Dallas Fort Worth Commercial Real Estate Market Growth Continues with Industrial and Retail Outpacing Nation

Dallas-Fort Worth Super Growth Continues,
with Retail & Industrial Outpacing Nation: Market Report

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Commercial Real Estate deals and lending do not appear to be slowing down just yet, according to a new report out by CoStar

Commercial Real Estate loans increased in the third quarter of 2022 by 2.2%, up from the previous quarter’s 2.1% growth. 

Overall, lending rose $37.4 billion.

Industrial continues to the lead the way. 

In fact, the amount of industrial space absorbed has doubled from pre-pandemic years. Rent is up another 11.8% for the sector over last year. 

Logistics space has seen even larger growth, at 13.5% year over year.

Dallas-Fort Worth (D-FW) also continues to lead the way in the industrial sector, reporting the largest absorption over the past 12 months, outpacing even Houston, Atlanta, Phoenix and Chicago, according to recent report by NAR

D-FW absorbed 34 million square feet of space in Q3 of 2022. D-FW also ranks No. 1 among U.S. metros in industrial square footage under construction.

According to the same report, retail is also up 19.3 percent over pre-pandemic levels – and net absorption has remained positive for seven consecutive quarters in the country.

The highest demand is being driven by general retail and neighborhood centers, which account for almost 90% of the net absorption.

Once again, Dallas-Fort Worth leads the way in this sector, too, with 6.5 million square feet absorbed over the past 12 months, a million square feet ahead of its next biggest competitor – Houston.

Multi-family also continues to hold strong, and rents are expected to continue to grow — even as they decelerated somewhat in the third quarter of 2022. 

However, rents are still up overall 10.7% year over year across the country, according to Moody’s Analytics

Vacancy rates also remain at five-year lows at an average of 4.4%.

With interest rates higher and home values rising, many buyers priced out of the market continue to rent. 

D-FW also performs better than most of the nation in multi-family, only outranked by NY.

FINAL THOUGHTS & OUTLOOK

Overall, growth in the commercial real estate industry remains positive, aside from a somewhat tepid office sector. 

While some expect slowdowns in Q4 2022, many CRE leaders and experts remain optimistic that commercial lending and deals do not seem to be slowing down just yet – especially as the job sector continues to perform well in the area, too.

In fact, D-FW added 261,000 jobs since last year, an astounding 7% gain compared to the 3.8% national increase. 

The professional services sector added jobs at a rate of 9.3% over last year. 

Unemployment dropped as well, from 4.4% to 3.3% in the region. 

Consumer spending has also remained strong at 10.3% higher in Dallas County and 14.7% higher in Tarrant County than prior to the pandemic. Spending typically indicates robust consumer demand and confidence, all good reports.

Lingering inflation and job cuts across parts of the country signal to some that changes may be ahead – but we can tell you one thing, Dallas-Fort Worth is the place to be if you’re investing in commercial real estate. 

The D-FW economy appears to not only be weathering the storms but growing and flourishing at unprecedented rates, even in the face of mild uncertainty.    

Dallas Fort Worth Commercial Real Estate Market Growth is High (1)

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