Full Service Limited Service - Texas A&M University...Full Service Limited Service Dallas, TX South...

7.8

% 8.8

%

8.1

% 8.8

%

7.9

%

8.5

%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Full Service Limited Service

Dallas, TX South Region National

$1

40

$7

5

$1

51

$1

00

$1

57

$1

04

$0

$50

$100

$150

$200



73

.0%

70

.6%

73

.3%

69

.0%

73

.4%

70

.8%

40%

50%

60%

70%

80%



7.8

% 8.8

%

8.1

% 8.9

%

7.9

%

8.5

%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%



$1

38

$7

3

$1

48

$9

7

$1

53

$1

03

$0

$50

$100

$150

$200



72

.9%

70

.1%

72

.8%

68

.3%

72

.9%

70

.5%

40%

50%

60%

70%

80%



Dallas, TX | Lodging

Integra Realty Resources – DallasMark R. Lamb, MAI, CPA, FRICS

Senior Managing Director 700 E. Campbell Road, Suite 265

Richardson, TX 75081 Phone: 972-960-1222 x101

[email protected]

2015 Mid-Year

Lodging Snapshot

Market Commentary As a leading center for business and industry in the southwest region of the country, Dallas consistently generates demand for hotels. The improving economy and the expansion and relocation of business to the Dallas metro area have helped to drive occupancy among both full-service and limited-service hotel properties. Occupancy and average daily rates are at the highest levels in the last five years. Occupancy increased in the first part of 2015 to an overall rate of 73.5 percent, and demand should continue to push daily average rates slightly upward. Cap rates and discount rates remained relatively flat for the last quarter and are expected to see little variation as this year goes on.

Development in downtown Dallas, Uptown, and the Victory Park area, in addition to the expansion of the Arts District and the completion of Klyde Warren Park have influenced demand for lodging in the city’s core. In the suburban areas of the Dallas metro, office and retail are the foundation of the lodging demand. The Dallas suburbs are home to the headquarters of many national and international companies - many of which are expanding.

Legend

■ Full Service Lodging ■ Limited Service Lodging

8.0% 8.2% 8.0%

9.0% 9.0% 8.6%

0%

2%

4%

6%

8%

10%

Market Regional National

GOING IN CAP RATE (%)

10.5% 10.1% 9.8%10.5% 10.6% 10.2%

0%

2%

4%

6%

8%

10%

12%


DISCOUNT RATE (%)

$134$144 $150

$72

$95 $101

$0

$20

$40

$60

$80

$100

$120

$140

$160


LODGING RATE ($/ROOM)

71.0% 71.2% 71.9%69.5% 67.2% 69.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%


OCCUPANCY RATE (%)

AVERAGE ANNUAL CHANGE IN VALUE

Time

Full Service

Lodging

Limited Service

Lodging

Previous 36 Months Increase 2% - 3.9% Increase 2% - 3.9%


Future 12 Months Increase 2% - 3.9% Increase 2% - 3.9%


TOP SEVEN CAP RATE FACTORS

Supply/demand

Property income growth

Local economy, job growth, unemployment

National economic conditions/GDP growth

Interest rates

Availability of financing

Risk premium of private real estate


Integra Realty Resources – DallasMark R. Lamb, MAI, CPA, FRICS



[email protected]

2015 Mid-Year

Market Commentary (continued) The announcement of Toyota to relocate its North American headquarters to Plano in a $2.1 million facility will furtherincrease lodging demand in the northern suburbs of Dallas, along with existing demand generators such as StonebriarCenter in Frisco and the Shops at Legacy in Plano. Although construction within the lodging sector has lagged in recentyears, the trend appears to be shifting and an estimated 1,500 new rooms are slated in the next 12 months. Notable newprojects include the recent announcement of the redevelopment of the 21-story 1700 Commerce building and the neighboring Mercantile Commerce building in downtown Dallas into a Hampton Inn, a Residence Inn, and an AC Hotel.The recently announced $700 million luxury, mixed-use development in Frisco known as The Gate also includes plans for a boutique hotel. The overall economic strength and the expansion of business in the region will continue to drive theexpansion of the lodging sector in Dallas.

About IRR Integra Realty Resources (IRR) is the largest independent commercial real estate valuation and consulting firm in North America, with over 200 MAI-designated members of the of the Appraisal Institute among over 900 professionals based in our 66 offices throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services across all local and national markets. Our valuation and counseling services span all commercial property types and locations, from individual properties to large portfolio assignments. For more information, visit www.irr.com or blog.irr.com.

