Dallas-Fort Worth warehouse leasing is on a roll
Thursday January 19, 2012
Dallas Morning News – by Steve Brown
Don’t look now, but the North Texas warehouse market has bounced back.
After two years of net declines, warehouse and industrial leasing surged in Dallas-Fort Worth in 2011.
Expanding and relocating tenants rented about 6.5 million square feet of industrial space in the area last year. That’s the best net leasing North Texas has seen in four years.
And all signs point to a better year for the local warehouse market in 2012.
“I’m hearing about a lot of activity,” said Jeff Turner, who heads the Dallas regional office for Duke Realty. “The market is sure looking a lot better.”
Of course, that’s not tough to do, given the last few years.
In 2009 and 2010, industrial building occupancies in D-FW fell by more than 2 million square feet total because of business moves and consolidations, according to the latest statistics from Cushman & Wakefield.
But 2011’s leasing totals have more than made up for those declines during the recession. And overall industrial vacancy dropped by more than a percentage point.
Net leasing for D-FW warehouses was higher than for office and retail buildings combined last year.
Developers and brokers say the market is poised to return to a period of strong leasing and construction.
“We are getting national attention from how the D-FW area has recovered,” said Jack Fraker, vice chairman and managing director in CBRE Group’s Dallas office. “Southern California and southern Florida are probably ahead of us” when it comes to the warehouse rebound.
“But a lot of national and regional distribution is being driven to Dallas, and we have good generic growth from our economy,” Fraker said.
The D-FW area had the second-fastest-growing economy in the nation last year, behind only energy capital Houston. And the region is one of the fastest-growing population centers.
That means more people with jobs buying more stuff that has to be kept in warehouses at some point.
During 2011, the biggest increase in net warehouse leasing in North Texas was in industrial parks near Dallas/Fort Worth International Airport, with 3.2 million square feet.
The Inland Port district along Interstates 45 and 20 in southern Dallas County was second, with about 1.5 million square feet of net leasing.
Little warehouse space was under construction in North Texas at year’s end — fewer than 2 million square feet.
But that will soon change, industry leaders say.
“There is so much pent-up demand in some submarkets that is more than the available supply,” Fraker said. “I would expect you will see some speculative development soon.”
First, lenders have to loosen their purse strings.
And something has to give when it comes to warehouse rents .They’ve been basically flat for years; meanwhile, prices for land and construction are moving up again.