Dallas - Fort Worth Industrial Summary - 4Q 2021
Dallas-Fort Worth 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 over 1 billion SF, just behind Chicago's 1.3 billion SF. The industrial sector has proven to be the most resilient among CRE sectors since the onset of the pandemic and has thrived since early 2020. 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 MSF. 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.
While demand is spread through the entire metroplex, four submarkets captured 50% of the move-ins over the last 12 months, with NE Tarrant/Alliance (6.4 million SF), SE Dallas/I-45 (5.2 million SF), E DFW Air/Las Colinas (4.8 million SF), and NE Dallas Garland (2.8 million SF).
Over the past 12 months, the market has added 26.7 million SF of inventory. However, vacancies have remained stable at 5.3% 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 44.6 million SF over the past 12 months. The metroplex leads the nation in construction, with 62.8 million SF underway.
At 9.3%, 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, a close second to the 175 million SF added to the Inland Empire.
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.
Year-to-Date leasing activity tracks at 65.7 million SF surpassing where we were this time last year by 4.6 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. Examples of other large leases can be found throughout submarkets 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. Based on the current construction pipeline and demand CoStar anticipates robust leasing activity for the remainder of 2021 and into early 2022.
2020, the metroplex had experienced 68.5 million SF of leasing activity, surpassing e decade-high of 60.5 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. The property, located at 2600 Rental Car Drive in Irving, is the largest warehouse with the 2 million square foot Passport Park, developed by a joint venture between Trammell Crow and CBRE Global Investors. Uline moved into the facility in May 2021. Meanwhile, 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.
Located on the southeastern fringe of the metroplex, thirty 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. Amazon moved 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.
With robust tenant demand, Dallas's industrial market is thriving. Despite record levels of supply infusions we have absorbed, absorbing 24.5 million SF year to date, an increase from the 24.4 million SF in 2020. Strong demographic growth and solid economic underpinnings are anticipated to keep the momentum into 2022, with net absorption expected to reach 60.6 million SF with 69.1 million SF of new deliveries during that period.
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.