TAG Industrial Watch: July 20, 2024
Now that the second quarter is in the books, let’s take a look at how the industrial market performed nationwide and within the major markets covered by TAG Industrial. The good news is that industrial demand experienced a major rebound from the first quarter largely thanks to big-box demand, however, Q2 net absorption fell about 10% year-over-year as leasing demand dropped by 25% (CoStar, Top 50 metros, minimum 10K SF). With net deliveries outpacing demand, the national vacancy rate touched a 10-year high of 6.6%. The historic divergence in vacancies that TAG has been closely covering continued to expand with big-box (200K SF+) jumping to 8.5% and small industrial (10k-50k SF) touching 4.0%. This divergence is starting to show up in annual rent growth as big-box rents decelerated at a faster pace than small industrial but still carries a 110-basis-point premium. Overall, rent growth slowed to 4.3%, slipping below its pre-pandemic trend.
Starting with the nation’s fastest-growing industrial market, the vacancy rate in Dallas-Fort Worth rose to 9.9% in Q2, the highest level since Q3 2011. While demand significantly picked up from Q1 and was 5% higher than in Q2 2023, supply (concentrated mostly in big-box) outstripped demand again. Interestingly, the oversupply that has inflicted big-box is also pushing up small industrial vacancies in DFW with net deliveries posting the highest level since Q2 2008. At 12.1% big-box vacancies are double that of small industrial at 5.8%. Despite above-average vacancies, the DFW’s 7.9% growth rate in asking rents is well ahead of the national average and still above its pre-pandemic pace. For a recap of the rest of Texas’ major markets, look out for next week’s edition of the Industrial Watch.
I N D U S T R I A L N E W S
Industrial Net Absorption More Than Doubled In Q2
GlobeSt.com – July 15, 2024
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Industrial Prices Continue Upward
Trend Despite Challenges
GlobeSt.com – July 2, 2024
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Private Equity Group Abruptly Shutters Logistics
Company With 500 Drivers, 19 Terminals
Bisnow – June 24, 2024
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Industrial Property Values On The Upswing
Commercial Property Executive – July 8, 2024
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Initial Jobless Claims Rebounds To Highest Since Aug 2023
ZeroHedge – July 18, 2024
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R E G I O N A L N E W S
John Deere Buys Land to Develop 1M-SF Indiana Warehouse
Connect CRE – July 2, 2024
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Move Over, Multifamily: The DFW Oversupply
Narrative Has Claimed A New Victim
Bisnow – July 8, 2024
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Dallas Industrial Investment Sees Surge
Commercial Property Executive – July 9, 2024
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Inland Empire Industrial Demand Surges
GlobeSt.com – July 10, 2024
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California Firm Seeks Tax Breaks to
Build Semiconductor Plant In Texas
CoStar – July 15, 2024
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