Commercial Real Estate News – Week of July 11, 2025
Click below to listen:
Commercial Real Estate News – Week of July 11, 2025
Transcript:
Welcome to the Deep Dive. Today we’re plunging into the really dynamic world of commercial real estate, our mission simple, cut through the noise, grab the most important nuggets from the latest news, and help you understand what’s truly driving the market. Especially right here in the Dallas-Fort Worth area, and we’re really zeroing in on a critical timeframe here, July 3rd to July 10th, 2025.
This past week saw just immense activity. Texas markets they’ve been consistently at the forefront of national discussions showing exceptional resilience really, and growth leadership. What’s particularly significant, and we’ll get into this, is Dallas claiming the number one spot nationally for commercial real estate performance.
So yeah, our focus today is on the most impactful stories from this week, especially the DFW retail sector. We wanna give you actionable insights, to understand trends and spot opportunities that Dallas ranking is. Incredible. Seriously, number one. Okay, let’s dive into the broader economic and market forces.
First, the big picture. So DCO magazine, pwc Urban Land Institute. They’re saying Dallas is hashtag one for 2025. Driven by, what was it? 11.2% employment growth, 6.1%, population increase. Pretty staggering numbers. This first time. DFWs held that top spot since 2019. And Houston’s right up there too. Number three, nationally.
But here’s the thing that gets interesting. While Texas is shining nationally, commercial real estate distress that’s telling a different story, distress is up 23% over $116 billion. That’s the highest in what? Over a decade. Okay. Dallas is number one. We have this huge national distress number. How do those two things square up?
Is Texas really immune or are we maybe missing something? That’s really the critical question, isn’t it? Because what we’re seeing is a bifurcated market. It’s split. On one hand, yes, you have systemic issues work from home, high borrowing costs, it’s creating national distress. That $116 billion figure, it’s not just a number.
It represents, a real opportunity for investors who are agile, who have patient capital. They might find some undervalued assets, but it also signals caution, right? Especially if you’re holding properties maybe with debt maturing in sectors that are more vulnerable. Even here in Texas, we are seeing some investor caution in specific asset classes, but the state overall.
Still seen as a bit of a safe haven thanks to those fundamental growth drivers you mentioned, and think about the refinancing pressures. Fortress Investment Group, for example, they’re facing a $2 billion crisis with warehouse bonds. The deadline is July 15th. That’s coming right up now. This is a major institutional player having trouble refinancing.
Amazon leased warehouses. That causes concern across the industry about well broader market stability, and Forges has assets in Texas. So this isn’t just some. Far off national issue for us, it connects back. While Fortress highlights some definite pain points, we’re also seeing signs of long-term confidence.
Strategic capital is still being deployed. Look at BlackRock. They just made their largest private markets acquisition ever. $7.3 billion for elm tree funds. That signals a really strategic push into build to suit. Industrial real estate. Elm Ree manages what, over 250 commercial properties and Elm Ree, by the way, they have offices down in Austin.
So this deal ties into that broader trend, institutional money moving into private markets like net lease where the tenant handles most operating costs. Making income streams more predictable, and we absolutely have to talk about the tax bill. The one big, beautiful bill President Trump signed on July 3rd.
It’s a sweeping tax and spending package. It makes those 2017 corporate tax cuts permanent, keeping the rate at 21%, and it permanently extends the 20% pass through deduction too. Now for commercial real estate, this bill is it’s clearly an attempt to reignite investment. It makes opportunity zones permanent, it brings back.
100% bonus depreciation for property letting you expense real estate investments immediately, and manufacturers can immediately write off qualifying facility costs. The idea here is that these incentives could unlock stalled projects because they dramatically improve the after-tax returns for developers that potentially makes deals work even with higher borrowing costs.
It’s about shifting the math, the economic calculation for new investments, particularly in these high growth areas like Texas. Adding another layer here, the US dollar, it’s dropped about 10% against major currencies this year in 2025. That has a kind of dual impact on real estate. On one side, US assets look cheaper for foreign investors.
Good news there potentially, but on the other side it might. Signal some global skepticism about the US outlook. We saw foreign direct investment into US real estate plunge in Q1 2025, down to $52.8 billion the lowest since 2022. Still, some savvy international buyers might see this as a bargain. You hear phrases like the US market being on sale for value hunters.
