DFW INDUSTRIAL Submarket Coverage
DFW INDUSTRIAL Market Experts
HARRISON DAVIS HUDSON SHEETS WESTON PORTER JON SKIDMORE DANNY PHILLIPS
HLC OUTLOOK
The overall DFW industrial market remained active through the first half of 2024. Leasing activity and absorption are normalizing back to pre-covid levels following an unprecedented surge coming out of the pandemic in 2020 as companies reacted to disruptions in the supply chain.
Despite the report of negative absorption in two submarkets, Q2 2024 marked the 55th consecutive quarter of positive net absorption (more than 13 years). Costar reported mid-year net absorption at 9.86M SF. When annualized, this figure is in line with the longstanding historical norm of approximately 20M SF net positive absorption. Additionally, the trailing 12 months stands at 23.9M SF of positive absorption.
Construction deliveries for Q2 2024 totaled 12.8M SF, bringing the mid-year YTD deliveries to 27M SF. As the peak construction pipeline continues to deliver, the vacancy has trended upwards and pre-leasing downward as tenants have more options to consider. With continued headwinds created by the capital markets, deliveries will sharply decline in subsequent quarters as the focus for new developments is primarily concentrated on infill submarkets where we are still seeing record setting land pricing.
Sublease space has settled after coming off a year-end all-time high of 1.1%. The current sublet vacancy rate remains at 0.9%. (compared to a historical average of 0.3% to 0.5%). Thus far, the availability has not had a meaningful impact on direct leasing / absorption as the majority of the available sublease space on the market is offered seasonally or as partial spaces.
As we continue 2024, we expect the overall industrial market to remain relatively stable. However, rent growth is expected to slow or stall in some pockets due to current vacancy from recent deliveries. Manufacturing tenants, foreign companies and 3PL users will continue to be among the key drivers of absorption, as the region’s strategic location and excellent transportation infrastructure attract businesses.
Despite the pre-covid normalization, we expect the DFW region will outperform other parts of the country in 2024 as it continues to be the biggest benefactor of population growth, a favorable business climate and large-scale relocation efforts into the market.
DFW INDUSTRIAL Trends & Transactions
KEY MARKET INSIGHTS
• Absorption: YTD = 9.86M SF, trailing 12 months = 23.9M SF
• Vacancy Rate: Direct increased to 9.3%, Sublet receded to 0.9%, Total = 10.2%
• Deliveries: 12.8M SF, trailing 12 months = 59.7M SF
• Under Construction: 21.8M SF, compared to 66M SF 12 months ago
MARKET OBSERVATIONS
• As debt markets remain tight, the development wave has slowed down. In some infill submarkets where quality supply remains constrained, increased rental rates will provide developers the confidence to move forward and land prices will continue to climb.
• Fundamentals of what makes DFW appealing are unchanged. Population growth, lower cost of living, probusiness environment, central location and connectivity will continue to be attractive to businesses and capital markets.
• Tenant demand has regulated to pre-covid levels
• Construction Costs continue to stabilize
• Increased Demand from Foreign Companies and Manufacturers
• Increased Attention On Workforce and Labor Pools
MARKET TRENDS
• Sublease listings remain high but have slightly tapered.
• With new deliveries to the market, tenants now have more options than they have had for a while. A temporary increase in concessions is expected in some submarkets and/or size ranges.
• Manufacturing requirements have increased steadily as companies look to onshore production
• Rental Rate growth continues albeit more slowly, each individual submarket is performing differently.
TOP LEASE TRANSACTIONS
• Google signed a 1,049,022 SF lease at 3400 Catherine Court with Clarion Partners.
• Mondelez signed a 985,723 SF lease at 11700 Harmonson Road with Ares.
• RJW signed a 649,398 SF lease at 2200 Berry Road with Dalfen Industrial
• DW Distribution leased 548,340 SF from LPC at 3210 Railport Parkway in Midlothian, Texas.
• TireHub LLC signed a 420,526 SF lease at 9221 Trinity Boulevard with Stream.
• HAECO Global Engine Support signed a 289,564 SF lease at 11124 Goodnight with Crow Holdings.
• SAF Holland signed a 255,672 SF lease at 7602 Merrit - Building 6 with Jackson Shaw.
• Zurn Plumbing renewed a 252,532 SF lease at 3580 N Highway 161 with Molto Capital.
• IFCO signed a 241,512 SF lease at 1420 Military Parkway with Huntington Industrial.
• Shaoneng Group signed a 142,718 SF lease at 3333 W University with Billingsley in Denton.
• CEC Electric signed a 120,900 SF lease with STAG Industrial at 2450 Valley View Lane in Irving.
• Western Pacific Building Materials signed a new lease totaling 101,900 SF at 9000 N Royal in Irving with Prologis.
