Texas’ industrial sector is experiencing a sustained boom, with major cities like Dallas, Austin and Houston all witnessing significant growth. The Lone Star State’s individual markets paint a picture of vibrancy, innovation and expansion.
Dallas industrial sector is ‘incredibly blessed’ “I know it sounds like a cliché we hear over and over, but the DFW area is so much healthier and has so much more activity than almost every market in the country,” said Allen Gump, executive vice president at Colliers DallasFort Worth. “We are all incredibly blessed to be in a market that is this vibrant with the best real estate community of any in the world.” He attributed the vibrant market to a robust developer community, strong investor interest and record leasing activity.
“For the last several years there has been a great deal of money looking for great places to invest,” Gump said. “And since we were having record leasing and net absorption, that led to more projects coming to fruition. Depending on the submarket you’re looking at, developers are being more prudent and rather than building spec, they’re waiting for the tenants. So this will slow down the amount of speculative building for the time being.”
When selecting locations and project types, factors like competition, leasing trends, labor pools and highway access are crucial, Gump stressed. Project size alignment with market demand and profitability against construction costs are also vital considerations. “It’s important to know that if you’re going to build a 1 million square foot building, how many others are built or under construction vs. 1 million square foot deals in the market?” Gump said. “Sometimes it’s better to be ‘pad-ready’ and wait for the tenant to surface.”
The Texas CHIPS Act, which incentivizes semiconductor development, is impacting the Dallas market. The legislation not only stimulates chip production but also drives demand for ancillary industrial facilities from suppliers, further amplifying activity. “It truly has a multiplying effect on industrial demand even if these plants are being built by the companies that are going to occupy,” Gump said.
While he anticipated a natural slowdown in demand after years of rapid growth, Gump saw this as a temporary adjustment.