The commercial real estate market in Dallas has experienced a rollercoaster of change in the past few years. Even so, Dallas is still considered one of the strongest and fastest-growing economies in the country. When lending is tight, and the economic slowdown the entire country has experienced impacts both landlords and tenants, industry leadership is critical.
D CEO caught up with Bob Mohr, (founder of Mohr Partners and founder and CEO of Mohr Capital) about the local commercial real estate (CRE) market. He has been a well-respected thought leader in the industry for more than 30 years.
Here, he provides insight into where we are and where we’re headed.
What industry-wide patterns can we expect to see in Dallas CRE throughout 2024?
Because of our location and our growth, Dallas will continue to fare well. We are starting to see more product hit the market. Granted, the Fed rate isn’t coming down as fast as people thought it would, so some companies are having to look at the projects they built and decide if they want to continue to hold and fund them. And even if the interest rates come roaring down, it will take time for everything to settle out.
Office is separate. The office sector is realizing it needs a quality asset for people to want to return to the office. For example, in our Mohr Capital office, we enjoy a great location and have a chef on the property to differentiate us.
For the most part, office values are down 30% — that’s huge when people put 20% down. That said, we are still doing better in Dallas than in other parts of the country. New York is having a hard time getting people to return to the office. People in Dallas are showing up more.
Since I started Mohr Partners in 1986 I have seen five major shifts—the global financial crisis, the 1990 tax changes, the S&L fraud, the dot.com bubble, and the pandemic. Dallas always comes out of the challenges stronger than before.
How do you anticipate Mohr Capital will contribute to these patterns?
We have always been on the corporate user side from my time at Mohr Partners 38 years ago to today, and Mohr Capital has been around for over 20 years. It wasn’t about bricks and mortar but about what the tenant needs and wants.
We have built a good reputation because folks can count on us. Corporate America — the people sitting in these buildings — can count on us. We have a long track record of using our in-house capital from our Family Office, which has helped us during pullbacks, especially during the pandemic.
We have longstanding bank relationships. People have followed us all over the country and continued to fund projects, even in a pullback market.
We are centrally located in Dallas, although we handle projects all over the country. We currently own properties in both Dallas and Austin. In the Midwest, we have a business park consisting of seven million square feet. We are building a 700,000 square-foot industrial park in Phoenix, and we have two projects underway in Nevada.
How is Mohr Capital handling challenges? What are the key differentiators that have contributed to your company’s success?
Our creativity for tenants is what has made us very competitive on projects—offering tenant improvement dollars, additional parking, and a hazmat facility. We are adaptive, and we have great lender relationships.
Our people also make a difference. We have team members who have been with us for over 20 years. In spring of 2023, an EF-3 tornado ripped through our industrial park in Whiteland, Indiana, destroying a one-million-square-foot warehouse. The storm tore right through the middle of the building, flinging debris all over the area. And in less than a year, we have completely rebuilt it and already have leased half of it.
Between our in-house team, contractors, and the people of Whiteland, Indiana, everyone pitched in, and we got it done. It was proof that you never know what will happen tomorrow.
Describe Mohr’s expansion in development opportunities within the next few years in Dallas and beyond?
There may be a decent supply of industrial now, but the dynamics of supply chain and e-commerce will soon bring an additional demand for industrial investment. With the possibility of the Fed rate being pulled back a little, industrial is one of the biggest bright spots.
People have been hopeful interest rates would come crashing down, but it’s not going to happen that way with this last Fed pause. We certainly would like to see a pullback, but it’s also good to see inflation numbers coming down.
We also do retail investment and have about 10 projects right now in retail, including a shopping center in Tulsa anchored by REI.
The first half of the year may continue to be slow, but we see a brighter outlook on the horizon as inflation continues to cool.
What is ahead for Mohr Capital?
In terms of the general market, we have turned a corner. At the end of last year, there weren’t a lot of people talking, but now we are seeing a lot of opportunities — people reevaluating their portfolios, especially from an acquisition side. And Mohr is leading the effort.
We have multiple properties under contract and are working on projects consisting of existing facilities with short-term leases. In many cases we see the opportunity to create value by working with the users directly. We are actively looking for industrial land sites and vacant industrial facilities. Some are brand new that haven’t been leased yet or are just being completed. We have the financial resources to come in and buy those up and get them leased — all of these are great opportunities.
Bob Mohr is the founder of Mohr Partners, Inc., the largest wholly-owned U.S.-based corporate real estate services firm. The firm has more than 25 offices in North America with over 300 associates providing global corporate real estate services. Mohr Partners is a unique leader in managing all aspects of commercial real estate portfolios for corporate clients. The firm annually completes over 2,400 commercial real estate transactions on behalf of corporations, totaling over $1.5 billion in transaction volume.
In 2002, he founded Mohr Capital to broaden the services provided by Mohr Partners in the real estate capital markets. Mohr Capital specializes in the acquisition, development, and value enhancement of large corporate offices and industrial projects. Mohr Capital creates unique leverage allowing the client to reduce occupancy costs and enhance profitability. Mohr Capital has developed and acquired properties totaling over $2 billion.
