Q2 2025 Industry Spotlight: Greg Toro
GREG TORO | Sr. Managing Director, JLL – Capital Markets
Greg Toro is a Senior Managing Director in JLL's Capital Markets, Americas division, based in Dallas, where he advises institutional clients on multi-housing investment sales across the U.S. With nearly two decades of experience, Greg brings deep market knowledge and transaction expertise to every deal he oversees. Since beginning his career as an Analyst at Holliday Fenoglio Fowler (“HFF”) in 2007, before its acquisition by JLL in 2019, he has played a central role in closing over $25 billion in real estate transactions, comprising more than 300,000 units.
Known for his strategic approach and long-term client relationships, Greg has been a trusted advisor to many of the multifamily industry’s top investors. Before joining HFF, he began his career as a research analyst at Crescent Real Estate Equities in Fort Worth, providing him with a strong foundation in data-driven analysis that continues to support his work today.
On June 11th, SPI Advisory co-founder & principal, Michael Becker ("MB") sat down with Greg ("GT") to discuss his insights on transaction volumes, cap rates, and what’s driving investment decisions in the Dallas-Fort Worth multifamily market.
MB: What are your high-level thoughts on the current state of the market? You primarily work with Class A to A- properties rather than workforce housing, but I imagine you have good exposure across the board. The market seems disparate in terms of variances between projects and properties and the motivations of buyers and sellers. What are you seeing that’s interesting, changing, or different?
GT: Location has absolutely risen to the top of everything right now. Whether that’s from an operations standpoint – supply considerations, property performance, making sure you’re not next to problematic operators in the workforce space, or just institutional decision-making. It hasn’t been uncommon to hear: ‘we’re going to do one or two deals right now. We have the capital to do more, but we’re just getting the engines fired back up.’
What’s interesting is while bigger is better for some, others are asking for smaller equity checks than they historically did as they get more active in the market again. Some are ahead of others, but many are dipping their toe back in more cautiously. For them to even look at something, the location has to check every box. That said, more institutional groups are showing up as the year has progressed.
Then, there's all the noise with the HFC legislation changes. We looked at some data earlier and found transaction volume through the first quarter was $2.3 billion across about 65 transactions. But about a third of that was conversions, which weren’t necessarily real trades. It’s hard to track what constitutes a true arm’s length sale.
Our market historically traded around $11 billion annually – maybe $10 billion one year, $12 billion another – for four or five years until the big run-up in 2021 when we hit $28 billion. When people look at where we are now versus that peak, it sounds dramatically down. But, in 2023, we did about $9 billion, and last year was around $8 billion, pushing toward $9 billion. It doesn’t sound quite as dire when you frame it that way.
However, deal sizes have gotten much bigger, so the number of transactions has dropped significantly. Back in 2018-2019, we were seeing about 400 deals per year. The last couple of years, we’ve been closer to 225-250 deals annually. If we’re doing 60-something transactions per quarter right now, and a good chunk of those are conversions, it really shows the lack of actual transactions happening.
Even with all that, DFW is still number one in the country and has been for six straight years.
MB: To your point on volume... So, in 2023-2024, we sold roughly $8-9 billion per year, and pre-COVID we were selling about $10-11 billion?
GT: Exactly. $10-12 billion wasn’t uncommon, and the peak was $28 billion in 2021. 2022 was on pace to match that until everything shifted dramatically in the third quarter – really even before that. The first quarter of 2022 and most of the second quarter, we were on track to potentially outpace 2021. We ended up at $21 billion in 2022, then it dropped to under $10 billion in 2023. There were some hangover deals, because that year was so lumpy.
MB: Right, and you had HFC noise in 2024, plus all the Jason Post and PFC deals in 2022 and the first half of 2023. So, the last two years, we’ve been slightly below the pre-COVID average in dollar volume, but the number of transactions is about two-thirds of historical levels just due to the run-up in values?
GT: That’s exactly right. You’d have to go back to 2014 to find the true number of trades we’ve seen in the last year or two.
MB: Since 2014, our market has expanded by what, 200,000-250,000 units?
