- The DFW industrial space vacancy rate reached 11.2% in Q2, up from 7.6% a year earlier.
- Speculative developments made up 90% of the under-construction pipeline and/or recently completed projects.
- Major leases by Google and RJW Logistics highlight continued interest from large tenants, despite market challenges.
According to recent data from Savills, the DFW industrial market’s post-pandemic demand has begun to stabilize. Vacancy rates are rising, and speculative developments are declining, as reported on The Real Deal.
By The Numbers
The overall vacancy rate in DFW’s industrial market rose to 11.2% in Q2, up 7.6% YoY. This marks the area’s highest industrial vacancy rate since 2011. At the same time, 14 MSF of industrial space hit the market, with an additional 21 MSF currently under construction.
Meanwhile, speculative projects, which represent 90% of recent developments and ongoing projects in DFW, are only 17% pre-leased. Mark Russo, Savills’ VP of industrial research, noted an uptick in activity among large users, offering a positive outlook for the market despite the high vacancy rate.
The rise in interest rates over the past year has compounded market strains. Landlords are grappling with higher overhead costs due to loan refinancings, forcing them to lower rents, which fell by 3% YoY in Q2.
Bright Spots
Despite these challenges, there have been some notable successes. Google (GOOGL) secured about 1 MSF in North Fort Worth, while RJW Logistics leased 640 KSF in Mesquite, pointing to sustained demand from larger tenants.
Why It Matters
Russo estimates it would take a sustained vacancy rate drop to 7% for two years, with no new construction starts, to rebalance DFW’s industrial market at current growth rates.
Additionally, Dallas industrial property owners are contending with inflated property taxes. Recent appraisal estimates from Dallas County showed 53–70% higher tax assessments compared to last year, adding another layer of complexity for industrial landlords.
