🔮 Higher interest rates are slowing commercial real estate buys and building starts heading into 2023. What does that mean for the Dallas-Fort Worth market? 2023biz 2023forecast 2023DMNforecast
Unlike in previous economic slowdowns, there are still billions of investment dollars looking at North Texas for real estate.
“When we think back about all the cycles in commercial real estate, this is unique because we didn’t cause it,” said Mark Gibson, chief executive of Jones Lang LaSalle’s Americas capital markets division. “This is not a supply issue. It’s not necessarily a demand issue right now. “This is a cost of capital issue,” Gibson said. “There is plenty of capital. You might not like the price at least right now.”Higher commercial mortgage rates are already causing a decline in property values and causing buyers to hit the pause button on new deals until they can better gauge pricing. Some real estate service firms have begun staff and spending cuts in anticipation of a decline in business next year.
“Whether it’s residential or on the commercial side and the capital markets and lending for new projects, everything is tied to interest rates,” said Jeff Ellerman, vice chairman in the Dallas office of CBRE Group. “We are in territory we have not been through in decades. That is creating a lot of uncertainty. That’s causing people to change plans.”
Ellerman and other top D-FW property execs expect that Texas will weather next year’s economic changes better than most parts of the country. That was the case in the Great Recession, when D-FW bounced back with record commercial real estate activity.“It doesn’t feel like 2008 and 2009 for sure,” Ellerman said. “Businesses here are still growing and are doing well. TheRead more real estate stories
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