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.