lpa

Dallas County is targeting 2026 to purchase land for a new jail, a project expected to cost up to $5 billion and take nearly a decade to complete. The Lew Sterrett Justice Center’s severe overcrowding and nearly 50-year-oldinfrastructure are key drivers behind plans for its replacement.  

Consultants are already evaluating how the new facility would be designed and built, though a final site has not yet been selected. What is clear though, is that the new jail will not remain at its current riverfront location between Dallas’ two iconic Calatrava bridges. State law requires the jail to remain within a few miles of the county courthouse, which narrows potential locations.  

Why this Matters for Commercial Real Estate  

The most consequential aspect of the project may not be the jail itself, but where it won’t be.  

The Jail’s relocation has implications far beyond public safety infrastructure. Moving the facility would free up 15 acres of highly visible, county-owned riverfront land near downtown. This is one of the most prominent undeveloped parcels in the city.  

The site, currently valued at approximately $109 million, sits along the Trinity River corridor and has already been discussed as a potential location for major redevelopment, including a new Dallas Mavericks arena, mixed-used development, or other civic and commercial uses. For commercial real estate, this represents a rare instance where public-sector investment directly unlocks private-sector opportunity. 

A Rare Redevelopment Opportunity  

Large, contiguous riverfront sites near downtown are increasingly scarce. The potential availability of this parcel creates an opportunity for:  

• Mixed-use residential and commercial development  

• Sports, entertainment, or cultural facilities 

• Public-private partnerships tied to urban revitalization  

• Long-term value creation along the Trinity River corridor  

Because the land is county-owned, any redevelopment would likely involve complex negotiations, zoning considerations, and public input, but also offers the chance to shape a high-profile gateway into downtown Dallas.  

What’s Next  

Dallas County expects to acquire land for the new jail in 2026, which would formalize relocation plans and begin the multi-year process of approvals, design, and construction. The county is also prioritizing a modern, outcomes-focused jail, emphasizing mental health treatment, rehabilitation, and reduced recidivism. A shift that could influence facility design, land needs, and surrounding infrastructure.  

CRE Takeaway 

For commercial real estate professionals, Dallas County’s jail project signals:  

• A long-term redevelopment catalyst tied to public-sector investment  

• The potential release of one of downtown Dallas’ most valuable riverfront sites 

• Opportunities for large-scale mixed-use, civic, or entertainment-driven development 

• A project timeline measured in years, allowing for strategic positioning and planning 

As plans progress, the relocation of the Lew Sterrett Justice Center could prove to be one of the most consequential real estate shifts in downtown Dallas in decades, reshaping both the skyline and the development pipeline along the Trinity River.  

At LPA, we track projects like this because major public-sector investments often precede meaningful shifts in land value and redevelopment potential. As plans advance, accurate valuation, market context, and timing will be critical for understanding how opportunities along the Trinity River corridor evolve.

If you’re evaluating property impacted by public infrastructure projects or need data-driven insight into land value and highest-and-best-use considerations, LPA provides the research and valuation expertise to support informed decisions.

2025 marked a turning point for multifamily real estate, with a surge in luxury apartment development across the U.S. This increase in high-end supply began to reshape rent trends and renter behaviors.  

The Rise of Luxury Apartment Development  

Luxury apartment development gained momentum in 2025 as developers shifted toward Class A multifamily projects nationwide. Higher land prices, labor constraints, and construction costs pushed many developers toward higher-end properties to maintain returns. As a result, new deliveries increasingly featured modern design, premium finishes, and extensive amenity packages. 

Several key factors drove this expansion such as population growth, investor demand, and higher construction costs. Rapid population growth, especially in fast-growing regions, continued to support rental demand even as affordability pressures increase. At the same time, investors gravitate towards luxury multifamily properties for their stability, consistent income, and performance. Rising construction costs also play a role, encouraging developers to look into higher-end projects that could support the higher rents.  

Luxury apartment development was heavily concentrated in the Sun Belt and high-growth metropolitan markets, including Texas, Florida, Ariona, and much of the Southeast. These areas are prime targets for multifamily investment because they have a large growing population, strong job-creation, and pro-business policies. As a result, many of these markets saw a major increase in luxury apartment deliveries throughout 2025.  

