Welcome to the Deep Dive. This week we’re cutting through the commercial real estate news for the week ending June 13th, 2025. Our goal here is simple, pull out the key insights, the nuggets you need from recent reports and analysis so you can really understand the market. We’ll be focusing particularly on trends relevant to Dallas Fort Worth and, the retail sector.

Yeah, we’ve sifted through quite a bit, Reuters. G Globalist, CRE Daily Modern Retail, the Texas Business Journals, local profile Biz O, commercial Property Executive. The whole gamut. We wanna give you the essentials without you having to wade through everything yourself. Okay. Let’s get into it. You really have to start with the the big economic picture, right?

That sets the stage for everything in CRE. What’s the word from the Federal Reserve? The expectation based on the reports is that they’re likely holding steady. I. Keeping that key interest rate, in the 4.25% to 4.5 u percent range holding steady. And is that purely because inflation looks a bit better?

Not entirely, no. While inflation readings have eased somewhat, the main reason being floated is this ongoing uncertainty around tariffs and trade. That seems to be the big factor, right? That’s right. Issues, exactly. It leads to what they’re calling. Cautious patience, and of course stable. But still elevated rates mean financing costs for commercial real estate remain high.

That impacts deal flow, values everything. And speaking of caution, Jamie Diamond had some pretty strong words, didn’t he? He did. Jamie Diamond over at JP Morgan Chase gave a clear warning. He basically said the boost from pandemic stimulus is wearing off and the real impact of these recent tariffs, he thinks that’s gonna start hitting the actual economic numbers soon.

Soon. Did he give any indication of why we haven’t seen the full impact yet? Something about job growth maybe? Yeah. He pointed out the US labor force has grown quite fast recently, which might have masked some underlying softness, but the really interesting point he made was about stockpiling companies apparently spent about a billion dollars a day stockpiling goods to beat terrors a billion a day.

Wow. Yeah, so that stockpiling has essentially, kicked the can down the road. It’s delayed the visible hit from tariffs, making the timing of this potential deterioration he mentioned, pretty hard to nail down. Okay, so tariffs are a known pressure, but the timing of the fallout is still uncertain because of that stockpiling.

Let’s look at the actual job numbers then Bureau of Labor Statistics from May, 2025. What did that show? May’s job growth was stable but definitely slower than previous months. And interestingly, there were also downward revisions to the job numbers from earlier months, so the pace might not have been quite as strong as first reported.

And did any particular sector stand out in that may report? Yes, and this ties directly into our retail focus today. While overall jobs grew, the retail trade sector actually lost jobs. The report specifically mentioned about a 7,000 job decrease in retail employment compared to April a drop in retail jobs.

Wow. As we’re talking about tariffs potentially hitting soon seems connected. It really does. There is a study mentioned that found tariffs are finally starting to show up in consumer prices for things like furniture and apparel. Prices for those goods are up several percent compared to 20, 24 levels after months of companies trying to absorb it.

It seems they’re passing it on now and higher prices for shoppers. That could mean less foot traffic eventually hitting retail landlords. Exactly. If you’re paying more, you might buy less or shop less often. That squeezes retailers, they face higher costs from tariffs and potentially softer demand.

It makes ’em cautious. Maybe they delay opening a new store. Maybe they try to renegotiate leases. It creates pressure. Okay, so the macro picture is. Cautious tariffs are a big factor. Maybe still playing out and retail is already showing some stress. Let’s shift gears a bit. What about national commercial real estate trends more broadly?

Across different property types. Looking back over the long term, like the last 25 years, from 99 to 2024, it’s fascinating. The median deal size, just the dollar amount, not adjusted for inflation has actually tripled. Tripled in price doc, but are the deals for bigger properties. That’s a surprising part.

No, the actual physical size of the properties in those median deals has gone down. Retail spaces and deals were about 11% smaller, industrial down around 14%, so paying way more per square foot for smaller buildings. Precisely. The average price per square foot jumps something like 200% to 250% for both retail and industrial over that time.

