IRR-Dallas Mid-Year Viewpoint 2015 Local Market Report - Industrial
The Dallas industrial property sector continues to strengthen, resulting from a strong local economy with high employment, steady population growth, and expanding business. The overall vacancy rate has been on a steady decline since 2010 and will likely continue through this year. Rental rates are increasing for both warehouse/distribution space and flex space properties. This trend should continue through the end of 2015. Overall absorption has been positive over the past four years and demand indicates this will continue even with an estimated 10 million square feet of new industrial space planned over the next six months.
The Dallas Morning News reported recently that the DFW area led the nation in industrial leasing for the first quarter of 2015. Cap rates declined slightly in 2014 but should see little variation through the remainder of 2015. Discount rates remained steady over the past year but 2016 will likely see a slight decrease in discount rates. South Dallas County continues to experience a construction boom in the industrial sector.
The intermodal development in this area coupled with the ability to link directly to other ports appeals to the warehouse/distribution market. Notable development in South Dallas includes the recent completion of a 1 million square foot building at the Southfield Park 35 business park and nearly 2.5 million square feet is under construction at Port Logistics Realty’s Southport Logistics Park in Hutchins. The DFW Airport, Arlington, and Grand Prairie submarkets are additional hot spots for development, both speculative and build-to-suit. Regional distribution centers continue to populate the area; Ulta Inc. will be leasing nearly 700,000 square feet of space in the Mountain Creek Business Park for a regional distribution center and R.R. Donnelly & Sons will lease more than 800,000 square feet at the Crow Penn Distribution Center on Interstate 20. The growing reputation of Dallas as a distribution hub, which is helping to increase demand, should continue to drive the expansion of the Dallas industrial market.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.