. We’re going to break it all down, help you understand where commercial real estate is headed, especially as we get closer to 2025.

Right. A big question is this whole. Extend and pretend thing, is it really coming to an end? It’s a big question. A lot of folks are wondering. Your sources actually give us a lot to consider. We see stuff about loan modifications, delinquency rates, and even some political and economic factors at play.

Yeah, it’s all connected. Plus, we’ve got those specific examples, like the McKinney National Airport expansion and Bloomingdale strategy in Texas. Always good to have those real world examples. Makes it more tangible. Absolutely. Let’s start with McKinney, actually. That airport story is fascinating. They’re moving forward with a commercial terminal, but it’s smaller than what they originally proposed.

Voters rejected a bigger bond measure last year. Yeah, back in 2023, residents voted down a 200 million bond. Now the city council is moving forward with a 70 million plan. So, smaller scale. Yeah, it’ll be smaller. Three gates, five parking positions for the planes. But still a big addition. Significant. And they got federal funding for it, right?

That’s right. They secured some federal funding, low interest infrastructure loans and grants. Interesting. It seems like there’s a lot of faith in the airport’s potential. Definitely. The airport already brings in 29 million a year for the region. And with commercial flights on the horizon That number’s only going up.

Exactly. Plus, they’re working on a separate runway expansion. Another 24 million going into that. McKinney’s really investing in their future. It’s a great example of how things can work out, even when the first plan hits a roadblock. They adapted, found another way. But let’s step back a bit. Look at the bigger picture of lending in commercial real estate.

Your sources point to a lot of loan modifications happening, especially for those non owner occupied borrowers. Yeah, that’s a trend we’re watching closely. In the first 9 months of 24, the median percentage of those modifications jumped 65 basis points. That’s significant. It is. Any idea what’s behind that?

Well, one thing that really sticks out is what’s happening with the smaller banks. They’ve seen a huge increase in modifications. A 217 percent jump. 217%? Wow, that’s a massive increase. What’s driving that, do you think? It seems like those smaller banks are feeling the heat. They’ve got all these underperforming commercial real estate loans.

The modifications are a way to buy time, hoping things turn around, they’re trying to avoid foreclosures if they can. So it’s kind of a temporary fix, kicking the can down the road a bit. You could say that, yeah. It delays things. For some properties, though, it’s just delaying the inevitable, and we see this happening in the office CMBS market, too.

Only 11 percent of the loans maturing in September were actually paid off in full. Almost half got short term extensions. It’s a big difference from what we used to see. So, lenders are getting less and less patient with just extending things. Seems like it. Does this tie into that extend and pretend question?

Definitely. It’s all connected. These short term extensions have helped prevent a total market meltdown. But for how long? The clock’s ticking, lenders are starting to get picky, especially about assets that aren’t performing well. Makes sense. They can’t just keep extending forever. So what’s the timeline here?

When do we think things might hit a breaking point? Well, from what the sources suggest, 2025 could be a turning point. We’ll likely see more properties in distress hitting the market. That often leads to prices going down. Which can create opportunities for some. But challenges for others. Exactly.

Especially when it comes to financing. That’s a crucial point. We’ve been talking about these big market trends. But how does all this affect someone like you who’s actually making decisions about commercial real estate right now? Well, you gotta understand the current situation. But you also have to look ahead.

Anticipate these potential shifts. Lenders might get stricter. Certain sectors like office headwinds. All of that has to factor into your strategy. It’s not just about finding a good deal. It’s about finding a deal that makes sense in this changing environment. Okay, before we go too deep there, I want to touch on something else that popped up in your sources.

These smaller stores popping up everywhere. Ah, yes. That’s an interesting trend, isn’t it? It is. Starbucks, Tim Hortons, even Bloomingdale’s are getting in on the act. Everyone seems to be embracing smaller spaces. It seems counterintuitive though, right? Why make your store smaller when you could have more space for merchandise or customers?

It’s not just about size. It’s about efficiency and adapting to how people shop these days. These smaller formats often help retailers cut costs, streamline their operations, and cater to customers who want things fast and easy. So it’s about keeping up with the times. Exactly. And we’re seeing this with Bloomingdale’s, right?

