About this same time over the last several years, I have provided in my blog a snapshot of how our market (that is, Dallas-Fort Worth combined) is faring in the world of institutional real estate investment. To be specific, how is our area doing in attracting—and keeping—investment dollars from the country’s largest tax exempt pension funds. For almost 40 years, these data have been carefully collected by NCREIF (the National Council of Real Estate Investment Fiduciaries) in its NCREIF Property Index, NPI.
As of year-end 2016, the NPI was tracking 7,362 assets with an aggregate appraised value of $525,273,700,000—call it $525 billion. That’s a cool $71.3 million per asset; by that measure, this is big time real estate investing. And in case you were wondering what property type is most favored by these large investors: it is office, followed by apartments, then retail. The industrial sector has the most individual properties, but because of the relatively lower cost (per asset), it falls a distant fourth in dollars invested.
So in terms of where these large, hopefully sophisticated, and well-advised institutions are currently invested, where does DFW stand? Right at the top, as shown below:
| Market | Total Investment* | No. of Assets | $ Per Asset* | 2016 Total Return |
| New York | $65,246.1 | 374 | $174.5 | 5.94% |
| Los Angeles | $41,312.1 | 482 | $85.7 | 10.24% |
| Washington D.C. | $41,238.7 | 345 | $119.5 | 5.33% |
| Chicago | $31,825.9 | 458 | $69.5 | 7.31% |
| San Francisco | $24,457.8 | 149 | $164.1 | 8.68% |
| Dallas-Fort Worth | $23,496.0 | 415 | $56.6 | 9.10% |
| Seattle | $21,255.6 | 325 | $65.4 | 9.63% |
| Houston | $20,807.7 | 277 | $75.1 | 1.49% |
| Source: NPI 4thQ / 2016. *In millions | ||||
These top eight metro areas comprise about 45 percent of the total invested funds. This should be no surprise as institutional investors seek the safest harbors for their investments, so there is safety in numbers.
The take-away from this data, at least to me, is that DFW has the lowest value per asset, for the third largest number of total assets in a market, with the third highest trailing one-year return. Intuitively, I like our metrics: lowest price point, high volume, and competitive returns.
These rankings are better than when I last reported. I see nothing on the horizon to suggest DFW’s position in the world of big time real estate investment will diminish, at least in the near future. That’s why I believe we are right where we should be.
Chuck Dannis is a senior managing director at National Valuations Consultants Inc.