The reasons cited are. Tighter supply of good assets, higher construction costs, making new builds pricey, and investors really focusing on smaller, top tier trophy assets instead of big portfolios. Okay. That’s the long view. What about recent activity, like Q1 of this year, 2025? Q1 showed signs of a rebound median deal volume nationally was up about 30% year over year, and the average price per square foot also climbed up around 15% compared to last year.

So activities picking up and values for what is trading are rising. Yeah, it suggests the market’s finding some traction even with the headwinds is the way deals are getting done changing. Especially thinking about foreign investment. That’s a really keen observation from the reports. International investors are still interested, especially in growth markets, but how they invest is shifting.

Instead of just buying properties outright, we’re seeing more complex deal structures. Things like joint ventures, preferred equity, mezzanine debt. Even rescue capital. Can you break those down a bit? Why the shift? Sure. Think of it like different ways to slice the funding pie JVs are partnerships, share the risk, share the reward.

Preferred equity and Mez debt are in between layers of financing riskier than a standard mortgage, but less risky than pure ownership equity. They offer potentially higher returns. And Rescue Capital is basically funding for projects and trouble that can’t get traditional loans. Investors are using these because while prices are high, rates are high, these structures let them put money to work maybe with less cash upfront or a different risk profile, especially when chasing yield in popular spots like the Sunbelt, or in hot sectors like beta centers.

It’s about managing risk in a pricing market. Got it. So overall, the story for U-S-C-R-E is a gradual comeback from the reason sum. Yeah. That seems to be the narrative. Transaction volumes are definitely up from the bottom. One report. Put the total through May, 2025 at around $30 billion. Still down a bit, maybe 7% from last year’s pace, but nearly tripled the volume we saw during the trough in 2023.

And retail and multifamily sales are leading that pickup. Particularly in those Sunbelt cities. Any other quick sector trends that caught your eye nationally? Yeah, a couple. Medical office construction seems pretty steady, unlike traditional office, which is lagging. There’s also a lot more interest in logistics and especially secure data centers, partly due to supply chain worries, things like.

The Colonial Pipeline hack really woke people up to infrastructure needs. Texas gets mentioned a lot there, and PropTech funding seems to be bouncing back too. Focusing on sustainability data, AI for managing properties. Okay, good overview. Now let’s really zero in on retail specifically. I. Then bring it home to Dallas-Fort Worth.

How are the sources describing the national retail outlook Right now, the phrase that sticks out is resilient and fragile captures the split personality of the sector. Perfectly resilient, but fragile. How does that actually play out? The resilience is in necessity based retail. Grocery stores, fast food chains, gyms, beauty salons, things people use regularly.

Demand there is pretty steady. Okay? The fragility is more in the discretionary categories. Drug stores, dollar stores, certain apparel or home goods retailers, they’re much more sensitive to people cutting back spending due to inflation or those tariff price hikes we talked about. So it really depends on what kind of store we’re talking about.

Exactly. And overall, despite some slower leasing here and there, retail rents and occupancy are generally holding up. Okay. Nationally, a big reason is just a lack of new high quality space being built in many desirable areas. Scarcity helps support values, though you do see more weakness in areas that lost a lot of office workers, that daytime traffic.

Makes sense. Are any specific types of retail properties really hot right now for investors? Oh yeah. Grocery anchored centers, they are absolutely the darling of the retail investment world right now. Sales hit around $7 billion nationally in 2024, and they’re trading at record prices average of $209 per square foot.

Investors love the stability. Grocers sign long leases. They’re reliable tenants and they bring consistent foot traffic that helps the smaller shops in the center too highly sought after. Let’s talk specific retailer news impacting real estate, Walmart and their drones. That sounds pretty futuristic.

It’s happening now though. Walmart is really scaling up drone delivery. They’re adding a hundred new stores to the program, including some right here in Texas, Houston and Dallas specifically. That’s millions more households they can reach. It’s a big move in automating that last mile delivery. And Texas is clearly a key state for them.

And back to apparel, retailers and tariffs. What’s the mood there? It’s definitely cautious. You look at recent earnings calls from Gap, Abercrombie, American Eagle. They’re all talking about rising costs from tariffs and seeing maybe softer demand. For close Gap mentioned like a 200 $300 million hit from tariffs this year.

