DFW Dominating The U.S. Net Lease Transaction Market
The Dallas-Fort Worth area leads the U.S. in net lease commercial real estate sales for the fiscal year ending in Q3, logging $3.2B in transactions, an increase of 6.4% from the previous year, according to CBRE.
It ranks second in the nation for the third quarter of 2020 alone, booking $670M in CRE net lease sales volume during Q3, CBRE reported.
Net lease deals involve assets with long-term leases and consistent cash flow and are defined by an expectation of tenants paying rent, taxes, insurance and maintenance, leaving minimal expenses for landlords.
While the market's total Q3 2020 net lease investment volume plummeted 38.6% from pre-pandemic levels a year ago, DFW still remains a top spot for investors deploying capital into commercial real estate.
In fact, net lease product is outpacing available supply in some parts of DFW, CBRE Senior Vice President Jared Aubrey said in a statement.
“The demand from national and global investors who are looking to invest specifically in DFW and Texas has never been stronger,” Aubrey added. “While the pandemic has certainly disrupted the market, investors view Texas as a market with dynamic growth and a business-friendly economic climate that is positioned to emerge from the pandemic before similar markets across the U.S.”
Demand in DFW is so strong in some cases that sellers are achieving stronger pricing than they did pre-COVID, Aubrey said.
Net lease volume nationwide experienced a relatively weak Q2, but transaction volumes increased 24.4% quarter-over-quarter in Q3, reaching $11.7B.
The office sector comprised 33.6% of all U.S. net lease deals in Q3, an increase of 1.1 percentage points from Q2, even with concerns about going back to work still percolating throughout the marketplace, CBRE noted.