The Dallas-Fort Worth Metroplex recently surpassed both Los Angels and Chicago as the largest industrial market, with an inventory of over one billion square feet, according to a market report by CoStar.
The biggest drivers of Dallas’ industrial market growth include e-commerce, manufacturing and logistics companies. Over the past year, developers have added 32.2 million square feet to the market, and vacancies have remained steady at 5.5 percent due to the strong demand, according to CoStar.
The Dallas-Fort Worth Metroplex also leads the country in construction with 78.6 million square feet of industrial space currently in the works.
The top sub-markets in the Dallas-Fort Worth market as of right now are the Southeast quadrant of Dallas/I-45, the NE quadrant of Tarrant County and then the South Central Tarrant County area, which all together have over 50 percent of positive net absorption for the past year.
The annual rents for Dallas-Fort Worth are among the strongest in the nation and are expected to continue growing with positive double-digit growth through the second quarter of 2023. The fastest growing areas of the metroplex are the Upper Great Southwest, the Las Colinas area and Southeast Dallas.
So far this year, there have been 985 total transactions for the industrial sector, with a grand total of 42.3 million square feet changing hands.
Sales volume is also strong. Industrial sales totaled $1.6 billion this past year and prices have continued to increase, reaching $117 per square foot up from $102 per square foot in early 2021 – with CAP rates holding steady around 5.5 percent.
Large brands are also looking to Dallas-Fort Worth as a strategic logistics hub, include big names like Target, Nike and Samsung. Fifteen hundred new leases were signed as of mid-August 2022 and 84 of these were for spaces 100,000 square feet or larger.
Population growth in Dallas-Fort Worth has also led to an increase in demand for grocery store entities and so the competition is on, with H-E-B entering the market along with a new Sprouts location.
Other grocers, like Wal-Mart, who are feeling the competition, have also increased their space and spending by $800 million with Wal-Mart investing in two new spaces in Lancaster, including a 1.5 million square foot e-commerce center and 730,000 square foot distribution center – both expected to be ready by 2023. Kroger is also adding more space to its portfolio, with a 350,000 square foot automated online grocery facility in the works.
In addition to grocers, semiconductor companies are also expanding their presence in D-FW, with Texas Instruments adding a 102,000 square foot project as well as its new $30 billion campus in Sherman, among other semi-conductor companies adding space in D-FW.
Right now, the average rents for industrial space in the metroplex is right around $8.50 per square foot. Industrial rent growth in D-FW is outpacing the national average at 14.2 percent right now. Logistics facilities have had the highest rent growth of the sector, at 15.9 percent.
The next industrial frontier for Dallas-Fort Worth, according to a new report by CoStar, is Forney, Texas. Goodyear and Amazon both selected the city for new development, then several other developers have followed suit with hundreds of thousands of square feet of space already completed and another several million square feet on the way.
Overall, the metroplex continues to see strong population growth, is fast becoming a mecca for logistics, e-commerce and manufacturing, as well as an attractive location to the hundreds of company headquarters that have moved their locations to D-FW, to enjoy a lower cost of doing business and the region’s growing, skilled workforce.
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