A EO said $40 million annually. Wow, that pressure on margins, plus maybe people spending less on fashion, it makes them hesitant about opening new stores, maybe even pushes them to renegotiate existing leases. Creates real uncertainty for their physical footprint. But not all apparel is struggling, right?

Boot Barn seems to be doing well. Boot Barn is a great panel example. They’re expanding rapidly, aiming for over 500 stores by 2030, often in smaller markets, not just the big coastal cities. And fun fact, their HQ is right here in Plano, Texas shows there’s still room for growth with the right concept, even with Texas roots.

But then you have the flip side. Like the Hooters closures, right? They abruptly closed dozens of locations, including several in DFW. It’s just an example that some older casual dining or specialty retail concepts are struggling to keep up with costs or changing tastes. And those closures mean vacant properties, often standalone buildings.

Hitting the market here in Texas shows that constant turn. Okay, let’s pivot fully to DFW. Now, the development scene here seems incredibly active based on the reports, what’s fueling it. A huge driver is corporate relocations. Dallas leads the nation. 100 HQ moves between 2018 and 2024. Texas overall, including Austin and Houston, got over a quarter of all USHQ moves last year.

This constant influx of companies, of people, it just fuels demand for everything. Office, industrial, apartments, and definitely retail to serve them all. Yeah. We’re seeing that translate into major projects even in areas previously overlooked, like Southern Dallas. Absolutely. The shops at Redbird, the redevelopment of that old mall is a huge success story.

It’s now a thriving mixed use center with medical and retail, and its success is attracting massive new investment nearby, like the proposed University Hills campus. That’s a billion dollar 1.5 million square foot project with commercial, residential hotel. Even a stadium next to UNT Dallas. Southern Dallas, which historically lagged is seeing explosive industrial growth, 50 million square feet and huge multi-family growth.

It’s being called a growth engine now, and retail is vital to support that and looking north up in Collin County. Huge projects there too for sure. McKinney just approved Huntington Park. That’s a 785 acre mixed use development north of three 80. That scale, residential, commercial, retail altogether is exactly what these booming north Texas suburbs need.

It shows the demand for these integrated live work play places way outside the downtown core. We’re also seeing older retail getting repurposed Aren. Oh, yes. That’s a key trend. The demolition of that old empty outlet mall north of Dallas is a prime example. They’re clearing it to build a new mixed use project, likely office housing and newer, probably smaller format retail.

It’s happening across DFW replacing dated low density retail with higher density mixed use that fits today’s needs. And the report specifically mentioned developers targeting certain fast-growing suburbs. Yeah. Places like Frisco, the Colony and Alan McKinney were highlighted. That’s where developers see a lot of the current action following the population and job growth right up the corridor.

Okay. Let’s try to wrap this up. So the big economic picture is, complex. We have the Fed holding steady, but warnings about tariffs and potential slowdowns from people like Jamie Diamond. Retail is already feeling some of that, right? Nationally. CRE is recovering in terms of deal volume, but capital is getting more creative with JVs and preferred equity, especially chasing yield in the Sunbelt and within retail.

It’s really a split story. Necessity and grocery anchored are strong, but discretionary retail is facing more pressure and bringing it back to DFW. It’s incredibly dynamic. Massive growth fueled by corporate moves is driving huge projects in places like Southern Dallas and McKinney. But we’re also seeing adaptations, old malls coming down from mixed use and some specific retailers struggling while others like boot barn expand.

It’s constant change. It really is. You’ve got this national economic uncertainty layered on top of intense local growth here. It creates a complex market, but definitely one with opportunities if you know where to look, especially in retail across different DFW Submarkets. So thinking about all these moving parts, the national economy, the shifts within retail itself, and this really intense development and demographic change happening across Dallas Fort Worth, how does that shape your perspective on where.

The specific retail real estate opportunities and maybe the challenges lie in different parts of DFW right now. That’s the key question, isn’t it? It really comes down to understanding the specific location, the tenant mix, and those local growth patterns. The details matter immensely here. Indeed, they do.

That brings us to the end of this deep dive. Thanks for joining us.