They’ve got their Bloomy’s concept. Smaller stores, a more curated selection, a focus on the in person experience. Right on. And they’re opening one of those Bloomy’s stores in Frisco, Texas. Part of a bigger mixed use development. Bye. And speaking of Texas, it’s booming with new retail space, especially what they call first generation space.

Brand new construction, never been occupied. Houston alone has added almost 25 million square feet of it since 2020. That’s incredible. Seems like developers are pretty optimistic about Texas. They are. A lot of activity there, a lot of growth. But even within Texas, you see different trends playing out depending on the sector.

Retail might be thriving, but the Dallas Fort Worth multifamily market tells a different story. Yeah, your sources show rents actually going down in Dallas Fort Worth. Yeah. For the second year in a row, that’s kind of surprising given how strong the Texas economy is overall. It is. And these declines are across the board.

All property classes, even those fancy four and five star rentals, they’ve dropped by 2. 1 percent over the past year. So what’s causing those rent declines? The main thing seems to be a mismatch between supply and demand. They’re building more units than the market can absorb. That puts downward pressure on rents.

So Advantage Renters in Dallas Fort Worth right now. For now, yeah. But the predictions say rents could stabilize in 2025, maybe even start going up again in 2026. Of course, that’s just a prediction. Things change. They do. Speaking of changing trends, there’s that story about data centers taking off in Irving, Texas.

Oh yeah. Microsoft and QTS Realty Trust, they’re planning seven data centers there. Seven. And the city council is giving them some pretty sweet deals to make it happen. Like cutting their property taxes in half for the next decade. That’s right. A 50 percent reduction for 10 years. That’s a big commitment.

But cities are really fighting to attract those tech giants. Data centers bring jobs, investments, you know, a certain prestige. It’s all part of Irving’s bigger plan to grow their economy. It reminds us that real estate isn’t just about buildings. It’s about the economic forces that shape those buildings.

The communities around them. And while we’re on the topic of transformation, there’s that interesting story about the old Raytheon manufacturing plant in Dallas, the one that’s becoming a Porsche dealership. That’s the one park place dealerships bought the 15 acre site planning a big redevelopment, A great example of how old industrial spaces can find new life.

Could be retail, entertainment, even housing. Absolutely. It shows how adaptable real estate is. Needs change. Markets change. We’re seeing this across the country. Old factories are becoming all sorts of things. It’s fascinating. And in this case, it really highlights how strong the luxury car market is in Dallas.

An aerospace factory becomes prime real estate for a high end car dealership. But now, let’s zoom out again. Consider the bigger economic and political picture. Okay. Because your sources had some insights there as well. Yeah, there’s a lot going on. The Fed’s been cutting interest rates. But they’re also hinting that they might slow down those cuts in 2025.

Right. They just lowered the benchmark rate by 25 basis points. Right. But their message is clear. They’re going to be more careful moving forward and that combined with some uncertainty about the new Trump administration’s policies. Yeah. Well, it’s making the stock market a bit jittery. Yeah, there’s definitely some anxiety.

Investors are trying to figure out how those policies will play out, especially when it comes to taxes and tariffs could have good and bad effects. depending on the sector. It’s a lot to take in. Hard to predict what will happen, but it’s important to stay informed. Understand how these big economic and political trends might affect the commercial real estate market.

Absolutely. Everything’s connected. Creates both opportunities and challenges. Okay, so we’ve covered a lot in this first part of our deep dive. We talked about specific developments like the airport and that Raytheon plant. We looked at broader trends in lending and retail. We even touched on the economic and political landscape.

We did. A lot to digest. It is. But the key question is, what does all this mean for you, the listener? How do you make sense of it all? How do you apply it to your own decisions? That’s what we’ll dive into in the next part of our deep dive. We’ll connect these dots, explore what it all means for someone navigating commercial real estate in 2025 and beyond.

Okay, so we’ve laid out some pretty big trends that are shaping commercial real estate, but let’s get more specific now. What does this all mean for someone who’s actually out there trying to navigate this market in 2025? Right, let’s try to connect these dots. We were talking about the potential end of extend and pretend, which could mean, More distressed assets hitting the market.

That’s sounds kind of scary, but it could also be a good thing, right? Exactly. Could this be a chance to pick up some properties at a discount? I mean, that would be pretty appealing for someone who’s looking to get into the market or maybe expand their portfolio. It could be, but there’s a trade off.

