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D-FW supply of sublease industrial and office space is growing

More than 16 million square feet of North Texas warehouse and office space up for grabs.

The supply of surplus North Texas commercial space is growing with millions of square feet of properties now on the sublease market.

Since the start of the COVID-19 pandemic, businesses have dumped more and more excess office space on the market.

And now companies are adding to the mix with sublease industrial space.

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The amount of sublease warehouse space — buildings leased to businesses but now offered to other firms — has more than doubled in the last year, according to a new report from Cushman & Wakefield.

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More than 5 million square feet of sublease industrial space was available in Dallas-Fort Worth at the end of 2022, according to the commercial property firm’s estimates.

Some of the largest blocks of subleased industrial space are located in Southern Dallas County, near DFW International Airport and in Grand Prairie.

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Warehouse space is being offered that previously was leased to companies including Kenco Group, LifeScience Logistics, Hollander Sleep Products and Amazon, Cushman & Wakefield reports.

The warehouse space deemed excess by some firms may be a bargain for other companies.

“With the rapid rent growth in the D-FW market, lease rates that tenants secured even just six months ago are already under market” rents, said David Eseke, Cushman & Wakefield executive managing director. “This creates opportunity for other users to find move-in ready functional space for less than full sticker

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“About 50% of the sublease space on the market today is Class A product.”

While industrial sublease space is growing, it represents just a fraction of the available warehouse space in North Texas, where developers are adding more than 80 million square feet of buildings.

And the warehouse sublease totals are about half what’s available in the office market.

At the end of the year, more than 11.5 million square feet of sublease office space was being marketed in the D-FW area.

“A fresh round of new space was added to the market in 2022 with signs of further increases on the horizon,” Cushman & Wakefield analysts report.

Some of the largest blocks of space to hit the market in the fourth quarter included 120,000 square feet added by Nationstar Mortgage in Lewisville and almost 95,000 square feet from Bestow located east of downtown Dallas. Splunk also put more than 82,000 square feet of sublease on the market in Plano’s Legacy business park, according to Cushman & Wakefield.

Office subleasing in North Texas has soared as more companies have let employees work from home since the pandemic began.

Other firms have reduced their office footprint due to staffing cuts in recent months.