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DFW Industrial Boom Showed No Signs Of Slowdown In Q1

Surging demand has some developers struggling to keep up new warehouse supply in Atlanta.

The year 2019 may have brought in many new things, but a slowing industrial commercial real estate market in Dallas-Fort Worth is not one of them.

The DFW region recorded its 34th quarter of positive absorption in the industrial market during the first quarter, CBRE reports. 

Even with Cushman & Wakefield reporting 30.1M SF of industrial space under construction during the same period, supply and demand remain at a healthy equilibrium. 

“Given the number of active requirements currently seeking space, we anticipate market fundamentals to remain in equilibrium throughout the balance of the year,” Cushman & Wakefield Executive Managing Director Nathan Orbin said.

New industrial developments are key to keeping this balance in place. Most of the construction reported by Cushman in Q1 occurred in Alliance (7.4M SF), followed by DFW Airport (5.6M SF) and Great Southwest (4.8M SF). 

DFW recorded 5.2M SF of positive net absorption in the first quarter alone, while nearly 5.1M SF of industrial space was delivered, Cushman said. Cushman's absorption rate includes only those tenants that have occupied the premises. 

Major contributors to Q1’s absorption rate included Stanley Black & Decker, which leased 1.3M SF in the Alliance industrial market, and Ashley Furniture, which grabbed 877K SF in Mesquite. 

Industrial tenants Thirty-One Gifts and Lollipop also nabbed more than 600K SF of industrial space in DFW Airport and East Dallas, respectively, Cushman said.

“This strong demand exceeded new construction deliveries of 5M SF and overall vacancy declined slightly to 7%,” Cushman Executive Managing Director Kurt Griffin said. “Although there is in excess of 30M SF currently under construction, over half (15M SF) of the total is pre-leased, leaving 15M SF of available speculative product.”

CBRE also reported that the area's construction pipeline increased over the prior quarter, hitting 16.1M SF at the end of Q1 2019, with a pre-committed lease rate of 50%.

The commercial real estate firm also documented 11.4M SF of construction starts in Q1, with 36% of those already pre-committed. 

The vacancy rate in Q1 edged up slightly to 6.1% at the end of the quarter, but remained below the long-term average, CBRE said.

CORRECTION, APRIL 3, 5:35 P.M CT: A previous version of this story included an inaccurate figure for construction starts. The story has been updated with the correct information.