EXISTING INVENTORY
VACANCY
GSW/ARLINGTON
CURRENT EVENTS
Per CoStar metrics, the Great Southwest (GSW) industrial submarket ended Q2 2024 with a decline in performance. However, the submarket as a whole remains in a very stable position. GSW reported negative absorption of 643,838 SF as well as a slowdown in leasing velocity this quarter, posting year-to-date leasing activity of 1,615,116 SF, ranking last among the nine major submarkets. Additionally, GSW reported a total of 2.9M SF of new projects under construction at the end of Q2.
The GSW mid-year vacancy rate currently sits at 7.6%, an increase of 100 basis points from the Q1 reported vacancy rate of 6.6%. The majority of the increase can be attributed to recent deliveries of approximately 1.5M SF and moderate leasing activity. Despite the one percentage point increase, GSW still ranks second among the major submarkets with the lowest vacancy rates behind only Northeast Dallas (5.8%). Projecting forward to the remainder of 2024, we expect the GSW statistics to stabilize as tenant demand in premier submarkets increases and under construction projects continue to decrease.
TOP LEASE TRANSACTIONS
• Zurn Plumbing renewed a 252,532 SF lease at 3580 N Highway 161 with Molto Capital.
• Accelerated Courier signed a 48,980 SF new lease with Prologis at 3325 Roy Orr Boulevard.
• Vertical Culinary Solutions renewed a 43,329 SF lease at 700 106th Street with Oxford.
• Anderson Electrical Sales renewed a 34,985 SF lease at 2920 114th Street with Prologis.
• Venture Solutions renewed a 122,259 SF lease at 4401 Cambridge with Ivanhoe Cambridge.
DEALS IN THE MARKET
• Westcore Texas Industrial Portfolio – Westcore is selling a multi-building, 3,090,059 SF portfolio with two (2) assets in the GSW submarket.
• Great Southwest Infill Shallow Bay Portfolio – CanTex Capital is selling a multi-building, 194,840 SF portfolio with three (3) industrial assets in the GSW submarket.
• Dallas Infill Logistics Portfolio – Link is selling a multibuilding, 1,310,492 SF portfolio with four (4) assets in the GSW submarket.
NEW DEVELOPMENTS
• Commerce Center 161 – a 105,072 SF two (2) building spec development with Hopewell/MBK Partners
• Wildlife Commerce Park | Wildlife 14 & 15 – two (2) building spec development with Crow Holdings Industrial totaling 228,121 SF and 305,640 SF, respectively
• Remington I-30 | 701 E Wildlife Parkway – a 440,960 SF development with Ironwood/Graff Interests
• 2125-2129 Bardin Road – a 83,174 SF, two (2) building spec development with Hamilton Commercial
• Park South GSW | 2650 Great Southwest Parkway – a 284,865 SF, two (2) building development with Bridge Logistics Properties
• 2550 114th Street – a 41,923 SF development with Hamilton Commercial
• Trinity 360 Industrial – a 187,920 SF spec development with Leon Industrial
• Constellation Commerce 360 – a 200,493 SF, two (2) building spec development with Constellation
• Shady Grove Logistics Crossing – a 1,035,018 SF, three (3) building spec development with Scannell Properties
LARGE EXISTING VACANCIES
• 2100 N Refuge Way | Wildlife Commerce Park 5 – 683,569 SF
• 2401 W Marshall Drive – 320,366 SF
• 602 Fountain Parkway – 300,705 SF
• 1600 S
DFW AIRPORT
CURRENT EVENTS
VITAL STATS
TOP LEASE TRANSACTIONS
• CEC Electric signed a 120,900 SF lease with STAG Industrial at 2450 Valley View Lane in Irving
• Western Pacific Building Materials signed a new lease totaling 101,900 SF at 9000 N Royal Lane with Prologis in Irving.
• RSI VIsuals signed a 98,397 SF lease at 2100 State Highway 121 in Grapevine with Bridge Logistics Property.
• Metrie, Inc signed a new 96,672 SF lease at 3801 S 20th Avenue on DFW Airport land with Link.
DEALS IN THE MARKET
• DFW Class A Industrial Portfolio - KKR is selling a 650,000 SF portfolio that includes International Airport Center, totaling over 450,000 SF. The remaining buildings in the portfolio are located in Mesquite.
• Passport 125 – Stream Realty Partners is selling their freestanding 125,000 SF, fully leased property at Passport Park.
NEW DEVELOPMENTS
• Horizon Landing – a 336,716 SF three (3) building project developed by Foundry Commercial located in Irving just east of the Airport. Building 1 will be delivered in Q4 2024 and Buildings 2 and 3 will be delivered in Q2 2025
• Park West Crossing – ML Realty Partners is under construction on their final phase at Park West. The final phase includes three buildings totaling over 225,000 SF and are due to delivery in Q3 2024.
