Last month’s sale of the three-building, 500,000-square-foot Raytheon Corp. campus in Richardson’s CityLine development totaled about $110 million. The year-old office complex in the CityLine development was acquired by an investment arm of the Church of Jesus Christ of Latter-day Saints.
Combined, all three of those big deals added up to less money than 2016’s largest North Texas real estate transaction — the $825 million sale of the State Farm Insurance regional headquarters in Richardson.
Trophy commercial property purchases in Dallas-Fort Worth last year topped $3 billion.
JLL’s Crews said there were fewer local megadeals out there for investors in 2017. His firm recently listed a 1980s Uptown Dallas office building for sale and has been knocked back by the interest. “We are giving tours almost every day,” he said.
“There is plenty of demand,” Crews said. “Dallas still has all the fundamentals. We just need the product to sell.”
Investors looking for buys in North Texas have less to choose from this year, said John Alvarado, senior vice president at CBRE.
“We’ve had a couple of deals this year that have helped to keep the overall volume of transactions at a healthy level,” Alvarado said. “But there’s really nothing big pending with the exception of one large downtown asset.”
That’s the 56-story Renaissance Tower office skyscraper, which CBRE is marketing for sale. CBRE also brokered the purchase of the Raytheon buildings. And it’s negotiating the sale of the former Parkland Hospital campus northwest of downtown to investor Sam Ware.
Alvarado said the large buildings that have traded in the last few years in Dallas probably won’t return to the market for a while. “We are not going to have as many of those mega-transactions,” he said.
In the second quarter, D-FW office building sales added up to more than $400 million, according to estimates by Yardi Systems Inc. That was the most volume of any Texas city, and 60 percent of statewide sales.
Although the number of properties up for grabs in North Texas may be down, there’s no lack of money for purchases, said Beth Lambert, executive managing director with Cushman & Wakefield.
“There is an abundance of debt and equity,” Lambert said. “There is probably more capital than we have seen in any cycle. It’s a great mix of onshore and offshore funds.”
Lambert said investors have to dig deeper to find properties with an upside.
“Buyers are looking to where they can create value,” she said. “But a lot of the value-add deals are done. All the easy, low-hanging stuff is done.”
Lenders also are being more conservative in financing acquisitions. “There is more discipline on all sides of the business,” Lambert said.
She said some owners have decided to hang on to commercial properties because it’s so late in the real estate cycle.
“People keep asking, how long is this market going to last?”