Q2 2012 Dallas, Texas Retail Property Sales Analysis

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Q2 2012 Dallas, Texas Retail Property Sales Analysis

Metro Volume and Pricing

Recent retail property sales meeting Reis’ criteria have been sparse.* Only five deals closed all told during the first half of 2012 for a combined total of only $43.5 million, well off the previous year’s pace. The mean selling price was $166 psf. Only one sale closed during the latest quarter. In the transaction at hand, the second largest in a year, American Realty Capital paid Direct Development $21.6 million ($204 psf) for a 279,751-square-foot portion of the Liberty Crossing community center in northeast suburban Rowlett (a 173,890-square-foot Target store was not included in the transaction). The deal closed in June at an 8.7% cap rate. The center, built in 2007, was 5.0% vacant at time of sale.

Top Submarkets

With sales activity running slow and dominated by small deals, the sole deal recorded for Dallas’ Highlands submarket—the $82 million November sale of the 479,294-square-foot Timber Creek Crossing—amounted to the largest property and dollar volume totals for the past four quarters. The Northeast and Carrollton/Southeast Denton submarkets followed with nearly identical property totals—105,861 and 104,303 square feet. The respective dollar volumes of $22 million and $12 million, however, were far apart. For 80,622 square feet traded in several deals, Allen/Frisco/McKinney had the highest average selling price (among submarkets with notable totals) at $319 psf.

Cap Rate Comparisons and Forecasts

With sales running in small volume, 12-month rolling cap rates reflect only a minimal number of deals and thus have been subject to fluctuations. Still, recent data indicate an overall downward trend. The 12-month rolling rate as of second quarter was 8.7%, same as the quarter before but down from 13.9% a year prior. Second-quarter 12-month rolling cap rates for retail transactions in the Southwest and the U.S. as a whole were 7.6% and 7.8%, down from 8.2% and 7.9% the quarter before.