So yeah, a weaker dollar could attract some foreign money. But that optimism is definitely tempered by what a lot of industry leaders are calling the messy reality of 2025. That comes from Bnos halftime report survey. They talk to 40 C-suite execs. The takeaway initial optimism for 2025 is gone replaced by acceptance of higher for longer interest rates.
That big wave of distressed assets, everyone expected it’s delayed. Lenders are extending loans and tenant demand is bifurcating. Splitting meaning location and quality matter more now than ever. So the focus right now across the CRE sector, it’s really on adaptability and patience. Lots of patients. Yeah, that survey really paints a clear picture, doesn’t it?
Adaptability and patience. Okay, let’s shift focus now specifically to Dallas-Fort Worth. Given that number one ranking and our retail focus, Frisco is just blowing up a $3 billion mixed use development pipeline. That’s huge. You’ve got fields over $660 million. The Universal kids resort the mix, another $3 billion project.
What’s really driving these massive multi-billion dollar bets up there, and how are they changing the whole North Texas landscape? Frisco’s growth is, truly remarkable. It’s fueled by that constant influx of corporate relocations plus a rapidly growing population that creates demand for everything.
Housing, retail, entertainment, you name it, specifically Fields West. That’s a $2 billion, 160 acre mixed use piece. They just secured $500 million in financing and get this, it’s already 70% for its 350,000 square feet of retail space. Signing tenants like. Bloomies, Kendra Scott, pottery Barn, Sephora, that’s not just filling space.
It really validates the big shift towards experiential high-end retail, and it shows the market’s confidence in that booming North Texas consumer base. These projects. Yeah, they’re fundamentally transforming North Texas into a true live work. Play destination and moving just a bit south McKinney’s also seeing major growth.
They approved the 785 acre Huntington Park development. That’s by the Dallas based Billingsley company. It’s another big mixed use project in a really fast growing corridor up there. And importantly for housing the instead apartments in McKinney 376 units they were just acquired. The plan is to convert over half 191 units to affordable housing for renters earning between 30% and 80% of the area median income.
That shows some real effort, to preserve workforce housing options in these rapidly growing suburbs. Yeah. Which is critical. Absolutely. That balance between shiny development and keeping things affordable is so important. Okay. What else is standing out? Any other retail innovations or maybe broader DFW initiatives catching your eye?
Definitely seeing some exciting retail expansion across DFW Kill Winds, the chocolate and ice cream place. They’re planning 10 new Texas locations, including several here in DFW pay more, which Resells tech stuff. They’re expanding into Houston and the Dallas Metroplex too. And this is interesting kind of a logistics innovation.
Walmart’s expanding its drone delivery, they’re adding it to. A hundred more stores across Houston, Dallas. They’ve already done over 150,000 drone deliveries since 2021 shows where things are heading. On the city side of things. Dallas officials are trying to streamline development. They’re moving to close a zoning loophole.
Apparently neighborhood opponents could delay cases for just $150, so the aim is more efficiency, more. Fairness for developers that could really help project timelines a big win potentially. Separately, UT Dallas bought a vacant office building about 151,000 square feet right next to its Richardson campus.
Their enrollment is booming, so they need the space. It’s a smart repurposing of an older commercial building and looking west towards Fort Worth. And Arlington Fort Worth just saw the groundbreaking for a big mixed use project on the Trinity River. It’s called Merrimack. Hundreds of apartments retail space plan, and in Arlington streetlights residential.
Started face. Three of their project in the huge Viridian master plan community, adding hundreds more multi-family units, leveraging all those recreational amenities they have there. Man, DFW is definitely a hotbed of activity. No question about that. Number one ranking. Alright, let’s broaden out a bit.
Look at Texas wide trends, more retail stories, maybe other key CRE sectors. Tell me about this hemp industry story. Sounds like a close call. Oh, it was an incredible story. And the impact on retail CRE across Texas is direct and massive. Governor Abbott vetoed senate Bill three right at the last minute, that single veto saved estimate, say.
8,000 hemp retail businesses. Think about the square footage. They occupy millions. It protected an $8 billion industry, 50,000 jobs. That intervention literally kept thousands of retail doors open. It’s huge for those small businesses and their landlords. And what’s also surprising is how the retail sectors performing overall.
Indoor malls, believe it or not, actually outperformed open air shopping centers. Recently. Mall visits grew 2% versus less than 1% for open air places. People are talking about a mall revival, partly driven by Gen Z. A survey found 63% of them prefer physical stores. This really reinforces the overall strength we’re seeing in retail.
