Industrial demand proved resilient through a difficult economic year in 2020 and continued to thrive during 2021. Here’s a look at the current state of the sector and some predictions for the future.
1. Jobs, jobs, jobs.
This past year has seen the creation of many industrial sector jobs, especially in trade, transportation, and utilities. According to Moody’s Analytics, the industrial sector in Dallas-Fort Worth grew by 10,833 jobs—1 percent—in the third quarter of 2021.
The leading indicator of industrial demand is driven by jobs in trade, transportation, and utilities, which accounted for the majority of industrial roles at 75 percent, or 831,952 jobs.
The region’s industrial employment totaled 1.1 million jobs at the end of September.
2. Rising demand.
As a whole, the market is experiencing positive elevated demand and supply. We are currently tracking more than 36.2 million square feet of active tenant requirements; this includes both organic growth and expansions of companies with operations in Dallas-Fort Worth, as well as new businesses entering the market.
Leasing velocity has been driven mostly by new deals, which is increasing absorption and keeping vacancy low.
At the end of the third quarter, the overall vacancy rate was 6.6 percent, a 20-basis point decrease compared to the prior quarter. This is resulting from net absorption outpacing completions by 962,518 square feet.
We believe leasing activity will continue to be extremely robust, keeping vacancy below historical levels.
3. Strong absorption.
Net absorption of nearly 9 million square feet at the end of the third quarter brought year-to-date numbers to 23.9 million square feet. The market is currently on track to surpass 30 million square feet of net absorption for the year.
Demand is driving up rental rates, which have, on average, have grown more than 20 percent since 2018.
Dallas-Fort Worth’s central location and extensive transportation and distribution network will continue to make it a vital logistics hub into 2022 and beyond.
Nathan Orbin co-leads Cushman & Wakefield’s industrial agency leasing team in Dallas.