The Deal Sheet; It's a Landlord's Market
Industrial vacancies are continuing a downward trend from 12.4% in 2010 to the current 7.1%. The 12M SF of space under construction (36% pre-leased) should have tenants ready to pack their boxes and move in.
Stream’s industrial division managing director Blake Kendrick says that leasing demand is growing and keeping pace with supply. We will see a flight to shallow bay product (shallow bay is the hottest new fashion, you may have seen it in Milan or Paris) on the supply side with seven shallow bay buildings under construction within North Texas totaling 1.1M SF and 17 more in the late planning stages. Between 2006 and 2009 (the last development cycle), there were 29 shallow bay buildings totaling 3.5M SF built within the DFW Airport submarket alone.
So, where will we see spec? Most likely at DFW Airport, Great Southwest, and Alliance, he says. Popular building amenities are likely to include security, trailer positions, clear height (we're all getting taller), and the ability to accommodate e-commerce users, Blake says. Through 2014, he says, the market will deliver about the same square footage that will be absorbed, keeping vacancy rates constant while stabilizing rental rates as competitive sets increase with the new product. Don’t be surprised to see Class-B and C rates increasing, too.
