DFW’s economy is experiencing continued growth. The area’s total job base has risen by almost 12% since the end of 2019 and hit a new job peak in Q4 2023. Industrial jobs rose by 13.6%, or 100,000 new jobs in warehousing, wholesale trade, and manufacturing since 2019. In 2023 alone, DFW added 25,000 industrial jobs.
Even with this strong economy, DFW’s industrial vacancy has continued to rise the end of Q4 2023 it was recorded at 9.9%, which is higher the region’s long-term average of 8.4%. This is mostly due to a lag in lease-up of its significant development pipeline.
For assets delivered in 2020 and 2021, demand was solid, with vacancy in those properties well below the regional average. In comparison, buildings delivered in 2022 are roughly 20% vacant, with 2023 deliveries at 58% vacancy. While still in the initial lease-up, these assets showed incremental improvement from the previous quarter.
“Although vacancy has inched up in some existing properties, it remains well below its long-term average. Because of that, we do not see the increase as a major market worry because it is driven by the recent deliveries still in initial lease-up,” said Avison Young Senior Market Intelligence Analyst, Walter Bialas.
Due to tight supply in stabilized properties and strong and consistent demand, as well as increasing land and development costs, DFW’s industrial rents have been rising the last several years with Q4 2023 ending with rents at $7.60 per sf which is a 66% increase over the past five years.
DFW’s industrial metrics have been exceedingly robust.
“DFW continues to reinforce its position as a strategic national logistics hub due to its central location, accessibility, and an affordable alternative to other major markets. We expect market vacancy to begin to move lower later in 2024 and into 2025 as the notably slower development pipeline lets this new product lease-up,” noted Greg Langston, Principal and Managing Director for Avison Young’s Dallas office.
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