Commercial real estate is booming – NBC 5 Dallas-Fort Worth

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The real estate market is hot in North Texas.

But it’s not just about housing – experts say the home buying frenzy we see is happening in commercial real estate as well.

Demand drives up construction rent costs.

“Prices are now at record highs,” said Chris Dharod, president of Dallas-based SSCP Management. “There is a lot of money from other cities that come here because they want to own real estate in DFW. For a long time, people wanted to buy real estate in California. Now it’s the Texan real estate they want to own. “

His company owns several shopping malls, apartment buildings and other real estate, so Dharod has been able to observe the ever-changing market as the pandemic unfolded for the past 18 months.

He said that before COVID-19 disrupted the economy, the market was much more predictable and stable.

“At the start of the pandemic, many businesses kind of slowed down and completely froze any growth they were experiencing. They stopped building restaurants, they stopped moving offices and building offices,” he said. he declared. “Since then, companies in most industries have recovered and prices are now at record highs. “

Now, commercial properties are selling well above the asking price in many cases.

“The prices are very high and it’s quite surprising how expensive real estate has become, especially in a market like DFW,” Dharod said. “There is currently real estate where a buyer fixes a significant portion of the purchase price on the first day. I had never seen this before the pandemic started. “

Some segments of commercial real estate such as warehouses / industrial are booming right now as e-commerce and online shopping have skyrocketed during the pandemic.

According to the Dallas Morning News, local developer Holt Lunsford Commercial just sold five industrial park properties in the Dallas-Fort Worth area to a Boston-based real estate group.

Businesses are grabbing the warehouse space, and some have to wait one to two years to get it in parts of North Texas.

With inflation pushing up commodity costs and demand pushing up property values, local business owners need to get creative to stay afloat.

“Demand is on the rise and buyers have to be much more aggressive in order to acquire the property they are looking to acquire,” Dharod said. “We’re lucky to be in such a hot market in DFW where there’s a lot of growth, there are a lot of very well capitalized and skilled developers taking properties and taking them to a different level.”

Dharod said single block retail sites are getting incredibly expensive and hard to find. Rough land and demolitions are also in high demand. On the other hand, the demand for space for shopping centers is comparable to two years ago.

As for offices, Dharod said DFW’s demand hasn’t changed much from before the pandemic. However, some spaces charge a higher rent during lease renewals.

“I think businesses are going to use office space a little differently than before. There may be more flexible space where people can work from home one, two or three days a week and they are only in the office. that every once in a while, “he said.

Overall, rising costs and high demand are placing the burden on businesses renting space, purchasing goods, or just trying to cover the overall operating costs of the business which continue to rise.

“A lot of these homeowners are bracing for inflation. The other thing that has happened is that I think there are a number of companies that have a lot of money, ”Dharod explained. “They’re willing to spend that money and grow their business. So when you put those two factors together – businesses with the money to spend and real estate owners who know they can charge more rent when demand increases, that’s what creates higher rents and higher costs. real estate prices. “

The national association of real estate agents has created a list of the 10 best commercial office markets of 2021. Half of the markets are in Texas and Florida.

Dharod said the high demand will be here to stay for some time.

“I think the big problem is the last 18 months where we’ve had a ton of change and I think the speed with which things change is going to continue for the foreseeable future,” he said. “We’re going to see companies that are going to have to continue to adapt very quickly to survive over the next 12 to 18 months.”

Adapt to survive

Inflation, which is expected to last until 2022, makes running a business more expensive than ever.

This is especially difficult for catering professionals, who are preparing for difficult days.

The latest data from the Texas Restaurant Association showed an eye opening results of a survey of businesses across the state:

  • 96% pay more for food
  • 64% pay more for occupancy or rent
  • 91% have much higher labor costs

No business seems to be immune to the fight, as the Maple Leaf Diner in Dallas can attest.

“It’s been a mad rush of constant change to ensure survival at this point,” said owner Mike Delaurier, who has developed the popular restaurant over the past six years at his location on Preston Road.

After a tough 2020, this year brought back the brunch crowd crowds and the steady traffic that the diner was used to seeing.

“I think it’s good, it’s definitely coming back. Which is helpful given the costs ahead,” Delaurier said. “Without all of these huge numbers of people, it would probably be disastrous if our volume were much lower.”


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Mike Delaurier, owner of Maple Leaf Diner in Dallas.

These rising costs of running the restaurant, such as food and supplies, are yet another curve in what has been a difficult 18 month period.

“Our shortening that we used to fry our food, I was paying $ 17 for a jug. He’s 42 now. So we’re not talking about small increases. It’s more than double the price and it’s just for the product to fry my food, it’s not real food, ”he said. “The costs of food are just getting astronomical. Not only the cost, but it is difficult to get things. We probably spent 10 extra hours this week traveling around town trying to get our products that we needed to serve. “

Recently, the TRA shared the latest information on wholesale food prices:

  • A year ago, a tenderloin cost $ 100 at a restaurant; today it’s $ 200.
  • Cooking oil used to cost $ 20 for five gallons, but now it’s $ 40.
  • Chicken, which is very hard to find, has gone from $ 3 a pound to $ 6 a pound.
  • Flour is up 30%.
  • Pork is up 27%.
  • Eggs are now up 40%.

“To make matters worse, the Delta variant significantly reduced sales in dining rooms. 91% of our operators confirmed seeing a decrease in traffic to restaurants, ”Emily Williams Knight, TRA President and CEO, said at a press conference this month.



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The cost of food and ingredients add even more stress to local business plates.

Delaurier said he pivoted as much as he could to make up for losses from the pandemic.

“This whole pandemic is fundamentally a battle of attrition. It’s being able to face the things that come with you and pivot, ”he said.

Some companies have even had to adjust the cost of their products or menus to cover rising costs.

“For me, a dinner is about value and not very expensive. So I really struggle with these fees to try to keep those prices low without affecting the quality. Because that’s an important thing to me,” said Delaurier. . “I know there are places that change different things, change different items and products to make them inexpensive, but for me, I stand for quality.”

Fortunately, Delaurier was able to negotiate the renewal of his lease for a good rent rate when it was up in 2020. But other businesses might not be so lucky now, as rent increases are in the double digits this year. year compared to last year and costs continue to remain at an all time high. levels.

Either way, TRA said businesses are banking on the upcoming holiday season to generate more revenue and hopefully a little more relief.

“The holiday season is a critical season even in a good year for most restaurants, so our number one message to the public today is to please, please dine out,” Knight said. “Please buy a gift card at a restaurant. “


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