Steady Rent Growth, E-Commerce Activity Buoy DFW Industrial Market
Dallas-Fort Worth industrial rents held steady in the third quarter as e-commerce activity prompted absorption of larger warehouse and industrial space across the Metroplex.
The market-wide triple-net industrial rental rate in DFW reached $4.95 per SF in Q3, up from $4.64 a year ago, Transwestern reported in its third-quarter DFW market note.
Rental rates across all nine DFW industrial markets grew at a healthy pace of 2% to 6% on a triple-net basis year-over-year even as demand for smaller industrial assets declined in the third quarter, according to Transwestern.
Rental data compiled by Transwestern in the third quarter and throughout 2020 also suggests industrial rents will remain solid in the coming 12 months.
Industrial occupancy, on the other hand, shows two contradicting trends with end users consuming less space inside smaller industrial assets located inside denser submarkets while market-wide construction of larger footprints grows on e-commerce demand alone.
New product deliveries reached 4.9M SF in Q3, with larger projects like the 709K SF Passport Park 2 in DFW, the 581K SF Mark IV Commerce Park 1 in North Fort Worth and DHL's 474K SF NW Commerce Park 1 distribution center in Fort Worth adding to the overall supply.
The third-quarter vacancy rate grew 50 basis points from last year to 6.8%, with 48M SF of industrial space sitting vacant out of 705M SF. North Fort Worth and South Dallas reported the highest third-quarter vacancy rates of 11% and 8.8%, respectively, according to Transwestern data.