DFW AIRPORT

Vital Stats

Current Events

The Dallas-Fort Worth (DFW) Airport industrial submarket finished Q2 2023 with a 5.4% vacancy rate. That is a slight uptick compared to the 5.0% vacancy rate at the end of the Q1 due to new delivered product at Passport Park and Highway 121 which will likely be leased prior to the end of the year. The sweet spot size range remains in the 200K - 500K SF size range as there are only two options readily available in that size today. Expect rates to continue to rise as Passport Park and Highway 121 become fully built out with minimal options available.

Top Lease Transactions

• Lennox has signed a 499K SF lease with Weber Gruene located at their DFW Logistics Hub development on Airport land.

• Fed Ex has renewed their 279,330 SF lease with LaSalle at 840 W Sandy Lake Road within their Coppell Trade Center project.

• Dallas Airmotive has signed a 145,776 SF lease with HLCI at their DFW Walnut Hill development at Passport Park.

• Nautilus Hyosung has signed a 125,443 SF lease with Stream Realty at their Passport 125 development at Passport Park.

Deals In The Market

• DFW Airport/Valwood Portfolio – KKR is selling a five (5) building project totaling nearly 600K SF.

• North Dallas Infill Portfolio – TA is selling six buildings totaling over 500K SF in the Airport, Valwood, Metro and Richardson submarkets.

New Developments

• Royal 114 – A 430K SF four (4) building project with Archway Properties and Nuveen, set to deliver in Q3 2023.

• Passport 125 – A 125K SF development with Stream Realty Partners at Passport Park, set for completion in Q3 2023. This building has been pre-leased.

• DFW Logistics Hub – A three (3) building project totaling 1.5M SF developed by Weber & Company and Gruene Real Estate located on Airport land, set for delivery in Q4 2023.

• DFW Walnut Hill – HLCI has broken ground on their freestanding 145K SF building located at Passport Park on Airport land, set to deliver in Q3 2023. This building has been pre-leased.

• Mustang Court – Brookfield is kicking off construction on their 3-building development in Southlake totaling 335,401 SF, set for delivery in Q4 2023.

• Genesis 121 – Freestanding 182,983 SF rear loader on Highway 121 in Grapevine developed by Bridge Logistics Properties. Set to deliver in Q1 2024.

• Skyway Logistics Center – Box Investment Group has broken ground on their freestanding 84K SF development in Irving just east of DFW Airport.

• Airport Corporate Center – Leon Capital Group is under construction at 4500 N Belt Line on their 60,400 SF building, set to deliver Q3 2023.

The bulk of warehouse rental rates are increasing into the $7.50 - $8.00 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $9.50 to $10.50 depending on the finish level and age. Rental abatements are still prevalent depending on renewal versus new deals and the size of the lease transaction. Tenant improvement costs remained high because of increasing construction costs.

DFW International Airport is ranked as one of the largest cargo airports in the country. It boasts a high proportion of newer buildings since 2000 and, as a result, the submarket has a high concentration of efficient product with clear heights and dock configurations suitable for modern distribution. The submarket consists of large big-box users including Amazon, Uline, PPG, Bed Bath & Beyond, McKesson and many others.

Current Events

The East Dallas submarket ended Q2 with the second highest vacancy rate across DFW. While alarming, it is important to understand that it consists of three distinctly different micro-markets. Central East Dallas, East Dallas/ Mesquite and Forney/Terrell each tell a different story so the data must be examined closely.

Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. Although reporting a vacancy rate of 15.6%, it should also be noted that the overall availability rate for this micro-market is only 5.1% currently. The broader view by those focused on institutional-grade industrial projects should not be influenced too heavily by this micro-market. Much of it has been previously redeveloped or is planning to be redeveloped as opposed to new industrial development. Crow Holdings does have a proposed project on the far east side of this pocket which will compete more with the East Dallas/Mesquite submarket.

East Dallas/Mesquite holds the “bread and butter” of the submarket. While reporting an 12.5% vacancy rate, it is important to note that a 753K SF former data center (3.0% of the micro-market) recently signed a deal with Canadian Solar. With several new buildings being recently delivered and a few new subleases hitting the market there are now more options than we have seen in the past 2 years. There are little to no options available in the nearby NE Dallas/Garland submarket which should push leasing activity to this pocket. Leasing activity still remains steady but this pocket should be watched closely with more deliveries on the way.

Forney/Terrell is the new frontier and is seeing a significant amount of speculative development due to land availability, compared to the other established micromarkets. As speculative projects have been completed, Hayes Retail has been the most active tenant in the market, absorbing the first 2 projects to be delivered. With the development activity consisting mostly of 500K+ buildings and the newness of the overall micro-market, the vacancy figures have the potential to make some large swings in the future, if delivered vacant. We do expect this corridor to remain active as it provides excellent access to critical supply chain arteries and the labor required to operate.

Top Lease Transactions

• Cart.com has signed a 766K SF lease at 301 Apache Trail with FGT Holdings.

• Canadian Solar Inc. has signed a 753K lease at 3000 Skyline with Capstar.

• General Dynamics has signed a 239,918 SF lease at 19800 IH 635 with Creation Equity.

• Peach State Hobby has signed a 93,322 SF lease at 300 US Hwy 80 with Barings.

Deals In The Market

• 635 Military Parkway is a 725K SF three (3) building portfolio with Huntington located in Mesquite.

New Developments

• Gateway Crossing Logistics Park – A 1,762,886 SF three (3) building project in Forney with Principal and Holt Lunsford Commercial Investments (a 1,024,549 SF cross-dock, a 473,397 SF cross-dock, and a 264,940 SF cross-dock)

• Innovation Ridge Logistics Park – A 1,137,650 SF three (3) building project in Forney with Lovett (a 817,538 SF cross dock, a 175,092 front load, and a 145,020 SF front load)

• Platform 80/20 – A 942,659 SF two (2) building project in Forney with Intrepid Equity (a 512,223 SF cross-dock and a 430,436 SF cross-dock)

• 20 East Trinity Pointe | Phase I – A 1.8M SF three (3) building project in Forney with Stream Realty Partners

• Mesquite 635 – A 555,790 SF three (3) building spec project in Mesquite with LGE (a 239,918 SF front load, a 159,728 SF rear-load, and a 156,144 SF rear load)

• East Dallas Commerce Center – A 373,322 SF spec development in Mesquite with IDI Logistics

• Landmark Sunnyvale – A 316,297 SF spec development in Mesquite with Landmark Companies

• Mesquite Airport Logistics Center | Phase II – A 1.3M SF three (3) building project in Mesquite with Dalfen

• 635 Military Parkway – A 532,972 SF three (3) building development in Mesquite with Huntington Industrial Partners

• 1220 Data Drive – A 315,906 SF two (2) building project located in Rockwall with Seefried Industrial Properties

• 635 Commerce Center - A 262,322 SF two (2) building project located in Mesquite with Stonelake

Large Existing Vacancies

• 2700 E Scyene Road - 325,218 SF

• 5351 Samuell Boulevard – 260,600 SF (Sublease)

• 1130 E Kearney Street – 244,200 SF

• 2401 E Meadows Boulevard – 216K SF

• 5151 Samuell Boulevard – 211,234 SF (Sublease)

• 4401 Samuell Boulevard – 186,720 SF

• S Buckner Boulevard – 102,206 SF