Market Snapshot: Dallas-Fort Worth Office Market Blooms
- Mar 23, 2015
Dallas-Fort Worth (DFW) has geared up for a good start in 2015, as last year the region experienced the highest office net absorption since 2006, according to recent CBRE research data. In the last quarter of 2014, the DFW area boasted an 18.4 percent vacancy rate; an average asking rate of $20.68 per square foot; a net absorption of 343,496 square feet; and 1,035, 636 square feet of delivered office space.
The growth can be ascribed to Texas’ central location, low taxes, diverse workforce, and significant employment growth. Statewide, the unemployment rate dropped to 4.6 percent in November 2014—120 basis points lower than the one in 2013, and 90 base points lower than the national rate. According to the same source, Dallas registered a year-over-year employment growth of 3.7 percent. As a result, approximately 116,000 new jobs were created.
In Q4 2014, DFW absorbed 3.2 million square feet of office space and delivered more than 1 million square feet, almost double the amount registered in Q3 2014. A significant number of new projects were not pre-leased prior to completion, which pushed up vacancy rate to 18.4 percent.
The gross asking rates have continued to increase, but at a more moderate pace. Since the third quarter, the rates increased by $0.27, having reached $20.68 per square foot in Q4 2014. The most significant increases in price have been observed for Class A products.
Construction surpassed 7 million square feet of new space for the second consecutive quarter. This is the highest amount of pipeline product since Q1 1999, CBRE market data shows. The most significant deliveries of the last quarter were:
- Knoll Trail Plaza—a 4-story, 120,000-square-foot building in the Far North Dallas submarket.
- Nationstar Mortgage HQ—a 3-story, 175,585-square-foot, build-to-suit office project located in the Legacy/Frisco submarket.
- Hillwood Commons I—a class A, 157,909-square-foot office project in the North Fort Worth submarket.
- The Cassidy Building—a six-story, mixed-use project with more than 99,000 square feet of space in Downtown Fort Worth.
Charts courtesy of CBRE