Market conditions have caused Dallas-Fort Worth commercial real estate sales to plummet.
Business deals totaled $3.5 billion in first quarter of this year, down more than 70% from same period in 2022, Dallas Morning News Reportciting a study by MSCI.
DFW is to be crowned King of Business, leading the nation in commercial real estate transactions last year. The region still ranks second in the country behind Los Angeles’ $6.3 billion.
“Volumes are being challenged by rising mortgage costs and more conservative credit conditions for new issue bonds,” Alexis Maltin, head of real asset research at MSCI, told the media. “Despite the recent decline in prices… . . buyers and sellers still disagree on pricing, with buyers preferring to walk away rather than overpay.”
DFW’s office sector has been hit by soaring costs and a tightening lending environment. However, office sales in the region still totaled about $500 million in the first quarter.
Despite the challenges, many investors They are willing to spend money on properties whose mortgages are coming due or that are at risk of being foreclosed by the lender, the outlet said.As remote work booms, some investors are looking to repurpose distressed office buildings, including office to residence convert.
However, Paul Smith, a partner at Dallas-based real estate investor Velocis, said most investors may not be willing to make deals until the market stabilizes.
“My sense is that when rates stop moving, we’re going to start seeing capital unleashed,” Smith told the press. “It doesn’t have to go down, it just stops going up. Then the equity can be underwritten, it can price the deal when it knows it can price the debt.”
— Quinn Donoghue
