For the third year in a row, Dallas-Fort Worth nabbed the nation's top spot for commercial property transactions despite experiencing a massive drop in annual volume.

Nearly $19B of DFW commercial real estate traded hands in 2023, down 58% year-over-year, year-end data from MSCI Real Assets showed. More than $9B, or about half of the market's transactions, was concentrated in the multifamily market, followed by $4.3B of industrial deals.

Office and retail properties were among the least popular with DFW investors at $2.3B and $1.8B in deal volume, respectively. Still, the $576M sale of CityLine, a 2.2M SF office property in Richardson, was among the top 25 deals of the year nationally.

Single-asset sales drove the majority of nationwide transaction activity in 2023, with 20 of the top metros logging at least 80% of their volume in individual purchases, the MSCI report said.

The largest multifamily single-asset sale in DFW was the 500-unit Avalon West Plano, which AvalonBay purchased in October for $142M, per MSCI.

Dallas was also the second-most popular market for cross-border investment, with $1.9B in international transactions occurring in 2023. That’s a drop of 30% year-over-year, which knocked Dallas out of the No. 1 spot it held in 2022 and paved the way for Manhattan to take its place.

DFW is renowned as a top market for CRE investment, but it is hardly immune to the property distress that crept across the U.S. last year.

The Dallas area has about $2B worth of CRE that is distressed, per MSCI. Another $9.4B has the potential to become distressed due to delinquent loan payments, forbearance or slow lease-up, among other factors.

The balance of distress nationwide reached $85.8B by the end of 2023, growing by $28.9B over the course of the year.

Office constituted the majority of distress in the U.S., comprising 41% of the value of troubled and bank-owned properties, per MSCI. More than $35B worth of loans backed by office buildings were distressed at year’s end, with another $54.7B at risk of becoming distressed.

Lenders have initiated the foreclosure of several distressed office properties in Dallas, including the 211 N. Ervay building owned by Wolfe Investments as well as Uptown Tower, though that property narrowly avoided its fate when its owners filed for bankruptcy in December.