• Edmonds 121 Interchange – Box Investment Group is under construction on their freestanding, 50,125 SF building on 121 Business in Lewisville. The building is set for delivery in Q3 2024.
• 121 Commerce Center – GTIS is under construction on their 272,160 SF rear loader on Highway 121 in Grapevine. The building is set for delivery in Q4 2024.
• Tristar Business Park – Hopewell is underway on their two (2) building projects on Highway 114. The project totals 175,000 SF and is set for delivery in Q4 2024.
• Constellation Mustang Crossing – Constellation is under construction on their four (4) building project in Southlake. The project totals 546,000 SF and is set to delivery in Q1 2025.
• DFW West Logistics Park – The Hunt family is under construction on their first phase at DFW West. Building 1 totals 200,568 SF and will be delivered in Q4 2024.
• Estelle Creek Industrial Park – Lake Washington Partners is under construction on their two (2) building project totaling 166,460 SF in Irving. The project is set to deliver in Q3 2024.
The DFW Airport industrial submarket finished Q2 2024 with a 10.9% vacancy rate, similar to where Q1 ended. That is an uptick compared to the 7.7% vacancy rate at the end of 2023 due to newly delivered product at Passport Park, Highway 114 and State Highway 121. A majority of these new deliveries will be leased by the end of 2024 or early 2025 as we see demand continue to normalize. Net absorption in the DFW Airport submarket ended Q1 2024 in the negative 2M range, while Q2 provided positive net absorption of 1,951,188 SF. There was a wave of 30,000 - 60,000 SF and 100,000 SF spaces that hit the market in Q1 but have slowly been coming off the market as the demand in this size remains steady. With 20 active tenants currently pursuing spaces below 100,000 SF in the DFW Airport submarket, we expect Q3 2024 stats to show positive net absorption. With only 450,000 SF of new construction projected to deliver in Q3 2024, the vacancy rate is expected to decrease to the sub10% range, especially if bulk leasing takes place at Passport Park. The ideal size of space continues to be under 100,000 SF, a good indicator for the increased amount of availability in that size range. Additionally, there has been strong demand for deals in the 500,000 SF - 1,000,000 SF range. With minimal new construction starts in 2024, we expect market metrics to continue to improve as we move into the second half of the year.
Depending on vintage, rental rates for bulk warehouse spaces are experiencing increases into the $7.75 - $8.50 range. For functional shallow bay product, we’re seeing rates between $11.50 to $13.50 for spaces in the 50K to 100K SF range, depending on age and size of the asset. To increase tenant interest, most landlords are providing additional rental abatement and concessions while continuing to seek face rates with escalations.
EXPERTS
ANDREW GILBERT
EAST DALLAS
CURRENT EVENTS
The East Dallas submarket remained consistent with the first quarter, showing 870,656 SF of positive net absorption throughout Q2 2024. This brings the year to date absorption to 1.6M SF for the first half of the year. There were fewer deliveries in Q2 compared to Q1, with 2.2M SF of product being delivered in the last three months. This cut the total under construction numbers for the submarket in half, leaving 2.7M SF left still under construction.This construction activity spans a very large square footage range, so as you micro analyze any opportunity moving forward, each size range will tell a different story.
It is important to understand that the East Dallas submarket consists of three distinctly different micro-markets, Central East Dallas, East Dallas/Mesquite and Forney/Terrell. The data must be examined closely to see their difference.
Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. It should also be noted that the overall availability rate for this micro-market is currently only 4.3% while being 15.5% vacant because of the multi-story abandoned Sears warehouse at 710 Belleview. 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. The most important thing to note for the Central East Dallas pocket is that Crow Holdings broke ground on their Core30 Logistics Center project totaling 510k SF between two buildings. The project is due to deliver mid-year, 2025.
East Dallas/Mesquite continues to be the backbone of the overall East Dallas submarket. While reporting a micro-market vacancy rate of 10.6%, it had 370k SF of positive absorption and 1.1M SF of leasing activity. The uptick in the vacancy rate is due to the 733k SF of new deliveries in this pocket. If leasing demand remains consistent, the vacancy rate for this specific corridor should quickly get back to the single digits as the under construction numbers are the lowest they’ve been in the last five years. Tenants continue to focus on this area for strong labor and population growth that East Dallas has to offer.
Forney/Terrell is still the main point of conversation within the East Dallas submarket largely due to the amount of spec development delivered and set to deliver. The micro-market has a vacancy rate of 23.9%, consisting mostly of Exeter’s 500K SF building, Stream’s 1M SF building and Lovett’s 817K SF building. There will be one final wave of spec developments that deliver in Q3 2024 with most being in Gateway Crossing Logistics Park. With the bulk spec development put on hold for the past few quarters, it bodes well for this pocket to chew through the vacancy rate as tenant demand in the 300k SF and over range has stayed strong across the metroplex.
