Dallas - Fort Worth Industrial
A Declining Construction Pipeline
Key Takeaways Recent Transactions
• Construction activity is down to 19 million square feet, a 5% decrease from last quarter, and it’s the smallest amount seen in the market since Q2 2017.
• Following eight consecutive quarters of new supply being over 10 million square feet, this quarter’s supply dropped sharply to 5.8 million square feet, consistent with the trend of gradual decreases in recent quarters.
• This quarter’s vacancy rate remains unchanged from the previous quarter, staying consistent at 9.6%.
• Similar to the previous quarter, the overall lease rates have seen a persistent increase despite no change in the vacancy rate.
In the third quarter of 2024, the Dallas-Fort Worth market has seen a continuation of the trends established earlier in the year. This consistency has led to a projected reduction in construction and new supply, aiming to align supply more closely with demand. Construction activity has decreased to 19 million square feet, while new supply has dropped further to 5.8 million square feet. These declines suggest a temporary slowdown in new construction, with vacant buildings awaiting tenants. The vacancy rate has held steady at 9.6%, the same as in the last quarter, as tenants gradually fill available spaces. Year-to-date net absorption rose to 16.7 million square feet from 11.1 million in the previous quarter, though it remains below historical levels. The market is forecasted to return to higher net absorption figures in 2025. Despite an increase in lease rates, they remain affordable to new tenants, and the industrial market could see demand continue to rise, potentially returning to prepandemic levels.
The current vacancy rate, at its highest in a decade, is expected to see a gradual decline as deliveries reduce over the next few quarters. Absorption levels are forecasted to return to pre-COVID numbers, and while these won’t match the record levels from the COVID era, they will still have a significant effect on lowering the vacancy rate.
At the end of third quarter 2024, building inventory in the DFW Warehouse/Distribution Market - Big-Box consisted of 416,646,181 square feet in 870 properties. Net absorption year-to-date through third quarter 2024 was 16,438,945 square feet. The vacancy rate stood at 13.8%, an increase from the rate of 11.6% reported at this time last year. Quoted rental rates averaged $6.88 NNN per square foot, which is up 8.7% compared to the rate of $6.33 NNN from the same quarter last year. As of end of Q3 2024, 53 properties were delivered year-to-date, totaling 25,515,997 square feet, and 9,917,836 square feet in 29 properties were under construction.
¹ Big-Box is defined as Warehouse/Distribution buildings over 200,000 square feet and minimum clear height of 28 feet.
At the end of third quarter 2024, building inventory in the DFW Warehouse/Distribution Market - Non Big-Box consisted of 462,838,738 square feet in 9,105 properties. Net absorption year-to-date through third quarter 2024 was negative 2,741,653 square feet. The vacancy rate stood at 8.3%, an increase from the rate of 5.6% reported at this time last year. Quoted rental rates averaged $9.79 NNN per square foot, which is up 8.7% compared to the rate of $9.01 NNN from the same quarter last year. As of end of Q3 2024, 93 properties were delivered year-to-date, totaling 6,652,957 square feet, and 8,448,908 square feet in 115 properties were under construction.
¹ Big-Box is defined as Warehouse/Distribution buildings over 200,000 square feet and minimum clear height of 28 feet.
At the end of third quarter 2024, building inventory in the DFW Warehouse/Distribution Market consisted of 879,484,919 square feet in 9,975 properties. Net absorption year-to-date through third quarter 2024 was 13,697,292 square feet. The vacancy rate stood at 10.9%, an increase from the rate of 8.3% reported at this time last year. Quoted rental rates averaged $9.30 NNN per square foot, which is up 10.3% compared to the rate of $8.43 NNN from the same quarter last year. As of end of Q3 2024, 146 properties were delivered year-to-date, totaling 32,168,954 square feet, and 18,366,744 square feet in 144 properties were under construction. 9,975
At the end of third quarter 2024, building inventory in the DFW Flex Market consisted of 106,505,789 square feet in 3,502 properties. Net absorption year-to-date through third quarter 2024 was negative 592,593 square feet. The vacancy rate stood at 6.1%, an increase from the rate of 5.1% reported at this time last year. Quoted rental rates averaged $14.10 NNN per square foot, which is up 4.8% compared to the rate of $13.45 NNN from the same quarter last year. As of end of Q3 2024, 14 properties were delivered year-to-date, totaling 345,101 square feet, and 471,052 square feet in 16 properties were under construction.
At the end of third quarter 2024, building inventory in the DFW Manufacturing Market consisted of 113,384,297 square feet in 996 properties. Net absorption year-to-date through third quarter 2024 was 3,605,070 square feet. The vacancy rate stood at 2.8%, a decrease from the rate of 3.6% reported at this time last year. Quoted rental rates averaged $6.43 NNN per square foot, which is down 8.5% compared to the rate of $7.03 NNN from the same quarter last year. As of end of Q3 2024, 4 properties were delivered year-to-date, totaling 2,101,366 square feet, and 241,745 square feet in 3 properties were under construction.
3.6 MSF # of buildings
net absorption YTD
2.1 MSF | 4 Bldgs 241k SF | 3 Bldgs new
hannah.williams@colliers.com
$4.4B+
$96B
2B