Industrial Leases: Dallas-Fort Worth helping lead e-commerce, logistics trend

E-commerce and logistics companies claimed a larger share of the 100 largest industrial-and-logistics leases signed in 2018 than they did a year earlier, with the Dallas-Fort Worth market helping lead the way.

The e-commerce and logistics growth underscores the growing influence of those companies on U.S. warehouse construction, according to a new report from CBRE.

CBRE’s analysis of last year’s industrial-leasing activity in the U.S. found that 61 of the largest 100 leases were signed by e-commerce companies and logistics firms for a total of 61.5 million square feet. In the previous year, those two sectors claimed 52 of the largest leases for a cumulative 43.2 million square feet.

The Dallas-Fort Worth market had 10 of the largest warehouse leases for a total of 11.1 million square feet in 2018, trailing only the Inland Empire in Southern California and the PA I-78/81 Corridor in Eastern Pennsylvania.

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Six of the leases in DFW were for e-commerce and logistics companies, putting the area on par with the national trend.

These figures were slightly down from 2017, when 13 warehouse leases were signed in the DFW area for a total of 11 million square feet. Six of those leases were for e-commerce and logistics companies.

“In 2018, DFW’s industrial real estate market saw unprecedented demand for a multitude of reasons,” said Ryan Keiser, executive vice president with CBRE’s Industrial & Logistics practice in Dallas. “The growth of e-commerce – specifically the ever-increasing e-commerce service levels such as two-day, same-day and white glove delivery options – was a huge factor. We also are seeing demand for distribution centers due to the Metroplex’s location and transportation infrastructure, and we see strong local demand due to the area’s population growth.”

Keiser expects comparable demand for industrial and logistics real estate in 2019. “DFW’s real estate and labor markets continue to represent an ‘easy button’ for corporate users needing to expand their supply chains due to DFW’s availability of cost effective industrial real estate and quality labor,” said Keiser.

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“These figures illustrate that there still is a lot of momentum behind e-commerce uses in US warehouse leasing, despite concerns that the sector’s expansion may be reaching its later stages,” said David Egan, CBRE’s Global Head of Industrial & Logistics Research. “We expect this type of leasing momentum to continue in 2019.”

Wells Fargo Economist Charles Dougherty recently examined the Texas and Dallas-Fort Worth economy and noted the impact of logistics and e-commerce on the area.

“One announcement that I think sort of slipped pass some people because of the big Amazon HQ2 thing, is Fort Worth got chosen as one of the sites for the Amazon Air Project,” said Dougherty.

“We talk about the Amazon affect where a much higher percentage of retail going through e-commerce, which has really spread the need for really sophisticated supply chains and truck drivers.

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“Every retailer in the game right now is trying to very quickly expand those supply chains so we should get it. There’s a really hot demand for industrial properties, for warehouses, distribution facilities.

“Basically, those factors increase the need for logistics. You need truck drivers, need more capacity at airports, higher capacity for freight. It’s just one thing we’re seeing across the country, but it’s especially prevalent in [North Texas],” he said.

Several large projects in or near Fort Worth were announced last year and early this year.

In December, Perot Development Co. received approval from the Dallas Fort Worth International Airport board of directors for ground leases on 196 acres at the east end of the airport. The site fronts the President George Bush Turnpike (SH 161), adjoins the Dallas Area Rapid Transit (DART) Orange Line and is directly across the freeway from the DART Belt Line Station.

The Irving property will be the site of Perot Development’s DFW Park 161 master-planned project, encompassing four global e-commerce hubs known as Logistic Centers 8, 9, 10 and 11, totaling over 2.4 million square feet.

In February, Transwestern Investment Group (TIG) announces it has acquired a 1.2 million-square-foot industrial property in north Fort Worth’s Alliance Corridor. TIG acquired the property from DHL Supply Chain on behalf of one of its separately managed accounts.

The Alliance submarket is home to a large master-planned, mixed-use community developed by Hillwood. It is anchored by the Alliance Global Logistics Hub, which includes BNSF Railway and Union Pacific’s Alliance Intermodal Facility.

Regardless of industry, the largest industrial leases got even larger last year. The largest 100 from last year – spanning uses such as e-commerce, logistics, manufacturing, food and beverage, technology and retailing – totaled 19 percent more space than the largest of 2017.

Last year’s largest industrial leases were spread across 32 markets, with many clustering in leading logistics hubs including California’s Inland Empire (20 leases), Pennsylvania’s I-78/I-81 corridor (11), Dallas-Fort Worth (10), Atlanta (nine) and Chicago (five). Others claiming several large leases were Columbus (four), Detroit (four) and St. Louis (three).

“These are among the leading markets that offer the high-quality logistics facilities that many of these e-commerce users are seeking,” said Chris Zubel, investor leader for CBRE Americas Industrial & Logistics. “This activity builds upon itself when a region provides the transportation access, qualified labor pool and state-of-the-art real estate that many e-commerce users need.”