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Friday, January 2, 2015

A Look at the D-FW Industrial Real Estate Market

By Greg Langston (Dallas)

Record low levels of industrial vacancy and solid demand are giving real estate professionals reason to be optimistic about the future of the Dallas industrial real estate market.

That being said, the market still has a few hurdles to overcome before achieving potentially robust growth. While recent forecasts project that the D-FW market will experience rising demand across a wide range of commercial real estate sectors in the comings years, demand in the industrial market is expected to remain steady or even decline slightly. This is due, in part, to the fact that many current developments will not be completed for an extended period of time. Regardless, demand within the industrial market is already higher than it was in 2013, indicating that what we’re seeing is far from stagnation.

A recent report from Dallas Magazine is slightly more bullish in its view of the industrial market. The piece notes several converging factors that seem to lean in the market’s favor: the growth of e-commerce, a strong local labor market, and pent-up demand finally seeing a prospect of resolution. Most notably, South Dallas is experiencing strong growth within the industrial sector, with Alliance also named a potential hot-spot for the next wave of industrial expansion.

Despite this great potential, there are plenty of potential pitfalls that could be fallen into. For example, the piece from Dallas Magazine points to the need for infrastructure investment if development is to continue at its current pace. Similarly, rising construction costs are cited as another potential limiter of development. These issues shouldn’t be overblown--after all, all signs point to a healthy market in the coming years. Regardless, these forces are shaping the market in ways that must be observed and accounted for.

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