Saturday, June 3, 2023 Jun 3, 2023
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Moody Younger: DFW Absorption Up in 2011

The Consumer Price Index is ticking up—but so is net absorption in Dallas-Fort Worth. The industrial market is forecast to exceed more than 11 million square feet, on par with pre-recession levels. The office sector is expected to hit nearly 2 million square feet in net absorption this year.
By |
Moody Younger

Those scrumptious holiday meals are costing you more this season. Increased consumer demand for turkey and dairy products, as well as retailers passing on higher shipping, processing and storing costs to consumers, pushed the average cost of a classic Thanksgiving meal for 10 people up 13 percent to $49.20 in 2011, according to the American Farm Bureau. It follows the upward trend in the food and beverage price component of the Consumer Price Index for urban consumers, which grew 4.5 percent for the 12 months ending in October, according to the U.S. Bureau of Labor Statistics.

Despite the increased price tag, the average cost for a holiday meal is still less than $5 per person—a bargain compared with the cost of most fast-food value meals (and plenty more satisfying and filling than a chicken nugget!).

Also on the rise this year is net absorption in the Dallas-Fort Worth office and industrial markets. Through the first three quarters of 2011, the office market posted more than 1.4 million square feet of positive net absorption and is on track to absorb a grand total of nearly 1.8 million square feet by year’s end. The office market was 22.1 percent vacant as of third quarter 2011, but positive leasing momentum should push the overall office vacancy rate down to 21.9 percent by the close of the year. Asking rental rates are beginning to bottom out and concessions have reached their peak, which should translate into rental rates appreciating in 2012.

The North Texas industrial market registered more than 7.8 million square feet of positive net absorption through the first three quarters of 2011. By year end, the industrial market is forecast to exceed more than 11 million square feet of positive net absorption, on a par with pre-recession net absorption levels. Strong leasing activity, especially in the warehouse/distribution sector, resulted in a 10.7 percent vacancy rate as of third quarter 2011 and the local industrial market is forecast to end the year at 10.3 percent vacant. Industrial asking rents appear to be sensing a floor with the strongest submarkets experiencing some rental rate growth. We expect that growth to accelerate through the next several quarters.

The Dallas-Fort Worth industrial and office markets weathered the economic storms over the past few years and are thankfully seeing a resurgence in activity. As we take time to reflect during this holiday season, let’s remember to be grateful that we’re in a dynamic commercial real estate market with bright prospects for 2012.

Moody Younger is an executive managing director for Grubb & Ellis, overseeing the firm’s activities in Texas, Oklahoma, Arkansas, and northern Mexico. Contact him at [email protected]