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Industrial market remains strong; DFW leads in construction

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Transwestern has released its national industrial report for the first quarter of 2018 and the Dallas-Fort Worth area is No. 1 for first quarter industrial real estate under construction with 23.7 million square feet.

The total U.S. market ended the quarter with an average asking rental rate of $6.27 per square foot ($5.13 in DFW, down 2.5 percent), reflecting annual rent growth of 10.5 percent, led by Sacremento and Phoenix. Vacancy closed the quarter at 4.7 percent (6.4 percent in DFW). Overall, 41 of the 48 Transwestern reporting markets posted positive quarterly absorption, leading to a total of 62.4 million square feet absorbed nationally.

“Although annualized absorption is beginning to trend down, the overall outlook for the sector remains bullish, with 80 percent of our markets posting an increase in asking rental rates,” said Stuart Showers, director of Research in Houston.

Further support of the sector’s strength is a construction pipeline with more than 300 million square feet nationwide.

“Rents are unlikely to flatten until deliveries outpace demand,” Showers said. “And while some investors could retreat from asset prices they believe are nearing a peak in primary industrial markets, there are plenty of opportunities in secondary markets to keep investment strong.”

Demand for warehouse space in proximity to households is driving the sector as e-commerce’s growing impact extends well beyond brick-and-mortar retail.

“The transportation, logistics and distribution industry continues to be a primary market driver throughout the country,” said Matthew Dolly, director of Research in New Jersey. “The industrial market is working overtime to keep up with consumer demand and the growing impact of e-commerce.”

One of the most recently-announced industrial projects is from Atlanta-based real estate development and acquisition company Robinson Weeks Partners. On April 27, the group announced it has started construction on a 562,640 square foot industrial building at Airport South Logistics Center within Dallas Fort Worth International Airport.

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