Dallas - Fort Worth Industrial
Key Takeaways
• Construction activity, totaling 20 million square feet, has decreased by 32% from the previous quarter and is now at its lowest level since 2017.
• The new supply of industrial properties has been decreasing over the past several quarters but remains above 10 million square feet for the 8th consecutive quarter.
• The overall vacancy rate has continued to moderately climb. This quarter, non bigbox vacancy rates have increased to 7.9% driving overall vacancy rates up to 9.8%.
• Synonymous with the previous quarter, the overall lease rates have also continued to increase despite the rise in the overall vacancy rate
A Positive Turn in Net Absorption
The Dallas-Fort Worth market experienced a second quarter very similar to the first quarter of 2024. Although the metroplex stands as a booming environment for industrial based jobs and economic expansion, the industial market still saw rising vacancy rates. This is mainly due to the millions of square feet of speculative space that has hit the market over the past few years still looking for first tenants. However, new supply has decreased, while net absorption has drastically increased to 8.8 million square feet from last quarter’s 0.5 million square feet signalling that the supply and demand is heading toward leveling off to a good balance. The slight increase in overall asking lease rates has rung still affordable to the demand looking to relocate or establish a new location in the DFW market. Based off the current events, the dynamics of the industrial market could possibly return to “normal” with more demand slowly coming into the market.
Market Trends
As projected last quarter, absorption has increased due to several large deals that have occupied space in the 2nd quarter such as RJW Logistics Group occupying 649,000 sqaure feet in April 2024.
Recent Transactions
At the end of second quarter 2024, building inventory in the DFW Warehouse/Distribution Market - Big-Box consisted of 412,345,375 square feet in 862 properties. Net absorption year-to-date through second quarter 2024 was 10,066,615 square feet. The vacancy rate stood at 14.4%, an increase from the rate of 9.8% reported at this time last year. Quoted rental rates averaged $6.73 NNN per square foot, which is relatively flat compared to the rate of $6.67 NNN from the same quarter last year. As of end of Q2 2024, 43 properties were delivered year-to-date, totaling 20,387,750 square feet, and 11,019,015 square feet in 25 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 second quarter 2024, building inventory in the DFW Warehouse/Distribution Market - Non Big-Box consisted of 461,828,951 square feet in 9,061 properties. Net absorption year-to-date through second quarter 2024 was negative 1,479,887 square feet. The vacancy rate stood at 7.9%, an increase from the rate of 5.4% reported at this time last year. Quoted rental rates averaged $9.77 NNN per square foot, which is up 12.9% compared to the rate of $8.65 NNN from the same quarter last year. As of end of Q2 2024, 66 properties were delivered year-to-date, totaling 5,733,770 square feet, and 9,942,578 square feet in 114 properties were under construction.
9,061
461.8 MSF
- 1.5 MSF # of buildings new supply under construction overall market size asking rate PSF (NNN) vacancy rate net absorption YTD Vacancy and Rental Rate
5.7 MSF | 66 Bldgs
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 second quarter 2024, building inventory in the DFW Warehouse/Distribution Market consisted of 874,174,326 square feet in 9,923 properties. Net absorption year-to-date through second quarter 2024 was 8,586,728 square feet. The vacancy rate stood at 11.0%, an increase from the rate of 7.3% reported at this time last year. Quoted rental rates averaged $9.21 NNN per square foot, which is up 12.6% compared to the rate of $8.18 NNN from the same quarter last year. As of end of Q2 2024, 109 properties were delivered year-to-date, totaling 26,121,520 square feet, and 20,961,593 square feet in 139 properties were under construction.
9,923
26.1 MSF | 109 Bldgs
At the end of second quarter 2024, building inventory in the DFW Flex Market consisted of 104,519,423 square feet in 3,495 properties. Net absorption year-to-date through second quarter 2024 was negative 492,553 square feet. The vacancy rate stood at 6.0%, an increase from the rate of 5.3% reported at this time last year. Quoted rental rates averaged $13.90 NNN per square foot, which is up 4.7% compared to the rate of $13.27 NNN from the same quarter last year. As of end of Q2 2024, 12 properties were delivered year-to-date, totaling 207,003 square feet, and 540,568 square feet in 19 properties were under construction.
3,495
207k SF | 12 Bldgs
At the end of second quarter 2024, building inventory in the DFW Manufacturing Market consisted of 111,612,294 square feet in 986 properties. Net absorption year-to-date through second quarter 2024 was 1,184,093 square feet. The vacancy rate stood at 3.9%, an increase from the rate of 3.6% reported at this time last year. Quoted rental rates averaged $7.19 NNN per square foot, which is relatively flat compared to the rate of $7.11 NNN from the same quarter last year. As of end of Q2 2024, 2 properties were delivered year-to-date, totaling 1,078,469 square feet, and one 15,000 square foot property is under construction.
1.2 MSF # of buildings
absorption YTD
1.1 MSF | 2 Bldgs
hannah.williams@colliers.com
$4.3B
$96B
2B