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Report: DFW Investors Continue Chasing Yield

DALLAS-Colliers International's Q2 Capital Markets Report for the region says investors continue flocking to Texas commercial real estate. One reason: Continued office space demand leading to shrinking inventory and higher rents.

By Amy Wolff Sorter | Updated on August 05, 2013

DALLAS-Colliers International’s Dallas/Fort Worth Capital Markets Report notes that during Q2 2013, investor yield-chasing strategies through commercial real estate buys continued in full force. The reasons for these trends ranged from continued low short-term interest rates to the fact that office space continues shrinking, leading to more demand and higher rental rates.

On the commercial real estate investment side, during the trailing 12-month period ending June 30, 2013:

  • Fifty transactions had been completed, versus the 65 recorded by the end of Q2 2012.
  • Total sales volume by the end of Q2 2013 stood at $2.8 billion, versus the $2.4 billion at the same time a year ago.
  • The average transaction sales price at the end of 1H 2013 was $57.5 million as opposed to the $36.9 million reported at the end of 1H 2012.

The report also notes that cities such as Dallas and Houston are attracting investors willing to pay for cap rates and returns similar to the core markets. However, in true core markets, cap rates and returns are a product of shorter lease terms and lesser credit tendencies. In Dallas and Houston, however, what is being purchased is yield from long-term leases and strong credit tenancy.

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