How Luxury Supply Is Affecting Rent Growth  

Many high-end apartment buildings are opening simultaneously in the same markets, creating direct competition for renters. With significantly more luxury apartments available than in the past, landlords can no longer rely on scarcity to drive up rents, resulting in slower rent growth. To attract tenants, properties must differentiate themselves by offering unique features or incentives, such as move-in specials, reduced deposits, or flexible lease terms. Concessions, like a free month of rent, are increasingly common in Class A units. This competition at the top tier also eases pressure on Class B and C properties, moderating rent growth across the broader market. Ultimately, luxury apartments now compete through a combination of amenities, services, and strategic pricing to stand out in a crowded market.   

Overall, the growing supply of luxury apartments in 2025 increased competition, slowing rent growth at the top tier and creating ripple effects that moderate rents across more affordable Class B and C units.  

Renter Seasonality and Leasing Patterns  

The peak rental season typically runs from late spring through summer, driven by factors like new job relocations, graduations, and families moving before the school year. During this time, rents often reach their highest levels, and landlords can be more selective with tenants. Conversely, fall and winter tend to be slower, prompting landlords to offer concessions or more flexible lease terms. However, in 2025, the surge of new luxury apartments gave a wider range of options, limiting landlords’ ability to raise rents even during the traditionally high-demand months.  

Shifting Tenant Preferences  

Renters are becoming more selective, focusing on getting value for their money, flexible lease terms, and apartments with appealing amenities. Features that used to be considered premium, like gyms, coworking spaces, and smart-home technology, are now expected in most luxury apartments. Because rent growth is slowing, some renters are moving to smaller or more affordable units, trading down from luxury apartments to save money. This shift reflects a growing emphasis on quality, convenience, and experience over simply occupying a high-end space.  

Regional Differences Across the U.S.  

• Sun Belt Markets 

Sun Belt Markets continue to lead in luxury apartment absorption. Cities like Dallas, Houston, Miani, and Phoenix are seeing rapid leasing due to strong population growth, job creation, and inbound migration. High demand allows new luxury units to lease quickly, though developers still face pressure to differentiate properties with amenities, services, and pricing strategies.  

• Slow-Growth or Supply-Heavy Markets  

In slower-growing or overbuilt metropolitan areas, leasing new luxury apartments has been more challenging. With higher vacancy and more competition among landlords, properties take longer to fill, which can slow rent growth. Landlords in these markets often rely on incentives or flexible lease terms to attract tenants.  

• Suburban Luxury Developments 

Suburban luxury apartments are gaining popularity as renters seek more space, affordability, and access to lifestyle amenities outside urban cores. These developments are capturing demand from families and professionals looking for a balance between city convenience and suburban living. This trend highlights a broader shift in renter preferences beyond traditional downtown locations.   

What This Means for Developers and Investors 

For developers and investors, timing and differentiation are critical. Delivering new apartments during peak leasing season, typically in spring and summer, helps maximize occupancy and rent potential. Properties must stand out with unique amenities and thoughtful pricing, rather than relying on being new or classified as luxury. Operators should also focus on efficient management and tenant satisfaction to reduce turnover and maintain stable income, as tenant experience increasingly drives rental success.  

Looking Ahead to 2026 

In 2026, the pace of luxury apartment construction is expected to moderate resulting in fewer new units entering the market. As luxury supply stabilizes, rent growth is also likely to stabilize. In contrast, demand for high-quality apartments will remain strong. Allowing developers and investors who prioritize value, thoughtful design, and compelling amenities to be in a better position to succeed in a more competitive market.  

The expansion of luxury apartments highlights the importance of linking national multifamily trends to local market conditions and asset performance. At LPA, we remain focused on providing the insights and strategic support needed to navigate the market headed into 2026.  

Retail: Evolution Over Extinction 

For years, retail was often viewed as a declining asset class, driven by the steady rise of e-commerce and accelerated by the COVID-19 pandemic in 2020–2021. Online shopping reshaped consumer expectations around convenience, speed, and price, putting pressure on traditional formats—particularly big-box and commodity-driven retail. At the same time, oversupply in certain markets and several high-profile retailer bankruptcies contributed to the perception that retail was in decline (think Sears, Toys “R” Us, JCPenney, and Bed Bath & Beyond).

