Welcome to the Deep Dive. We’re your shortcut really to getting smart on the latest in commercial real estate news for this week, June 20, 20, 25. Today we’re aiming to cut through all the noise. We want to distill the really critical insights and just deliver them straight to you. And we’ve got a laser focus today on the incredibly dynamic commercial real estate market right here in Texas.

That’s right. Specifically, we’re diving deep into Dallas-Fort Worth retail. And this deep dive, just so you know, is brought to you by Eureka Business Group. You’re your trusted authority in commercial real estate brokerage, especially. In the DFW market and we’ve carefully curated quite a selection of top tier articles and some cutting edge research.

The goal here is really to ensure you get a comprehensive but still concise view of the current market conditions. Saves you hours of sifting through stuff yourself. Exactly. It’s about getting to the, the real essence of what’s actually happening on the ground. Okay. Let’s really unpack this then, because what we’re seeing in Texas retail, it isn’t just resilience.

It’s a fascinating study in adaptation. How is a sector that’s facing these national headwinds, closures, rising costs, how is it not just surviving, but in places like DFW actually thriving? That’s really the core question we’re digging into today. So let’s kick off with something genuinely compelling, this remarkable resilience of the Texas retail market.

Despite all the macroeconomic uncertainty we’ve been tracking it really seems to be defying gravity somehow. It does. We’re seeing distinct growth patterns, investor opportunities emerging across key cities. Austin, Dallas, Macallan, Houston. It’s clear Texas continues to stand out. That’s a really crucial observation.

When you hear someone like Kylie Hiller from Cushman and Wakefield highlighting Austin’s retail market a sub 4% vacancy rate. Yeah, that’s more than just a number. It’s basically a flashing neon. Sign for investors, it says, this isn’t just strong, it’s fiercely competitive. Every available square foot is getting snapped up.

It signals well a landlord’s dream, really, and a market that’s ripe for new strategic development. A landlord’s dream. Exactly. And this robust demand, this low vacancy, it isn’t just Austin. This general Texas trend is, I’d say, very much amplified in the Dallas-Fort Worth market. It shows these powerful underlying fundamentals for retail.

That sub 4% in Austin certainly catches the eye. So building on that Texas resilience theme, let’s drill down into Dallas-Fort Worth, the retail landscape there. It seems to have its own unique set of challenges and well triumphs. Are the challenges truly unique or are they mirroring national trends? What’s the real impact of tariffs on DFW retailers?

Is it just noise or are we seeing actual shifts? One key development we are seeing in DFW is retailers getting a clear line of sight on tariffs. Mark Masser, new Mark Chairman mentioned this at Biz Knows DFW Retail Summit. It means businesses can now make more informed decisions sourcing pricing that’s crucial for stability in their supply chain.

Okay, so more clarity there? Yes. But Bob Young of Weitzman also acknowledges there’s still significant uncertainty hanging around. And we’ve even seen some consumer pullback. Remember those US retail sales falling in May, right? I saw there. Yeah. So for retail properties, this adds a layer of complexity.

Reduced consumer spending directly impacts tenant performance, and that in turn hits lease negotiations. Consumer pullback is definitely a worry. But how are DFW retailers specifically? Mitigating that. It feels like despite these headwinds, DFW retail isn’t just surviving, it seems to be capitalizing on some massive opportunities, especially in mixed use.

Look at that huge legacy west acquisition. Oh, absolutely. That legacy West deal, it truly underscores the market’s confidence. The scale of it, 1.15 million square feet mixed use. In DFW, it was acquired for a staggering $785 million Kite Realty and GIC. Wow. And this wasn’t just any deal. It reportedly commanded the highest price ever paid for a mixed use property in the region, highest ever.

That’s the report. So this isn’t just strong investor confidence, it’s like a thunderous vote of confidence in DFWs top tier retail destinations. And these, highly sought after integrated mixed use environments. The fact that a deal like this still commands such a premium. It really speaks volumes about DFWs perceived stability, especially when you consider nationally.

So many CRE loans for just a few years back are now facing refi at much higher rates, a staggering $785 million. So it’s just an eye popping number. But this legacy West deal, it’s not just an isolated event. It feels like part of a much larger DFW growth story unfolding. Definitely. How much of this confidence do you think is fundamentally tied to those big population shifts We’ve been seeing?

If we connect this to the bigger picture, DFWs population growth has notably shifted northward. And that’s fueling the emergence of these billion dollar mixed use projects in suburbs like Frisco and also down in Southern Dallas. These are essentially mini cities that combine. Residential retail office space, all designed to create vibrant communities, right?

