By Roger D. Wyche
With all the attention being paid to CRE announcements such as those from Toyota, Liberty Mutual, the Dallas Cowboys, Charles Schwab, State Farm, along with the plethora of multi-family and office projects going up in Dallas’ Uptown district, where is there room in the discussion for warehouse development in the North Texas/DFW commercial real estate market?
I started my CRE career leasing industrial warehouses where I quickly learned the importance of Warehouse/Distribution space in the economic food chain. While not as sexy as a new twenty-story office building or new corporate campuses, most of the goods we buy daily at grocery stores, malls, restaurants, car dealerships, 7-11’s, etc., have been manufactured, stocked, and distributed to consumers from warehouses.
As the popular saying goes “Out of Sight, Out of Mind,” which summarizes the industrial warehouse market in the DFW area. Much of the available space is often tucked away in various “pocket” submarkets where the only traffic is employees going to work and the 18-wheelers delivering raw materials to manufacture products as well as picking up finished goods. This is where the rubber meets the payment for commerce in our economy.
Most people are unaware that there is approximately 800m s.f. of warehouse/distribution, manufacturing, and flex space available in the DFW market. There has been an additional 10.5m s.f. of new space delivered during 2015, yet the market occupancy rate for the entire DFW remains almost 94% occupied. Space is being absorbed rapidly by major users such as BMW, Quaker Foods, Proctor Gamble, L’Oreal and Ace Hardware, to name a few. These strong industry fundamentals continue to attract capital to the business for new construction, value add acquisitions and investment sales opportunities.
With Black Friday Christmas sales down and Cyber Monday sales headed to the stratosphere, the warehouse industry has quickly adapted to deliver mega fulfillment centers for online retailers and, let’s face it, EVERY retailer must have an online platform or perish. Companies such as Amazon have leased over 2.7m s.f. in three locations in the DFW area employing approximately 3,000 since 2013. Wal-mart has two fulfillment centers in the DFW market with approximately 1.6m s.f. dedicated to e-commerce. Many other tenants will be scrambling to catch-up, creating numerous development opportunities for CRE developers and sponsors.
So, while the headlines are featuring the latest corporate campuses, office towers, and mixed-use centers being built in the Metroplex, one cannot overlook the healthy North Texas industrial market.
Metropolitan Capital Advisors is focused on advising our Clients on acquiring, constructing and recapitalizing industrial properties through its access to a variety of debt and equity capital providers. Contact Roger Wyche or any of the MCA Team to learn more about how we can help capitalize your next warehouse/flex/industrial project or property acquisition.
The Author, Roger D. Wyche, is a Senior Director in the Dallas office of MCA. Roger can be contacted at rwyche@metcapital .com