As the commercial real estate industry works to shake off the impact of the pandemic, North Texas is coming out on top. The influential Emerging Trends in Commercial Real Estate report released each year by PwC and the Urban Land Institute has ranked Dallas No. 1 on its list of markets for real estate performance in 2025.
DFW has consistently been in the top 10 for six years, but this marks its return to the top spot for the first time since 2019.
Miami ranked No. 2, followed by Houston, Tampa-St. Petersburg, Nashville, Orlando, Atlanta, Boston, Salt Lake City, and Phoenix.
With employment growing 11.2 percent since February 2020 and deep diversity of industries in its economy, ULI and PWC characterize DFW’s post-pandemic recovery as “enviable.”
“We have such a diverse economic base that we recovered more quickly than other markets from COVID,” said Tamela Thornton, executive director of ULI Dallas-Fort Worth. “And just by nature of being a real estate town, folks see trends and have an ability to implement what directions the industry seems to be going.”
The largest metropolitan statistical area in the state and the fourth-largest in the country, Dallas delivered annualized five- and 10-year returns of 7.9 percent and 8.8 percent respectively, putting the region in the top quartile of performance in the NCREIF Property Index for both periods. It’s the only MSA in the state that can claim this.
Highlighting property trends, PwC and ULI outline a new era for industrial product. On the heels of a massive pandemic-era influx of supply, high-quality supply options should be bountiful for users pursuing a “strategic, deliberate approach to growth that will shape the future of the supply chain.”
Thornton forecasts a diversification of product. “At the most simplistic level, people were just building industrial without really any true recognition of what future users were really going to be looking for,” she said. “Now, there’s going to be a little bit more discernment in what folks are building, and so we’re going to be focusing on assets that have strong power grid connectivity, things that are bringing a little bit more of sustainable building features, facilities that might have a little bit of flexibility.”
Data Centers, Retail Sector, and Population Growth
The report also highlighted expectations for data centers, which are projected to become one of the most active property types in the country over the next decade. DFW ranks No. 4 among top U.S. markets for data centers, with 1,358.9 megawatts of inventory and a 1.4 percent vacancy rate. The expectation is that the friction between high demand and constrained supply (mainly due to limited power capabilities) will continue nationally for the next five years.
“I think that one of the things we’re going to have an opportunity to take advantage of is the mix between some of the AI and the technologies that are being supported by our growing education base, as well as the demand for those differentiated types of products,” Thornton said. “You’re going to see rents continuing to rise.”
Retail vacancies are at or near a 20-year low across most U.S. markets amid a three-year wave of increased demand. The sector “has been quietly performing over the past couple of years after not a lot of new supply was delivered during the pandemic, and a lot of the space was repurposed and right-sized to fit the needs of consumers,” Thornton said. “But I think what we’re starting to see is just a little bit of a better mix of smaller community-based retail that’s targeted to where folks are living, working, and playing, combined with a little bit more specialty retail. And because there hasn’t been a lot of new supply, we’re going to see retail repositioning of older spaces that can be flexed into newer uses.”
With continued population growth—the number of people in DFW increased by 6.1 percent between 2023 and July 2023—Thornton sees affordability and attainability for housing becoming front-and-center for development and investment activity.
“We’re going to have to focus on delivering a variety of housing types, looking at new products, looking at appropriate densification that’s built in concert with retail, office, other uses,” she said.
She also talked about site availability and the impact on where developers are choosing to build.
“We’re going to start seeing some repositioning of where [developers] are going,” she said. “You’re going to have the larger, more industrial developers that will continue to build in the suburbs. But given that you can’t build your way out of the infrastructure challenges as quickly as people might like, there’s going to be more interest in repositioning inner core suburban and even looking at downtown urban core as areas of opportunity.
“I’m looking out the window at what’s going on here in Uptown, and we’re getting infill,” Thornton added. “We’re getting new development, and I think we’re going to continue to see that.”
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