However, that narrative was incomplete. Even during this period, well-located and necessity-based retail continued to perform, supported by grocery, dining, services, and experience-driven uses. Strong centers with the right tenant mix and demographics remained resilient, while challenges were largely concentrated in outdated or overbuilt formats.

In reality, retail has been rebalancing rather than disappearing. Physical retail today must offer more than products on shelves—it must provide experiences and environments that online shopping cannot replicate.

This shift has led to a redefinition of retail, not its extinction. Across markets, experiential and mixed-use formats, including pop-ups, entertainment-driven destinations, and hybrid retail concepts, are consistently outperforming traditional strip centers.

These Modern Retail Spaces are Designed to:  

• Attract foot traffic  

• Encourage longer visits  

• Provide experiences that cannot be replicated online  

What This Means  

Retail is unlikely to return to pre-pandemic norms because the future of retail will favor:  

• Picking the right mix of stores for the local area instead of filling in a center with the same big-name chains as everywhere else.  

• Adding experience and entertainment will build a high retention rate.  

• Combining retail with homes, offices, and lifestyle spaces creates a long-lasting and attractive place to visit.  

• Quality, design, and overall experience are more important than just having a lot of space.  

Why the Sunbelt Is Well Positioned 

1. Rapid Population Growth 

More residents create a high demand for housing, retail, and services. 

1. Economic Expansion 

The region has strong job growth, especially in tech, healthcare, energy, and service industries. Growing employment attracts workers who need housing, shopping, and amenities.  

1. Favorable Climate: 

Mild winters and warm weather encourage outdoor shopping, entertainment, and mix-use developments 

1. Pro-business Environments: 

Many Sunbelt states have low taxes and business-friendly regulations, which encourages commercial development.  

Bottom Line: 

Retail sentiment is no longer trending toward its disappearance, but it has become more selective. Performance today is driven by location, tenant mix, and the ability to serve how people actually live, work, and spend time. Markets like the Sunbelt, which support population growth, mixed-use development, and experience-driven retail, remain well positioned. At Lowery Property Advisors, we evaluate commercial properties with this perspective, focusing on fundamentals, market context, and how assets are positioned for long-term relevance.

The commercial real estate market in 2025 did not move in one direction, or for one reason. Instead, performance varied widely by region, asset type, and local fundamentals, reinforcing a key lesson for property owners, investors, and lenders: national headlines only tell part of the story.

Using CoStar-reported trends and market observations from across the country, here’s a look at how different regions and asset classes performed in 2025, and what those differences mean heading into 2026.

---

Sun Belt Markets: Growth Still Matters—But Selectivity Is Key

Markets such as Tampa, Dallas–Fort Worth, Austin, Phoenix, and Nashville continued to outperform many national averages, supported by population inflows, employment growth, and business expansion.

What we saw in 2025:

• Retail and industrial assets remained resilient

• Rent growth moderated but stayed positive relative to the U.S. average

• Office performance varied widely by submarket and building quality

• New construction slowed, helping stabilize fundamentals

Key takeaway:
Growth markets still rewarded investors and owners—but only when assets were well located and aligned with current tenant demand. The days of broad-based appreciation gave way to property-level performance differentiation.

---

Midwest & Secondary Markets: Stability Over Speed

Markets like Indianapolis, Columbus, Kansas City, Minneapolis, and Des Moines demonstrated a different kind of strength in 2025—consistency.

What we saw in 2025:

• Less pricing volatility than coastal or high-growth markets

• Continued demand for industrial and necessity-based retail

• Steady occupancy supported by diversified local economies

• Investor interest driven by lower basis and predictable cash flow

Key takeaway:
In a cautious capital environment, stability became an advantage. Secondary markets proved that slower growth does not necessarily mean weaker fundamentals—particularly when operating costs and entry pricing remain favorable.

---

Coastal Gateway Markets: Correction and Repricing Continue

Major coastal metros—including New York, San Francisco, Los Angeles, Seattle, and Boston—continued to adjust in 2025, particularly in the office sector.

What we saw in 2025:

• Office pricing resets driven by utilization and leasing uncertainty

• Increased bid-ask spreads across several asset types

• Strong demand for best-in-class assets, even as overall volume remained muted

• Greater scrutiny of income assumptions and exit cap rates

Key takeaway:
2025 reinforced the importance of current, market-supported valuations in gateway cities. While challenges persisted, well-located and well-leased properties continued to trade—just under more disciplined assumptions.