We’re talking major developments like a universal resort in Frisco, a $200 million surf resort up in McKinney, a $950 million Kalahari waterpark in Allen, the surf resort in McKinney. Okay? Yeah. And don’t forget, over $8 billion in developments. Planned way up at leak Texoma. Now this rapid expansion, it presents opportunities obviously, but GFFS, Evan Beatty raises a crucial point, which is, can these new greenfield developments, building on previously undeveloped land, can they truly replicate the, let’s say.

The street grid and walkability of older established urban cores like downtown Dallas. That’s a real challenge, creating truly integrated, walkable communities from scratch. That’s a really interesting point. A nearly billion dollar waterpark. It does make you wonder what that says about. Where people are choosing to live and spend their leisure time, doesn’t it, that these huge entertainment anchors are popping up?

Speaking of vibrant communities, we can’t talk DFW growth without highlighting the redbird redevelopment in Southern Dallas. That area of faced disinvestment for years, but Redbird seems to be genuinely transforming it. Oh, it was a remarkable turnaround story for Southern Dallas. Absolutely. The redevelopment of the old 1970s Redbird Mall into the shops at Redbird, that’s been pivotal, changed the whole narrative for the area.

Peter Brodsky’s project exactly. His decision back in 2015 to buy and redevelop that 1 million square foot mall. It truly anchored the area’s revitalization, and now we’re seeing new mixed use. Projects like the $1 billion University Hills development breaking ground nearby a billion dollars there too.

Yeah. This single project alone, 270 acres of homes, 1500 apartments, one and a half million square feet of commercial space. They’re even considering a potential sports stadium. And beyond that specific project, Southern Dallas has seen almost. 50 million square feet of industrial space added since 2020 and a 59% jump in multifamily units.

Wow. 59% development officials in Dallas confirmed there are over 20 projects in the pipeline just for Southern Dallas, as Brodsky himself put it with the right policies and investment. Southern Dallas is becoming a real growth fi for the city, a growth engine. For commercial real estate pros, this area represents a significant opportunity for strategic investment and development right within the DFW market.

Indeed, and this strategic adaptation is clearly vital. Now, while Df W’s story is compelling, it is crucial we understand it within the broader national retail narrative. Absolutely. Because what’s happening nationwide could, either amplify or potentially challenge the local success we’ve just discussed.

Right, and a key development there is the prediction from CoreSite research. They’re forecasting what some are calling a retail apocalypse 2025. They’re predicting up to 15,000 store closures nationally. 15,000. 15,000. That’s a significant 55% increase over 20, 20 figures. This isn’t just a headline about closures.

It’s a profound market reset. Think about it, 15,000 national store closures, a 55% jump from 2020. That forces landlords to rethink every single retail space. It presents a massive opportunity. Sure. For repurposing or retenanting with innovative concepts. Concepts that via the apocalypse narrative. So opportunity within the challenge.

Exactly. We’re seeing major chains like Party City, Joanne, big Lots, Macy’s. They’re. All pursuing substantial closures, and that obviously has major implications for retail, real estate markets everywhere. It creates both challenges and these new opportunities for strategic repositioning and kind of hand in hand with those closures.

We’re also seeing rising retail occupancy costs, right? Yeah. Putting a direct squeeze on both the retailers and the landlords, that’s a critical point for the sector. Yes, retailers are definitely feeling the pinch. National average occupancy costs hit 7.73%. Now compare that to 5.83% in 2023. That’s nearly two full percentage points higher.

That’s significant. It really is. For a retailer, that kind of jump can be the difference between profit and loss on every square foot. It forces tough decisions on expansion, even survival, and at the same time, average rental rates have climbed to $16 and 59 cents per square foot. That’s a 9% increase over 2022.

So this upward pressure on costs for retailers and simultaneously for landlords trying to maintain margins, it’s creating a very dynamic environment, requires careful management, strategic insight. And in terms of navigating these costs, dollar tree’s, tariff strategy offers maybe a potential playbook for other value focused retailers.

Oh there’s strategically shifting, sourcing, optimizing their logistics, adjusting their product mix, and all of that in turn has implications for their real estate demand and the types of spaces they’re looking for. Interesting playbook, and it begs the question, how are technology and fresh capital reshaping not just retail, but the broader commercial real estate landscape?

Yeah we’re definitely observing a significant and growing trend towards investing in alternative real estate sectors. Institutional investors are increasingly targeting niche. Areas experiential retail is a key sector that seems to be leading the recovery, moving beyond just traditional models.

Experiential, yeah. And this aligns with broader trends where industrial data centers, multifamily assets, they’re also attracting substantial investment. And the general prop tech market property technology is just absolutely booming. It’s a uptick. Yeah. It’s projected to reach $88.37 billion by 2032.

