Dallas Is NOT Houston! Everybody in Dallas in every sector of the real estate and development industry is busy. No one seemed particularly concerned that the Federal Reserve was planning to raise rates at their June 2016 meeting.The general consensus was, if anything, a Fed increase may accelerate the investor demand for real estate where cap rates have flattened somewhat and even for trophy properties that continue to compress. I heard a new low for cap rates: 3.5% for a McDonald’s deal.

There was discussion that increased retail development costs are driving shopping center rents that were once in the mid $20’s, then moved to the $30’s and are now in the $40s. Those rates contrasted with discussion that “Junior Box” tenants who are being further challenged by online shopping, are reducing their footprints and resisting the higher rents that the Starbuck’s, Chipotle and Jimmy John’s will pay for “Hard Corners.” All that said there was no discussion of any slow down from Dallas development executives in any property sector other than multi family.

Make no doubt that Dallas is NOT Houston. Dallas deal velocity feels more like New York City!