In its new DFW Industrial Insight report for Q4 2022, global commercial real estate services company JLL says that Dallas-Fort Worth’s record-setting year for industrial construction activity and deliveries continued through the end of the year.
The report says the DFW industrial market led the U.S. in development activity for all four quarters of 2022, finishing the year with 61.6 million square feet under construction.
A total of 45.8 million square feet was delivered in 2022, with the emerging East Dallas submarket seeing the largest inventory growth, with a 10.3% increase for the year.
For the third consecutive quarter, DFW’s industrial development pipeline topped over 60 million square feet in Q4—leading the nation again for development activity with 22.6% preleased.
Demand strength continues
“Demand continues to be strong,” the report said, with leasing activity totaling over 12.1 million square feet for a third consecutive quarter.
“The largest leases of the quarter included the prelease of a 1 million s.f. speculative building in South Dallas by Careismatic Brands and a 626,718 s.f. lease in the East Dallas submarket by Masonite,” the report states. “Prologis closed on a $23 billion acquisition of Duke Realty at the beginning of the quarter, adding 17.5 million s.f. to the company’s portfolio in the Dallas-Fort Worth market. This was the largest transaction by size within the market since Blackstone Group purchased the industrial platform of Colony Capital in Q4 2019.”
The final three quarters of 2022 rank among the market’s top four highest all-time, JLL added.
East Dallas, meet South Dallas
Why did the East Dallas submarket see the region’s largest industrial inventory growth? JLL says it’s because developers are capitalizing on the submarket’s “population growth, immediate access to labor, and proximity to the neighboring South Dallas submarket.”
Spec construction for “mega-box” properties over 1 million square feet has continued to be focused in South Dallas, where nearly 31% of deliveries were located, JLL noted.
DFW poised to retain the top spot in U.S. through first half of 2023
The depth of DFW’s current industrial development pipeline is expected to keep the market in the top spot in the U.S. through the first half of 2023, JLL predicts.
“Construction kick-offs are expected to slow in the last half of 2023 relative to the new starts seen during the three consecutive highest quarters of construction activity that began in Q2 2022,” the report states. “However, sustained demand and specific occupier requirements will continue to keep the market as one of the highest nationally.”
“Leasing activity is expected to remain strong into 2023 as preleasing of speculative product continues, and requirements for big-box properties of nearly every size range remain active in the market for new space,” JLL added.
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