We all know there are peaks and valleys, highs and lows in all commercial real estate markets and the
Dallas/Fort Worth commercial real estate marketplace is no different. We have seen our share of ups and downs over the past 5 years in DFW however this time the market is back on top and it appears it will be there for years to come.
Tenants, owners and users of
industrial real estate have found the DFW market to be an optimal location and the vacancy trends agree with them. The overall DFW industrial market will finish up 2013 well below a 10% vacancy factor at approximately an 8% vacancy factor. The last time we saw vacancy rates this low in the market place was in 2007 and even then we didn’t fall below 8%. Over the past 5 years we saw a market high in 2010 with vacancy rates climbing past 11% to a market low today right at 8.0%.
Three percentage points may not sounds like a huge shift to the casual real estate observer, but when you look at the total square footage in the DFW market the numbers don’t lie. With approximately 700,000,000 square feet of industrial product in the Dallas/Fort Worth market a 3% shift accounts for 21,000,000 square feet of absorption.
This momentum has been noticed by tenants, users, investors, developers and owners alike which has helped spur the occupancy growth over the past 3 years.
When you look at the major sub-markets in DFW the only sub-market that has a vacancy rate above 10% is the Northeast Dallas market.
However that market has seen over 350,000sf worth of new construction in 2013 and that pushes the vacancy factor higher. The highest occupancy rate in DFW belongs to the South Fort Worth submarket at just over 5%. The most active market has been the Northwest Dallas submarket with over 2,000,000 square feet of absorption which includes almost 500,000 square feet of new delivers this year.
Predictions for 2014:
All signs indicate that the DFW industrial market in 2014 will continue on this upward trend. Market conditions show that 2014 will be a Landlord’s/Owner’s market. We should see new deliveries, increased occupancy, larger deal transactions, increased demand, and continued market absorption.
Furthermore, and thanks to the overall health of the market, we should also see rental rates increase, sales prices increases and move-in incentives such as free rent or tenant improvement dollars will go down.
Nick Talley is a Vice President in the Fort Worth office for
Bradford Commercial Real Estate Services and specializes in client representation, brokerage and consulting for property owners and the corporate user of industrial, flex, and office. 600 N. Texas Street, #100, Fort Worth, TX 76102, Ph: 817-921-8177
January 7, 2014
