IRR-Dallas Mid-Year Viewpoint 2015 Local Market Report - Lodging
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.
The announcement of Toyota to relocate its North American headquarters to Plano in a $2.1 million facility will further increase lodging demand in the northern suburbs of Dallas, along with existing demand generators 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 1,500 new rooms are slated in the next 12 months. Notable new projects 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 the expansion of the lodging sector in Dallas.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.