TOP LEASE TRANSACTIONS
• RJW signed a 649,398 SF lease at 2200 Berry Road with Dalfen Industrial
• HPG Brands signed a 133,952 SF lease at 201 S Clay Road with Landmark Companies
• UTU, Inc signed a 60,256 SF lease at 2601 E Meadows Boulevard with Landmark Companies
• Kandi America signed a 45,637 SF lease at 3325 Marquis Drive with Reserve Capital Partners
DEALS IN THE MARKET
• 1201 Big Town – a 508,500 SF building owned by KKR
• 635 Military Parkway – a 533,632 SF portfolio owned by Huntington
• KKR Class A DFW Infill Portfolio – a 657,089 SF four (4) building portfolio owned by KKR
• Project Maverick – a 789,605 SF six (6) building portfolio owned by Mavik Capital Management
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)
• East Dallas Commerce Center – a 373,322 SF spec building in Dallas with IDI Logistics
• Landmark Sunnyvale – a 316,297 SF building in Mesquite with Landmark Companies
• Town East Junction 540 – a 193,800 SF building in Mesquite with Leon Capital
LARGE EXISTING VACANCIES
• 12955 FM 2932 – 1,009,530 SF
• 755 Ridgecrest Road – 817,538 SF
• County Road 212 | Building 2 – 512,223 SF
• 13871 US Highway 80 – 500,063 SF
• County Road 212 | Building 1 – 430,436 SF
• 4001 N Prairie Road – 373,322 SF
•
• 510 N Peachtree Road – 240,457 SF
• 13020 FM-1641 – 195,900 SF
• 520 S Town East Boulevard – 194,073 SF
• 328 Clay Road – 182,369 SF
• 733 Ridgecrest Road – 175,092 SF
• 721 Ridgecrest Road – 145,020 SF
• 4401 Samuell Boulevard – 143,801 SF
NORTHEAST DALLAS
VITAL STATS
CURRENT EVENTS
The Northeast Dallas submarket continued to maintain low vacancy and ended Q2 2024 with a 5.8% vacancy rate, recording a 2 basis point increase from the previous quarter. This marks the seventh consecutive quarter that Northeast Dallas has had the lowest vacancy rate amongst all other DFW submarkets. Overall net absorption sat at 1.0M SF for the quarter, and totals 1.5M SF year to date.
It is important to note that Northeast Dallas consists of three primary areas that are unique in their tenant base, maturity, and overall landscape. Each micro-market must be examined separately as its rare to see tenants consider space from one to the next. Northeast Dallas/Garland, Plano/Richardson, and Allen/McKinney/Frisco each boast unique strengths that make them viable for a diverse tenant mix.
TOP LEASE TRANSACTIONS
• SAF Holland signed a 255,672 SF lease at 7602 MerritBuilding 6 with Jackson Shaw
• OK Stone signed a 164,656 SF lease at 2701-2801 S Shiloh with DRA
• Intertek signed a 122,921 SF lease at 1809 10th Street with Nuveen
• Petoskey Plastics signed a 77,486 SF lease at 620 McIntyre Road - Building 3 with Becknell Industrial
• Specs signed a 65,000 SF lease at 1901 FM 546 with Greystar
• KCW Enterprises signed a 38,180 SF renewal at 2600 Research Drive with Kennington Capital
• Guardian Packaging signed a 37,800 SF lease at 3605 Security Street with Garland K2 LLC
• Altatronix signed a 34,827 SF lease at 2821 Telecom with Dayton Street Partners
DEALS IN THE MARKET
• Project Maverick – a 789,605 SF six (6) building portfolio owned by Mavik Capital Management
NEW DEVELOPMENTS
• Lakeview Business District Phase I – a 1,063,642 SF five (5) building spec project in Rockwall with Jackson Shaw
• 121 Technology Park – a 370,860 SF four (4) building spec project in Allen with Stillwater Capital
• Centerville Commerce Center – a 150,926 SF spec building in Garland with Leon Capital
• Lookout Logistics Center – a 102,273 SF spec building in Richardson with Crow Holdings Industrial
• Rowlett Business Center – a 68,640 SF spec building in Garland with Hopewell Development
• 260 E Exchange Parkway – a 50,864 SF spec building in Allen with Gillett Commercial
LARGE EXISTING VACANCIES
• 4030-4040 Forest Lane – 562,025 SF
• 910 10th Street – 328,704 SF
• 600 McIntyre Road – 209,016 SF
• 2801 N State Highway 78 – 197,983 SF
• 12791 International Parkway – 183,764 SF
• 600 Millenium Drive – 164,866 SF
• 1220 Data Drive – 157,953 SF
• 1280 Data Drive – 157,953 SF
• 1501 Kings Road – 154,923 SF
• 580 McIntyre Road – 147,780 SF
• 1411 E Lookout Drive – 138,003 SF
• 201 Range Drive – 119,485 SF
• 1405 E Lookout Drive – 118,893 SF
• 12790 International Parkway – 113,864 SF
• 10401 Miller Road – 108,490 SF
Northeast Dallas/Garland is the oldest and most mature micro-market consisting of logistics and manufacturing tenants. Vacancy increased by 80 basis points, quarter-overquarter, from 3.6% to 4.2%. We can expect the vacancy rate for the micro-market to remain steady with Kandi America leasing a 45K SF vacancy off Marquis along with other sizable pending leases. As the construction pipeline thins, vacancy is expected to decrease throughout the year as developers shift focus to redevelopment and covered land plays. Lastly, with close proximity to the core population of DFW, rental rate growth is still expected as it has not quite reached levels comparable with other submarkets like Valwood and South Stemmons.
