Welcome to the Deep Dive. We’re your shortcut to getting up to speed on the latest in commercial real estate. Today. We’re really cutting through the noise, those headlines you see everywhere, to give you some crucial insights, and we’ll have a special focus of course on our dynamic Dallas-Fort Worth market.

Our goal here is simple, equip you with a clear. Authoritative view on what’s shifting in the market right now, give you the knowledge you need to make informed decisions for this deep dive. We’ve looked at a pretty wide range of sources. Think major outlets like CNBC, CoStar, but also industry specifics like Biz O and Globe Sent.

And all this covers the key developments from, let’s see, July 10th through July 18th, 2025. And our focus really is gonna be on understanding the underlying trends. It’s about finding the real opportunities. In retail, in office, and across the broader Texas market, we wanna highlight what truly matters.

If you’re navigating commercial real estate today, our aim is to empower you with direct actionable knowledge. Okay. Speaking of those underlying trends. Retail. Wow. It’s in a really fascinating state right now. Some are calling it unprecedented transformation at the headline figures. They certainly tell a story Through June 20, 25, nearly 6,000 store closures announced.

That’s over 120 million square feet of retail space. Huge. To put that in perspective, that’s like closing what? Over a hundred large shopping malls and yet. New openings, they only covered just under 4,000 stores, adding about 75 million square feet projections now point towards maybe a record 15,000 closures for the whole year.

Yeah, it’s really easy to look at those numbers that retail churn and jump straight to thinking physical retail is dying. But what’s really fascinating here is how that perception often misses the the bigger picture, ne Neil Saunders and Global Data points out. That’s just simply not true despite these massive closures.

The US retail vacancy rate, it’s actually remained surprisingly tight around 4.3%. Vacant spaces are getting released pretty quickly that we did see a slight increase. CoStar data shows 5.8% in Q2 2025, but historically that’s still very tight. Yes, absolutely. There have been high profile bankruptcies.

You mentioned Rite Aid 4 89 stores, Joanne 815 locations after their second bankruptcy party, city 7 38 Big Lots, 682 closures. But the key takeaway really is that new players and even existing brands, they’re rapidly absorbing that space. It shows remarkable resilience and we are seeing specific examples, right?

New openings from big names that really highlight this. Kroger, Ulta Beauty convenience store chain cases, the Japanese discounted ISO and Ashley Furniture too. But here’s where it gets really interesting. I think we’re seeing institutional capital making a well, a big return to retail. Yes. This shift signals a powerful vote of confidence.

Non rate investors, these are typically your large private equity funds, pension funds. Not the publicly traded REITs. They were involved in 36% of multi-tenant shopping center purchases in Q1 2025. That’s a huge jump from just 8% in 2024. It really suggests that these sophisticated long-term investors are actively looking past those retail apocalypse headlines.

They’re seeing where the real value’s being created. Overall retail real estate sales are up 7% year over year nationally and deals over a hundred million dollars. They’ve surged by 85%. We’ve seen some big transactions too. Starwood Property Trusts $2.2 billion acquisition of fundamental income properties.

That’s a net lease platform, 467 properties. Tenants pay most expenses there and Lucky Strike Entertainment, buying 58 of its own venues for $306 million, basically to cut down their rent obligations Regionally, we’re seeing this strength play out to Florida. For example, west Palm Beach retail occupancies are at record.

Highs Driven by what? 90,000 new residents in Palm Beach County alone. City place, that big mixed use development vacancy rates are below 3% and big brands are following the people Foot Locker. Moving to St. Pete Publix planning a new 50,000 square foot store in Panama City Beach. So how does this all translate back to your market here in DFW in Texas?

It’s arguably even more compelling. While the national retail vacancy sits at 5.8%, the South actually has the lowest rate at 5.4% and the Texas Real Estate Research Center, they’re forecasting over 6 million square feet of new retail deliveries and about 3% rent growth. Just for 2025. That signals continued health, robust activity right here.

