Demand for U.S. industrial space is at an all-time high, and D-FW is leading the way, according to new national research from Cushman & Wakefield.

The North Texas market recorded 5.3 million square feet of net absorption in the fourth quarter of 2016, topping Chicago (4.1 million square feet), Houston (4.1 million square feet), the Inland Empire (3.6 million square feet), Atlanta (3.5 million square feet), and Memphis (3 million square feet).

Nationally, the U.S. industrial markets absorbed 63.6 million square feet of space in the final quarter of 2016, propelling net absorption for the year to a record-setting 282.9 million square feet.

The current industrial expansion is one for the record books. As of January 2017, the industrial sector has registered 27 consecutive quarters of net occupancy gains, placing this up cycle among the longest ever. It is also among the strongest, with net absorption for the past three years (825.5 million square feet) surpassing the strongest period of occupancy growth in the prior cycle (726.8 million square feet, from 1997-1999).

In Dallas-Fort Worth, developers are scrambling to keep up with demand. Currently, 17.1 million square feet of new construction is underway. The GSW/Centreport and I-20/Inland Port submarkets are dominating the market, with just over 8.7 million square feet under construction between the two. Last year, developers delivered 22.4 million square feet of industrial space, with 86.8 percent constructed on a speculative basis.

Strong leasing activity supports the heightened level of spec development, says Randy Baird, executive vice president of Cushman & Wakefield’s Capital Markets division and head of the firm’s Southwest Industrial Advisory Group. “Even though we’re setting records in terms of new construction, the user market is absorbing everything that’s being built,” he says. “The D-FW industrial market is extremely healthy.”

Overall, industrial tenants absorbed nearly 23.7 million square feet in North Texas during 2016—an impressive 43.2 percent higher than the 16.5 million square feet absorbed in 2015. According to Baird, e-commerce tenants are helping to fuel the demand. “Sales in e-commerce are growing at five times the rate of brick-and-mortar retail,” he says. “Some of the more notable e-commerce deals in D-FW last year include Amazon, Chewy.com, and Wayfair, which together leased more than 3 million square feet. What’s especially significant is the fact that this is all new absorption; these companies aren’t moving from one space to another—it’s brand new demand in the market.”

The region’s size and strong market fundamentals continues to attract not just tenants, but investors, too. This includes foreign investors, who have expanded beyond national portfolios and funds to include single assets in North Texas and smaller local and regional portfolios. “There’s more pent-up demand for core industrial assets, but the bid lists are very healthy for Class B assets and even for somewhat specialized assets and properties in outlying locations,” Baird says. “Virtually every investor is under-allocated to industrial. D-FW is an industrial hot spot and a primary point of focus for deployment, which makes industrial real estate here a hot commodity.”

Click here to access Cushman & Wakefield’s latest U.S. Industrial MarketBeat report.

Click here to access Cushman & Wakefield’s latest D-FW Industrial MarketBeat report.