Plano/Richardson has continued to experience an identity shift as it no longer relies solely on the tech industry. As DFW has grown, this area has transformed and attracted a more diverse tenant mix focused on fulfilling supply chain needs while remaining attractive to tech companies due to the proximity to skilled labor. The 6.4% vacancy rate remains steady from the previous quarter and a historic low of 5.3% could soon be achievable with some recent leasing activity on the large existing vacancies. It is also important to know that the current vacancy consists primarily of specialized flex space.
Allen/McKinney/Frisco is the newest micro-market and is seeing the most development activity due to the availability of land. Vacancy decreased from 6.6% to 5.8%, a 80 basis point decrease even as 1.0M SF delivered this quarter. We expect this trend to continue since Stillwater recently delivered their project off Texas 121 with no remaining projects under construction. There are approximately 2.2M SF of projects in the planning phase, with a handful of starts by the end of 3Q 2024. Lastly, more institutional capital is starting to get comfortable with the Allen/McKinney/Frisco market due to the absorption story and the chase for new sites is in full effect.
NORTHWEST DALLAS
CURRENT EVENTS
The Northwest Dallas submarket finished Q2 2024 with a 7.8% vacancy rate, unchanged from the previous quarter.The higher vacancy compared to 2020 - 2023 is due to Tuesday Morning vacating more than 1M SF in the submarket and Denton delivering 3M SF of new industrial product year to date. There is a new wave of 20,000 SF - 30,000 SF spaces on the market in Northwest Dallas which is the sweet spot size range for the submarket. We expect these spaces to be leased with nominal downtime. The Northwest Dallas submarket recorded 1M SF of positive net absorption, year to date.
Northwest Dallas continues to see steady leasing activity with Valwood being a haven for building supply companies including Trane, Carrier, Shearer Supply, Goodman, and Huttig. Additionally, 3PL’s requiring direct access to I-35 have shown increased interest as well. Billingsley, Longpoint, Panattoni, and TA Realty have leased their recent developments in Valwood with little to no land readily available for new industrial development. This will factor into the vacancy rate, decreasing throughout the remainder of 2024. Activity in the Denton micromarket started slow this year but has recently picked up momentum as the year progressed into Q2. There are currently 1M SF of tenants in the market at the proposal stage or beyond who will likely have signed leases by year’s end. Denton continues to be a desired location for users due to its continued population growth and strong labor pool.
TOP LEASE TRANSACTIONS
• BuzzBalls signed a 256,000 SF lease at 2051 McKenzie in Valwood from Sun Cha who recently purchased the property from Link
• US eLogistics signed a 115,920 SF lease with Link at their Live Oak Logistics Park in The Colony off Sam Rayburn Tollway
• Fagan Logistics renewed their 72,121 SF lease with ATCAP Partners at 1430 Bradley Lane in Carrollton
• Authentix renewed their 63,237 SF lease with Adler Partners at 4355 Excel Parkway in Addison
DEALS IN THE MARKET
• Westcore Texas Industrial Portfolio – Westcore is selling an industrial portfolio in Texas of which 1.2M SF is in DFW. Of that 1.2M, there is over 600K SF located in Northwest Dallas. It also includes product in Turnpike and GSW.
• Dallas/Atlanta Infill Portfolio – Stonelake is selling a portfolio in Atlanta and Dallas, 275,000 SF of it in Dallas across two projects. The portfolio is currently under contract.
• Corbin Road Business Park – The Marriott Family is selling a twenty-seven (27) metal building portfolio in Denton totaling 880,000 SF. The project is currently under contract.
