Statistics show that Dallas-Fort Worth (DFW) has the fastest growing industrial building market in the country. In addition to the frenzy of new construction, some Class A and B properties are selling for twice their assessed value.
Appraisal districts are closely following the market and higher property tax assessments are predicted for 2015.
More than 16 million square feet of industrial space is currently being built in North Texas making it the top market in the U.S., according to Cushman & Wakefield. Of the total, almost 12 million is being built as spec space with no signed tenants.
This is not just a flash in the pan—the market is expected to add an additional 23 million square feet of new inventory over the next three years.
Investor sales of warehouse and industrial properties are up over 15% for the region. According to CoStar, some notable sales transactions during 2014 included:
The Class A Dallas Cowboys Distribution Center for $22.3 million ($55.73 psf)
A 996,218 sf portfolio of Class B industrial buildings in the Valwood Industrial Park
A 310,000 sf Class B distribution warehouse in the Centreport Business Park
in Fort Worth ($53.87 psf)
These transactions reflect unprecedented sales per square foot in DFW and illustrate the high investor demand for industrial space in the area.
Other Factors Point to a Strong Market
A report by Real Capital Analytics indicates that average cap rates for DFW industrial properties are 7.6%. These rates are reflective of the increased amount of functional second and third generation buildings being traded.
Overall vacancy dipped .1% in 4Q 2014 from the same period in 2013. Direct asking rental rates rose 8.0%. All these factors equate to higher values in the industrial sector.
Appeals Will Be Necessary
Even though the Dallas-Fort Worth industrial market is prospering as whole, not all properties are actually appreciating in value.
It is crucial to carefully research and document all factors that could lead to a lower tax assessment and lower property tax bill. The ability to appeal properties on the basis of equity with similar properties under Texas statutes provides another means of securing fair assessments.
2015 Notices of Valuation will be issued at the end of this month and the appeal deadline is