With kerfuffles going on around the country like occupy Wall Street, Main Street, any street USA, can the next big thing be to Occupy Sesame Street? Most folks in North Texas remain unenlightened with regard to the political impact of these movements. And all the while, a slightly more orderly occupy movement has been going on in our area without much pomp.
Despite last year’s concerns about a double-dip recession, unemployment, a weak housing market, unrest in the Middle East, Iran nukes, bellicose North Korean leaders, and the European debt crisis, the health of our real estate sectors has been improving. I have been in this business for 27 years, and I don’t remember a time when the Dallas-Fort Worth area has been considered such a darling by the national real estate investment community.
Take industrial real estate for example. People are buying more cereal, dog food, furniture, carpeting, and flat screen TVs than before. There has to be a spot to keep all this stuff after it gets offloaded from the boat and/or cranked out of the mill and shipped by rail or truck to North Texas. Our geography, transportation infrastructure, and cost of doing business are prime reasons why DFW is the best part of the country from which to distribute these necessities for the good life.
The vacancy rate has been dropping faster than that stubborn national unemployment rate—exponentially faster, in some areas. According to Costar, the DFW industrial market began 2011 with an 11.8 percent vacancy rate. By Q3 it was down to 10.5 percent, and down again by year end 2011 to 10.1 percent. Last year, North Texas absorbed 12.1 million square feet of industrial space—more than 10 times the amount of 2010.
For a more impressive turnaround story, take a look at the East DFW Airport submarket, which includes business parks east of the airport and in Coppell. This submarket began 2011 with an 18.3 percent vacancy rate—and ended at 11.9 percent. It absorbed about 2.5 million square feet.
Duke Realty was singing the blues in 2010 about having so much available space to fill in that area. At the start of 2011, its Coppell vacancy rate was 22 percent. That has since dropped to 9 percent. Duke signed more than 2 million square feet of new leases and renewals in 2011.
There are deals in the market now that are talking build-to-suit because the available space is not on the ground where it’s needed. Premium buildings have been taken over by occupiers, and all we have left are the runner-up facilities.
DFW industrial real estate professionals can cheer now the Occupy Movement has reached us. Bless the occupiers! We love them. They can stay as long as they pay the rent—and I don’t think that will be a problem in the foreseeable future.
Jim Hancock has served as managing director and senior advisor for Sperry Van Ness since 2006. He also currently serves on the board of North Texas CCIM. Contact him at [email protected].
