Dallas-Fort Worth Gets Its Second Wind
- Mar 19, 2015
Q4 2014 marked Dallas-Fort Worth (DFW) Metroplex’s 17th consecutive quarter of positive net absorption, according to recent research data compiled by CBRE. In the fourth quarter of 2014, the industrial market in DFW managed a 6.9 percent vacancy rate; an asking rate of $4.12 per square foot; a net absorption of 2.3 million square feet; and 6 million square feet of delivered industrial space.
Due to the large number of industrial projects that were completed throughout the fourth quarter, the vacancy rate increased for the first time in two years. Both the direct and overall vacancy rates rose by 60 basis points, which led to a 6.8 percent direct vacancy rate and a 6.9 percent overall vacancy rate.
As compared to Q3 2014, when the Metroplex absorbed 3.8 million square feet, DFW ended the fiscal year with a net absorption of 2.3 million square feet. Despite an increase in vacancy and a lower net absorption, market fundamentals have continued to remain healthy. CBRE ascribed the market’s health to various factors such as DFW’s diverse and well-educated workforce; the area’s growing population; and the Metroplex’s central location, which makes it ideal for regional and national logistics and distribution hubs.
Despite boasting an estimated population of 6.8 million—which is a 33 percent increase in population from 2000—employment in DFW has continued to grow. Year-over-year employment grew by 3.7 percent from October 2013 to October 2014.
The last quarter underlined a new trend for the DFW industrial market. Whereas in previous years the absorption rate was primarily influenced by large build-to-suit projects and big box spaces, in Q4 and Q3 2014, the rate of absorption was mostly influenced by operations in the 50,000-200,000 square feet range.
Notable deals were Hines and AEW Capital Management’s acquisition of Parc 114; James Campbell Company’s acquisition of a 2 million-square-foot industrial portfolio; and Industrial Property Trust’s purchase of a 1.3 million-square-foot Class A portfolio.
Charts courtesy of CBRE