Remember those alternative capital sources we discussed, the private equity firms, credit funds, they’re stepping in to fill the gap left by the traditional banks. But they’re not doing it out of the goodness of their hearts, right? They want higher returns, stricter terms, that kind of thing. Exactly. So it’s not just about finding a good deal It’s about finding a deal that works with this new Piter financing environment You might need to get a little creative a little more resourceful to make things happen.

So opportunities Yes, but with some added challenges What else should someone be thinking about as they’re looking at commercial real estate in 2025? One thing to remember is that not all property types are created equal We talked about the challenges in the office sector, and even some weakness in the multifamily market, at least in certain areas like Dallas Fort Worth, those trends don’t just disappear overnight.

Right, all those empty office buildings aren’t suddenly going to fill up, even if extend and pretend does fade away. The multifamily market, well, maybe it’s stabilizing, but it’s still very much a renter’s market in a lot of places. Exactly. So, you need to be really careful about what type of property you’re investing in, and where, on the other hand, we’ve seen how strong industrial properties can be, particularly in markets like Texas, where the data center boom is driving a lot of demand.

And let’s not forget about retail. It feels like things have shifted away from that retail apocalypse, doom and gloom we were hearing a few years ago. It has. The retail landscape is definitely changing, but it’s not dying. The success of these smaller format stores, the continued demand for first generation space, especially in Texas, Those are all good signs.

It’s all about adaptation, right? Both for the retailers themselves and for anyone looking to invest in retail properties. Absolutely. Understanding the specifics of each market and property type is essential. What works in Houston might not work in New York City. The key is to look beyond the headlines.

Really dig into the data, talk to local experts, and develop a deep understanding of the market you’re interested in. So due diligence is more crucial than ever. Don’t just jump into something based on a gut feeling. Take the time to really vet the opportunity, and speaking of the bigger picture, we can’t ignore those economic and political uncertainties looming out there.

Right, those play a role too. The Fed’s rate cuts give borrowers some breathing room, but they also raise concerns about inflation down the road, and then there’s the wild card of the incoming Trump administration, and how their policies might impact everything from taxes to trade. It’s a lot to keep track of and honestly it can feel a bit overwhelming.

How does someone even begin to make sense of all this and translate it into something actionable? That’s a great question. I think the main takeaway is that the commercial real estate market is in a state of change. The old rules might not apply anymore. Those who can adapt, innovate, and be proactive will be the ones who come out on top.

It’s not about riding the waves. It’s about learning how to surf, so to speak. Okay, so we’ve talked about the need for adaptability, the importance of due diligence, and being aware of these broader economic and political forces. What are some concrete steps someone can take to prepare for 2025 and beyond?

Well, first and foremost, research. Don’t just rely on gut feelings or what you hear from your buddies. Immerse yourself in the data, analyze the trends, and connect with experts in the specific markets you’re interested in. So go beyond just reading a few articles, really dive deep and develop a solid understanding of what’s happening in the market.

Exactly. There are some great resources out there like CoStar that provide tons of data and analysis on the commercial real estate market industry, publications, research reports, networking events. Those can all be valuable sources of information. And don’t underestimate the power of networking. Building relationships with other professionals in the field can give you a real advantage.

Absolutely. Networking allows you to tap into the collective wisdom of the industry. Learn from other people’s mistakes and stay ahead of the curve. You can get insights that you won’t find in any report or database. Okay, so research, data analysis, and networking are key. What about the financial side of things, especially given that tighter lending environment we talked about?

That’s crucial. Having a strong financial foundation is essential. This means maintaining a good credit score, getting pre approved for financing if you’re planning to borrow, and being realistic about your investment goals and your risk tolerance. So don’t jump into a deal just because it seems like a good price.

Make sure you understand the financial implications and that you’re comfortable with the level of risk. Exactly. And remember, flexibility is key in this market. Be open to considering different types of properties, exploring alternative financing options, and adjusting your strategy if things change. Be adaptable.

Be responsive. Don’t get stuck with a rigid plan that might not work in this fluid environment. Right. And finally, I would add patience and discipline to that list. The commercial real estate market is cyclical. There will be ups and downs. Don’t let the short term noise distract you from your long term goals.