So this sustained retail performance, especially when you factor in DFWs, continued population growth will present some pretty unique opportunities if you’re positioned to spot that next wave of successful retail spots. Okay. Shifting gears a bit, what does all this mean for the office market? Because we’re seeing for the first time in maybe 25 years, a truly historic shift.

It could really redefine city landscapes. We’ve definitely hit what you could call an inflection point. Nationally, more office space is actually being removed now through conversions, demolitions, that kind of thing. That’s 23.3 million square feet, and that’s more than what’s being added through new construction, which is about 12.7 million square feet this year.

This net reduction, it’s a strategic move. It’s an attempt to lower that persistently high national office vacancy rate, which is still hovering around 19%. It’s a clear sign that landlords, developers, they’re actively trying to, rightsize the market and it seems like it might be having some effect.

The market is showing some positive signs. Signs of recovery, positive net absorption, meaning more space leased than vacated for four quarters running now, plus office leasing activity was up, what, 18% in Q1, 2025 compared to last year. And if you look specifically at Houston, it has the country third highest amount of office conversion, square footage planned or underway, about 6.7 million square feet.

That represents 3.2% of a toll office market. And what’s significant is that many of these are slated to become multifamily. Which just reflects the incredibly strong fundamentals in the apartment sector, right? Yeah. Finding a new use for these underutilized office buildings. Okay, so that brings us to Dallas-Fort Worth.

Connecting this to the bigger picture, DFWs office market really is a standout story, partly driven by what some folks are playfully calling y’all street that nod to all the financial firms moving in. Absolutely DFW Office leasing showed really positive momentum in Q2 2025. 3.2 million square feet leased that pushed the first half leasing volume of 35% compared to last year.

And yes, the financial services sector is a huge driver. You’ve got the Texas Stock Exchange, TXSE, raising $120 million. The NYSE Reincorporating Chicago Branch here in Dallas, NASDAQ planning a regional hq. These are major moves. Yeah, not small players at all, and that helps explain why DFW maintains that impressive 61% office usage rate among the strongest in the us.

But what’s also fascinating here is this continued flight to quality trend. Exactly. Class A office space. The newest buildings, the ones loaded with Amen. That’s what continues to dominate leasing and it’s driving rent growth. This is happening even while some older Class B buildings are getting renovated, trying to compete.

So it raises an important question for you. What does this ongoing preference for premium space mean when you’re assessing the value and, future potential of office properties in DFW, especially if you’re considering a renovation or maybe a new acquisition moving beyond just retail and office. Texas as a whole just continues to be this undeniable powerhouse in commercial real estate.

That’s right. Dallas-Fort Worth still holds that number one spot as the top commercial real estate market in the us. That reflects significant investment, significant development activity statewide. And this isn’t just happening in the downtown cores either. No, definitely not. We’re seeing really significant momentum in Southern Dallas County areas that maybe historically were underserved.

There are some mega projects there that could be total game changers. Yeah, think about Ali Partners buying 5,200 acres down in Ferris. That project is expected to bring 5,000 new homes, 2000 acres just for data centers, and another thousand acres for manufacturing. A warehouse, huge scale, or Hoke Global’s, $1 billion University Hills Project next to UNT Dallas.

That’s hundreds of homes, 1500 apartments, one half million square feet of commercial space, a hotel, even a stadium. Now, what’s interesting there is that industrial growth has really outpaced, multifamily and office in that part of the county. It’s kinda a fascinating challenge, but also an opportunity, right?

You have this. Large blue collar workforce, almost 50 million square feet of industrial added since 2020. But residential and office grows lagged behind. So now developers like Micki Nu with his Adeline mixed use project. They’re stepping in, they see the strong fundamentals, they see the need for that catalytic investment, and local communities are getting involved too, offering incentives, investing in infrastructure to support it, and stepping back again to the broader capital market picture we’re hearing about.

