Institutional Investors Could Turn Fort Worth Into Tier One City
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In the last real estate cycle, few institutional investors took a hard look at Fort Worth, but not anymore. Across multiple product types, a handful of big institutional investors have entered the Fort Worth market along with local investors and developers who have been around for decades.
“Institutions are getting more interested in Fort Worth, so it's becoming more of an accepted development area,” Greystar managing director Laird Sparks said.
Greystar has multifamily deals all over the Metroplex with about 6,000 units under construction and another 5,000 planned, spanning from market-rate to senior housing to student housing.
Historically, Dallas has been a tier one market and Fort Worth has been a tier two, Sparks said. Since about 2010, Fort Worth has evolved.
M2G Ventures co-president Susan Gruppi thinks Fort Worth already is a tier one city.
“If it’s not already, it will be in two or three years,” she said. “Fort Worth used to have a ‘this is how we’ve always done it’ mentality, but there’s been a push recently to become more progressive.”
Gruppi likes to think that M2G, which she runs with her twin sister, Jessica Worman, has been part of that modernization. The value-add retail and mixed-use redevelopment company centers all projects around art and placemaking. M2G is redeveloping the O.B. Macaroni factory and developing about five acres in the Foundry District, among others.
The idea of competing with out-of-state buyers worries Gruppi from a buyer’s standpoint, but she thinks the more people who bring diversity to the city, the better. “We can be competitive because we established a foothold early,” she said.
In the current cycle, more multifamily supply has coming online, traffic has gotten worse, retail pockets like Clearfork and the Foundry District have popped up, and many new or previously sleepy neighborhoods have blossomed, Sparks said.
In Gruppi’s experience, about 80% to 90% of real estate transactions in Fort Worth happen off-market, so those new players will need local owners like M2G to get established.
Fort Worth has an unusual relationship with land in the city center, Gruppi said.
“We have big ranches in the middle of the city, and recently you’ve seen developments like Clearfork that have come from that,” she said.
Sparks has started to see land scarcity around the urban core.
“Fort Worth is doing what all maturing cities do. As we see West 7th mature from a land scarcity standpoint, it drives developers to the edge of prime,” he said.
Getting priced out of the coveted West 7th market drives development in new areas such as Magnolia, the Hospital District, the River District and Panther Island.
“In Dallas, you may have 30 or 40 institutions. Fort Worth used to be a lot of private capital, and though some big institutions are coming, it’s still a fraction of Dallas,” Sparks said.
Sparks said Fort Worth is not yet on the national radar, but many major investors come to Dallas for investment opportunities and stumble upon Fort Worth’s potential.
“When institutions come to Fort Worth, they understand it’s a diamond in the rough,” he said.
Hear more from Sparks and Gruppi at our Fort Worth State of the Market event on May 25. Get tickets here.