Why Texas? Q&A with Matthews Real Estate’s David Harrington

Matthews Real Estate Investment Services is a Southern California company that recently opened shop in Dallas. Connect Media caught up with David Harrington, Matthews’ Executive Vice President and National Director, Multifamily, to find out the reason behind the eastward expansion – and what’s next for the company. Harrington is one of the many panelists who will be speaking at Connect Texas Multifamily on Aug. 24.

Q. Matthews is a Southern California company that recently opened an office in Dallas. Why?
A. There were several strategic reasons behind our move to North Texas. First, we needed to expand our investment sales footprint. We have spent years building relationships and transacting with clients in Southern California, and many of these clients have been and are looking to be active investors in various Texas markets. Given our unique structure as a company, with an open and collaborative culture, our expansion directly correlates to an enhanced service and experience for the client and importantly, more investment opportunities.

Next, with the launch of Matthews Asset Services, the Texas marketplace was the perfect place to roll out an additional service line to our clients through offering a value–add property management and retail leasing platform. Offered at competitive pricing, this service provides an institutional quality product to owners of all-sized properties to ultimately improve the net operating income of their assets.

Finally, we are expanding our operations team and many of our new hires will be based in our Dallas office, so we can capitalize on the business-friendly environment the state provides.
As far as further expansion in Texas is concerned, we already have investment sale teams in place that are aggressively working markets outside of Dallas-Fort Worth. Presently, we are investigating the Austin market for office space, and see that as the next likely move for Matthews.

Q. From your perspective, how does the Texas multifamily market compare to others nationally?
A. Most of Texas has outperformed the market as a whole, and being a leader in job growth over the last 10 years is a big reason for such great results. In fact, in the last year the Dallas-Fort Worth metro added more total jobs than any other metro in the country with the exception of New York, which is home to more than double the population.

What’s interesting to note is that, with all of the new units coming online, the renter demand and absorption rates have been steady, keeping up with this new supply. Additionally, while some urban core, luxury product has plateaued on rent growth, the B and C areas and product still have a runway for continued rent growth. In many cases, long-term, private individual owners of multifamily assets in these B and C areas have been asleep at the wheel, and as ownership in this type of product changes, it offers tremendous opportunity for the value-add buyers still hungry for deals.

Q. What is your forecast for the sector, both nationally and in Texas?
A. We have already begun to see a pullback in multifamily permitting for many major metros, including Dallas-Fort Worth. However, some West Coast markets are still pumping up permitting numbers, and while markets like DFW have seen a slight decrease, the overall number of units in the pipeline are still high. Fortunately, the demand for rental units is outpacing the supply.

Operationally, fundamentals are solid, which leaves us to look at interest rates as the one metric that will lead to pricing shifts if and when they ever increase in a meaningful way. Given the choppy data we continue to receive about the economy, coupled with an uncertain political climate at home and abroad, I would not expect any major moves in interest rates over the near term. Transaction velocity has trended downward in 2017, but recent figures show a bit of a rebound. I would expect pricing and transaction velocity over the next 12 months to be similar to what we have seen in the second quarter of 2017.

For comments, questions or concerns, please contact Amy Sorter