Dallas - Fort Worth Industrial Summary - 2Q 2022
Dallas-Fort Worth metroplex is the fourth largest metropolitan area in the United States, with a population of 7.9 million. It is also one of the fastest growing, adding 1.2 million new residents over the last decade. The region surpassed Los Angeles as the second-largest industrial market with an inventory of over 1 billion SF, just behind Chicago's 1.3 billion SF. The industrial sector has thrived over the last decade. The region has benefited from a diverse set of demand drivers ranging from e-commerce, manufacturing, and third-party logistics firms, all looking to increase their existing presence or enter the market.
E-commerce giant Amazon has made an outsized impact on the market in recent years and is now the region's largest occupier of industrial space with 16 million SF, eight buildings of which measure greater than 1 million SF. To put the magnitude of Amazon's presence in perspective, the second-largest occupier of space is Home Depot, with 8.3 million SF. Shipping firms DHL and FedEx each have about 4.5 million SF of space.
Over the past 12 months, the market has added 32.0 million SF of inventory. However, vacancies have remained stable at 5.5% due to a combination of impressive demand for speculative projects and several significant build-to-suits being delivered. Demand has been keeping up with the waves of construction, absorbing 35.7 million SF over the past 12 months. The metroplex currently leads the nation in construction, with 74.3 million SF underway. While demand is spread throughout the entire metroplex, three submarkets captured just over 50% of the move-ins over the last 12 months, with NE Tarrant/Alliance (7.4 million SF), SE Dallas/I-45 (6.6 million SF), and S. Cen Tarrant County (4.1 million SF). The amount of space preleased is 26%. Of the current construction pipeline, there is 47.5 million SF currently available, with 36 spaces 500,000 SF or greater. The largest is DHL Supply Chain's 1.2 million SF building in Elizabeth Creek Gateway. The project is expected to deliver in 2023.
At 13.9%, annual rent growth has remained positive and remains among one of the strongest large metros. Such robust growth is especially impressive considering the metroplex has added 171 million SF of new space over the last decade.
Third-party logistics providers, national retailers, and consumer packaged goods firms continue to look to Dallas-Fort Worth as a critical hub for their distribution networks. 2022 has gotten off to a strong start with 1,275 new leases signed in the first six months totaling 27.7 million SF. Fifty-seven were 100,000 SF or greater. These large deals account for 42% percent of the total leasing. The SE Dallas/I-45 Submarket reported six deals over 100,000 SF, totaling 2.2 million SF.
In 2021, the market reported 1,200 new/direct leases signed. Fifty-one were 200,000 SF or greater. Retailers impacted the market, accounting for 30% of the new leases signed. For example, Walmart signed a 1 million-SF lease in the Alliance Westport Industrial Park in the NE Tarrant/Alliance Submarket. Retailer Homegoods signed the largest lease of the year at just over 1 million SF in Carter Park East. The building is in Fort Worth and is currently under construction, with an expected delivery of October 2022. Other large leases can be found throughout the metroplex, like the SE Dallas/I-45 Submarket. The Sunridge Business Park in Wilmer continues to land large tenants. Yokohama Tire signed a 431,600-SF lease.
Located on the southeastern fringe of the metroplex, 30 miles from Dallas, Forney has emerged as one of the fastest-growing industrial nodes in the region. Offering developers, no shortage of developable land. In addition to access to Dallas, the distribution centers in Forney can also serve the eastern half of Texas, Tyler, and Longview. Goodyear was the first company to plant a flag in the area when it moved into its 1.2 million-SF distribution center delivered by Hillwood in early 2020—followed by Amazon moving into its 1.2 million-SF fulfillment center in mid-2021. Located just south of the new Goodyear Logistics Center, the facility added 500 new jobs to the area. As of early 2022, there were five buildings totaling 3.3 million SF under construction in the submarket, of which 100% were being marketed as available. The average asking rent on the new project is between $5 and $6/SF.
With robust tenant demand, Dallas' industrial market is thriving. Despite record levels of supply infusions, the market has remained stable. 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.
The information contained herein was obtained from CoStar; however, Bradford Companies makes no guarantees, warranties, or representation as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease or withdrawal without notice.