Over $350 billion in dry powder just waiting to be deployed. That’s a staggering amount of uninvested capital. It really is. In this dry powder held by investment funds, it signals growing optimism at the second half of 2025. See, many of these funds were raised a few years ago and they have finite investment periods, so there’s real pressure building to deploy that capital.

It means a lot of money is looking for a home, which indicates, potential for significant transaction activity ahead. It’s not just the traditional assets, right? We’re seeing huge moves in some alternative asset classes, particularly driven by this well insatiable demand for tech infrastructure.

That’s spot on. Look at Vantage launching a $3 billion data center campus in Nevada. That just underscores the continued expansion all driven by AI demand. Data centers are an asset class, seems it explosive growth right now. And then you also have Nvidia potentially leasing a hundred thousand square feet of office space down in Austin.

That might signal a kind of rekindled romance between big tech and Austin after things cooled off a bit. Okay, so while there’s clearly a lot of optimism, a lot of exciting trends, we also need to acknowledge the economic headwinds that are still definitely impacting CRE decisions. The housing market is one key area to keep an eye on.

Nearly a third of the largest 100 US housing markets are actually seeing prices fall. Now, inventory is rising, mortgage rates are still stuck in the high 6% range. Austin, Texas specifically is mentioned as seeing price declines. Now, this directly impacts housing availability and affordability, which you know, are crucial factors for attracting and keeping residents and businesses here in Texas.

And then on interest rates. The Federal Reserve is only planning maybe one or two rate cuts in 2025. Commercial mortgage rates are ranging anywhere from say, 5.24%, up to 15.25%. This elevated rate environment, it can certainly put a damper on deal making and refinancing. We saw that with recent office loan defaults in New York, the MO group and Savannah deals, and there’s a critical policy shift we need to consider too, how immigration enforcement is projected to quote, radically raise construction costs.

Yeah, the Prolog, CEO, Hamid Moga Damm, he issued a pretty stark warning, said aggressive immigration enforcement could lead to maybe a 15% to 23% loss of the construction labor force, and that workforce is already short by about 450,000 workers. This isn’t just an abstract number. It could significantly increase replacement costs, lengthen construction timelines for new projects, which indirectly could actually make existing properties more valuable because it would be less new supply coming online.

But then on the flip side, there’s a significant policy move creating a new layer of opportunity. Congress made opportunity zones permanent that could really reshape investment in distressed communities. That’s exactly the opportunity zone. Our OZ 2.0 program that’s set to go into effect January 1st, 2027.

It comes with new criteria, like a 7% area median income threshold, no adjacent higher income tracks allowed, plus increased transparency. Now, while investment in the current zones might slow down a bit in the meantime, the permanence of the program, that’s a net positive. It should really spur long-term investment in areas that genuinely need it.

And then just briefly, there’s this new tension emerging in the multifamily sector. The Trump administration requesting tenant information from landlords. This puts property owners squarely between federal inquiries on one side and tenant privacy and fair housing laws on the other. So it raises another important question for you.

How will these evolving regulatory complexities influence investment decisions in multifamily? Especially if you’re looking to expand a portfolio. All right, so as we wrap up this deep dive, it’s pretty clear that despite, various headwinds and challenges, the commercial real estate sector is showing some remarkable resilience and transformation.

We’ve definitely seen significant strength and opportunity, particularly right here in the Texas market and especially within the Dallas-Fort Worth retail sector. Yeah, if you connect all this to the bigger picture, that sheer volume of dry powder waiting to be invested, combined with these strategic market shifts like office conversions and the well the stubborn resilience of retail, it really suggests a curative significant transaction activity could be ahead for you.

Understanding these nuances isn’t just about, staying informed. It’s key to spotting those real opportunities, positioning yourself for success in this evolving landscape. So here’s a final thought for you to consider given these clear trends, the revitalization of physical retail, the continued flood of capital in major businesses into DFW, what specific maybe under the radar, retail, submarkets, or property types right here in Dallas-Fort Worth, do you think are poised for the most unexpected growth in say the next 12 to 18 months?

Thanks for tuning into this deep dive.