Investors say D-FW will be the top commercial property market in 2023

Commercial property buyers are targeting North Texas as the top market for new deals this year.

The Dallas-Fort Worth area ranked first in the nation for 2023 real estate investment among the 10 largest U.S. metro areas, CBRE Group found in a new survey.

“In prior downcycles, D-FW has proven to be more resilient than the U.S. as a whole due to the business-friendly state government, low cost of living, high quality of life and economic diversification of the Metroplex,” Danny Baker, a CBRE vice chairman said in a statement.

Dallas, Austin and Miami ranked as the best markets for this year in CBRE’s 2023 U.S. Investor Intentions Survey.

North Texas led the nation in total commercial property investment in 2022 with more than $42 billion in transactions, according to the latest estimate by MSCI Inc. The D-FW area has out-paced other U.S. metros for commercial property buys for three years in a row.

Apartment and industrial building sales accounted for the largest share of D-FW’s 2022 property investment volume.

And those types of property head buyers’ shopping lists for 2023.

“While there is uncertainty on a macro-level, its apparent that the apartment sector in D-FW has strong tailwinds are once again proving resilient, and apartments will continue to be a favored property type for investors,” Baker said.

North Texas leads the country in construction of both industrial buildings and new apartments.

Commercial real estate lenders also ranked the D-FW area as one of the preferred markets for new loans in 2023.

Real estate activity slowed in the final months of 2022 as higher interest rates and fears of a possible economic recession caused investors and lenders to hit the pause button on some deals.

Nationwide commercial property investment declined by about 15% last year from record levels in 2021.

More than half of investors surveyed by CBRE said they plan to buy less commercial property in 2023. And 60% say they will sell fewer properties or not sell at all this year.

Most investors say they expect commercial property price cuts of up to 30% with the biggest discounts for shopping malls and offices.

Despite headwinds in the commercial property industry, the D-FW area is expected to see continued construction and investment this year because of the area’s underlying fundamentals.

North Texas added more than 235,000 new jobs last year and grew employment at the fastest rate of any major U.S. metro area.

Dallas-Fort Worth was forecast to be one of the nation’s hottest real estate markets this year for investment and development – behind only Nashville in an earlier scorecard of metro areas that property executives expect to prosper. North Texas had a second-place showing in the annual Emerging Trends in Real Estate report.

“Ultimately, investor sentiment is largely based on population growth and D-FW gained more people in the past decade than any other major U.S. metropolitan area,” CBRE executive vice president Ryan Thornton said. “This provides companies with a huge talent pool for both white-collar and blue-collar employees.

“Moreover, D-FW’s central location and pro-business environment are two significant factors driving capital to invest here long-term,” he said. “Combine these factors with a lack of corporate and personal income taxes, and it’s easy to see why – has a thriving, diversified economy that’s attractive to investors.”