A sharp drop in investment activity this year wasn't enough to knock North Texas out of the nation's top spot in commercial real estate sales.
Dallas-Fort Worth led the nation in commercial real estate investment in the first nine months of 2023 at $13.2 billion, according to MSCI's latest estimates. It slightly surpassed Los Angeles, which topped the U.S. market with transaction value of $12.8 billion. In the middle of the year.
According to analysts, “Despite a 64% year-on-year drop in sales volume, Dallas was able to regain its number one position in the market since the beginning of the year.” D-FW ranked first in 2022 and 2021 as well.
D-FW's rise in the commercial real estate investment market is largely due to a huge number of apartment sales. Apartment purchases accounted for more than half of the investment ($6.84 billion) through the third quarter. There was approximately $2.9 billion in D-FW industrial construction transactions and approximately $1.3 billion in retail transactions.
Among the most active U.S. markets for commercial real estate activity, Houston ranked 6th and Austin ranked 10th. San Antonio placed him 18th.
High interest rates and a tight lending market have led to a significant drop in commercial real estate purchases this year.
According to MSCI, “The broad setback in commercial real estate investment was evident in the ranking of the most active U.S. markets, with not a single market recording growth compared to the first three quarters of 2022.” About. “All markets listed recorded double-digit declines in trading volume, with all but five markets declining more than 50% for the year.”
Nationwide, the biggest decline was in office building investment, which fell 65% in the third quarter compared to the same period last year.
MSCI estimates that through the third quarter, a total of $276.3 billion in investment real estate transactions took place across the United States. The largest share, at $89.6 billion, was accounted for by apartment purchases.
MSCI estimates that U.S. commercial real estate was worth $79.7 billion as of the third quarter due to deteriorating market conditions. Office buildings accounted for about $32.5 billion of the troubled real estate.
“Yet, current distress levels are less than half of what they were at the height of the Great Financial Crisis,” the report said.
MSCI says about $1.4 billion of D-FW's commercial real estate is currently in trouble, and an additional $8.8 billion in real estate transactions could be in trouble.
Manhattan is the top market for distressed commercial real estate, with $14.4 billion in distressed properties, followed by Chicago with $7.3 billion.
