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Recognizing we’ve spent more than 18 months managing a pandemic, let’s look at the data showing the Fort Worth market is remarkably stable. Industrial and multifamily assets have been in high demand, near the point of a feeding frenzy for the national equity markets. If there is capital to place, national investors want a piece of these asset classes in Texas.
Industrial leads, with Fort Worth’s inventory at 140 million square feet and 10 million under construction. In the past 12 months, 7.2 million has been absorbed, leaving the vacancy rate at 7.9%, down approximately 2% from the previous period. Market rents are up 7.6%, and sales prices are up 10%. It’s a good time to invest in industrial, to say the least.
Now for its very different cousin, multifamily. Currently, 103,883 units are in inventory, with 3,474 under construction. The vacancy rate is 6.4%. Market rents are up 9.7% and sales prices, 10%. Clearly, we can’t build apartments fast enough, a testament to the great quality of life we have to offer.
Fort Worth’s retail market is coming back. With 54.5 million square feet in inventory, currently 149,000 square feet is under construction.This is half of what we saw last year, but the net absorption is a whopping 697,000 square feet in 12 months, up 383%. With that commanding absorption, the vacancy rate is down 1% at 5.5%. Market rents are up 2%, and sales values are up 3%. Understandably, the retail market was hit hard with mandatory shutdowns in 2020. This comeback story here is impressive. Retail is now a product in high demand if we look at the vacancy and relatively low inventory coming online in the next 6 to 12 months.
Office received a bad rap during the pandemic, and for good reason. Almost every major U.S market witnessed a significant vacancy spike. As if Fort Worth was not unique enough, we are able to boast a material achievement in our office market over the past year, that is to remain stable.
By the numbers, Fort Worth has 44.6 million square feet of inventory and 323,000 under construction. The past 12 months’ vacancy rate of 13.6% is actually status quo for Fort Worth.
Over the past 10 years, our average vacancy rate has been just over 11%. Market rents are up 1%, and sales prices are the highest they’ve been in 10 years. Developers don’t build as much speculative property; rather they have taken the build-as-you-go approach.
This approach cuts both ways. We perform well in a crisis, but we lack the necessary vacant square feet, namely in the urban core, to attract the corporate employers we earnestly desire.
You are probably accustomed to the volatility in the stock market, but what about volatility in the construction market? If you are an owner or investor, you may have experience with escalating material and labor prices. Whether you are building a home or a commercial property, you have undoubtedly seen an impact. Material prices and labor costs are soaring along with the demand for new product.
Yes, we are doing business in a unique time, but what better place to do it? Our commercial and residential markets are experiencing demand like we have never seen. Industrial, multifamily, retail, office, and single family are all performing well, if not above average.
The end is in sight for COVID-related supply chain disruption, and we are left to wonder what will the future hold for our great city as it continues to benefit from the determination and innovation of the individuals who live and work here.