Industrial building demand soared in North Texas during the third quarter.
Expanding and relocating warehouse and industrial businesses pushed net leasing to 8.2 million square feet in the just-ended quarter, according to a new report from commercial real estate firm CBRE.
With the third quarter's strong leasing, more than 16 million square feet of net industrial deals have been recorded so far in 2017. Show Full Story
The biggest deals include an 874,000-square-foot lease by online retailer Wayfair in Lancaster and a 703,000-square-foot distribution center lease by Chinese appliance-maker Haier in Grand Prairie's Wildlife Commerce Park near Interstate 30.
"While the absorption of the first two quarters was fainter than the blockbuster quarters of the past two years, industrial demand roared back this past quarter to nearly 8.2 million square feet, which is the second-highest absorption observed this cycle," CBRE research director Robert Kramp says in a new report. "The majority of absorption can be attributed to consumer goods, e-commerce and logistics companies this quarter."
Most of the warehouse leasing was in North Fort Worth, near DFW International Airport, in southern Dallas County and in the mid-cities area between Dallas and Fort Worth.
Almost 5 million square feet of new North Texas industrial building space was finished in the third quarter. And CBRE estimates that about 60 percent of the new projects were already leased at completion.
More than 16 million square feet of warehouse and industrial development was still underway at the end of September. That's down from 2016, when more than 20 million square feet was being built. CBRE says the slowdown in industrial building "could be a sign that developers are holding back a bit to let the existing vacant space occupy."
Only about 6 percent of North Texas' industrial market was vacant at the end of the quarter.
The largest volume of continuing construction is in southern Dallas County, where more than 4.5 million square feet of industrial projects are underway.
"We appear to be on track to have a similar year to what we've had in 2015 and 2016," said CBRE's Steve Berger. "What we are seeing is marketwide."
Berger said a cutback in building in the third quarter isn't surprising.
"One of the good things about the industrial market is the supply can cut off more quickly," he said. "It doesn't take as long to build these as an office tower."