Commercial real estate deals totaling more than $13 billion were completed in North Texas in the first nine months of this year.
A steep decline in investment activity this year wasn’t enough to knock North Texas out of the top spot nationally for commercial property sales.
Dallas-Fort Worth led the country with $13.2 billion in commercial real estate investment in the first nine months of 2023, according to the latest estimate by MSCI Inc. It edged past Los Angeles, which had $12.8 billion in transactions and was the top U.S. market at midyear.
“Even with volume down 64% year-over-year, Dallas was able to reclaim the No. 1 spot among markets year to date,” according to the analysts. DFW ranked first in 2022 and 2021 as well.
DFW moved up among commercial property investment markets in large part due to a huge number of apartment sales. Apartment purchases accounted for more than half of the investments through the third quarter — $6.84 billion. There were almost $2.9 billion in DFW industrial building deals and $1.3 billion in retail transactions.
Among U.S. markets with the most commercial real estate activity, Houston ranked sixth and Austin was No. 10. San Antonio was in 18th place.
With high interest rates and a tight lending market, commercial property purchases are down sharply this year.
“The broad-based pullback in commercial real estate investment was evident in the rankings of the most active U.S. markets, with not one market posting growth compared to the first three quarters of 2022,” according to MSCI. “All markets on the list registered double-digit declines in deal volume and all but five slid more than 50% annually.”
The greatest national decline is in the investment in office buildings, which fell 65% in the third quarter from a year earlier.
MSCI estimates that a total of $276.3 billion in investment property transactions have taken place nationwide through the third quarter. The largest share — $89.6 billion — was apartment purchases.
Because of deteriorating market conditions, $79.7 billion in U.S. commercial real estate was distressed as of the third quarter, MSCI estimates. Office buildings accounted for about $32.5 billion of that troubled real estate.
“Still, the current distress level remains less than half that reached during the height of the Great Financial Crisis,” according to the report.
MSCI says about $1.4 billion in D-FW commercial properties are currently distressed with a potential for another $8.8 billion in troubled property deals.
Manhattan, with $14.4 billion in distressed properties, is the top market for troubled commercial real estate followed by Chicago with $7.3 billion.
Source: Dallas Morning News