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DFW: A Premier Inland Logistics Hub | Part 1- The Heartbeat of Southern Logistics

The Dallas-Fort Worth (DFW) metroplex has emerged as a dominant force in the U.S. logistics landscape, strategically positioned as a key inland port. This multi-part series delves into the factors that have propelled DFW’s ascent, exploring its robust infrastructure, thriving e-commerce sector, and the strategic expansions of major retailers. From its extensive intermodal facilities to its world-class airports and highway network, DFW’s logistical prowess is driving economic growth and shaping the future of industrial real estate in the region as an inland port.

DFW: A Strategic Inland Port

The Dallas-Fort Worth metroplex stands as a titan of logistics, serving as the indispensable nexus of transportation, distribution, and commerce for the Southern United States. Its strategic geographic location, coupled with a robust infrastructure, has cemented DFW’s status as a premier inland port, propelling economic growth and fostering a diverse industrial landscape.

E-commerce Fulfillment: DFW’s Strategic Advantage

The surge in online shopping has transformed the logistics landscape, and DFW has emerged as a leading e-commerce fulfillment hub. The region’s strategic location, coupled with its robust infrastructure and skilled workforce, makes it an ideal location for businesses to meet the demands of the rapidly growing e-commerce industry.

Shifting Distribution Strategies

E-commerce Impact and Shifting Trends. The rise of e-commerce has significantly influenced the DFW industrial market, driving demand for specialized logistics properties:

  •  Big Bomber Fulfillment Centers: These expansive distribution hubs, typically over 500,000 square feet in size, are designed to handle large volumes of inventory and streamline operations for major e-commerce retailers. Strategically located to optimize the distribution network, they facilitate efficient sorting, storage, and shipping of goods to regional and national markets. Their size and advanced technology support rapid order processing and high throughput, which is essential for meeting the increasing demand for fast and reliable e-commerce delivery services.
  • Last Mile/Shallow Bay Properties: These smaller, flexible spaces near urban centers facilitate faster deliveries and are highly sought after for last-mile logistics operations. Increased emphasis on last-mile logistics has led to a growing demand for warehouses located closer to consumers, optimizing the delivery process and enhancing customer satisfaction.
  • Returns Management/Reverse Logistics: Developing efficient returns management processes to improve customer satisfaction and reduce operational costs. Reverse logistics poses a significant challenge for online retailers as the volume of returns from online sales continues to rise. Managing the return process efficiently requires handling returned goods, restocking, and dealing with potential losses, all of which can strain logistics operations and impact profitability. As a result, there is a growing emphasis on proximity to major transportation hubs to expedite return processing and reduce costs, driving changes in warehouse location strategies and facility designs.
  • Sustainability Initiatives: Implementing sustainable practices in e-commerce fulfillment, including reducing packaging waste and utilizing renewable energy sources. Retailers and logistics companies are increasingly seeking properties that support eco-friendly practices, such as energy-efficient buildings, renewable energy installations, and facilities designed to minimize waste. This shift is driving demand for green-certified warehouses and distribution centers, as well as properties that enable efficient recycling and waste management systems. Additionally, there is a growing preference for locations with access to sustainable transportation options, such as electric vehicle charging stations and public transit, further influencing site selection and property design.

Strategic Advantages of DFW’s Logistics Infrastructure DFW’s logistics infrastructure offers several strategic advantages that enhance its role as a major inland port:

  • Intermodal Facilities: The region is home to multiple intermodal terminals, including facilities operated by major railroads such as BNSF and Union Pacific. These terminals facilitate the efficient transfer of goods between rail and road, streamlining the supply chain.
    • Union Pacific (UP) Intermodal Terminal: Located in southern Dallas County, this facility covers 360 acres and handles around 365,000 containers annually. Recent investments in technology and infrastructure have enhanced its efficiency and capacity.
    • BNSF Alliance Intermodal Facility: Situated in the AllianceTexas development in Fort Worth, this 700-acre facility can handle over 1 million containers annually. It has seen significant growth in cargo volumes, driven by its strategic location and robust rail network.
  • Airports:  DFW has three key airports, DFW Airport, Love Field and Alliance.  Alliance is a dedicated cargo airport in north Fort Worth.
  • Highway Network: DFW’s extensive freeway system, including major highways like I-35, I-20, I-30, and I-45, provides direct access to key markets across the United States.

Amazon: Dominating the DFW Industrial Landscape

Amazon has established itself as the number one industrial tenant in DFW, with an impressive portfolio of over 30 distribution facilities totaling more than 22 million square feet. This expansive footprint underscores Amazon’s strategic commitment to the region, leveraging DFW’s central location and world-class logistics infrastructure to enhance its e-commerce operations.

The scale of Amazon’s presence in DFW is unmatched by any other tenant. The company’s facilities range from massive fulfillment centers to specialized sortation and delivery stations, each playing a critical role in ensuring the rapid movement of goods throughout the supply chain.

Amazon’s dominance in DFW is not just a testament to the company’s aggressive growth strategy but also highlights the region’s importance as a logistical hub. The availability of extensive highway networks, proximity to major airports like DFW International and Alliance, and access to a large labor pool make DFW an ideal location for Amazon’s operations.

With over 22 million square feet of industrial space, Amazon’s investment in DFW is reshaping the industrial market, driving demand for more advanced, high-tech facilities. This dominance is also contributing to the overall growth of the region’s industrial real estate sector, attracting further development and positioning DFW as a premier inland logistics hub. As Amazon continues to expand its footprint and enhance its capabilities, the company is set to play an even more significant role in shaping the future of the DFW industrial market.