NEW DEVELOPMENTS
• Denton Logistics Center – Brookfield is under construction on their 269,600 SF rear loader on FM 1173 in Denton. The project is expected to be delivered in Q3 2024.
• Denton 35 Exchange – Eastgroup is underway on their two (2) building project on I-35 in Denton. The two buildings will total 243,000 SF and are set for delivery in Q4 2024.
• High Street Golden Point – High Street is under construction on their freestanding 180,657 SF development with I-35 frontage in Denton. It is projected to deliver in Q4 2024.
• Mayhill 380 Business Park – Velocis is under construction on their three (3) building project at Loop 288 and 380 in Denton. When completed in Q3 2024, it will total over 250,000 SF.
• M380 Business Park – Box Investment Group is wrapping up construction on their four (4) building development at Loop 380 and Masch Branch Road in Denton. It is set to deliver in Q3 2024.
SOUTH DALLAS
CURRENT EVENTS
VITAL STATS
TOP LEASE TRANSACTIONS
• DW Distribution leased 548,340 SF from LPC at 3210 Railport Parkway in Midlothian
• Dr Pepper leased 390,880 SF from Lovett at 4235 Singleton Boulevard in Dallas, just north of I-30
• Sow Good leased 324,000 SF from Nuveen at 4024 Rock Quarry Road in Dallas, just south of I-30
• JB Hunt leased 154,440 SF from Clarion at 1300 S Highway 67 in Cedar Hill
• Align/dba Spider Automotive leased 90,000 SF from Huntington Partners at 10710 Bonnie View Road in Dallas
• Go Paper leased 50,000 SF from Prologis at 4039 Rock Quarry Road in Dallas, just south of I-30
•
DEALS IN THE MARKET
• 301 S Millers Ferry Road & 200 Dalport Parkway – KBC Advisors (Seller) offering two vacant buildings (376,368 SF & 481,520 SF) totaling 857,888 SF in Wilmer, off I-45
NEW DEVELOPMENTS
• Pinto Road at Pleasant Run Road – 586,919 SF spec with Alto Real Estate Funds in Wilmer
• 601 W Pleasant Run Road – 420,643 SF spec with Hines Industrial in Wilmer
• Interstate 35 at Bear Creek Building A (327,380 SF) Building B (276,880 SF) spec with Core 5 in Lancaster
• 1110 E Pleasant Run Road – 364,306 SF spec cold storage with Cold Summit in Lancaster
• Hwy 287 in Waxahachie – 372,321 SF spec with Blue Star Land & LPC
LARGE EXISTING VACANCIES
• 3486 Cedardale Road – 1,084,460 SF spec development by Trammell Crow in Dallas (New construction)
• 1401-1501 E Pleasant Run Road – 1,027,068 SF spec with TRG/Grandview Partners in Wilmer (New construction)
• 950 N Interstate 45 – 1,013,833 SF spec development by Majestic Realty Company in Hutchins (New construction)
• 3800 Railport Parkway – 852,987 SF with Malouf in Midlothian (2nd generation)
• 1900 Southport Parkway – 746,420 SF spec with Bandera Ventures in Wilmer (New construction)
• 1701 E Pleasant Run Road – 744,452 SF spec with Bandera Ventures in Wilmer (New construction)
• 601 Distribution Drive – 610,622 SF spec with Champion Partners in Wilmer (New construction)
• 800 Cottonwood Valley Road – 565,600 SF spec with Stonemont in Wilmer (New construction)
The overall South Dallas Industrial submarket, as surveyed, encompasses I-30 west of downtown, southwest Dallas, Highway 67, I-20, and I-45, totaling approximately 183M SF. According to the survey, CoStar reported a positive net absorption of 2,098,479 square feet for South Dallas in Q2 2024.
With continued positive leasing activity, this combined sector of the industrial market is now 14.6% vacant, which is 40 basis points lower than was previously reported in Q1 2024. This decrease is largely due to a substantial decline in Q2 construction deliveries of 1.6M SF, a 64% decline from the Q1 2024 deliveries of 4.7M SF. Although South Dallas still has 4.5M SF remaining under construction in Q2 2024, it represents an additional 27% drop from the previous quarter. With construction deliveries declining quarter over quarter (Q/Q) at nearly 30%, the current double-digit vacancy in South Dallas will continue to erode over the next 12-18 months.
South Dallas had 2.7M SF of leasing activity in Q2 2024, of which 2.0M SF were new lease signings. Additionally, South Dallas as surveyed, has a year-to-date net absorption of 3.3M SF, which represents 33.6% of the overall DFW yearto-date net absorption of 9.86M SF.