It’s about having a clear vision and sticking to it even when things get a little rough. Exactly. By combining thorough research, sound financial planning flexibility, and a patient approach, you can set yourself up for success in this ever changing world of commercial real estate. Great advice. So much to think about.

It really comes down to being proactive, informed, and adaptable. Now I have one final thought before we wrap up this part of our deep dive. We’ve talked about the rise of those smaller format retail stores, and the increasing demand for first generation retail space, especially in Texas, and we’ve also discussed the data center boom happening in certain markets.

Yes, two seemingly separate trends. Where are you going with this? What if those trends could converge? What if data centers became anchors for new retail development? Data centers as retail hubs. That’s an interesting idea. Think about it. These data centers create a lot of high paying jobs, which attracts people who need services, amenities, places to shop and eat.

What if developers started incorporating those smaller format retail stores, maybe even some drive through only concepts, into those data center campuses? That’s not something we saw in your sources, but it’s definitely food for thought. It could be a win win, right? Data centers get the convenience of having these amenities on site for their employees and retailers tap into a built in customer base with money to spend.

It would definitely require some out of the box thinking and collaboration between developers, retailers, and the data center operators themselves. Yeah. But if done right, it could be a really innovative approach to mixed use development. It’s just a thought, but it highlights how important it is to think differently and explore those unconventional opportunities, especially in a market that’s changing as rapidly as this one now, with that idea in mind.

Let’s move on to the final part of our deep dive, where we’ll tie everything together and consider the key takeaways for you, our listener. Sounds good. Let’s do it. Alright, we’ve covered so much in this deep dive. Airport expansions, loan modifications, the rise of the smaller format stores, data centers booming, even talked about data center retail hubs, it’s a lot.

You initially came to us with a pretty specific question though. Right. Is the extend and pretend era truly over in commercial real estate? Yeah, that was the big question. And based on everything we’ve seen, it’s looking like the answer might be yes. The sources really point to lenders getting tired of this game.

Especially when it comes to those office properties that are struggling. It seems those short term extensions, the ones that have been keeping things afloat, might be hitting their limit. Exactly. And even big institutional investors are starting to lose patience. We saw that quote from Glenn Grimaldi, the CEO of Navtel Credit Partners.

He didn’t mince words. He was pretty clear. So, heading into 2025, it looks like lenders will be more careful about those extensions, more scrutiny, more demands from borrowers. Right. And for you, the listener, this means you need to be ready for a market that could be a bit wilder. More ups and downs. Might be some great deals coming out of distressed sales.

Getting the financing. That might be a whole other story. So what can our listeners do to prepare for this shifting market? Any advice? Sharpen those due diligence skills. Don’t just skim the surface. Dig deep into those financials. Really understand the local market. Make sure you’re comfortable with the risk you’re taking on.

So it’s more than just finding a property with a good price tag. Way more. You have to understand all the details. Make sure it fits with your plan and your risk tolerance. Absolutely. Good due diligence isn’t just about avoiding the bad deals, it can help you find hidden potential. Maybe that old Raytheon plant isn’t just for a Korsha dealership.

Maybe it’s a chance to build something totally new, a mixed use development that brings the whole area back to life. It’s about seeing the possibilities that other people miss. Having that vision, that entrepreneurial spirit. And speaking of possibilities, we were just talking about the data center boom and the rise of those smaller retail stores.

Hmm. What if someone put those two things together? You’re thinking about data centers becoming like anchor tenants for retail. Exactly. Imagine it. A data center campus with a bunch of those smaller stores around it. Maybe some drive thrusts. Serving the people who work there and live nearby. A whole new model.

Now that’s interesting. It’s different. For sure. But I like it. Could be a win for everyone. Developers, retailers, the data center companies themselves. Exactly. It shows how thinking outside the box, adapting to the changes, can lead to some really cool opportunities. And I think that’s the main takeaway from all of this.

The commercial real estate world is constantly changing. You have to embrace the change, stay informed, and be proactive. That’s how you thrive. Couldn’t have said it better myself. So, to our listener, we say embrace the change, stay informed, and never stop exploring. The future of commercial real estate is yours to create.

Well said. And with that, I think we’ve successfully navigated this deep dive into commercial real estate trends. We covered a lot, from airport expansions to those data center retail hubs. Hopefully you’re leaving here feeling more informed and inspired. Knowledge is power, right? The more you understand about this market, the better decisions you’ll make.

