Avison Young releases third quarter 2024 Dallas-Fort Worth industrial market report

Dallas-Fort Worth, TX – Avison Young has released its third quarter 2024 industrial market report for Dallas-Fort Worth (DFW).

DFW’s economy continues to expand, which has helped fuel the industrial market.

Even with this strong economy, DFW’s industrial vacancy remains elevated. As of the third quarter of 2024, vacancy was 11%, comparable to where it stood in the second quarter. While this is above the region’s long-term average of 8.3%, this increase is almost completely due to a lag in lease-up of its significant development pipeline.

For newer assets, demand has been strong. Limited space is available in the 90 million square feet (sf) delivered between 2019 and 2021. Vacancy in this space is 3.7%, well below the regional average.

In comparison, 2022 and 2023 deliveries pull average vacancy up because they are still in their initial lease-up phase. As of the third quarter, these properties combined are roughly 32% vacant. This is an improvement over the second quarter when they were 36.5%.

“Although vacancy has been inching higher in existing properties over the last year or so, it is still below the market’s long-term average. Because of that resilience, we do not see the higher vacancy as a major worry because it is driven by recent deliveries that are still being leased,” said Avison Young Senior Market Intelligence Analyst, Walter Bialas.

Due to tight supply in these stabilized properties, combined with the market’s consistently strong demand, DFW’s industrial rents have rapidly increased the last several years. In the third quarter of 2024, these increases look to have plateaued, coming in at $7.85 per sf on average. This should bring some needed predictability back to the market for investors, developers, and space users.

“DFW’s industrial market has been one of the strongest ever because of DFW’s position as a national logistics hub. Our region’s central U.S. location and multimodal accessibility for road, rail, and air are key to this reputation, as is our affordability compared to other distribution markets where average rents can easily exceed $12.00 to $16.00 per square foot. While market vacancy is now elevated, we expect it to move notably lower through 2025 as our slower development pipeline lets this new product lease up,” noted Greg Langston, Principal and Managing Director for Avison Young’s Dallas office.