EXPERTS
SOUTH STEMMONS
CURRENT EVENTS
The South Stemmons submarket finished Q2 2024 with a 50 basis point uptick in vacancy from 7.4% at the end of Q1 2024 to 7.9% at the end of Q2. Historically, the submarket has remained below 6.0%. As a whole, we have seen regional credit tenants become more cautious on their real estate decisions, trying to cut costs where they can as rent is a larger portion of their day-to-day operation than a larger corporation. South Stemmons has experienced dramatic rent growth over the last 5 years, in some instances over 150% on renewals. Over Q1 and Q2, consolidation efforts have been a common theme on a good portion of these renewals. While we have not seen rent comps move backwards, rents are starting to plateau.
We do foresee an uptick in vacancy in South Stemmons before recovering back to the normal sub 6.0%. The tenant base, made up of primarily regional credit and “mom and pop” type businesses, tend to be the most affected during economic shifts. The outlook for South Stemmons remains positive due to the submarket’s infill, irreplicable location. For tenants currently looking in the market, location has continued to outweigh functionality due to the close proximity to Dallas CBD, the Medical District, and immediate access to thriving Dallas suburbs.
TOP LEASE TRANSACTIONS
• HAECO Global Engine Support signed a 289,564 SF lease at 11124 Goodnight with Crow Holdings.
• BSP Warehousing renewed their 115,125 SF lease at 11430 Ferrell Drive with Sealy & Co.
• Turf Pros signed a 35,561 SF lease at 811 John Carpenter W Freeway with CanTex Capital.
• Astoria Event Venue signed a 23,180 SF lease at 3216 Royalty Row with CanTex Capital.
• Dallas Divine Dent signed a 21,284 SF lease at 11325 Gemini Lane with M2G Ventures.
• American Appliance renewed a 16,768 SF lease at 2859 Dairy Milk Lane with Link
DEALS IN THE MARKET
• Project Big Rig – Brookfield Properties recently closed on DRA’s multi-market portfolio totaling 1,195,691 SF.
• DFW Shallow Bay Industrial Portfolio – Basis Industrial is under contract on Birtcher Andersons multi-market portfolio totaling 439,916 SF.
• Dallas Infill Portfolio – Stonelake is selling a multi-market portfolio. Century Center is located within the West Brookhollow submarket totaling 167,437 SF.
• Northwest Service Center – Entrada is selling a five building portfolio located within the West Hines submarket totaling 156,576 SF.
NEW DEVELOPMENTS
• Trinity Industrial Park | Building A – a 39,774 SF development with GTC Real Estate Investments
• Trinity Industrial Park | Building B – a 42,999 SF development with GTC Real Estate Investments
LARGE EXISTING VACANCIES
• 5017 Pulaski Street – 109,117 SF (79,577 SF Contiguous)
• 119 Regal Row – 75,000
• 8107 Chancellor Row – 74,000
• 1715 Market Center Boulevard – 71,562
• 750 Regal Row – 68,260 SF
• 1608 Plantation Road – 67,575 SF
• 3276-3284 Quebec Street – 67,066 SF
• 7600 Ambassador Row – 66,915 SF
• 712-740 W Mockingbird Lane - 63,030 SF
• 3306 Quebec Street – 60,000 SF
NORTH FORT WORTH
VITAL STATS
Q2 Absorption vs. Prev. Qtr vs. 12 Mths Ago 2,405,569 598,907 1,249,964 Q2 Vacancy vs. Prev. Qtr vs. 12 Mths Ago 12.5% 12.5% 7.6% Q2 Leasing Activity vs. Prev. Qtr vs. 12 Mths Ago 3,252,148 561,658 3,715,190
U/C SF vs. Prev. Qtr vs. 12 Mths Ago
5,632,698 16,584,418 Q2 Delivered SF vs. Prev. Qtr vs. 12 Mths Ago
2,770,504 2,831,321 3,013,601
TOP LEASE TRANSACTIONS
• Google has signed a 1,049,022 SF lease at 3400 Catherine Court with Clarion Partners.
• Mondelez has signed a 985,723 SF lease at 11700 Harmonson Road with ARES.
• Cooper Medical has signed a 255,477 SF lease at 15100 Heritage Parkway with PGIM.
• Performance Food Group has signed a 103,803 SF lease at 15722 Heritage Parkway with PGIM.
DEALS IN THE MARKET
• DHL Alliance Logistics Center – a 1,227,243 SF singlebuilding project
• Westport Parkway Logistics Center – an 882,565 SF two (2) building portfolio
• Saginaw Distribution Center – a 321,193 SF single-building project
• Blueridge Portfolio – a 168,552 SF four (4) building portfolio
NEW DEVELOPMENTS
• Alliance Westport 14 – a 766,994 SF development with Hillwood due to deliver in Q2 2025.
