DFW MARKET INSIGHTS – INDUSTRIAL – 3Q 2021

Dallas – Fort Worth Industrial Summary – 3Q 2021

Industrial DFW Market Insights 3Q2021

The Dallas-Fort Worth industrial market performed remarkably well in 2020. The momentum has continued into 3Q 2021. Developers have delivered an incredible amount of industrial supply, averaging more than 20 million SF of net new space annually since 2015. The metroplex is the fourth largest metropolitan area in the United States, with a population of 7.6 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 just over 1 billion SF, just behind Chicago’s 1.3 billion SF. It is the largest metropolitan area without a navigable waterway or port. Instead, the area has relied on a robust network of air, rail, and highway infrastructure for connectivity.

The industrial sector has proven to be the most resilient since the onset of the pandemic and has thrived since early 2020. The region has seen 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. It is now the region’s largest occupier of industrial space with 16 million SF, with eight buildings 1 million SF or greater. To put the magnitude of this in perspective, the second-largest occupier of space is Home Depot, with 8.3 million SF. Market leaders DHL and FedEx each have about 4.5 million SF of space.

While activity was found across the metroplex, four submarkets captured 50% of the move-ins over the last 12 months, with NE Tarrant/Alliance accounting for 5 million SF. The connectivity provided by D-FW International Airport continues to attract industrial tenants, with 4.6 million SF. The industrial powerhouse of SE Dallas/I-45 reported 4.5 million. Finally, the area immediately south of D-FW, the Upper Great Southwest, reported 3 million SF.

Over the past 12 months, the market has added 28.6 million SF of inventory. However, vacancies have remained stable at 5.7% due to a combination of impressive demand for speculative projects and several significant build-to-suits being delivered. The market has been keeping up, absorbing 40.3 million SF over the past 12 months. The metroplex leads the nation in construction, with 49.5 million SF underway.

At 8.3%, annual rent growth has remained positive and remains one of the leading large metros. This is especially impressive considering the metroplex has added 171 million SF of new space over the last decade, a close second to the 175 million SF added to the Inland Empire.

Take a look at the individual Submarkets in our DFW Industrial Market Report:

Leasing

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. In May 2020, Amazon opened its first new fulfillment center in Texas since the coronavirus outbreak and launched a hiring spree for 1,500 full-time employees. The 855,000-SF facility in Oak Cliff, outside of Dallas, was developed by Hillwood. The impact of Amazon reverberates across the region; the e-commerce giant signed 10 leases totaling 4.3 million SF and recently completed its 2.3 million-SF distribution facility in Grand Prairie. 

From January to late September, the market experienced 52.2 million SF of leasing activity, surpassing where we were this time last year by 4.7 million SF. Of the 1,200 new /direct leases signed, 51 were 200,000 SF or greater. In early 2021, Walmart signed a 1 million-SF lease in the Alliance Westport Industrial Park in the NE Tarrant/Alliance Submarket. The Sunridge Business Park in Wilmer continues to land large tenants. Yokohama Tire signed a 431,600-SF lease.

At the end of 2020, the metroplex had experienced 59.1 million SF of leasing activity, close to the decade-high of 60 million reached in 2018. One of the largest leases of the year was shipping box and materials distributor Uline. The Wisconsin-based company is taking a 1.1 million-SF facility in Passport Park at the south end of D-FW International Airport. California-based health product supplier Sunrider is moving into a 1.1 million-SF facility on the corner of Miller and Challenger in the Midlothian Business Park, 25 miles south of Dallas. Construction of the $44 million facility is expected to be completed in 2022.

In Forney, Goodyear moved into its 1.2 million-SF facility. Nearby, Amazon announced it was adding a 1.2 million-SF fulfillment center and delivery station in August. The center will bring 500 jobs and is expected to open in 2021 at 1475 Akron Way, just south of the new Goodyear Logistics Center. 

Our projections show the industrial market holding up quite well, absorbing 23.7 million SF in 2021, an increase from the 21.5 million SF in 2020. The metroplex may expect a slowdown in 2022, with the market absorbing 15.2 million SF. 

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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.

October 26, 2021

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