Comin’ In Hot!

November 14, 2022
Market Reports


Comin’ In Hot!

By Ward Richmond

The DFW Industrial Real Estate Market was on fire once again in Q3 2022, displaying the strongest activity of the year thus far.

Tenant demand has remained strong despite constant doom and gloom headlines, continuous interest rate hikes, inflation and a sharp decline in shipping volume compared to Q3 2021. It will be interesting to see what happens as we close out 2022 and move into 2023.

Many major developers have put the brakes on planned speculative development as they attempt to wait out the turbulent debt markets. As a point of reference, construction financing has jumped +/- 300 basis points in some cases within the last six months with further hikes expected to come. Loan origination fees have doubled in some cases to compensate for the difficulty in securing debt.

DFW industrial real estate supply tells a different story with 76 Million SF under construction, although I expect we will see major slowdown in 2023 due to the aforementioned issues in the capital markets. Cap rates have raised a solid 100 basis points across the board and much further in some cases.

The only upside to this uncertainty in the capital markets is that construction pricing is finally starting to level out and sourcing materials and labor to build a building isn’t quite as challenging as it was a year ago at this time. Material pricing varies from commodity to commodity with lumber and copper prices dropping while oil and construction components are increasing (according to a recently released report by Ryan Companies).

From my perspective, Tenant demand remains as strong as ever with tenants continuing to duke it out for space – especially as it relates to the extremely tough to find infill sites. Q3 2022 displayed a robust 11.3 Million SF in absorption, accounting for almost 50% of 2022’s 24 Million SF in total absorption. This continues to drive down our vacancy rates from 5.6 in Q3 2021 to 5.4% today despite 28 Million SF in new product being delivered YTD.

Average Rental Rates are at an all-time high jumping from $4.31 psf NNN in Q3 2021 to $5.64 psf NNN today. If we see a major slowdown in speculative development in 2023, I expect these rates will continue to skyrocket. There is a bit of a soft spot in the +/- 1 Million SF market right now so if you’ve been thinking about leasing a big bomber in DFW now is the time with 5ish active Tenants combined with 12ish available buildings. 6 other developers are saying they’re moving dirt but I’m not fully convinced. Either way, if you want to take down a Milli like Lil Wayne, NOW is the time. This likely will not last long and I expect the supply pendulum will swing back hard in 2023 with big bombers much tougher to come by due to difficulty in securing spec construction loans.

There is a lot of uncertainty out there right now and from my perspective, Proactive Real Estate Strategy is more important now than ever. Today is a great time for Tenant’s to consider buying versus leasing. It is critical to work with developers who display transparency and creativity in the capital markets and think outside the box as it relates to corporate finance around the corporate real estate strategy.

Our team has developed these Core Operating Principles to help our clients navigate this challenging time in the industrial real estate market and we would love the opportunity to further discuss with you in an effort to maximize value and streamline efficiency related to your corporate real estate strategy.

  • Always Bring in An Expert
  • Be Proactive, Not Reactive
  • Operate with Urgency
  • Execute with Certainty
  • Be Aggressive
  • Be Easy to do Business With
  • Constant and Never-ending Improvement

To get further inside my supply chain brain,
please check out my website and blog:

Q2 2022 Top Richmond Projects

  • Gulf Relay – Fort Worth – TX – 291,515 SF – Lease
  • Confidential – Atlanta – GA – 250,874 SF – Lease
  • Confidential – Cedar Hill – TX – 147,079 SF – Lease
  • DB Schenker – Phoenix – AZ – 143,537 SF Lease
  • Keller Logistics – Denver – CO – Lease

Q2 2022 Top DFW Deals

  • DHL – Alliance – 1.2M SF Lease
  • ITS Logistics – Alliance – 1.04M SF Lease
  • Pegasus Logistics – Alliance – 754,000 SF Lease
  • Crate & Barrel – South Dallas – 698,000 SF Lease
  • GXO Logistics – South Fort Worth – 644,000 SF Lease

Key Takeaways


Rental rates for all industrial product types increased by $0.75 compared to last year coming in at $5.64, an alltime high for DFW as well.


Construction activity, at 76.4 million square feet is the greatest amount ever recorded for a quarter.


The vacancy rate is 5.4%, still hovering near historically low levels. Big-Box vacancy rate is 6.8% while non-BigBox is 4.9%, both of which are near their all-time lows.


Ward Richmond has over fifteen years of experience specializing in industrial real estate, and has negotiated over 500 transactions while working in over 100 cities across the USA, Canada, and Mexico. Several publications have featured Ward for his expertise in this field including the Wall Street Journal, Dallas Morning News, and Dallas Business Journal. He also serves on Colliers International Industrial Advisory Board, and is a member of the Logistics & Transportation Solutions Group.


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January 18, 2023: BGSA Supply Chain, Palm Beach, FL

March 19, 2023: IWLA, Palm Springs, CA

May 10, 2023: Colliers Logistics & Transportation, Las Vegas, NV

The Supply Chain Syndicate is supported by Colliers International Research Team