---

Asset Class Performance: Not All CRE Moved Together

Retail

Retail was one of the more stable asset classes in 2025, particularly for:

• Grocery-anchored centers

• Neighborhood retail

• Smaller-format spaces favored by national brands

Construction remained limited, supporting rent levels in many markets.

Industrial

Industrial demand normalized after record highs in prior years, but fundamentals remained healthy:

• Vacancy increased modestly in some markets

• Rent growth slowed but stayed positive

• Location and logistics efficiency became even more important

Office

Office performance was highly market and asset-specific:

• Class A, well-amenitized buildings outperformed

• Commodity office faced continued leasing challenges

• Valuations depended heavily on tenant quality and lease duration

Multifamily

Multifamily experienced:

• Slower rent growth due to new supply deliveries

• Generally stable occupancy in growth markets

• Greater emphasis on operating efficiency and expense management

Key takeaway:
In 2025, asset class performance depended less on category and more on execution, location, and market fundamentals.

---

What 2025 Taught the CRE Market

Several clear lessons emerged:

• There is no “average” CRE market anymore

• Regional and submarket data matters more than national trends

• Asset quality and tenant profile drive value

• Accurate valuations require real-time, localized insight

These themes shaped decision-making throughout 2025 and will continue to influence transactions, financing, and development strategies in 2026.

---

Looking Ahead to 2026

As markets move further into normalization, success will depend on understanding where demand is durable, where pricing has adjusted, and where assumptions need to be reset.

At Lowery Property Advisors, we evaluate commercial real estate through a market-specific, data-driven lens, recognizing that credible valuations depend on understanding not just what happened—but why it happened in each market. As regional differences continue to shape performance, clarity and context remain essential for informed real estate decisions.

The retail leasing landscape is undergoing a significant transformation, driven by evolving consumer behavior and a shift in how retailers utilize space. According to recent CoStar Analytics data, the trend toward smaller, more efficient retail spaces is accelerating, signaling a notable change for property owners and investors.

Smaller Leases, Bigger Implications

Over the past year, nearly 53,000 retail leases—spanning more than 206 million square feet—were executed, but the average retail lease size has dropped below 3,500 square feet for the first time on record. This decline reflects a clear pullback from the large “big box” spaces historically favored by department stores and major general merchandise retailers.

Retail spaces under 5,000 square feet now make up roughly 80% of all lease transactions, accounting for just over half of total leased square footage. Breaking it down further:

• Leases under 2,500 square feet represent 44% of all retail transactions and 29% of total leased space.

• Leases between 2,500–5,000 square feet contribute 36% of transactions and 22% of total square footage.

• In contrast, spaces exceeding 20,000 square feet account for less than 5% of leases and just 11% of leased square footage.

For property owners and investors, this trend underscores a critical takeaway: bigger is rarely better in today’s retail market.

The Tenants Driving the Shift

Food and beverage retailers have emerged as the most active tenants in the small-space segment. Starbucks, Chipotle, Chick-fil-A, Jersey Mike’s, Dunkin’, and McDonald’s are leading the charge, focusing on formats that cater to speed, convenience, and experiential dining. Many of these concepts rely on drive-thru or pick-up-oriented designs, highlighting the continued importance of accessibility and visibility.

Service-oriented tenants are also shaping the small-box market. Financial institutions like H&R Block and Chase, along with telecom providers such as Verizon Communications, illustrate the ongoing need for a physical presence among essential and daily service providers.

What This Means for Retail Property Owners

The bifurcated recovery across retail box sizes reinforces the importance of agility. While consumer spending is strong, demand varies widely depending on space and tenant type. Smaller, adaptable spaces are increasingly preferred, while larger, inflexible retail formats are becoming less appealing.

For landlords, investors, and brokers, the key takeaway is clear: properties that accommodate smaller, flexible formats with high visibility and accessibility are more likely to attract active tenants and achieve consistent occupancy.

Looking Ahead

As retail continues to evolve, understanding these leasing trends is crucial for navigating the market successfully. Properties designed for efficiency, convenience, and adaptability are more likely to attract active tenants and maintain consistent occupancy.

