REDnews Dallas-Ft Worth Industrial Summit Recap BY RAY HANKAMER
Timothy Veler
Conrad Madsen
Allen Gump
WEBINAR HOST: TODD PHILLIPS-REDnews Panel 1 – Industrial Real Estate Market Overview Moderator: Timothy Veler-Transwestern Panelists: Conrad Madsen-Paladin Partners; Allen Gump-Colliers International; Mark Graybill-Lee & Associates; John Gorman- Holt Lunsford Takeaway: This is an unprecedented time for industrial development in the Metroplex; one of the only things putting a brake on activity is lack of sites; DFW is “Number three” nationally in desirability for industrial demand; labor availability is the first box every user wants to ‘check’ before they continue their discussions with landlords and developers. Bullets: • Vacancies are in the 6% range; the market ‘paused’ for four to six weeks at the beginning of Covid and it took off; 30 million square feet are currently under construction; lease rates continue on an upward trajectory. • The market is SO dynamic, and each submarket has its own dynamics; a glut may appear in a submarket but in six months there is no space; we see no end to demand; so many moving parts to deals, that tenants need a really good broker to explain all that is going on in each submarket. • South Dallas along I-30, I-45, and I-20 is now heating up, although qualified labor can be less available all around the Metroplex in certain locations; also Forney, Midlothian, Denton and other outlying areas are getting attention. • Industrial real estate is the ‘darling’ of institutional investors at the moment; in the next couple of years DFW should catch up to Chicago’s size as an industrial hub, due to population growth from incoming companies who are drawn to the local pro-business climate, and lower taxes. • Fear of supply chain interruption is driving companies to expand inventory; ‘just in time’ is subject to logistics interruptions, leaving consumers unserved; 8
APRIL 2021
Mark Graybill
John Gorman
disruptions from Covid showed fragility of ‘just in time’; it is time to expand inventory storage to a ‘just in case’ level. • On-shoring to Mexico will benefit Mexico, which is becoming more and more competitive with Asian manufacturers, due to its closeness to the U.S., resulting in faster and cheaper shipping on shorter distances; many ships at Long Beach and other West Coast ports have long waits to get to the unloading dock for their containers. • Industrial building costs are rising due to increased robotics, and other sophisticated tenant improvement needs; some industrial boxes are used for electronics manufacture and assembly, and need A/C and lots of electricity, combined with a high car parking ratio. • Amazon accounts for around 20% of annual expansion since 2015, and other giants are following where Amazon goes and what A mazon does. • Structural steel costs are soaring, driven by Amazon construction around the country, making it difficult for contractors to bid and hold the line on their quotes. • International investment cash is seeking industrial product all over the U.S., and especially DFW, where population growth promises rising demand for goods passing through warehouses; some traditional retailers are using abandoned big boxes as fulfilment centers for their goods. • Industrial tenants are willing to pay higher rents in older buildings if they are close to density of rooftops. Panel 2-Working with Local Government to Build Lasting Product Moderator: Todd Phillips-REDnews Panelists: Chris Strayer-Ft. Worth Chamber; Michael Talley-Denton County; Continued on Page 10>