The national vacancy rate hit a historic low of 5.5% in Q1 2025. That underlying strength is what supports all these expansion plans we’re seeing across Texas, a Gen Z Mall revival. That’s fascinating. Definitely counterintuitive to which you might expect. What about other big retail players making moves in Texas?
Some big names are definitely active. Walmart opened its first new Texas Supercenter in four years. It’s down in Cyprus, near Houston. Features their store The Future Design, and it’s clearly competing head on with H’S push into North Texas. We’re also seeing luxury Step Up. Its physical presence. Perry Gold, that’s Wayfair’s high-end brand, opened a flagship store in Houston’s Highland Village and Gong Sha bubble Tea, which seems to be everywhere, is expanding statewide.
All signs point to robust retail growth. Now, if we look analytically at some other sectors, multi-family dynamics are particularly interesting right now. Q2 2025 saw a huge surge in apartment demand. Nationally, the US absorbed over 227,000 units. That’s the strongest performance since the boom of 2021.
2022. Dallas actually improved its absorption rate here. Austin and San Antonio, though were struggling a bit more partly due to higher office vacancies. Austin’s office vacancy hit 27.7%. That’s high. So demand for apartments is strong nationally, but rent growth is basically flat. Why? Because there’s so much new supply coming online.
National occupancy did climb slightly up to 95.6%, but here’s the flip side. Multi-family prices have seen their steepest drop since the 2008 crash down to 12.1% year over year. So high demand, flat rents, falling prices. It’s complex. Wow. 12.1% drop in prices even with strong demand. That’s a stark contrast.
Are there other, maybe less obvious drivers shaping commercial real estate in Texas? Unexpected things? This raises an interesting point actually. Something fascinating is how youth sports complexes are becoming major real estate drivers. We’re seeing billions, literally, billions. Being invested in project centered around travel tournaments, big training facilities.
They’re creating these all in one destination. Sports, venues, hotels, restaurants, retail, all bundled together. It’s not just about building ball fields anymore. Cities are partnering with developers viewing these complexes as infrastructure projects, basically ways to boost tourism and the local economy.
It really shows a kind of pivot in municipal development strategy. Focusing on capturing that family, leisure and travel dollar. And even with challenges like hurricane Barrel and those historic windstorms down South Houston’s market showed remarkable resilience commercial property values, there still rose 2%.
Retail vacancy is incredibly tight at just 5.4%. Houston’s industrial sector is also just booming. Trammell Crow started a huge, nearly million square foot development near the Houston Spaceport. That’s part of an almost 18 million square foot industrial pipeline there. You’ve got companies like World.
Emblem opening new manufacturing facilities, RSK, real estate partners buying up land plus Houston’s mayor announced a pilot program to streamline permitting that should help development timelines across the board. It’s that kind of fundamental strength, that resilience that allows Houston’s. Property values to rise even after major weather events.
It really underscores the Texas economy’s long-term health, doesn’t it? And finally, just briefly, we should mention the devastating flash floods in the Texas Hill country over the July 4th weekend. The economic losses are estimated between 18 and $22 billion. Mostly infrastructure tourism related direct CRE damage seems limited because the affected areas are largely rural.
But lenders are keeping a close eye on securitized loans, those bundled mortgages in the hardest hit counties. So that’s a potential long-term watch item. Wow. Okay. Let’s try to wrap our heads around this. What a win. Especially right here in Texas. Dallas hits number one nationally. Then you have all these critical details impacting retail, industrial, multifamily.
Yeah, the whole landscape is definitely shifting. Yeah, if you zoom out for just a second, the consistent theme is Texas just continuing to outperform. Even with those national headwinds we talked about, it’s driven by that population growth, the diverse economy, the business friendly policies we always hear about, and the resilience of the retail sector specifically is a real bright spot.
It shows just how crucial it is to understand those local market dynamics and position yourself strategically. So for you, the listener trying to navigate all this, what does it really mean? We’ve seen the current environment isn’t just about single deals anymore. It’s about fundamental shifts, integrating retail tech like those drones, a renewed focus on quality, on location.
It matters more than ever. Which brings up a really important question for the future, I think in a market that has both this incredible growth in these underlying systemic pressures, how will changing consumer behavior keep shaping the next wave of successful CRE investments? Something to think about.
We definitely encourage you to keep watching how these trends play out, see how different sectors respond to both the big national shifts and this amazing localized growth we’re seeing, especially here in Texas. This has been the deep dive into the latest commercial real estate insights.
** News Sources: CoStar Group