At LPA, we provide insights and guidance on commercial real estate trends, helping property owners, investors, and tenants make informed decisions. Whether you’re evaluating lease opportunities, assessing your property portfolio, or exploring market trends, our team is here to answer your questions and offer expert advice every step of the way.

The Federal Reserve issued its third rate cut of 2025 this week, lowering the benchmark federal funds rate by 25 basis points to a target range of 3.5%–3.75%. While the move was widely expected, it still marks an important shift in the monetary landscape—one that will influence capital markets, development activity, and investor sentiment heading into 2026.

At the post-meeting press conference, Chair Jerome Powell noted that policymakers now feel “well positioned to wait and see how the economy evolves,” signaling a more measured, data-dependent approach for the months ahead.

So what does this latest cut mean for the real estate sector—and specifically the commercial environment that LPA serves?

---

What Lower Rates Mean Right Now

A reduction in the federal funds rate generally filters through the economy by lowering the cost of borrowing. That can take a few different forms:

• Cheaper construction and development financing
  Lower short-term rates ease costs for construction loans, bridge financing, and value-add projects—segments that have been under pressure since 2022.

• More favorable terms for floating-rate borrowers
  Property owners with variable-rate debt, including certain commercial loans and HELOCs, may see relief as lenders adjust pricing downward.

• Potentially improved liquidity in the investment market
  Cap rate pressure may ease slightly, and buyers sidelined by expensive debt could begin re-engaging.

That said, mortgage rates—both residential and commercial—don’t move in lockstep with the Fed. Many lenders are still pricing in economic uncertainty and elevated credit risk, meaning the real estate response is likely to be gradual, not sudden.

---

A Residential Market That’s Stabilizing, Not Surging

Housing has been in a holding pattern for the better part of a year. Nationally, home sales, new listings, and pricing have mostly flattened, with Fall 2025 numbers showing little movement from a month or even a year earlier.

A few notable patterns have emerged:

• Buyers have slightly more negotiating power.
  The typical home sold for about 1.5% below list price in October 2025, the widest discount since 2019.

• Supply and demand vary widely by market.
  In cities like San Francisco, supply has tightened while demand has picked up—an early signal that local dynamics will shape recovery paths.

• Overall volatility is calming.
  After five years of rapid swings, the residential sector appears to be leveling off rather than preparing for another sharp upcycle.

---

Commercial Real Estate Lens: What the Rate Cut Signals

For the commercial sector, the implications are more nuanced. Even with this rate cut, capital remains more expensive than it was during the pre-2022 cycle. However, several trends are emerging:

1. Improved Feasibility for New Development

Construction starts have slowed dramatically since rates began rising in 2022. A lower cost of capital—paired with moderating materials and labor inflation—could bring select projects back into feasibility.

2. Increased Transaction Activity

Buyers and sellers have spent much of 2024 and 2025 far apart on pricing expectations. As financing becomes more accessible, price discovery should improve and deal volume may begin ticking upward.

3. Stabilization Across Asset Classes

• Industrial demand remains resilient but not explosive.

• Multifamily performance continues to depend on local oversupply trends.

• Retail is steady, bolstered by strong consumer activity in key markets.

• Office remains bifurcated, with quality and location driving outcomes.

Lower rates won’t reverse structural shifts—especially in the office sector—but they do reduce pressure on owners with near-term maturities and support refinancing opportunities that simply weren’t penciling six months ago.

---

Outlook for 2026: Cautious Optimism, Not a Rapid Rebound

Looking ahead to 2026, the market points toward cautious optimism rather than a quick rebound. Capital markets are expected to loosen gradually as borrowing costs ease in small steps, with any additional Fed cuts arriving slowly under its “wait and see” approach. As financing becomes more accessible, buyer and seller expectations should begin to realign, improving underwriting conditions and opening clearer paths for acquisitions, recapitalizations, and dispositions. Growth will likely remain selective—favoring population-driven markets and sectors such as logistics, healthcare, and sunbelt metros—while investors and lenders continue to operate with discipline, supporting a steadier and more sustainable recovery compared to past cycles.

For LPA clients, this environment underscores the importance of understanding how national shifts translate into local market behavior and asset-level performance. Our team continues to provide tailored market intelligence, updated valuation insights, and strategic support for those planning their 2026 strategies—ensuring you stay well-positioned as conditions evolve.