With industrial vacancy at near-record lows, North Texas developers are kicking off new projects and wagering that brisk demand will continue.
It’s a solid bet. With its central location, robust transportation infrastructure, and the most talented real estate developers in the nation, Dallas-Fort Worth continues to demonstrate its significance as a major warehouse and distribution hub.
So what’s driving activity? Where do the greatest opportunities lie? And what barriers stand in the way?
To find out, we gathered eight industrial market leaders to get their on-the-ground insights for a special roundtable report in the Dallas-Fort Worth Real Estate Review, a quarterly publication produced by D for the Dallas Regional Chamber and The Real Estate Council.
Participating were Dave Anderson, executive vice president, CBRE; Jim Brice, partner, Holt Lunsford Commercial; Bill Burton, senior vice president, Hillwood Properties; Terry Darrow, head of the Dallas industrial group, JLL; Jon Napper, managing partner, Courtland Development LC; Tom Pearson, executive vice president, Colliers International; Brad Struck, president of industrial services, E Smith Realty Partners; and Michele Wheeler, president and chief operating officer, Jackson-Shaw Co.
Here’s what they had to say.
RE REVIEW: Let’s start by talking about industrial activity so far this year.
JON NAPPER: And who’s making all the deals.
DAVE ANDERSON: We came off a very good 2013, with 18.6 million square feet in positive absorption, which was really the strongest we’ve had since 2000. It’s tough to repeat that. We’re up to about 6.7 million square feet so far this year, so we’re not on pace to do 18.6. But if we end up somewhere in the 13 million-to-15 million-square-foot range, I think we’d all be very happy.
NAPPER: That’s about average. A little more.
ANDERSON: The average over the past 30 years is …
TOM PEARSON: I would agree with Dave on the forecast for absorption by the end of the year. We experienced a little bit of a lull in the summer.
MICHELLE WHEELER: We’re now seeing tenants making decisions much more quickly than they were in the past.
TERRY DARROW: We’ve got several deals that are ready for move-in now that are pretty good-size deals that actually happened last year, so that will really make for a robust second half. We’re thinking that, like Dave, 13.5 million is good, especially in light of the absorption last year. If you look at it, a lot of that happened in the fourth quarter, but you’re not going to follow quarter after quarter with that heavy of absorption. So we had a big fourth quarter last year, and we should have good third and fourth quarters this year.
JIM BRICE: I would agree. From our company’s standpoint, we did over 600 deals and at least 10 million feet last year; and through June this year, we’ve done 255 deals and at least 4 million feet, so I think we’re on pace. We’ve got several large deals that we’re about to make, so I think from a company standpoint, we’re going to be very similar to where we were last year. And as Terry mentioned, last year, from the absorption standpoint, you can take 10 deals and get to 12 million feet pretty quickly.