Absolutely. Keep learning, keep exploring, keep pushing the boundaries. Until next time, happy investing, everyone.

** News Sources: CoStar Group 
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Commercial Real Estate News – Week of December 13, 2024

Commercial Real Estate News – Week of December 13, 2024

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Commercial Real Estate News – Week of December 13, 2024

Transcript:

 Welcome back. Today, we’re diving deep into commercial real estate. You know, you’ve given us a really fascinating mix of sources for this one, economic forecasts, some development news, even some articles on retail trends. We’ve gone through all of it to bring you the insights you need to know. And we noticed you’ve got a particular interest in the Dallas Fort Worth market.

Yeah. It’s a hot market. It is. And the DFW economy seems to be humming along nicely, which usually that’s a pretty good sign for CRE. Right. But we’ve got some economic headwinds nationally, so I’m curious to hear your perspective on how things might play out. Well, you know, it’s not always as straightforward as we’d like, so.

Let’s start with the labor market, nationally. We’ve added almost 2 million jobs this year, according to our commercial real estate news. Typically. That’s fantastic news for CRE. More jobs mean more demand for office space, retail space, industrial properties, the whole nine yards. Right. It makes sense. Yes.

But. We also know that interest rates are stubbornly high. One of the Investor’s Business Daily articles we’ve got even suggested the Fed might not cut rates as much as everyone thought next year. How does that factor into things? Yeah, that’s the million dollar question. Higher interest rates mean it gets more expensive to finance those property purchases.

And that makes investors a little bit hesitant. Especially when they don’t know where rates are headed. And, historically, rising interest rates have often led to a slowdown in CRE transactions. Deals take a lot longer to close. Projects might get put on hold. Investors get a lot more cautious. So, we’ve got these two forces at play here.

A strong labor market that’s pushing things forward, and high interest rates that seem to be, you know, pumping the brakes a little bit. What’s the historical interplay between these forces been like in CRE? It’s fascinating to see these forces play out against each other. The key is to find how they balance out that strong job growth.

We’ve got can drive demand for commercial properties, but those high interest rates can stifle investment. So what you’re going to want to watch for in the coming months is how those forces interact. Keep a close eye on job growth, but at the same time, you really want to pay attention to what the Fed is saying and doing with interest rates.

If job growth remains strong and interest rates stabilize or even start to come down a little bit, that could be a really positive signal for the CRE market. Okay, so a bit of a balancing act now. Let’s zero in on the DFW market for a second. CoStar reported that DFW added 74, 800 jobs in the year ending in October.

And here’s the kicker, that growth was across all sectors. Yeah, that kind of broad based job growth, it’s a strong indicator of a healthy, diverse economy. It’s just definitely something that attracts businesses and investors, looking at CRE opportunities. Absolutely. And speaking of attractive markets.

Office employment, which has been a little bit sluggish nationally. It’s showing signs of life and DFW. That’s definitely worth noting, especially considering the national trends, right? And coup star even highlighted some specific examples of this new office leases for companies like Goldman Sachs and Wells Fargo in the area.

Do you think this is a sign of recovery for the office sector? Or is this just a temporary blip? What do you make of it? I think It’s a little bit early to call it a full blown recovery while those new leases are encouraging. We do have to consider the bigger picture We’re still in a period of adjustment where companies are figuring out their office needs and those hybrid work models Are becoming more and more common.

The real question is whether this stabilization in DFW. Yeah is unique to this market Or, if it’s the beginning of a broader trend. Okay, I see your point. Now, let’s shift gears for a second. To a company that’s been making a lot of headlines in CRE lately, Amazon. And this time, it’s not about their online shopping dominance.

You’re talking about their push into same day prescription delivery. Exactly. Amazon is building a massive fulfillment center. In DFW specifically for this and they’re planning to roll out same day medication delivery to almost half the country by next year. They’re even incorporating robots and AI into these pharmacies.

It’s like something out of a sci fi movie. It’s a pretty build move. Yeah. That speaks to Amazon’s aggressive expansion strategy. Particularly in the healthcare sector, it’s pretty fascinating to see how they’re leveraging technology to disrupt traditional industries. It is. But I’m curious, beyond just the pharmacy aspect of things, what does this move tell us about Amazon’s broader strategy?

