Dallas-Fort Worth industrial absorption surpasses 10M square feet in first quarter
North Texas has experience positive industrial absorption for nearly 11 straight years.
If you follow commercial real estate, it should come as no surprise that Dallas-Fort Worth is one of the hottest industrial markets in the country. Even with that in mind, the region’s first quarter industrial statistics were robust.
The market saw 10.3 million square feet of net absorption during the first three months of the year, according to CBRE. Over the last 12 months, North Texas has seen 27.4 million square feet of net absorption. The market has also experienced positive industrial absorption for nearly 11 straight years, according to Newmark.
The following are three of the largest industrial leases signed during the first quarter.
- Walmart – 14700 Blue Mound Road, Fort Worth – 1 million square feet
- Bissell Inc. – 2821 Danieldale Road, Lancaster – 524,800 square feet
- Plastipak Packaging Inc. – 3200 Kingsley Road, Garland – 470,590 square feet
Every industrial submarket saw positive net absorption during the first quarter. The most absorption was seen in north Fort Worth (6.7M-SF) and around Dallas Fort Worth International Airport (5.4M-SF). Because of the demand for industrial space around DFW Airport, rents in the area now command a 22.1 percent premium over average NNN rents elsewhere in, according to a report by CBRE. Industrial rents generally have been on the rise in DFW, and could continue to increase due to demand and construction costs.
“Construction pricing is an area of concern as steel costs have risen significantly over the first quarter. This may impact the number of new project starts throughout the remainder of the year, and will push rents higher for those buildings that do get built,” said Kurt Griffin, executive managing director and co-lead for Cushman & Wakefield’s Industrial Agency Leasing team in Dallas-Fort Worth.
Even as 27.9 million square feet of new industrial space is expected to deliver in North Texas this year, new deliveries during the first quarter could not outpace net absorption. Some 8.3 million square feet was delivered between January and March, with 51 percent of that space already preleased. South Fort Worth has the most space under construction currently with more than 6 million square feet. Nearly 8 percent of that space has been preleased.
Other submarkets are much tighter. Northeast Dallas has more than 2 million square feet under construction right now, with 65.6 percent of that space preleased. The East Dallas submarket, which includes Mesquite, has nearly 2 million square feet under construction and is 64.7 percent preleased. DFW’s total industrial inventory currently stands at 837.2 million square feet, according to CBRE.
With absorption outpacing new deliveries, industrial vacancy has dropped to 5.4 percent, the lowest it’s been in over a decade.
“We continue to see strong tenant demand for space across all size ranges. Active user requirements total over 25 million square feet and there are shortages of available space options in select submarkets,” said Nathan Orbin, executive managing director at Cushman & Wakefield, in a prepared statement.
While demand continues for companies looking to lease industrial space, plenty of demand also exists for investors looking to buy it. The following are three of the largest industrial sales executed during the first quarter.
- 3800 Cedardale Road, Dallas – 776,630 square feet – Bought by Atlanta-based Arcapita
- 111 Customer Way, Irving – 491,308 square feet – Bought by Provident Realty Advisors
- 3200 Irving Blvd., Dallas – 250,000 square feet – Bought by Pennybacker Capital and M2G Ventures
SOURCE: https://www.bizjournals.com/dallas/news/2021/04/27/dfw-industrial-real-estate.html