Dallas Fort-Worth industrial market report
Q2 2024
DFW’s economy continues to expand. The region’s job base has risen by 10.5% since the end of 2019. Since year-end 2019, industrial jobs rose by 10.6%, or 78,000 new jobs in warehousing, wholesale trade, and manufacturing.
Even with this strong economy, DFW’s industrial vacancy remains elevated. As of Q2 2024 it hit 11.0%, comparable to where it stood in Q1. One observation is that this is well above the region’s long-term average of 8.3%, but that is not the full story. This vacancy increase is almost completely due to a lag in lease-up of its significant development pipeline.
For newer assets, demand has been strong. Limited space is available in properties delivered between 2019 and 2021, with vacancies well below the regional average. In comparison, more recent deliveries pull that average up. Properties delivered in 2022 are roughly 15% vacant and 2023 deliveries are 49%. These newest vintages, which have improved modestly since last quarter, are still in their initial lease-up.
Even with this strong economy, DFW’s industrial vacancy remains elevated. As of Q2 2024 it hit 11.0%, comparable to where it stood in Q1. One observation is that this is well above the region’s long-term average of 8.3%, but that is not the full story. This vacancy increase is almost completely due to a lag in lease-up of its significant development pipeline.
For newer assets, demand has been strong. Limited space is available in properties delivered between 2019 and 2021, with vacancies well below the regional average. In comparison, more recent deliveries pull that average up. Properties delivered in 2022 are roughly 15% vacant and 2023 deliveries are 49%. These newest vintages, which have improved modestly since last quarter, are still in their initial lease-up.
10.8 | 22.7 msf
Demand slower, but that’s not bad…
At 10.8 msf for 2024’s first half, absorption should end the year well above trend, although feeling soft given the annual 30-40+ msf it hit the last few years. Likewise, leasing activity came in at 22.7 msf for the year. While a notable deceleration from what had become “normal” in DFW the last several years, it is actually 25% ahead of its longer-term half-year average of 18.3 msf.
11.1%
Vacancy remains elevated, but the story is more nuanced
Vacancy remains elevated at 11.0%, essentially unchanged from the first quarter, due to the lag in lease-up of DFW’s extraordinarily high development pipeline.
$8.34
Still “affordable” after all these years...
In the second quarter, industrial rents hit $8.34 psf, a 20% increase in the last year. Despite this, DFW remains an affordable logistics hub, but the dramatic increase has created sticker shock.
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