And how might it impact the CRE landscape, especially in DFW? This move signals a couple of things that are really important. First, Amazon’s need for logistics and distribution space is only going to grow as they continue to expand these same day delivery services require these massive, strategically located facilities.

Second, it really emphasizes their commitment to automation. And cutting edge technology. They’re pouring money into robotics and AI to optimize efficiency and speed, which has huge implications for the types of facilities they require. So if you think about DFW specifically, how could this move influence industrial real estate demand?

You can expect to see continued strong demand for warehouse and distribution centers in the region. But it’s not just about size anymore. These facilities need to be more and more sophisticated. Incorporating robotics, AI, all these advanced technologies, developers and investors who can meet those specific needs will be in a fantastic position to capitalize on this trend.

The innovations in DFW don’t stop there. We also have the brand new Texas Stock Exchange setting up its temporary headquarters in Dallas. Yeah, that is a total game changer. For the Dallas business scene, you. A new stock exchange has the potential to attract more financial firms to the area, boosting job growth and demand for office space.

It’s really exciting to think about all those ripple effects, but what about the long term implications of a new stock exchange? What should people be looking for to understand how this might all play out in Dallas? If we connect this to the bigger picture, the establishment of a brand new stock exchange.

It can signal a shift in the financial landscape. It could lead to increased competition and innovation in the industry. As for Dallas specifically, just keep an eye on the types of companies that are drawn to the area. Are we seeing a big influx of financial institutions, tech firms, startups, the mix of businesses that choose to locate near the exchange?

It’s going to be a strong indicator of its long term impact on the Dallas market. Alright, we’ve covered a lot of ground already. The labor market, interest rates, some major developments in DFW, and even Amazon’s foray into futuristic pharmacies. Now, let’s dive into another hot topic in CRE, retail. That’s a sector that’s been undergoing a lot of transformation over the past few years.

It has. One of our sources, Chain Storage, had a really interesting piece on the evolution of open air centers. You know, they’re moving away from those traditional anchor stores and embracing what they call experiential retail. We’re talking outdoor gathering spaces, restaurants, entertainment. It’s almost like mini town squares.

It’s fascinating to see how developers are adapting to those evolving consumer preferences. It’s an essential shift. In the past, those open air centers really relied. Uh huh. On those big anchor stores. Yeah. To draw shoppers in. But with the rise of online shopping and all those changing consumer habits, developers are realizing they need to create destinations that offer more than just shopping.

It’s about creating. Mm hmm. A sense of place. Yeah. And community. That’s all about the experience. Right. Right. You know, creating spaces where people, they want to hang out. They want to socialize, enjoy themselves. And, This trend toward experiential retail, it could create opportunities for local businesses as well.

These centers could actually drive demand for smaller, more specialized retail spaces, which would benefit independent retailers and restaurants. What are your thoughts on that? I completely agree. The rise of experiential retail really offers a unique opportunity for local businesses to thrive. They can differentiate themselves from those big national chains.

By offering unique products, personalized service, you know, that local touch that really resonates with people. It’s about creating that sense of community and fostering those personal connections. We’ve got a great example of this in action. Chain Storage, they highlighted a development project in Naperville, Illinois, where a developer is transforming what’s essentially a vacant corner into a restaurant destination they tapped into.

Yeah. The community’s desire. For more walkable, vibrant spaces, and they’re even incorporating a theater and an ice rink into the development. Talk about creating an experience. Yeah, that’s a fantastic example of placemaking. It’s about going beyond, just building structures. And instead, creating spaces that foster a sense of community, encourage social interaction, and enhance the overall quality of life for residents.

It’s a really inspiring approach to development. Yeah. How can developers replicate this success in other locations? What are those key ingredients for creating these vibrant, community driven spaces? We’re replicating that success. It starts with a deep understanding of the local community’s needs and desires.

Developers need to engage with residents, listen to their preferences, and incorporate those insights into the design and planning process. It’s about creating a sense of ownership and belonging. For the people who are going to be using those spaces and when it’s done well, placemaking can generate benefits for everyone involved.

For investors, it can mean increased property values, higher rental rates, and a stronger return on investment. For the community, it means a better quality of life, stronger social connections, and a real sense of pride. Okay, we’ve talked about the big picture, zoomed in on DFW, explored the rise of experiential retail, I even touched on placemaking.

