There are several trends that are shaping the Dallas industrial market right now. The uncertainty of financial markets and lack of liquidity is certainly hampering the market. Limited access to capital is withholding business expansion. We are also working with motivated landlords that are helping make successful tenant representation transactions, whether it is a restructure or a new deal. Equity is sitting back and waiting for values to continue to fall.
I’m seeing short-term commitments on renewals; tenants are reluctant to make large commitments. There is minimum activity in the market as tenants are just making do with what they have. There is growing space availability as more bankruptcies create more inventory — and also opportunities. For example, tenants like Home Interiors and Fitz & Floyd have left the market, creating more available space. There are many 30,000-square-foot to 80,000-square-foot clients in the market but not as many big deals. We have made some deals on space and land that had previously not been available.
Tenants are looking for facilities with extra storage areas and ability to secure the truck court. Facilities that have access to DFW airport and 30-foot clear height or greater are a big plus in this market. Obviously, industrial facilities that are offering the cheaper rates are a clear winner with tenants. The newer facilities have tax abatements, making them even more competitive. Tenants are really looking at landlord stability too; that seems to be increasingly more important. There are buildings that were strictly lease-only in the past that are now available for purchase and are getting attention by users who want to own their real estate.
Historically, the area south of town on Interstate 45, land around Alliance Airport and the area north of DFW airport have all been development hotspots, but no new projects have been started in the last 6 months. At this time and for probably several years to come, we do not need any new development. There is ample inventory in all markets.
Lease activity is extremely slow, transactions are taking longer and investment sales are more or less nonexistent. But deals are still getting done. Prospective users are looking for the national economy and job growth to improve before making long-term decisions. While it will probably be another 6 to 12 months before we begin to see a turn around, it is coming. Right now, we are still watching the business owners lie low and weather the storm. Overall, Dallas/Fort Worth remains one of the best places to be. We are lucky that despite the unprecedented economic downturn we are still seeing activity.
— Sharon E. Morrison is a principal in Transwestern’s
Dallas office.