GT: That’s probably right. If you think about it more broadly, multifamily as an asset class and investment allocation for institutions has changed dramatically since 2013-2014. Industrial and multifamily have risen to the top of where allocation wants to be and the sheer volume that could occur today is dramatically different. The asset class has just grown up so much.
Today, besides interest rate noise, there’s also tariff uncertainty and other factors. We’ve been tracking data nationally for the last couple months on 60+ individual deals that either had price, went non-refundable, or closed. Taking out portfolios and just looking at single assets, less than 10% had issues. One dropped the week of Liberation Day, and another had capital issues at the property level unrelated to market conditions. There were a couple re-trades, but when you break down the data, offers are moving forward – people are waiving contingencies and closing.
That said, there were some impacts. Some foreign capital was confused about whether to deploy in the US or wait and see, and some institutions decided to pause temporarily. So, there was definitely some investor sentiment impact, but there have been enough positive data points that people in our space aren’t overly worried.
MB: Volume has been down both in the number of trades and total valuation. We’re almost halfway through 2025… where do you think the market shakes out by year-end in terms of sales volume?
GT: It feels like it’s going to be similar to last year’s total volume.
MB: $10 billion plus or minus?
GT: I’d say probably a little less – maybe $9 billion. The tough part is determining how much of that represents true trades versus conversions. However, BOV volume keeps increasing which could lead to a busy year end.
MB: And, within that number, there’s noise from the new HFC legislation, which created a rush from Q1 through about a month ago.
GT: Correct. I do think it will lead to some transactions, but most of those will probably be next year since many properties need to come into compliance by early 2027.
MB: You focus predominantly on Class A and A- properties with institutions as your primary buyers and sellers. What are you seeing as most important to institutions right now? What’s getting them to buy? You mentioned location and bite-sized deals.
GT: Location is number one. Is it in a submarket inundated with supply where they can’t underwrite any growth for a couple years? If location works but there’s excessive supply, they will be probably less competitive on pricing to aggressively pursue.
Look at where REITs are trading on an implied cap rate – they can’t typically buy a 4.5% cap deal and have it be accretive. If it’s a lease-up deal and they believe year one or two will be much higher as it stabilizes, that’s where supply considerations come into play. Can they actually grow out of it? They need to show growth through their first couple of years of their hold period to their investors.
MB: Which DFW submarkets would you say are more attractive versus less attractive from that perspective?
GT: Frisco is one, and anything along 121 near Legacy will check boxes. They look at harder-to-find deal locations like Grapevine or Coppell, but there are just fewer transactions there. Most of Uptown is still a target, and we’re starting to see some positive rent growth there, given where supply is.
Las Colinas is also a targeted submarket, especially if they invest in office and understand that neighborhood. However, some are less bullish because of the existing inventory volume.
MB: What are some challenging markets? Is Downtown Dallas more challenging than Uptown?
GT: Uptown is a more institutional submarket, but Downtown is a different animal because much of it is conversion product. Some folks like that; others aren’t used to that type of asset. There’s not much ground-up product Downtown. It’s just a different submarket. Actually, some of those assets have performed way better than expected, though some have challenges like poor parking from office building conversions.
Mansfield and Celina are a couple other submarkets that institutions have been more cautious with in the short term, though the supply picture is improving. DFW delivered 44,000 units last year and absorbed 44,000 units, one-for-one. People were hoping to see more rent growth in the spring, but it’s beginning to turn more positively and will trend further next year as deliveries continue to dwindle. Through the first quarter on a trailing twelve-month basis, we absorbed 48,000 units, with New York second at 34,000 – quite a huge gap.
MB: Why are Class A/A- sellers selling right now versus holding out?
GT: A lot of it is loan maturities. Merchant builders are selling again, though less than our market is used to, given delivery volumes. Much of that is performance-driven. They’re trying to improve leasing, but some equity partners don’t want to move yet.
For institutional groups, it might be more fund-related reasons, but there aren’t many redemption problems like there used to be. That used to be a major driving factor, but there’s still some 'our fund needs to recoup capital' motivation.
MB: From my perspective, the market’s clearing the best assets – highest-quality, prime locations at mid-to-upper 4% cap rates. Is that what you’re seeing?
