"The market has behaved in line with our forecast for the year," Robert Kramp, client services' director for Grubb & Ellis, stresses to GlobeSt.com. Vacancy is 9.6% in the 643.6-million-sf inventory. And though there are two million sf under construction, he predicts the region is on solid ground to stay below 10% vacancy, the historical threshold to set up some traction for building owners.
Kramp says the region is on track to end the year at 9% vacancy, possibly even 8.75%. "We've seen vacancy drop a full percentage point in two years and a half a point in the past year," he says. The under-construction space is evenly divided between build-to-suits and spec. "One million sf of speculative space in a 650-million-sf-market is a drop in the bucket," he adds.
The positive traction has manifested into a rent increase in warehouse/distribution space, which accounted for 512,797 sf of the Q2 absorption, according to Kramp's analysis. The category, on average, is pulling down $3.78 per sf while research and development and flex space averages $7.27 per sf. Overall rents in the region rose four cents to $4.73 per sf triple net on an annual calculation.
Year to date, North Texas has absorbed 3.4 million sf. Even the Great Southwest Industrial District, which was pushing well into the mid-teens last year at this time, ended the quarter with 12.4% vacancy in its 83.6 million sf of stock. The D/FW Airport submarket has the highest vacancy, 13.4% in 50.7 million sf. Close behind with 12.9% is Northeast Dallas' near 84.8-million-sf inventory. Five of nine submarkets have vacancies below 9%, with the lowest coming out of East Dallas, 6.4% in a near 31.2-million-sf inventory.
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