Target and Walmart: Expanding Distribution Networks to Compete with Amazon

As e-commerce continues to evolve, major players like Target and Walmart are increasingly focusing on bolstering their distribution networks to compete with Amazon and other online retailers. The Dallas-Fort Worth region, with its strategic location and advanced logistics infrastructure, has become a critical hub for these retail giants as they strive to enhance their supply chain capabilities and meet the growing demands of online shoppers.

Target’s Investment in Distribution

Target has made significant investments in its distribution network, recognizing the importance of speed and efficiency in fulfilling online orders. In 2023, Target opened a new 1.5 million-square-foot distribution center in the DFW, specifically designed to support its growing e-commerce operations. This state-of-the-art facility serves as a critical hub for Target’s regional distribution and also features advanced automation technology to streamline order processing and enhance delivery times. The new center aligns with Target’s broader strategy to expand its supply chain footprint and optimize its last-mile delivery capabilities.

Walmart’s Strategic Expansion

Walmart, already a dominant force in retail, has been aggressively expanding its distribution network in the DFW to keep pace with the rising demands of e-commerce. Walmart opened a 1.5 million-square-foot automated fulfillment center in late 2023 in Lancaster and a 730,000-square-foot automated grocery distribution center in 2024 (also in Lancaster).  All told, Walmart has over 7 million square feet of distribution space across DFW.

These new facilities are among the largest and most technologically advanced in Walmart’s network. Once completely operational, these facilities are expected to move more than twice the volume of traditional fulfillment and grocery distribution centers, significantly improving the accuracy, quality, and speed of product distribution. This investment underscores Walmart’s commitment to leveraging cutting-edge technology to enhance its supply chain, thereby improving efficiency and customer satisfaction.

Home Depot

Home Depot has significantly expanded its distribution network in DFW over the past few years, underscoring the region’s strategic importance to the company’s overall supply chain and logistics operations. As part of its $1.2 billion investment to enhance its national distribution and delivery network, Home Depot opened a massive 1.5-million-square-foot distribution center in 2020 in Dallas. This new facility was designed to fulfill both online and in-store orders, meeting customers’ needs through multiple delivery channels, whether it’s direct-to-home delivery or pickup at local stores.

DFW is now a critical hub for Home Depot’s supply chain strategy, with roughly 7 million square feet of warehouse/distribution space. This expansion not only increases the company’s distribution capacity but also brought approximately 1,500 new jobs to the area.

The Dallas distribution center is equipped with advanced automation technologies, including more than six miles of mechanized lines and a zero-emission hydrogen fuel cell charging station, which powers material handling equipment sustainably and efficiently. The facility also manages the customer delivery and installation of large appliances, offering a streamlined and enhanced purchase experience for customers in the DFW. This expansion is part of Home Depot’s broader strategy to offer same-day and next-day delivery to 90 percent of the U.S. population, catering to the evolving expectations of both Pro and DIY customers.

Lowe’s

Lowe’s, a major competitor of Home Depot, has increased its distribution network in the DFW as well. In 2021, the company opened a nearly 650,000-square-foot facility that enables Lowe’s to provide faster and more predictable deliveries to customers in the Southwest and Midwest. This facility, part of a broader investment to improve Lowe’s supply chain infrastructure, is equipped with automation technology and is focused on fulfilling online orders directly to consumers. This strategic development helps Lowe’s reduce delivery times and strengthens its position in the highly competitive home improvement sector.

Best Buy

Best Buy has expanded its distribution capabilities in DFW as part of its effort to strengthen its e-commerce operations. The company developed a 500,000-square-foot distribution center in Flower Mound in 2016. In 2024, Best Buy expanded by an additional 800,000 square feet at a new facility in Lancaster. These facilities were designed to handle the increasing volume of online orders, particularly for larger items such as appliances and televisions. Leveraging advanced logistics technology, the facility streamlines operations and reduces delivery times, aligning with Best Buy’s commitment to enhancing customer experience in the e-commerce space.

Wayfair

Wayfair, an online retailer specializing in home goods, set up a major distribution center in 2018 in Lancaster to support its expanding e-commerce operations. The 875,000-square-foot facility plays a crucial role in Wayfair’s efforts to enhance delivery speeds across the southern U.S. This distribution center supports the company’s next-day and two-day delivery services, which are vital for staying competitive in the fast-paced online retail market.

Dick’s Sporting Goods

A key example of the evolving industrial landscape in DFW is the planned 800,000-square-foot distribution center for Dick’s Sporting Goods in Fort Worth. Situated within the Risinger/35 Logistics Park, this next-generation hub will serve over 100 stores across Texas and the Southwest. Developed by Hillwood Construction Services, this facility underscores the region’s appeal for major retailers seeking modern, efficient logistics operations. The Alliance area, where the facility will be located, has become a hotspot for industrial development, driven by robust shipping infrastructure such as Alliance Airport and the BNSF Alliance Intermodal Facility. This project exemplifies the ongoing shift towards specialized, high-tech logistics hubs that cater to the rapid growth of e-commerce and the increasing demand for efficient supply chain management.

The Competitive Landscape and Future Outlook:

The expansions by Target, Walmart, and others in DFW reflect a broader trend among retailers to strengthen their distribution networks in key logistics hubs. As these companies continue to invest in advanced infrastructure and technology, the DFW region is poised to become an even more vital component of their e-commerce strategies. These developments not only enhance the competitiveness of these retail giants but also contribute to the overall growth and dynamism of the DFW industrial market. Looking ahead, the presence of these major retailers and their continued investment in the region will likely attract additional industrial development, further solidifying DFW’s status as a premier inland logistics hub. As the e-commerce landscape evolves, DFW is expected to remain at the forefront of logistics innovation, providing unparalleled opportunities for businesses seeking to optimize their supply chains and meet the demands of a fast-paced retail environment.

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Steve Triolet
Senior Vice President of Research and Market Forecasting
[email protected]
tel 214 223 4008