DFW Defies U.S. Industrial Slowdown With Build-Now, Fill-Later Mentality

The rest of the country is tapping the brakes on industrial development.

North Texas? Still flooring it.

Dallas-Fort Worth topped all U.S. markets for industrial construction in May, with more than 28M SF in the pipeline. That total is nearly 3% of the market’s existing stock, according to Yardi Matrix data. 

The wave of new supply has pushed the Metroplex’s industrial vacancy rate to 10.2%, among the highest of any major U.S. market.

While speculative construction like the 251K SF warehouse development Alliuz announced Tuesday in Mesquite will continue, the metro's pipeline is expected to shift toward build-to-suit projects.

Those would limit the market's exposure to huge spec projects that drive up vacancy. 

Yardi Matrix Manager of Business Intelligence Doug Ressler said there is still strong tenant demand in the sector, but he noted it has become more sporadic.

The market saw four leases of 350K SF or more signed during the second quarter, according to Savills’ Q2 industrial report. With more than 18M SF leased so far this year, DFW has already topped first-half totals from five of the past 10 years, according to JLL.

Still, net absorption in the Metroplex has slowed. Of the nearly 34M SF of industrial space delivered over the past year, less than two-thirds has been absorbed, making the region’s construction push “a bold strategy,” according to Ressler.

“Despite these challenges, the market is showing signs of adaptation,” Ressler said in an email. “Developers are shifting focus from bulk logistics space to smaller facilities or build-to-suit projects.” 

That shift, coupled with an expected stabilization of tenant demand, should help balance the metro’s industrial market by the end of the year. 

The Metroplex’s vacancy rate actually dropped 0.5% over the past 12 months, thanks to realized demand for those speculative projects, according to JLL’s Q2 industrial report. 

ARCO/Murray serves as Alliuz's design-build partner on the Mesquite project at Alcott Logistics Station, and the company believes its project will fill a need in the city. 

“The Mesquite submarket has seen steady demand for modern, Class-A industrial space — particularly from logistics and distribution users looking for quick access to the Metroplex,” ARCO/Murray Vice President Austin Brasher said in a statement.

“With a strong location, scalable design, and reliable infrastructure, this project is well-positioned to meet that demand.”

Hillwood and Trammel Crow had the biggest spec developments under construction last quarter, with projects of more than 1.9M SF and 1.7M SF, respectively.

DFW is on pace to hit the 20M SF of absorption threshold this year for the seventh straight year.

The outlook for next year is also positive, as JLL Research Manager Nick Thomas said vacancies are expected to continue their descent through the first half of 2026. Net absorption should also outpace new supply from the spec pipeline.

The market is beginning to adjust after years of rapid growth with a noticeable shift toward more build-to-suit developments and smaller, more flexible facilities.

That shift was evident during Q2, as Amazon has a 1.7M SF build-to-suit project under construction in South Fort Worth and McMaster-Carr Supply Co. has 841K SF on the way in the northern area of the city. 

The move by developers to focus on build-to-suit projects reduces the risk of speculative building and ensures new facilities have committed tenants even before work wraps up, Ressler said. The diversification in industrial stock can also attract a broader range of tenants.

Stabilizing vacancy rates, coupled with the region’s positive absorption trends for next year, offer a hopeful outlook for the Metroplex’s industrial leasing market, Ressler said. Plus, the region’s continued economic and population growth should help support DFW’s industrial market and entice new tenants to the area. 

“The current high-vacancy environment has created a tenant-friendly market, with better lease terms and concessions available,” Ressler said.

“This could encourage more companies to lease space in the DFW area.”