DFW Industrial Development Continues Its Upward Trajectory With No Signs Of Stall
The industrial development pipeline in Dallas-Fort Worth remains robust as tenants demand more upscale facilities in spec office buildings and industrial spaces across the Metroplex.
Not too long ago, developers on the industrial side of the market wanted to know two things: Did they have an industrial building and did it generate rent? Transwestern Development partner John Thomas said at Bisnow’s 2019 State of the Market event.
Fast-forward to 2019 and industrial developers find themselves facing heftier expectations as tenants demand everything from typical office finishes inside industrial spaces to on-site fitness facilities, Thomas said.
In this respect, the placemaking concept impacting multifamily and office developments also has taken hold in the once-sterile industrial warehouse environment.
But rather than pushing back, DFW developers — seeing economic stability in this asset class and a continuous cycle — find themselves answering these demands for more amenities.
There is good reason to keep tenants happy with industrial firms eating their way through new product within months of its release onto the market.
By the end of the first quarter, DFW’s industrial segment recorded 5.2M SF of net absorption, outpacing the 5M SF of supply added during the same period, Cushman & Wakefield said.
For 10 straight quarters DFW’s industrial absorption exceeded 3M SF, according to the same report.
The Great Southwest industrial submarket in DFW alone recorded the highest net absorption in Q1 with 1.6M SF absorbed, followed by AllianceTexas (1.5M SF) and Mesquite (860K SF), according to Cushman & Wakefield.
Much of the industrial absorption in these markets in Q1 stemmed from single-tenant deals.
Tool and device manufacturing firm Stanley Black & Decker, for example, inked a deal to secure a 1.2M SF distribution center in the AllianceTexas industrial market during Q1.
Mesquite’s absorption rate also lifted on Ashley Furniture’s one-time grab of 877K SF of industrial space in the East Dallas suburb.
The overall DFW industrial market remains strong even though the South Dallas industrial market showed signs of softness, Thomas said.
Compared to North Fort Worth and AllianceTexas, South Dallas is showing less activity in terms of population growth and housing-related construction, Thomas said. He sees this as a sign that the region is unable to support an industrial workforce to the same degree as other submarkets.
“If you drive around North Fort Worth, you will see apartments and housing being built,” Thomas said. “You don’t see the same thing happening down at (Interstate) 45.”
The statistics support Thomas’ claim of a sluggish South Dallas market.
This particular area experienced an industrial vacancy rate of 20.1% in the first quarter, compared to AllianceTexas and North Fort Worth, which recorded industrial vacancy rates of just 9.6% and 5.3%, respectively.