The 5 Largest CRE Deals In DFW Buoyed Tanking Transaction Volumes In 2023
Earlier this fall, data showing a 64% decline in property sales in Dallas confirmed the local industry's worst fears: The Metroplex is strong, but it isn't immune to downturns.
The news was disheartening, but not totally unexpected. Not a single metro tracked by MSCI Real Assets saw its transaction volume go up, as rising interest rates and a rash of bank failures stopped lending in its tracks.
But the precipitous decline was offset by several huge sales that once again confirmed DFW as a darling for commercial real estate investors. Despite macroeconomic headwinds and geopolitical crises, buyers with capital continued to cash in on demand created by the region’s strong employment and population growth.
“From DFW’s perspective, there still seemed to be some green shoots,” CBRE First Vice President Patrick Benoist said. “Investors want to be in North Texas.”
Very few transactions of scale occurred in 2023 compared to prior years, Benoist said, and each asset type saw its annual sales volume decline by double digits. Office was down 73% year-over-year in the third quarter, a trend seen nationally as changing work dynamics caused investors to tread lightly.
Still, three of the nation’s largest 2023 office trades occurred within North Texas. The sales of CityLine in Richardson and Comerica Bank Tower and Plaza of the Americas in Downtown Dallas helped buoy the region’s overall transaction volume and reaffirm its mettle to investors, Benoist said.
“When these large transactions occur, it’s another data point,” he said. “As we start to accumulate those data points, it provides a little bit of direction as to where the market is going. … Being in a market where you have had transactions is better than the alternative.”
Below is a list of the five largest deals by size completed in the first 11 months of the year, based on data from CBRE. They represent a mix of sales across two asset types, office and industrial. No retail transactions were large enough to make the cut, and multifamily was excluded due to a variation in data points.
1. State Farm’s Massive Regional Campus Finds A Taker Just Days Before Loan Maturity
Buyer: 3Edgewood
Seller: Transwestern Investment Group
Size: 2.3M SF
Asset type: Office
The late October all-cash sale of State Farm’s office campus in Richardson came just in the nick of time. The 2.3M SF development was snapped up by Robert Sarver, the former owner of the Phoenix Suns, just days before its loan was scheduled to mature on Nov. 6.
Texas’ nondisclosure laws kept the price under wraps, though anonymous sources told CoStar an entity affiliated with the Arizona-based investor paid $580M for the sprawling four-building complex, making it one of the priciest suburban office deals in the U.S. this year. The proceeds of the sale were expected to be used to pay off the loan in full, though it remains unclear what Sarver has in mind for the development.
2. Comerica Bank Tower Joins Slate Of Downtown Office Conversions
Buyer: Woods Capital
Seller: TriGate Capital
Size: 1.5M SF
Asset type: Office
The year kicked off with the sale of the 60-story Comerica Bank Tower at 1717 Main St. in Downtown Dallas. The January purchase added to the list of office-to-residential projects headed up by Woods Capital, which told The Real Deal it would turn the 1.5M SF office tower into luxury apartments and a hotel. Terms of the deal weren't disclosed.
The Comerica Bank purchase was preceded by a slew of other conversion announcements, including at Santander Tower and Bryan Tower. Projects in the works or underway are expected to produce nearly 2,000 new apartments, according to Downtown Dallas Inc. data reported by The Texas Tribune.
3. New York Investor Pays Top Dollar For Plaza Of The Americas
Buyer: Shelbourne Global Solutions
Seller: M-M Properties
Size: 1.2M SF
Asset type: Office
Despite all of the negative buzz surrounding 1980s-era office buildings, New York-based investor Shelbourne Global Solutions snapped up the Plaza of the Americas in late October. The three-building high-rise includes two 25-story office buildings and 120K SF of retail and dining options. The 400-room attached hotel wasn't part of the sale.
Capital improvements totaling $26M have been made to the property over the last decade, but Shelbourne planned to kick off another multimillion-dollar renovation before the end of this year. The complex is 60% leased and counts the Federal Deposit Insurance Corp. and Capital One among its tenants, according to The Dallas Morning News.
4. DeSoto Warehouse Sale Marks Biggest Industrial Transaction Of The Year
Buyer: TradeLane Properties
Seller: Blackstone
Size: 1.1M SF
Asset type: Industrial
DFW’s industrial market continued to attract investors far and wide this year, with the top transaction by size occurring in late September at Southfield Park 35, a 191-acre industrial park in DeSoto developed by Atlanta-based Seefried Industrial Properties and Affinius Capital.
Building 5, a 1.1M SF warehouse, sold to Illinois-based TradeLane Properties for an undisclosed price but was last valued at $67.9M. Nationwide Life Insurance Co. provided a $55M loan for the acquisition, according to CoStar data. The building was fully leased at the time of the sale to NFI Industries, a supply chain and logistics firm.
5. California-Based Investor Cashes In On Demand For South Dallas Industrial
Buyer: Cohen Asset Management
Seller: Blackstone
Size: 920K SF
Asset type: Industrial
Another warehouse in the South Dallas corridor caught the eye of an out-of-state investor in May when Los Angeles-based Cohen Asset Management snapped up Building 1 in DalParc Logistics Center. The property, which was fully leased to Amazon, had just undergone a series of renovations, including new roofing, better air circulation, upgraded racking and improved loading docks, according to CBRE.
Texas’ nondisclosure laws kept the sale price under wraps, but the property was last valued at $49M. A loan for $30.8M was issued at the time of the sale, CoStar data shows. The purchase added to Cohen’s growing Texas portfolio, which at the time totaled 8M SF.