GT: On trailing tax-adjusted numbers, yes. If a project checks all boxes and is in Uptown, 40% below replacement cost, with upside potential on rents, you could easily find a group willing to own it long-term and pay in the low-4s. Generally, the market’s trading sub-5% for Class A product.
MB: What about newer deals in suburban markets like Plano or Frisco?
GT: Absolutely still south of 5%.
MB: And if you go to Celina, Aubrey, Melissa, or parts of McKinney?
GT: Investors want to be at or north of 5% most often than not, but on many projects, the per-unit pricing isn’t very high, because rent rolls aren’t where pro formas projected as they work through supply issues. You will still find some trading below that level given per pound pricing compared to replacement cost.
MB: For 20-year-old vintage product, where is most of that trading?
GT: If it’s well-located, still sub-5%. The value-add story – some believe it, some don’t right now, given asset performance challenges we’ve discussed. If they think they can move rents significantly through true value-add improvements, and it’s often asset-specific, most believe they can do at least a light renovation. If value funds have been raised and they can add value through modest improvements, that drives pricing. It’s still probably sub-5% on much of that if well-located.
When you get to 1990s and older assets, it depends on the specific asset and location. 1980s product will definitely be higher. It would have to be a special asset in a special location to be below mid-5%.
MB: So, 1980s, 8-foot ceiling product is trading at high 5.5% to 6%?
GT: That’s probably right. 6% might be slightly high, but mid-to-high 5% range. Special location deals will be exceptions, but broadly speaking, yes.
MB: For 1970s or older, you’re certainly north of 6%. Have you seen any trades in the 7% cap rate range?
GT: It’s been a fleeting number. There hasn’t been much capitulation to that level, because there aren’t many trades. Unless someone truly had to sell, not many are willing to trade there, especially given the ownership profile of those assets.
MB: So, we have limited data points, because there haven’t been many trades in the vintage workforce housing space?
GT: Right. That’s starting to open up more as some need to transact, but there’s been more activity in Class A product. Some of that relates to who needs to trade and whether they can where buy-side capital wants to deploy. It’s just more liquid on newer product.
MB: It’s starting to get interesting with older assets. We grew up in that space before working our way up. Distress at scale seem to be surfacing… Lots of groups need to move, deals basically at debt basis plus closing costs, though many don’t make sense. Have you seen much trade below debt, or has everything been at debt or failed to clear if below debt?
GT: We haven’t seen a lot trade below debt, but we have seen some. When that happens, the lender has often been willing to offer financing – not on every asset, but a good portion.
MB: So, they provide high-leverage, below-market debt terms to achieve better value?
GT: Yes. We’ve seen restructures where lenders stay in deals, because they know, if it trades, it’s well below the loan balance. In most instances, those end up being 'bring in new asset management, give them a hope note, try to manage our way out, and sell at loan balance later.'
MB: Looking 12 months forward – what do you expect for the rest of this year and 2026?
GT: There was a lot of 'survive 'til '25' thinking that’s really shifted to a 2026 viewpoint. We’ve seen a lot of positive momentum – for instance our firm did the largest transaction in the market recently, the Quarterra trade at $4 billion, plus other portfolio trades. We are also extremely busy with large recaps nationally.
It feels like more assets will hit the market late third quarter into fourth quarter – projects that wanted to trade earlier this year but didn’t due to performance or other reasons. I suspect fourth quarter transaction volume will be much higher than what we’ve seen earlier this year. Hopefully that springboards into more assets next year.
Our firm’s fourth quarter last year was the second highest in terms of transaction volume revenue we’ve ever seen. That might not make sense given market conditions, but in the third quarter when rates dipped, people were ready to move. Much of that was refinancing activity, not just sales, but it shows how quickly the market can turn when people believe it’s the right time.
I don’t think we need six months of performance improvement. It can move really quickly.
MB: Do you think there’s capital and interest ready to spring into action when confidence improves?
GT: No doubt. This is very different from COVID, but thinking back then, we went from literally zero deals to our team having 13 deals on market within two weeks. It might not snap quite like that, but with all the capital wanting to transact on both sides, it could move very fast when it starts.
It feels like that should happen sooner rather than later. This has dragged out much longer than people anticipated, which is another reason why, when people feel ready to go, it’s going to happen quickly.