At Jones Lang LaSalle, we just held the annual Halloween office party for our families. After the festivities, I watched my children begin to trade the candy they collected. M&Ms and Reese’s seemed to be preferred over KitKats and any hard candy. In watching the “negotiations” evolve, it dawned on me that office investing at the portfolio level is not all that different.
In the commercial real estate world, investors are constantly trying to optimize their baskets with the right mix of assets, be it by location, metro area, property type, and potential value return.
Over the last few years, office investing in Dallas has notably shifted. Back in 2009, transactions were dominated by private buyers, including private REITs. According to Real Capital Analytics, key players at that time included KBS REIT, Dividend Capital, and StarPoint Properties—with many smaller transactions by local or regional groups like Caddis Partners, CCI, and JP Realty.
By 2011, office building sales shifted to more of an institutional player. The mix of deals surprisingly looking more like that of the United States. In fact, between 2011 and 2012 some of the top buyers included the likes of Brookdale Group (equity fund), JPMorgan, GE Asset Management, and Invesco. Importantly, our private buyer shifted over time, as well. Although we still had many smaller local and regional players active in the market, larger groups like Lincoln Property, Beacon, and Rosemont discovered Dallas with some significant purchases.
So what has been driving this change? Like the candy in the children’s’ Halloween baskets, Dallas became a more desirable “sweet,” given its solid economy, great job numbers, and reasonable asset pricing compared to other markets that had been bid up during the recovery.
If you’re looking for more information about North Texas or the other major U.S. markets we actively cover, check out our research site.
Jeff Staubach is a managing director for Jones Lang LaSalle. Contact him at [email protected].