Now, get ready for this one. We’re going to talk about dry cleaning vending machines. Dry cleaning vending machines. Yes, you heard that right. One company is installing these vending machines in apartments, offices, even retail centers, focusing on those high traffic areas. And they’re partnering with JLL.

To roll us out on a larger scale, it seems, both ingenious and a little bizarre, at the same time, what do you make of this trend? I think it’s a perfect example of the growing demand for what we call hyper convenience in retail. Consumers are more and more pressed for time. And they’re looking for those quick, easy solutions for everyday needs without sacrificing quality businesses that can deliver that kind of seamless on demand service, they’re getting a real competitive advantage.

It’s like the next generation of the vending machine. What other examples of this hyper convenience trend are you seeing pop up and how might it reshape the commercial real estate landscape down the line? Think about automated grocery stores. Mobile ordering a pickup, even the rise of drone delivery services.

These are all examples of how businesses are using technology and innovation to meet that growing consumer demand for instant gratification. This trend is likely to drive demand for smaller, more strategically located retail spaces that cater to crypt transactions and on demand fulfillment. We could see an increase.

In micro fulfillment centers, dark stores, even repurposed retail spaces designed for those hyperconvenient services. It’s amazing how quickly things are changing. Now, let’s take a look at retail investment for a moment. We’ve got some data from chain storage showing that some cities are outperforming others.

In terms of retail investment returns, Vegas is a top performer fueled by its tourism and strong retail sales. And then Charleston, South Carolina is another standout thanks to its population growth and higher than average incomes. What makes these cities so attractive to investors? The key is understanding those factors that are driving retail performance in each market.

Vegas benefits from that constant stream of tourists, which creates a really consistent base of shoppers. Charleston’s appeal really comes from its combination of population growth. Those rising incomes. And its own vibrant tourism industry. These factors create fertile ground for retail businesses to flourish.

And that attracts investors, seeking strong returns. Are there any hidden risks or opportunities that people should be aware of when they’re considering investments in these markets? Of course. Every market has its own little nuances. While Vegas enjoys that robust tourism sector, it is heavily reliant.

On the leisure and hospitality industry, which can be vulnerable to economic downturns. Charleston’s rapid growth can lead to some challenges like increased competition for retail space and rising operating costs. The key takeaway here is to do your due diligence, understand the unique dynamics of each market and weigh those potential risks and rewards.

Before you decide to jump in. Sound advice. All right. For our final stop on this retail journey. Let’s talk about Tractor Supply, the nation’s largest rural lifestyle retailer. They’re on an aggressive expansion path, planning to open 90 new stores in 2025. That is impressive growth, especially when you think about the broader trends we’ve been talking about in the retail sector.

Right. They’re tapping into what they call the life out here trend, offering a wide range of products from pet supplies to farming equipment. What are the main drivers behind this trend and how might it affect commercial real estate? The The life out here trend reflects several significant shifts in society.

We’re seeing a growing interest in sustainable living, self sufficiency, a desire for more space, and connection to nature. And this is driving population growth in rural areas and creating a really strong demand for businesses. That catered to that lifestyle. Tractor supplies expansion is a direct response.

To this burgeoning market and their success shows the potential for other retailers and businesses that are targeting this segment. So this life out here trend, it’s more than just a fad. It appears to be a much more fundamental shift in lifestyle preferences that’s likely to have a lasting impact on commercial real estate in rural areas.

We can see increased demand for retail space, housing, even mixed use developments that cater to this specific demographic. It’s definitely something to keep a close eye on. It’s amazing to see how these trends impact all these different sectors of the CRE market. You know, we talked about the rise of experiential retail, this demand for hyperconvenience, the growth of online shopping.

Oh, I can’t forget. About that ongoing evolution of the industrial sector driven by e commerce and all those sophisticated logistics operations that we’re discussing earlier. All of these trends are really reshaping the CRE landscape. It really is a dynamic time for the industry. But here’s something I’ve been thinking about.

You know, as we’ve been talking about all these trends and these technological advancements, what about the human element? How will all these changes impact the way that we interact with physical spaces? That’s a really crucial question. Has our lives become increasingly intertwined with the digital world?

