What DFW’s Single-Digit Industrial Vacancy Means
DFW’s industrial market is the healthiest it’s been in decades with vacancy in the single digits. Couple that with a better controlled pipeline of new product, and DFW is now one of the most dynamic industrial markets in the US. It’s why we’re thrilled to bring you Bisnow’s 4th Annual DFW Industrial Real Estate Summit on March 24 at the Intercontinental Dallas.
Holt Lunsford Commercial’s Jim Brice (left, with colleagues John Gorman and Canon Shoults) tells us DFW is among the top four industrial markets in the country, alongside California, the East Coast and Chicago. DFW also has the additional advantage of abundant space to grow. During the recession, construction ceased, but the marketplace continued to lease up. That led to DFW outperforming the rest of the nation while whittling away at the vacancy, Jim tells us. Historically, construction would have started when DFW hit 10% vacancy before allowing the erosion of vacancy to continue. Although there is a lot of capital in the market, developers and lenders have exercised more restraint this time around, he tells us.
What’s notable with the new development in the works is that it’s almost entirely funded with institutional money, Jim tells us. What that means: it’s cash and not a debt market situation. HLC is JVing with TA Associates on nearly 700k SF off I-20 between 67 and I-35 in the existing Stoneridge Business Park. The project, which is under construction, features three buildings (400k SF, 150k SF and 140k SF buildings) and should deliver by July, he tells us.
Construction is also underway on the 260k SF Turnpike West (groundbreaking pictured) in a JV with Frontier Equity and TA Associates on 15 acres at Chalk Hill and I-30 in Dallas. HLC acquired 86 acres several years ago with a different client, who sold it to a third-party advisory group, which is now developing it, Jim tells us. HLC JVed on the 280k SF Coppell Trade Center (in a JV with LaSalle Investment Management) and the 300k SF Crosby Trade Center (in a JV with Frontier Equity and ML Realty Partners). Both are in the process of being leased up.
Dalfen America Corp CIO Sean Dalfen tells us his firm is making a big re-entry into the Dallas market after selling a number of its assets across the country several years ago, including Firewheel Distribution Center. Now, DAC has more than 5.2M SF of Dallas projects on the table with plans to acquire existing assets, as well, Sean tells us. DAC plans to invest about $1B of equity in key markets across the US over the next three years with plans to allocate about 25% to 30% of that into Texas projects. DAC is closing a 200k SF deal in Austin, just bought 330k SF in Houston, acquired land in Houston to build a 100k SF facility, and is buying a 768k SF portfolio in South Texas that should close at the end of the month.
First out the gates is the three-phase spec development just south of DFW Airport off Valley View on airport land. The first phase of Passport Park will be two buildings totaling 600k SF on 35 acres. Construction drawings are done and DAC is awaiting approval of the DFW Airport board and the FAA to complete to start construction. Once the airport and FAA sign off, the project can be completed within nine to 12 months, Sean says. He’s working on a deal up to 4M SF for a single-user corporate campus of a major AAA-rated company that is looking to relocate to Dallas. That deal still has lots of moving parts, but he hopes to make an announcement in the next few months. Come hear Sean and Jim, among other experts, at Bisnow’s 4th Annual DFW Industrial Real Estate Summit on March 24 at the Intercontinental Dallas. Register here.