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DFW Leads in Warehouse Leasing and Construction

Real Estate

A couple construction workers looking at plans in a warehouse. | Image by kali9, Getty Images

Warehouse construction in the Dallas-Fort Worth area has been smashing records all year long, according to a report from Cushman & Wakefield, a global commercial real estate and market research firm.

Cushman & Wakefield recently published impressive data on the Dallas-Fort Worth real estate sector, particularly regarding warehouse construction. In just one year, the region more than doubled the total amount of warehouse space slated for construction. In the last quarter alone, the area has completed 30 new projects.

Moreover, more than 70 million additional square feet of warehouse space were under construction in Dallas-Fort Worth by the middle of 2022, making Dallas-Fort Worth the country’s leader in warehouse development.

This significant growth is only the continuation of a trend that has been underway for some time now. By the end of 2020, for example, 32 million square feet of new warehousing space had been built in Dallas-Fort Worth. In 2021, that figure rose to over 45 million square feet.

The new warehouse space has been concentrated in southern Dallas County and the AllianceTexas area of North Fort Worth. The Great Southwest Industrial District in Arlington, the Grand Prairie area and Mesquite have also been significant hotspots.

Cushman & Wakefield tracked more than 22.5 million square feet of DFW warehouse leases thus far in 2022. South Dallas County alone boasted 20 million square feet of newly constructed warehouse space by early July, according to Cushman & Wakefield. Fourteen million additional square feet have been built in AllianceTexas, and a further 4.5 million square feet have been constructed in Mesquite.

Some particularly gargantuan industrial space lease deals recently include Target’s 1.2-million-square-foot lease in AllianceTexas, Hayes Co.’s 712,900-square-foot lease in East Dallas, and Libbey Glass’ 605,500-square-foot lease in East Fort Worth. According to Cushman & Wakefield, more than 22.5 million square feet of warehouse space leases in Dallas-Fort Worth in 2022 alone.

Furthermore, only a mere 5% of Dallas-Fort Worth’s warehousing space remained vacant in June of 2022, according to the same Cushman & Wakefield report. Project deliveries had also surged by 76%, and projects under construction had risen by 18% since the start of 2022.

A likely source of this warehouse construction boom lies in the pandemic, which has triggered an unprecedentedly rapid rise in e-commerce in the United States. In turn, this has forced online retailers to significantly expand their warehousing space to enable them to store and prepare their orders.

However, as construction costs and interest rates on building loans have both been rising of late, Cushman & Wakefield forecast that the explosive growth we have seen in the area has likely crested. Kurt Griffin, an executive managing director at Cushman & Wakefield, said those developments will “have a dampening effect on the number of new developments that get financed, which will slow the future construction pipeline.”

Nathan Orbin, another executive managing director at Cushman & Wakefield, points out that demand for warehousing space shows no signs of slowing down. “Industrial users continue to increase their footprint in DFW due to population growth and consumer spending habits. We expect to see a slowdown in supply but continued strength in demand,” Orbin concluded.

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