Somewhere between the Dallas skyline and Ft. Worth’s Stockyards, property investors are cashing in on the ever-growing real estate hub that is DFW. According to the Colliers‘ Global Capital Markets Investor Outlook, Dallas in particular will be the nation’s top market for commercial real estate investment in 2022.
As for where these property investors will allocate their funds, roughly one-third of those surveyed intend to bank on industrial and logistics assets in Dallas while another one-quarter expect to invest in local multifamily.
Historically, Dallas-Fort Worth’s central location had made it an ideal ground-zero for companies wanting to serve clients across the country. It’s also a key player in the great “Sunbelt Migration,” the exodus of businesses and consumers from high-to low-tax states, and, according to those surveyed, the Sunbelt market shows no signs of slowing down.
In 2021, DFW managed to top the list of the country’s biggest real estate markets for property investing, with almost $47 billion in sales, according to a report from Real Capital Analytics. That’s more than double its 2020 totals.
“With $46.9 billion in total investment, 2021 represents a level 77% above the market’s prior record high,“ Real Capital Analytics said. “Manhattan is the only market to ever record a higher annual total.”
DFW’s poise for growth isn’t shocking – the metro area was one of the first in the country to see its construction activity rebound from the initial challenges brought on by the pandemic, like rising construction costs and government regulations. In 2021, it also closed on the $670 million sale of Uptown’s Crescent complex – one of the 10 largest transactions of its kind in the U.S.
Cumming, a global project management and cost consulting firm, reported total construction volume in 2020 for the metroplex hit $35.5 billion and is expected to exceed $36 billion each of the next three years.
Breaking those projections down further, commercial construction will account for $3.81 billion in 2022, compared with $3.89 billion in 2021. Manufacturing construction will contribute $1.28 billion in 2022, up from $1.26 billion in 2021, according to Cumming.
As of December, 21.7 million square feet of industrial space had been delivered in DFW, with the region leading the nation thanks to its 61.1 million square feet underway, according to a CoStar Analytics industrial outlook for 2022. That same outlook saw developers remaining extremely bullish on the metroplex as DFW continues to capture 12% of all industrial construction in the US.
Of course, construction delays caused by securing labor and materials have resulted in project delays and extended deadlines. However, Dallas still managed to rank number one on a list of the top cities for construction workers by Industrial paint and Protection Magazine. Its reasoning – the combination of market rebound and supply shortages has created a competitive market ripe with demand.
“As a result of the headwinds, developers are marketing 39 million square feet on CoStar and LoopNet as available for occupancy within the next 12 months. This is achievable considering the market reported 44 million square feet in 2021,” Paul Hendershot, CoStar’s senior director of market analytics, Dallas, said.
Fueling growth even further, investments in real estate technology and proptech, a leading tool for property investors, managers, contractors and construction workers, reached a record setting $32 billion in 2021.
“Investors are optimistic about today’s market liquidity, with many commenting on the incredible levels currently available. After a record-setting 2021, 2022 is lining up to be even stronger,” said David Amsterdam, President, U.S. Capital Markets & Northeast Region at Colliers.