The role of physical spaces needs to be reimagined. What’s going to draw people to those brick and mortar locations when they can do so much online? The answer probably lies in creating experiences that can’t be replicated virtually, creating spaces that foster genuine human connection and a sense of community.

We touched on placemaking, and I think That’s a perfect example of how developers are starting to think differently about the purpose and design of those physical spaces. Makes a lot of sense. Okay. Before we wrap up, I wanted to circle back to something we talked about earlier, the labor market. We talked about how a strong labor market is generally positive for CRE, but I noticed something interesting in our commercial real estate news source.

It looks like hiring in the leisure and hospitality sector is still Below pre pandemic levels, that is great observation. A little bit of a paradox when you consider the overall strength of the labor market that we’ve been seeing. Exactly. So what’s going on there? Why is that particular sector lagging behind the leisure and hospitality industry was hit incredibly hard by the pandemic.

Those lockdowns, the travel restrictions, social distancing measures really forced widespread closures. And let the significant job losses the sector has made progress since then, but it hasn’t fully recovered. Yeah, I can see why that would be the case. Our source also mentioned that the increase in office absorption, meaning companies leasing more office space, is being driven primarily by the Professional and business services sector.

That’s right. We’re seeing that shift in demand as we move further away from the peak of the pandemic with some sectors, we’re covering much more quickly than others looking at these different pieces of the puzzle, right? What does this tell us about the broader economic recovery and its impact on the CRT market?

It points to an uneven recovery With some sectors leading the charge, while others are still playing catch up, and that’s bound to have different effects on different types of commercial real estate. While we were seeing that increased demand for office space in some segments mm-hmm . The slower recovery and leisure and hospitality could have an impact on hotels.

Yeah. And other tourism related properties. It’s important to look beyond just those overall economic numbers. Right. And really dig into the sector specific trends. Absolutely. That nuanced understanding of those trends. Is crucial for investors and developers as they’re making decisions about where to allocate capital and what types of projects.

They should prioritize, they need to be able to anticipate those shifts in demand and adapt accordingly. Well, I think we have officially unpacked all of your sources for today. It’s been a really great conversation. Really insightful. Always a pleasure to delve into these topics and explore all those forces that are shaping the CRE landscape.

I agree. Before we sign off, any final thoughts you want to share with our listener? Just this, the CRE world is constantly evolving. There’s always something new happening, some new trend to watch, some new opportunity to explore. It’s a really dynamic field. And staying informed is absolutely key to navigating its complexities.

I couldn’t agree more. And that’s what makes these deep dives so fascinating. There’s always something new to learn and explore in the world of CRE. Exactly. It’s a field that, Constantly adapts new technologies, changing demographics, evolving economic conditions keeps you on your toes. It does. Speaking of evolving, you know, we’ve touched on so many interesting trends today from the rise of experiential retail to that increasing demand for hyper convenience.

But I’m curious, as we wrap up here, is there one trend that you find particularly intriguing or maybe one you think our listener should keep an eye on? That’s a great question. I think the convergence of technology and real estate is particularly compelling. We’ve talked about how e commerce has reshaped the industrial sector, and we’re beginning to see how things like AI and robotics are influencing everything from pharmacy fulfillment centers to those dry cleaning vending machines we talked about.

It’s really fascinating to see how technology is not just changing how we use space, but But also, how we design and build it. Yeah. That’s a really good point. And as we think about the future, it makes me wonder how these advancements will impact the role of physical space in our lives. That’s the million dollar question.

As we become more and more digitally connected, the value proposition of physical space needs to evolve. It’s not just about functionality anymore. It’s about creating those experiences. Fostering connections. Providing. That sense of place and community. Those are all things. That technology. Thank you. It can enhance, but it can’t fully replicate them.

Hmm. I think. That’s a really great takeaway for our listeners today. The world of commercial real estate, it’s complex, it’s always changing, but by understanding those key trends and driving forces, it can help you make more informed decisions, whether you’re an investor, developer, or just someone with a real interest in the future of our built environment.

Absolutely. Thank you. And remember. The CRE landscape is full of opportunities. Stay curious. Yeah. Stay informed. And embrace the possibilities. Well said. This has been your deep dive into commercial real estate. We hope you found it valuable, and we’ll see you next time for another fascinating exploration.

** News Sources: CoStar Group 
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