D-FW expected to be a top real estate market in 2023
Dallas-Fort Worth is expected to be one of the nation’s hottest real estate markets next year for investment and development.D-FW area trails only Nashville in a scorecard of metro areas where property executives expect to prosper. North Texas’ second-place showing in the annual Emerging Trends in Real Estate markets to watch report is a big improvement from last year’s seventh-place ranking.More than 2,000 real estate industry professionals from across the country were surveyed for the benchmark study, which is sponsored each year by the Urban Land Institute and PriceWaterhouse Coopers. More than 5,300 ULI members have been meeting this week in Dallas.While higher interest rates and the threat of recession are clouds over the real estate business, Sun Belt boomtowns outshined the rest of the country in the new forecast.“All of the Texas markets are still doing fine,” said Byron Carlock, who heads PwC’s U.S. real estate practice.Along with D-FW, Austin rates as the fourth hottest market in the country. San Antonio comes in 12th and Houston 14th in the top markets forecast for 2023.Carlock said while real estate conditions in markets such as Chicago and New York City are struggling, the Sun Belt is outperforming the country.
“The whole ‘smile states’ from Northern Virginia out to parts of Los Angeles are still showing strength,” he said.
D-FW is highlighted in the report for the area’s ability to draw funding for investment and building, its new business attraction and the strength of the local homebuilding market.
“Everyone still likes the hot Sun Belt markets ,” analysts said in the report.
Sun Belt boomtowns are expected to outperform the rest of the country if the U.S. economy tips into recession next year.“As we enter 2023, the pandemic-driven factors that upended the global economy for more than two years are starting to fade,” said Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets, in a statement. “At the same time, structural changes like the widespread adoption of remote work will likely continue to inform investor behavior.“A series of long-term factors such as the rising cost of housing, increased climate risk, and declining socioeconomic mobility pose continued uncertainty for the private and public sectors alike. “The commercial real estate sector is starting to “normalize” after a rollercoaster ride of the pandemic, booming sales and rising construction.
“Most markets have boomeranged back to pre-pandemic levels,” Carlock said.
“The U.S. commercial property market had an incredible run, with some of the strongest returns, rent growth, and price appreciation rates ever recorded,” the researchers said.The industry now faces challenges from rising interest rates and a persistent housing shortage that caused a surge in home prices in many markets .“Millions of people are taking matters into their own hands and moving to more affordable markets , such as the Sun Belt ,” the analysts said. “However, while that worked as a solution for early movers, prices and rents are now increasing in the very same places people went to seek affordability. “Changes in demand and use of offices, which were born out of the pandemic, continue to challenge commercial property investors and builders.“No one we interviewed expects a mass departure from office buildings – even under the most pessimistic scenarios,” the forecast said. “But it will take more time for firms to figure out how much space they will need, how it should be configured, and where it should be located.“Pro-office proponents note that the total number of office-using jobs in the United States was 5% higher than pre-pandemic levels as of midyear 2022, and the growth is even higher in Sun Belt metro areas such as Austin, Atlanta, Dallas, Tampa, and Denver.”Last week, commercial real estate firm JLL said it expects 65% of office workers to be back at their desks for a majority of the week by early next year. Austin, Houston and Dallas are among the top cities for office worker occupancy, JLL found.
Few real estate execs polled for the annual forecast expect a crash or liquidity crunch in property markets .
“The demand drivers for certain asset types like multifamily and industrial are still very strong and undersupplied,” Carlock said. “We are going to talk ourselves into a bigger downturn than we have to.”Data and fulfillment centers, moderate-income apartments and single-family rentals, life science facilities and senior housing are identified in the emerging trends report as top development prospects for 2023.Commercial property values haven’t yet shown much decline because of a lag in appraisals and a decline in sales, Carlock said.“People are proceeding with business plans but more cautiously – more equity and less debt,” he said. “We have never gone into a downturn with this much dry powder.”
While higher interest rates and the threat of recession are clouds over the real estate business, Sun Belt boomtowns outshined the rest of the country in the new forecast.
“All of the Texas markets are still doing fine,” said Byron Carlock, who heads PwC’s U.S. real estate practice.
Carlock said while real estate conditions in markets such as Chicago and New York City are struggling, the Sun Belt is outperforming the country.
“The whole ‘smile states’ from Northern Virginia out to parts of Los Angeles are still showing strength,” he said.
D-FW is highlighted in the report for the area’s ability to draw funding for investment and building, its new business attraction and the strength of the local homebuilding market.
“Everyone still likes the hot Sun Belt markets,” analysts said in the report.
Sun Belt boomtowns are expected to outperform the rest of the country if the U.S. economy tips into recession next year.
“As we enter 2023, the pandemic-driven factors that upended the global economy for more than two years are starting to fade,” said Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets, in a statement. Pro-office proponents note that the total number of office-using jobs in the United States was 5% higher than pre-pandemic levels as of midyear 2022, and the growth is even higher in Sun Belt metro areas such as Austin, Atlanta, Dallas, Tampa, and Denver.”
Austin, Houston and Dallas are among the top cities for office worker occupancy, JLL found.
Few real estate execs polled for the annual forecast expect a crash or liquidity crunch in property markets.
“The demand drivers for certain asset types like multifamily and industrial are still very strong and undersupplied,” Carlock said.
