With 67 million square feet of space underway in the Logistics, Specialized Industrial and Flex Markets, DFW is currently leading the nation in industrial construction activity, according to a new market insight report out by CoStar.
The region has also experienced the most new builds in the sector over the past year, totaling 31.4 million square feet in just 12 months.
The demand is being driven by companies looking to build and expand in the areas of e-commerce, manufacturing, and third-party logistics. Amazon has been a large driver of the impact on this segment in recent years, now occupying 16 million square feet of space in DFW. The next largest competitor is Home Depot at eight million square feet.
Notably here in the North Texas area, the city of Forney has become one of the most significant industrial areas within the metroplex, especially with the recent additions of Amazon and Goodyear and now several more developers that “have found their way to the area with several spec projects,” according to the report.
CHART BY COSTAR, JULY 2022
Fortunately, the vacancy rate remains steady due to the high demand at only 5.6%. Additionally, rent growth has also been increasingly positive at 12.9% annually, ahead of and outpacing the national average.
Just this year, 1,275 new leases were signed for space totaling 27.7 million square feet. Comparatively, there were 1,200 new and direct leases signed in all of 2021. Retailers made up 30 percent of leases signed.
According to CoStar’s future outlook, “Strong demographic growth and solid economic underpinnings are anticipated to keep the momentum well into 2022, with net absorption expected to reach 60.6 million SF with 69.1 million SF of new deliveries.”
Significant population growth has been driving job growth and all sectors of the commercial real estate market in Dallas-Fort Worth. The population has grown by over 1.2 million people in the past decade, and the area added 275,800 jobs last year alone – making it only of the only metroplexes to have fully recovered from COVID times, plus some. The North Texas area has also acquired over 150 new company headquarters. Due to the area’s low cost of doing business, lower taxes and highly skilled, growing labor force, more and more companies are choosing to make Dallas-Fort Worth their home.
Look for a favorable outlook to continue on space and land for warehouse construction throughout 2022 and beyond. If you own a good swatch of commercial land, now just might be a good time to put it on the market.