United States -  Dallas

Overview:

The robust population growth in the greater Dallas market has translated into job growth, led by construction and financial services jobs. A building boom has taken hold in the northern suburbs, and new construction of corporate campuses, office towers, and mixed-use developments dot the northern suburbs. The relocation of Toyota Motor Corporation’s U.S. headquarters to Plano affirms the appeal of the suburban communities for corporate addresses. The increased commercial demand spurring from a higher concentration of corporate activity has helped fuel RevPAR growth at area hotels, and amplified demand trends has spurred an expansion in full-service hotel supply.
 
Coined the “$5 Billion Mile,” a one-mile stretch of road along the Dallas North Tollway from Warren Parkway north to Lebanon Road, has $5.4 billion in investment either announced or under construction. The 91-acre The Star in Frisco will include the new home to the Dallas Cowboys World Headquarters, a training complex, and 12,000-seat multi-use event center (Ford Center at The Star), as well as a 300-room Omni hotel. The 175-acre Wade Park mixed-use development is planned to include hotels under both the luxury-oriented Langham Hotels & Resorts brand and the Texas boutique Hotel ZaZa brand. The makeover of Hall Office Park in Frisco, to include adding restaurants and retail, will also include adding a 170-room Curio - A Collection by Hilton hotel. A proposal is also underway to attach a Hyatt Regency hotel to the Stonebriar Centre Mall. To the south of State Highway 121, the 303-room Renaissance Legacy Hotel will open within the 240-acre Legacy West mixed-use development.
 
Furthermore, the March 2015 opening of the Nebraska Furniture Mart store in The Colony, which includes 560,000 square feet of newly constructed showroom space, has stimulated development activity along the State Highway 121 corridor, including numerous proposed hotel development projects; a 128-unit Courtyard by Marriott and a 122-unit Holiday Inn opened in The Colony in May 2016. Allen and McKinney are also experiencing growth in hotel supply; among the recently opened Sheraton McKinney and other limited- and select-service hotel projects proposed in the area, a full-service hotel and expansive conference center is expected to open in Allen.
 
New construction and revitalization efforts are evident in the northern portion of Dallas; namely, the $4-billion Dallas Midtown mixed-use development near Interstate 635 and the Dallas North Tollway is expected to transform the Valley View Mall site and is planned to include a dual-branded Residence Inn/AC by Marriott hotel. Closer to the nucleus, the Central Business District (CBD), Uptown, Victory, and West Dallas areas have benefitted from revitalization efforts, with growth occurring in the high-density residential, office, hotel, and retail/restaurant sectors. Healthcare development has also surged, with significant expansions at both Parkland Memorial Hospital and the UT Southwestern Medical Center. The $800-million William P. Clements Jr. University Hospital on the UT Southwestern Medical Center campus opened in December 2014, while the new, $1.27-billion Parkland hospital will open in August 2015. Attractions, such as Klyde Warren Park, the Perot Museum of Nature and Science, and the Dallas Farmers Market, have helped rejuvenate urban living and pedestrian traffic in Dallas. Additionally, construction of the city’s 1,001-room convention headquarters hotel was completed in November 2011, improving the salability and number of events at the Kay Bailey Hutchison Convention Center.
 
These factors have played a key role in steady occupancy growth and weighty increases in ADR within the core submarkets of Downtown, which in turn has attracted developers to the scene; a 171-unit Hilton Garden Inn opened in September 2015 and a 326-unit Westin opened in January 2016. Moreover, there is a host of additional hotels proposed, spanning a variety of service levels. Projects within the CBD include brands such as AC by Marriott, Residence Inn by Marriott, Hampton Inn & Suites, Curio - A Collection by Hilton, Fairfield Inn by Marriott, and Courtyard by Marriott. Luxury, boutique-style hotels have been proposed for development within the Tower Petroleum Building/Corrigan Tower and a planned Arts District high-rise. Proposed hotels in Uptown include a Dream Hotel and a Canopy by Hilton. Moreover, a lifestyle Virgin Hotel is planned within the Design District. Near Dallas Love Field, a dual-branded Aloft/Element project is underway. The numerous revitalization efforts and rehabilitation projects should allow Downtown Dallas to continue to evolve, with hoteliers benefitting from long-term improvements in RevPAR.
 
The market benefits from a well-developed transportation infrastructure. Dallas/Fort Worth International Airport is one of the nation's largest airports and serves as headquarters for American Airlines. In February 2011, the $2-billion DFW International Airport Terminal Renewal and Improvement Program (TRIP) commenced; TRIP represents a seven-year plan to improve Terminals A, B, C, and E. Moreover, airport officials are currently in discussion with airlines about the possible addition of a sixth terminal, Terminal F; officials estimate that construction would span roughly five years if the project moves forward. At Dallas Love Field, the end of federal flight restrictions in October 2014 has significantly boosted operations out of the airport. Other notable improvements include an expanding light-rail system (including added connectivity to DFW in August 2014) and new major highway projects, which should contribute to this market's accessibility and continued strength as a transportation and distribution hub.
 
Overall, both the suburban and urban submarkets within Dallas are expected to sustain long-term growth. This should support continued value gains in the next several years. Dallas lodging fundamentals remain strong, and the city is gaining momentum as a hotel investment market. Le Méridien Dallas, The Stoneleigh sold in November 2015 for $70,000,000, or nearly $400,000 per key, which is the highest per-key sale in recent years for the area.
 
* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Dallas United States
Previous Year +2% (20 of 71) +1% (49 of 71)
Growth in 2017 +2% (28 of 71) +2% (36 of 71)
Growth in next 4 years +12% (30 of 71) +12% (32 of 71)

Change In Value For Market:

Dallas RevPar % Change

For more information, please contact:

Russell Rivard, MAI
rrivard@hvs.com
  • +1 214 766-5394 (w)
Kathleen Donahue
kdonahue@hvs.com
  • +1 972 890-3548 (w)