That’s a massive leap from today’s roughly 36.55. Billion dollars. Huge growth. Projected huge. We’re talking AI powered analytics, virtual reality tours, smart building management. All these tools are transforming how commercial real estate is developed, managed, even transacted. And a huge part of this is just the adoption.

82% of PropTech companies are now using or planning to use AI based technology that indicates a truly transformational shift across the industry. 82% using or planning on ai. Yeah, that’s quite something. Now let’s take a quick glance at the DFW residential market, which certainly impacts retail demand. We have that CoStar chart.

Yes. The chart titled Monthly Rent gain Stall during Peak Leasing season in Dallas-Fort Worth. It’s quite insightful actually. It shows that month over month rent growth in DFW, while it’s seen periods of both positive and negative movement since January, 2023. Ups and downs. Exactly. But critically it experienced a stall in May, 2025, and that’s during what’s typically a peak leasing season.

Okay. A stall. Yeah. This indicates a flattening of rent growth and that can directly affect household budgets and consequently consumer spending and retail environments. Makes sense. So we focused heavily on retail, but how are other key CRE sectors responding to these broader economic currents? Let’s quickly scan the landscape for maybe some more headwinds and tailwinds.

Sure. In the office market, for instance, we’re seeing mixed signals. DFWs Class A buildings, the top tier, they’re outperforming, vacancy, actually fell in Q1, 2025. There’s that flight to quality trend companies wanting the newest, most amenity rich spaces, flight to quality. Uptown is leading construction with pretty high rents, around $37 and 84 cents per square foot.

However, the overall DFW office market remains weak and city center is lagging. Now compare that to Manhattan, which is showing some. Early signs of stabilization, but nationally, we’re seeing real pressure in the lending market. The lending side, yeah. The CMVS delinquency rate, that’s commercial mortgage backed securities.

Basically bonds backed by commercial property loans. It’s soared to an 11 year high of 11% in June, 2025. 11% delinquent. Wow. It signals significant distress, especially for older office and retail properties. Struggling to find tenants and crucially to refinance their expiring loans. In today’s higher interest rate environment, in multifamily Texas apartment construction is actually resuming after that tariff pause, which shows some market resilience.

However, world Cup hosts, cities like Houston face risks to affordable housing. You might see surges in hotel and short-term rental demand, possibly leading landlords to convert traditional rentals into vacation units for higher profit the World Cup effect potentially economically. The Federal Reserve paused rates again, their fourth consecutive pause in 2025.

The benchmark rate is holding at 4.25 4.5%. This signals possible future rate cuts, which the market wants to see. Definitely, and it’s crucial because so many CRE loans from the 3.755% range are now facing refinancing at much higher rates, maybe 6.5, 7.5%. This is a significant challenge, especially since two thirds of outstanding CRE debt is held by small banks.

That poses a bit of a systemic risk to the financial system. Small banks holding most of it. And just quickly on the policy front, there is a Senate proposal to extend key commercial real estate tax provisions that would offer some relief and continued support for the sector if it passes. Okay. Lots of moving parts there.

So to summarize our deep dive today, the Dallas-Fort Worth commercial real estate market is well incredibly dynamic. We’ve seen the retail sector in particular demonstrating this ongoing adaptation and resilience even amidst both national challenges and really significant local growth.

Absolutely, and if we connect these insights back to the larger strategic picture, DFW, especially in retail, continues to be a market of well significant activity and opportunity. For those who understand its unique trends, the population shifts, the aggressive mixed use development. We talked about the localized responses to broader economic factors.

There are clear paths for strategic investment and growth. This is precisely why having a deep. Nuanced understanding of the local DFW retail market isn’t just an advantage, it’s really a necessity for making informed decisions. So what does this all mean for you as you navigate this commercial real estate landscape?

It means that while the national headlines might paint a mixed, maybe even uncertain picture, understanding the local market specifics, especially in a vibrant growing region like DFW, it reveals these areas of really robust activity in strategic investment. It highlights where the real opportunities lie, and frankly.

Why that local market expertise is so vital. Now, for a final, provocative thought to leave you with, considering those predictions for increased store closures nationally and the shifting consumer behaviors being driven by ai, how might DFWs unique growth engines and its commitment to developing these walkable mixed use communities, how might that allow its retail sector to not just survive, but actually redefine the physical shopping experience and truly thrive in the years ahead?

Interesting question. Something to mull over as you explore these market nuances. Further, thank you for joining us for the deep dive. We encourage you to continue exploring these market nuances and always seek to add deeper understanding. Join us next time for another deep dive into the insights that matter most.