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|As distressed retail properties slowly move through the market this year, a pricing floor should emerge helping owners currently on the fence with decision-making, inevitably creating more chances for buyers, Marcus & Millichap Dallas regional manager Tim Speck tells us. In Q2 '10, the DFW retail market began to emerge from the relatively brief, albeit sharp local recession. (Vacancy is projected to stabilize by year-end and rent growth to resume in early 2011.) Rent renegotiations have largely dissipated, though new leases are being signed at 2004 effective rent levels. Nonetheless, an impressive economic and demographic outlook has attracted expanding retailers to the Metroplex, he adds.|
|Sales velocity in the multi-tenant sector in DFW dropped by more than 50% in the most recent 12-month period, Tim says, while deal flow picked up over the past three months, reaching a cyclical low in 3Q '09. Based on just a handful of transactions, the median sales price has fallen just 5% to $130/SF during the past year. Overall, valuations have declined more than 13%, he adds. Average cap rates have increased 120 basis points in the last year to just over 9% due to uncertainty regarding tenant health and the lack of potential buyers. First-year returns are expected to average in the low-9% range through the end of 2010.|