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DALTX Real Estate > industrial space > New Study Claims Dallas-Fort Worth Leads Nation in Industrial Space Under Construction
industrial space

New Study Claims Dallas-Fort Worth Leads Nation in Industrial Space Under Construction

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Industrial-Real-Estate

If it seems like industrial real estate is experiencing a renaissance in the Dallas-Fort Worth area, that’s because it is.

According to the October industrial report from CommercialEdge, Dallas is adding more industrial real estate than any other metro. Whereas geographical constraints are preventing many of the hottest markets from adding sufficient new space, markets unhindered by such limitations are taking advantage of unmet demand with impressive new supply pipelines. Dallas-Fort Worth is the prime example with 62 million square feet of industrial space currently being built.

Across the 50 most important industrial markets in the U.S., none have more industrial supply under construction on a percentage-of-stock basis than Phoenix, and only Dallas has more square feet being built on an absolute basis.

Dallas Leads in Industrial Space Being Built

The report analyzed the U.S. industrial market’s performance through September 2022 and found that:

  • Dallas-Fort Worth’s in-place rents stood at an average $5.15 per square foot and new leases signed at $6.11 per square foot. 
  • High demand continues to push prices up in the industrial sector, with national in-place rents nearly 6 percent over year-ago figures.
  • The national vacancy rate rests at 4.1 percent for the second consecutive month with occupier demand unlikely to weaken. 
  • With shrinking amounts of available industrial space nationally, 703 million square feet of new supply was under construction at the end of September. 
  • Although sale prices cooled in some markets during Q3, industrial assets are still trading for 54 percent more than in 2020.  

Eliza Theiss, senior marketing writer with CommercialEdge, said that both nationally and at the regional level, the Dallas-Fort Worth market had the largest amount of industrial space under construction in terms of square footage year-to-date. Specifically, the D-FW area had 61,967,685 square feet of industrial space under construction, representing 7.3 percent of our region’s existing stock. 

However, smaller metros are building industrial space at quite a clip, Theiss said.

“If we take into account all industrial markets, even the smallest, then rankings change from the perspective of space under construction as a percentage of the existing local stock,” Theiss explained. “Specifically, the markets of Tallahassee, Baton Rouge, Savannah-Hilton Head, and North Central Florida would claim the No. 1 through No. 4 spots, with under-construction pipelines that equal 33.3 percent, 27.6 percent, 23.7 percent, and 18.3 percent of local stock, respectively.”

Industrial-Real-Estate

While those are important indicators of the overall health of the Dallas-Fort Worth industrial market, the vacancy rate is one to watch, too.

“One of the most important performance metrics to mention at the end of Q3 is the fact that the national vacancy rate remained unchanged for the second consecutive month (at 4.1 percent),” Theiss said. “The other metric to really pay attention to is sale price trends for industrial assets.”

While the national average sale price for September was up 54 percent over the same period in 2020, after seven consecutive quarters of growth, sale prices cooled in some markets enough to bring the Q3 average below Q2 figures, Theiss explained.

“To be precise, Q3 posted a national average sale price of $127 per square foot, while Q2 stood at $136 per square foot,” she said. “However, that downtick in pricing was to be expected as a natural evolution considering the record transaction volume of last year and the state and direction of the current economic climate.”

For more detailed information on how the Dallas-Fort Worth industrial market stacked up against other regions, CommercialEdge has detailed figures here.

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