• Mercantile 820 Logistics Park – a 654,581 SF project with four (4) buildings with Velocis.
• Chesser 35 – a 313,732 SF project with two (2) buildings with Alliance.
LARGE EXISTING VACANCIES
• 25001 Eagle Parkway – 1,251,160 SF
• 9449 Silver Creek Road – 1,108,938 SF
• 13410 Highway 114 – 1,004,400 SF
• 1101 Interstate 35 W – 707,940 SF
• 3400 N Sylvania Avenue – 699,246 SF
• 3500 McPherson Drive – 634,744 SF
• 2500 Sylvania Cross Drive – 564,387 SF
• 4101 N Beach Street – 459,805 SF
• 405 Westport Parkway – 400,565 SF
• 3701 Gourley Drive – 391,228 SF
• 11301 North Freeway – 390,682 SF
• 1124 Bold Ruler Road – 386,250 SF
• 2601 Petty Place – 384,716 SF
• Interstate 35 Frontage Road – 371,327 SF
• 3000 Mark IV Parkway – 339,846 SF
• 15200 Heritage Parkway – 324,598 SF
• 8200 Harmon Road – 304,665 SF
CURRENT EVENTS
Given the fact that the North Fort Worth submarket has now had its fourth consecutive quarter of double-digit vacancy, it’s imperative to analyze the numbers to understand the overall vitality of the market. Understanding the dynamic between direct vacancy and available sublease space, as well as putting into context the 2023 year-end delivery of 16M SF of new product is paramount. Of the overall 12.4M SF of direct submarket vacancy (8.8%), 9.1M SF lies within the NE Tarrant/Alliance subsector and 3.3M SF lies within Meacham/Fossil Creek. 5.9M SF of the 9.1M SF Alliance vacancy is in buildings which delivered since January 1, 2023 - meaning 65% of all existing direct vacancy in Alliance is in first gen spec buildings. In that same breath, 2.3M SF of the total 3.3M SF of direct vacancy in Meacham/Fossil Creek is in buildings which delivered this calendar year of 2024 (70%).
With a HLC tracked figure of only 1.8M SF currently under construction in North Fort Worth, a historical above average of Q2 2024 positive net absorption posting of 2.4M SF and over 5M SF of active deals working in the submarket, North Fort Worth is well positioned to absorb a large portion of its existing vacancy before the next shovels are put in the ground.
SOUTH FORT WORTH
CURRENT EVENTS
Midway through 2024, the DFW industrial market turned in the second straight quarter of consistent messaging; The market is moving towards a state of balance with construction starts slowing in response to rising interest rates and slowing demand. In Q2 2024, the South Fort Worth submarkets performance paralleled that of the greater market. While the vacancy rate increased by 50 basis points(bps) quarter over quarter from 8.4% to 8.9%, absorption nearly doubled with 740k SF absorbed, up from the previous quarters 390k SF. On the surface this low level of absorption sounds alarming, but understanding the relationship of post pandemic demand and supply is important.
• 2024 YTD: Absorption: 1.125M Deliveries: 2.1M Under Construction: 388K Existing Vacant: 2.78M (1.34M if Majestic 781K and TCRG 655K are removed)
• 2023: Absorption: 4.65M Deliveries: 5.73M
• 2022: Absorption: 5.34M Deliveries: 5.03M
• 2021: Absorption: 4.69M Deliveries: 4.89M
The synopsis; South Fort Worth did not absorb a similar square footage of vacancy like it has over the past three years, but absorption as a percentage of deliveries was consistent to the previous three years. If Q3 and Q4 absorption is similar to the first half of 2024 which we believe to be a conservative assumption, the existing vacant supply will be reduced by 50% while only adding 377k SF of additional new product. This in turn will reduce the vacancy rate, and if no new starts occur over the next two quarters, the submarket is staring down supply constraints in 2025.
TOP LEASE TRANSACTIONS
• Aaron’s Furniture signed a 170,509 SF lease at Benbrook Parkway & Interstate 820 with Jackson Shaw.
• Pentonix Freight signed a 91,077 SF lease at 100 Successful Dr with Majestic Realty.
DEALS IN THE MARKET
• Point South Commerce Center – a 258,100 SF single-building project.
• Oak Creek Distribution Center – a 238,289 SF single-building project.
NEW DEVELOPMENTS
• Carter Park East – a 1,403,152 SF two (2) building BTS development with Clarion and Crow Holdings.
• Everman Park – a 1,014,905 SF one (1) building BTS development with TCRG Properties.
• Oak Creek Distribution Center – a 238,289 SF one (1) building development with Falcon Commercial Development.
• Campus Industrial Park – a 150,538 SF five (5) building development with Empire Holdings.
LARGE EXISTING VACANCIES
• 9401 Hemphill Street – 781,530