DFW building too much industrial space, Savills warns

With record-low rents and 78M-sq-ft in pipeline, North Texas risks oversupply

From left: Savills' Gregg Healy and Mark Russo
From left: Savills' Gregg Healy and Mark Russo (Savills, Getty)

The industrial market in Dallas-Fort Worth has grown dramatically in the past couple of years, but the number of facilities under construction has grown even faster, and rents are starting to show it.

A new report from national commercial brokerage Savillis warns that the pipeline of Dallas-Fort Worth industrial properties has far exceeded the 50 million square feet threshold, putting the market at serious risk of becoming oversupplied.

The DFW area now has 78 million square feet of space under construction — the most of any metro in the nation — amounting to about 10 percent of the current inventory of 742.2 million square feet, which is considered an oversupply risk. The 12.2 million square feet of new inventory delivered in the last quarter was a new record.

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Together with Houston, the market accounted for more than 20 percent of all industrial space under construction nationally at the end of the second quarter.

Investors have been pouring big money into buying up vast swathes of Dallas industrial space as well as building out more.

But those investors are already facing a lower return on their investments. Rent for DFW industrial space has hit a record low of $6.24 per square foot. That’s a 14.5 percent drop from last year, indicating that supply is already overwhelming demand.

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