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Despite economic challenges, the forecast for Texas CRE remains strong

Inflation, rising interest rates and empty office buildings remain valid concerns for commercial real estate (CRE) investors. But the National Association of Realtors (NAR) expects the CRE market to grow despite those obstacles.

CRE typically follows the ebb and flow of the overall economy, but NAR Chief Economist Lawrence Yun said in early May that the national market is anything but typical. While the office market lags in some regions, Yun says the industrial market is “booming.”

Texas continues to thrive in nearly every sector

The Lone Star State’s CRE market continues to grow exponentially during the pandemic as a popular landing spot for companies looking to relocate to a more business-friendly environment. Last year, dozens of large corporations moved their headquarters to Texas largely due to multiple incentives for employers and their employees.

Yun says the industrial sector remains vibrant as retail properties are hot, hotels are recovering, and apartments are also improving while rents are rising in all commercial properties. He adds that the need for multifamily housing is expected to grow by 10% over the next two years. Last year, a record $352 billion was invested in multifamily properties nationally.

Texas remains a popular choice for global investors

Two Texas cities are in the top four for CRE investment by international investors. The Association of Foreign Investors in Real Estate (AFIRE) 2022 survey places Austin second and Dallas fourth among the top destinations for global CRE investors.

Seventy-five percent of those surveyed said they planned to increase their investments this year, while 25% said they expected to make a significant increase. They cite factors such as ease of doing business, return on investment, quality of the available property and the ability to diversify their portfolios.