D-FW industrial vacancies inched higher in 2023 – The Dallas Morning News

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North Texas industrial building vacancies rose to just under 10% at the end of 2023 with almost 40 million square feet of additional warehouse construction underway.

Expanding and relocating industrial tenants net leased more than 28 million square feet of Dallas-Fort Worth buildings last year, according to a new report by commercial real estate firm Avison Young.


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“Although vacancy has inched up in some existing properties, it remains well below its long-term average,” Avison Young senior market analyst Walter Bialas said in a just-released year-end survey. “Because of that, we do not see the increase as a major market worry because it is driven by the recent deliveries still in initial lease-up.”

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At the end of 2022, D-FW industrial vacancies were less than 6%.

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Net industrial leasing in 2023 was down slightly from the 32.4 million square feet of space absorption in 2022, according to Avison Young.

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At the same time, the amount of D-FW warehouse space in the development pipeline has dramatically declined from more than 80 million square feet in late 2022 due to higher interest rates and tighter lending standards for commercial real estate.

Most industrial projects under construction at the end of the year were in Southern Dallas County (7,671,362 square feet), North Fort Worth (7,185,122 square feet) and east of Dallas (7,035,827 square feet). In the fourth quarter, 136 D-FW industrial buildings were under construction.

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Industrial buildings that opened in the area last year were on average more than 55% vacant when completed, compared with just a 20% vacancy in 2022, according to Avison Young.

The greatest industrial net leasing totals for 2023 were in Southern Dallas County (11,298,150 square feet) and North Fort Worth (8,695,077 square feet.)

North Texas remains one of the country’s top industrial building markets, even with recent slowdowns in new warehouse starts. And average industrial rents in the area have risen by more than 65% in the last five years, according to Avison Young.

“D-FW continues to reinforce its position as a strategic national logistics hub due to its central location, accessibility, and an affordable alternative to other major markets,” Greg Langston, principal and managing director for Avison Young’s Dallas office, said in a statement. “We expect market vacancy to begin to move lower later in 2024 and into 2025 as the notably slower development pipeline lets this new product lease up.”

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