O
ver the past 20 years, South Dallas has experienced significant fluctuations in its industrial real estate market. The area saw rapid construction and property deliveries followed by dry spells as developers waited for buildings to be absorbed. Despite this volatility, South Dallas delivered over 78 million square feet of industrial space in just two decades.

    However, the market is maturing faster than expected due to increasing demand for data and artificial intelligence computing centers along the I-45 corridor. Data center developers have secured nearly 1,500 acres, which would have otherwise added over 21.7 million square feet of potential industrial space. This shift has created a new dynamic in the South Dallas landscape, with data centers competing for land that could have been used for industrial real estate.

    As a result, the supply of industrial space is tightening faster than predicted, and investors are facing limited options. The existing inventory of 13 million square feet and pipeline of 22 million square feet will take around six to seven years to stabilize, based on last decade's absorption average. However, this period will also see continued growth in both data centers and industrial development.

    As South Dallas reaches maturity, market dynamics will shift, and opportunistic investors and developers will explore new frontiers. Potential markets like Waxahachie, Midlothian, and Ennis are emerging as attractive alternatives for north/south distribution. End users seeking east/west distribution will continue to be drawn to assets near Interstate 20.

    Despite growing pains, the future of South Dallas industrial real estate remains promising. Investors must stay ahead of the curve to anticipate the next wave of opportunities in South Dallas and beyond. As the market evolves, vacancy volatility will diminish, and South Dallas will become an infill, stable, and mature market.