Disclaimer While the great majority of data and content contained herein is proprietary to IRR, this publication includes data provided by third parties, and while the available data is presumed to be accurate, no representation or warranty is made regarding the accuracy of the information contained in this publication. This publication does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed.

DALLAS 12 MONTH FORECASTS

Categories Full Service Lodging Limited Service Lodging

Going In Cap Rate Remain Steady - no change Remain Steady - no change

Discount Rate Remain Steady - no change Remain Steady - no change

Lodging Rate Change (%) 4.00% 3.50%

Expense Change (%) 3.00% 2.75%

Construction (Rooms)

Years to Balance 2 2

1,500


Integra Realty Resources – Dallas Mark R. Lamb, MAI, CPA, FRICS



[email protected]

2015 ANNUAL

Lodging Snapshot

Market Commentary As a leading center for business and industry in the southwest region of the country, Dallas consistently generates demand for hotels. The improving economy and the expansion and relocation of business to the Dallas metro area have helped to drive occupancy among both full-service and limited-service hotel properties. In 2014, occupancy and average daily rates were at their highest levels in the last five years.

Occupancy is expected to increase slightly in 2015 and demand should continue to push daily average rates slightly upward. Cap rates decreased early in 2014 but are beginning to increase and will likely continue in this direction in 2015. Discount rates remained flat in 2014 and any variation over the coming year is expected to be minimal. Development in downtown Dallas, Uptown and the Victory Park area, in addition to the expansion of the Arts District and the completion of Klyde Warren Park, have all influenced demand for lodging in the city’s core.

Legend

■ Full Service Lodging ■ Limited Service Lodging

8.0%8.3% 8.1%

9.0% 9.2%8.8%

0%

2%

4%

6%

8%

10%


GOING IN CAP RATE (%)

10.5% 10.3% 9.9%10.5% 10.8%

10.4%

0%

2%

4%

6%

8%

10%

12%


DISCOUNT RATE (%)

$127

$144 $146

$69

$91$97

$0

$20

$40

$60

$80

$100

$120

$140

$160


LODGING RATE ($/ROOM)

68.4% 69.1% 71.0%69.3%66.1% 68.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%


OCCUPANCY RATE (%)

AVERAGE ANNUAL CHANGE IN VALUE

Time

Full Service

Lodging

Limited Service

Lodging





TOP SEVEN CAP RATE FACTORS

Supply/demand

Property income growth

Local economy, job growth, unemployment

National economic conditions/GDP growth

Interest rates

Availability of financing

Risk premium of private real estate


Integra Realty Resources – Dallas Mark R. Lamb, MAI, CPA, FRICS



[email protected]

2015 ANNUAL

Market Commentary (continued) In the suburban areas of the Dallas metro, office and retail are the foundation of the lodging demand. The Dallas suburbs are home to the Telecom Corridor and the headquarters of many national and international companies—many of which are expanding—and popular shopping destinations such as Stonebriar Center in Frisco and the Shops at Legacy in Plano. Although construction within the lodging sector has lagged in recent years, the trend appears to be shifting and an estimated 1,000 new rooms are slated in the coming year. Notable new projects include the redevelopment of the 21-story 1700 Commerce building in downtown Dallas into a high-rise hotel and plans for a boutique hotel within the recently announced $700 million luxury, mixed-use development in Frisco known as The Gate. The overall economic strength and the expansion of business in the region will continue to drive the expansion of the lodging sector in Dallas.

About IRR Integra Realty Resources (IRR) is the largest independent commercial real estate valuation and consulting firm in North America, with over 200 MAI-designated members of the of the Appraisal Institute among over 900 professionals based in our 66 offices throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services across all local and national markets. Our valuation and counseling services span all commercial property types and locations, from individual properties to large portfolio assignments. For more information, visit www.irr.com or blog.irr.com.

Disclaimer While the great majority of data and content contained herein is proprietary to IRR, this publication includes data provided by third parties, and while the available data is presumed to be accurate, no representation or warranty is made regarding the accuracy of the information contained in this publication. This publication does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed.

DALLAS 12 MONTH FORECASTS

Categories Full Service Lodging Limited Service Lodging

Going In Cap Rate Increase 1-24 bps Increase 1-24 bps

Discount Rate Remain Steady - no change Increase 1-24 bps

Lodging Rate Change (%) 3.75% 3.50%

Expense Change (%) 3.00% 2.75%

Construction (Rooms)

Years to Balance 2 2

1,000

http://www.irr.com/

blog.irr.com

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