Commercial real estate in DFW poised for another strong year
It may be a new year, but the Dallas-Fort Worth commercial real estate market probably won’t change much. Brokers, developers and contractors expect 2022 to be another strong year.
“All indicators are that it’s going to build on the momentum we have,” said Eric Hawk, a partner at Archway Properties, citing favorable factors such as a booming population, a business-friendly climate and a robust transportation infrastructure.
Dallas will be the nation’s top market for commercial real estate investment in 2022, according to the Colliers Global Capital Markets 2022 Investor Outlook. One-third of those surveyed by Colliers intend to invest in industrial and logistics assets in Dallas while one-quarter expect to invest in multifamily locally.
Contractors are already scrambling to find workers and materials to keep up with the demand for new projects as the Dallas-Fort Worth construction market surges. Local construction volume will reach $36.3 billion in 2022 after topping $36.6 billion in 2021, according to projections from Cumming, a global project management and cost consulting firm.
Of those amounts, commercial construction will account for $3.81 billion in 2022, compared with $3.89 billion in 2021, while manufacturing construction will contribute $1.28 billion in 2022, up from $1.26 billion in 2021, according to Cumming.
What’s driving industrial development
The same factors responsible for overall growth drive industrial development as well, Hawk noted. So does the surge in e-commerce brought about by Covid-19. “That industry has always been in double-digit growth mode, and it has accelerated as people have embraced buying online,” he said.
As retailers sell more products, they want bigger warehouses and to be closer to customers. “People realize they need more warehouse space to hold more inventory, so they have more flexibility at times when there are disruptions in the supply chain,” Hawk said.
Manufacturers are opening facilities as well. “We’re seeing some manufacturing businesses come back to the U.S. to get their products closer to the consumers,” Hawk said. “There’s been a lot of positives resulting in increases in industrial demand.”
A lot of space will be coming out of the ground
Dallas-Fort Worth’s central location makes it ideal for companies that want to serve customers across the nation, said Becky Thompson, a principal at Lee & Associates. “Anyone who is growing is looking here,” she said.
Thompson and her firm were so busy helping industrial tenants find space in 2021 that she could not recall a busier year. She expects 2022 to bring more of the same. “There’s going to be a lot of space coming out of the ground and we’re likely going to top what was built in 2021.”
Year to date, as of December, 21.7 million square feet of industrial space had been delivered in Dallas-Fort Worth and the region led the nation with 61.1 million square feet underway, according to a CoStar Analytics industrial outlook for 2022. To put the scale of construction into perspective, CoStar noted that Dallas-Fort Worth represented 12% of all industrial construction in the United States.
“Our bid calendar has never been fuller,” said Mark Duvall, vice president at Bob Moore Construction. The contractor has been busy building industrial facilities, multifamily properties and other projects.
Responding to rising construction costs and materials delays
Duvall expects the local market to remain strong in 2022 despite rising construction prices and materials delays. Bob Moore Construction, for instance, aims to keep projects on time and within budget by ordering materials sooner.
The contractor also builds secure storage yards on-site so it can store in-demand materials like steel, dock equipment and bricking systems. “Normally, we wouldn’t take delivery for months but we’re doing it now, so we have it and can stay ahead of the price increases,” Duvall said.
Duvall does not see construction slowing and is optimistic about the year ahead. As of now, it seems like the Dallas-Fort Worth commercial market could be as strong in 2022 as it was last year.
As seen in the Dallas Business Journal