The real estate market is hot in North Texas.
But it’s not just housing – experts say the frenzy we’re seeing in homebuying is happening in commercial real estate, too.
The demand is driving up costs from rent to construction.
“Prices are now at all-time highs,” said Chris Dharod, president of Dallas-based SSCP Management. “There’s a lot of money from other cities coming here because they want to own DFW real estate. For a long time, people wanted to buy California real estate. It’s now Texas real estate that they want to own.”
His company owns several shopping centers, apartment buildings and other real estate holdings, so Dharod has been able to observe the ever-changing market as the pandemic has unfolded over the last 18 months.
He said before COVID-19 disrupted the economy, the market was much more predictable and stable.
“At the start of the pandemic, a lot of businesses sort of slowed down and completely froze any growth that they were going through. They stopped building restaurants, they stopped moving offices, and building offices,” he said. “Since then, companies in most industries have picked back up and prices are now at all-time highs.”
Now, commercial properties are selling well over asking price in many cases.
“Prices are way up and it’s pretty surprising how expensive real estate has gotten, especially in a market like DFW,” said Dharod. “There’s real estate right now where a buyer is putting down a significant amount of the purchase price on day one. I never saw that before the pandemic started.”
Certain segments of commercial real estate such as warehouse/industrial are booming right now, as e-commerce and online shopping has skyrocketed during the pandemic.
According to the Dallas Morning News, local developer Holt Lunsford Commercial just sold five industrial park properties around the Dallas-Fort Worth area to one realty group based in Boston.
Businesses are snatching up warehouse space and some are having to wait one to two years to get it in parts of North Texas.
With inflation driving up the costs of commodities and demand sending property values through the roof, local business owners are having to get creative to stay afloat.
“Demand is up and buyers have to be much more aggressive to be able to acquire the property they’re looking to acquire,” said Dharod. “We’re lucky we’re in such a hot market in DFW where there is a lot of growth, there’s a lot of very well capitalized and qualified developers who are taking properties and taking them to a different level.”
Dharod said single-pad retail sites are getting incredibly expensive and hard to find. Raw land and tear-downs are also in hot demand. On the other end, demand for shopping center space is comparable to two years ago.