The CBD's absorption has dipped to -305,052 sf at second quarter's end after posting a moderate gain in the first quarter, according to a midyear report compiled by Karen M. Ganson, Grubb & Ellis research manager. Hardest hit is class A space with a -512,068 sf quarterly absorption and -814,526 sf for the first six months.
The CBD's decline is due in part to building renovations and the attraction of new buildings, more space, cheaper rents and high-tech infrastructures in surrounding suburbs, specifically Irving/Las Colinas, Richardson/Plano and Far North Dallas where a combined 3.7 million sf has been absorbed thus far this year. Downtown Dallas has a total inventory of more than 30.9 million sf of existing multi-tenant space, representing 18% of the entire area's office market, says Ganson.
According to Ganson, DFW class A space is going for a high of $23 per sf and class B at $19 per sf depending upon the submarket. CBD class A space has increased 15 cents per sf to $24.07 in comparison to $23.32 per sf in Irving/Las Colinas, $21.17 in Richardson/Plano and $22.83 in Far North Dallas.
But, it's not all bad news, Ganson told GlobeSt.com.Year-to-date absorption for the Dallas-Ft. Worth market totals 3.7 million sf, three times that of Houston's for the same period, and just 1.7 million sf below last year's end-of-year tally - with four months left to go before a final accounting. "So far it's a pretty healthy absorption level," she says. The CBD's vacancy rate is 28%, not a particularly bright note but considerably better than the 50% it was a few years ago, she emphasizes. Year-to-date overall vacancy is 17%.
Looming construction completions for broadband fiber installations in the CBD may be just what the doctor orders to restore the district, the largest of the DFW submarkets, to a more positive positioning. The submarket is rapidly becoming a workplace where untraditional meets traditional as more and more dot-coms surface on the CBD's periphery in Deep Ellum, an eclectic section dotted with tattoo parlors, music clubs and Hip Hop clothing shops at street level while more and more dot-coms lease renovated upper floors. And, it may be just a joke around town, but the CBD's E. Commerce St. is being dubbed eCommerce St. by the downtown crowd - a clear sign of the dot-com effect on the submarket.
The brightest spot for the CBD came with the second-quarter announcement of the first high-rise project in 15 years - the 30-story, 700,000-sf Victory Tower which will house the world headquarters for Hicks, Muse, Tate and Furst. The tower is part of a 70-acre, mixed-use project in the downtown hub that is under development by Ross Perot Jr.'s Hillwood Development Corp. and Tom Hick's Southwest Sports Realty.
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