Demographics
Nearly 7.7 million people live within the Dallas/Ft. Worth (DFW) urban core, with 9.6% expected growth over the next five years – second only to Houston (9.7%) in North America. Nearly 28 million people live within 250 miles of the urban core, with 7.7% expected growth over the next five years. Nearly a quarter of the total population within 50 miles of DFW is in the 18-to-34 age bracket.
Figure 1: Dallas/Ft. Worth Population Analysis
Source: CBRE Location Intelligence.
According to CBRE Labor Analytics, the region’s warehouse labor force of 150,029 is expected to grow by 17.3% by 2030. The average salary of a non-supervisory employee is $13.60 per hour, 3.4% lower than the U.S. average.
Figure 2: Dallas/Ft. Worth Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics.
*Median Wage (1 year experience); Non-Supervisory Warehouse Workers (forklift, warehouse workers).
Location Incentives
Over the past five years, there have been 73 economic incentives deals totaling more than $606 million at an average of $11,541 per new job in the DFW metropolitan area, according to Wavteq.
According to CBRE’s Location Incentives Group, among the top incentive programs offered in DFW is the Texas Enterprise Fund (TEF), commonly referred to as a “deal-closing” grant. TEF awards discretionary cash grants to companies considering a new project for which a Texas site is competing against other viable out-of-state options. Award amounts are determined based on an analytical model that factors in the average wage of new employees, the hiring timeline and a company’s total capital investment.
Another incentive program is the Skills Development Fund, which provides job training grants to community and technical colleges for customized training programs that support Texas businesses. This job training program is designed to upgrade the skill levels of new or existing employees, as well as increase wages of the Texas workforce.
Figure 3: Dallas/Ft. Worth Top Incentive Programs
Source: CBRE Location Incentives Group.
Note: The extent, if any, of state and local offerings depends on location and scope of the operation.
Logistics Driver
DFW’s central location gives it a significant advantage in reaching a large consumer base. The region is home to two major inland ports: Alliance Global Logistics Hub and the International Inland Port of Dallas.
The confluence of three major railroad networks (Union Pacific, Burlington Northern-Santa Fe and Kansas City Southern) puts 98% of the U.S. market within 48 hours by train. DFW International is the nation's ninth largest cargo airport and the only one with the capacity to double operations in its existing footprint. All major U.S. markets can be reached by air in less than four hours.
Capital Markets
Figure 4: Cap Rate Comparison
Source: CBRE Research.
Supply & Demand
With 387 million sq. ft. of total inventory, DFW is the fourth largest big-box market in North America. Occupiers continue to move into and expand within the market, as transactions increased by 30.2% year-over-year in 2020 to 35 million sq. ft. DFW’s direct vacancy rate dropped to 6.7% after 21.2 million sq. ft. of net absorption last year. 3PLs, retailers and wholesalers were the most active tenants in the market last year. Food & beverage occupiers accounted for nearly 13% of total transactions.
Despite robust demand, dropped to 19.2 million sq. ft., slightly slower than 2019. The availability rate is expected to decline in 2021, with only 11.3 million sq. ft. currently under construction. Taking rents increased to a record $4.07 per sq. ft. for big-box product. The lower amount of development, coupled with strong demand, will further reduce the availability rate and increase taking rents in 2021.
Figure 5: 2020 Occupier Transaction Market Share
Source: CBRE Research.
Figure 6: Transaction Volume
Note: Includes new leases, renewals, and user sales transactions 200,000 sq. ft. and above.
Source: CBRE Research.
Figure 7: Big Box Year-Over-Year Comparison
Source: CBRE Research.
Figure 8: Under Construction & Percentage Preleased
Source: CBRE Research.
Figure 9: First Year Taking Rents (psf/yr)
Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research.