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Dallas/Fort Worth Lead ULI’s 2025 Real Estate Market Rankings
The US real estate market is shifting more and more in favor of Sun Belt cities like Dallas, Miami, and Houston.
Jordan B. & Han-Gwon Lung
October 30, 2024
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Good morning. The US real estate market is shifting increasingly in favor of Sun Belt cities like Dallas, Miami, and Houston. In ULI's latest rankings, Dallas will take the #1 spot away from Nashville in 2025.
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Market Snapshot
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EMERGING TRENDS
ULI’s 2025 Real Estate Report: Cyclical Recovery Begins
The latest Emerging Trends in Real Estate 2025 report from PwC and ULI suggests markets are bracing for a rebound as cyclical growth takes center stage.
Top of the chart: Dallas claimed the No. 1 spot for real estate prospects in 2025, driven by its size, rapid demographic growth, and investor demand, according to ULI's latest rankings. The Texas city’s rise marks a shake-up, dethroning Nashville, which held the top position for three consecutive years. Now, Nashville sits at No. 5, behind Miami, Houston, and Tampa.
ULI and PwC Emerging Trends for Real Estate 2025
Sun Belt dominance: The ULI rankings highlight growing investor preference for Sun Belt cities driven by business-friendly policies and strong job growth. Texas cities, in particular, have seen significant growth, with Dallas enjoying 11% higher employment since 2020. Houston's shift from energy dependency led to its debut in the top 10 markets for 2025, bolstered by the second-largest U.S. population increase last year.
Emerging trends:
Multifamily: Despite a record 500,000 units slated for completion by year-end, demand remains steady, driven by demographic trends, remote work flexibility, and limited single-family housing supply.
Industrial: Tenants are refining logistics, emphasizing supply chain efficiency and sustainability. Nearshoring and onshoring fuel manufacturing growth.
Data Centers: Demand surges, driven by profitability and long-term leases. High power needs limit supply growth, sustaining rents and preventing oversaturation.
Senior Housing: Remains undersupplied, despite rapidly growing demand—an area ripe for development given the rising senior population.
Office: Continued weakness, with vacancy rates rising and tenant demand lagging. Office was ranked as the least favorable investment sector for 2025, with many investors still wary of remote work's impact.
Retail: Physical retail is rebounding with low vacancies and rising rents despite 2024 closures. Store closures hint at redevelopment opportunities.
Insurance: Climate change risks are increasing insurance costs, adding to challenges in high-growth markets, especially in Florida and coastal areas.
Fed rate cuts: The Federal Reserve’s anticipated shift toward cutting interest rates is signaling a peak in inflation and construction costs, helping clear transaction pipelines and boosting deals, reports ULI. But, rate cuts also suggest slower economic growth, which could temper net operating income (NOI) for property owners.
➥ THE TAKEAWAY
The bigger picture: ULI’s Emerging Trends report signals a shift from survival to growth, with lower interest rates opening the door to fresh opportunities. But don’t expect a simple replay of past cycles—new demands for modernized assets, senior housing, and logistics mean the winners will be those who can adapt quickly in the right markets.
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✍️ Editor’s Picks
Tax turmoil: The US CRE industry is anxious about potential tax changes before the 2024 election and hopes to maintain key relief measures, no matter who wins.
Evolving leverage: The ongoing CRE recovery gains steam as positive leverage returns in retail and hotel sectors, signaling improved cap rates and more favorable debt conditions.
Unlock industry trends: Explore the latest insights from Agora’s 2024 Real Estate Investment Management Survey and see how your firm can stay ahead in the upcoming new year. (sponsored)
Brain drain: Moody’s downgraded San Francisco’s credit rating from Aaa to Aa1 due to high office vacancies and lower economic activity.
Ballpark views: Baseball fans are buying condos with stadium views, as new developments like St. Louis's One Cardinal Way and San Diego's The Legend offer unobstructed field views and immersive stadium experiences.
🏘️ MULTIFAMILY
No more meat: Manhattan's historic Meatpacking District will soon undergo a major transformation into a 600-housing-unit complex with public spaces in a 66 KSF redevelopment initiative.
Affordable oasis: Related California and East Bay Asian Local Development are collaborating to construct 192 affordable apartments in Oakland near I-880.
Renting reality check: 11 major multifamily REITs reported a 1.82% YoY rent increase, with properties in major markets outperforming, per a Trepp fall report.
Keeping rents fair: Philadelphia, inspired by San Francisco, is now banning landlords from using rent-setting algorithms. They now face fines of up to $2K per violation.
Island luxury: Keller Williams expands to Guatemala with 50 condos in a 10-story tower on Fisher Island, Miami, offering luxury amenities.
Renovation case study: A JP Morgan-led group is seeking a $175M return on a $115M investment in an NYC building with 40% Section 8 units.
🏭 Industrial
Deal of the day: W.P. Carey (WPC) acquired Building A at I-64 Commerce Center—a 1MSF facility in Shelbyville, KY fully leased to Canadian Solar (CSIQ)—for $102M.
Executive evolution: Rexford Industrial Realty (REXR) promoted CFO Laura Clark to COO and appointed Michael Fitzmaurice as the new CFO, as the REIT prepares to advance SoCal industrial initiatives.
Building prosperity: Grandview Partners and TRG Development secured nearly $100M to refinance Core45, a new 1.6 MSF industrial park in Wilmer, TX.
Data center dynamos: DigitalBridge (DBRG) acquired London-based Yondr Group, a data center developer, with over 420MW capacity for tech giants worldwide.
🏬 RETAIL
Retail realignment: US retail property types are showing strong performance, with limited Class A space available and rising demand for small, credit-worthy tenants.
Retail revival: PMAT Real Estate sold the 94%-leased 276.2 KSF Waterside Marketplace in Detroit, with a strong tenant roster, for an undisclosed amount.
Burger bliss: Shake Shack (SHAK) is ready to open new Canadian locations at busy transit hubs and in Toronto's top mall, expanding internationally.
🏢 OFFICE
Prime prospect: Amazon (AMZN) is in talks to lease 350 KSF of office space at 452 Fifth Avenue in Midtown Manhattan from HSBC, which may be moving out by 2025.
Long-term stay: Airbnb (ABNB) extended the lease at its San Francisco HQ for another decade, occupying over 250 KSF until 2037.
Tech tango: Andreessen Horowitz's failed 8.3 KSF office venture in Miami reflects the region's mighty aspirations—and ongoing struggles—to become an international tech hub.
Coffee culture: Starbucks (SBUX) is mandating 3 days in office for its 3.5K staff, with potential firings if rules are not followed, as CEO Niccol's commute is criticized.
🏨 HOSPITALITY
Extended-stay evolution: Wyndham Hotels & Resorts (WH) partners with Reside to launch extended-stay Wyndham Residences across the country, opening 5 locations to start.
📈 CHART OF THE DAY
According to RealPage, from Fall 2020 to Fall 2024, 14 US universities have outperformed the national average for pre-leasing, usually at or slightly below 100% leased as of August.
Additionally, these 14 schools have grown rents at a higher rate than the national average among the core 175 universities tracked by RealPage over the last five years.
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