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GARY CARR

So what is the biggest roadblock to getting deals done?

VANDERSTRAATEN: There’s quite a bit of capital searching for a home, and that’s who we tend to compete with on the buy side. It’s getting more difficult. MORSBACH: Despite the velocity and the amount of capital and real estate really being an attractive asset class, deals are still really hard to get done. Because when people are pricing at what they perceive to be at the margin, underwriting gets refined to a level where there’s a lot of angst and there’s a lot of homework and there’s a lot of diligence and there’s a lot of tours and you’ve got to prepare for an investment committee. People are asking a lot of really tough questions. Dallas has held up to those questions heretofore, but they’re not easy. And this is certainly not the Wild West. These are highly disciplined, mostly institutional investors that are making some significant bets. Every trade has roadblocks; it’s just a tricky market. FLEISHER: These aren’t really roadblocks, but there are things we’re looking at or concerned about. On the construction side, HVCRE, which is high volatility commercial real estate, how the banks are going to understand that regulation and how that’s going to impact their ability to make construction financing, requirement of certain amount of equity, and how that equity has to be counted. We’re seeing that there has to be some absorption of that change and how that impacts the construction. Also, in the CMBS market, with the requirement for the issuer of the securitization to make representations for all the contributors to the class of that securitization, there’s some concern about how that’s going to impact the CMBS market, which is a large component of refinances or acquisitions—will it affect pricing, and will that crowd out some of the smaller investors?

Let’s talk about redevelopment projects in the core. What is the status of the downtown Dallas market, and what is the outlook?

CARR: I’m very bullish on what’s going on in the Dallas central business district. There are a lot of new stakeholders that are investing millions of dollars. There are 10,000 people living downtown; it’s transitioning into a 24/7 environment, with neighborhoods like Main Street and the Arts District, there has recently been a lot of investment made in the West End—and these are smart people who are looking at transitioning into a creative space environment—and then you’ve got Victory. If the economy stays on the same trajectory, you’re going to continue to see capital invested. MORSBACH: When you have a base of well-capitalized stakeholders, that’s an important distinction. Because a lot of these buildings—downtown in particular—were the definition of “zombie owner:” they couldn’t reinvest in their assets, so the buildings were languishing, and, therefore, the tenants weren’t

WINTER 2015

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 9

Dallas-Fort Worth Real Estate Review - Winter 2015  

What's next for the Design District; Dallas-Fort Worth as an international hub; Sustainability; The Crane Report

Dallas-Fort Worth Real Estate Review - Winter 2015  

What's next for the Design District; Dallas-Fort Worth as an international hub; Sustainability; The Crane Report