DALLAS–At the mid-way point in 2014, GlobeSt.com caught up with NAI Robert Lynn's President, Mark Miller, to get his take on the current Dallas market, the trends he is tracking and what's ahead for the industry.
GlobeSt.com: How would you sum up the current state of the Dallas market?
Miller: The Dallas market is currently very competitive as a result of low vacancy rates and increased demand. Multiple tenants are looking at the same spaces, and many of our clients have competition on deals. There has been increased activity on the industrial side, but we have not seen as many large deals 400,000 square feet or more. We are also seeing significant construction, which should alleviate competition in the future. Some of the hot markets for construction include the Legacy office market and on the industrial side – DFW Airport and the South Dallas markets.
GlobeSt.com: What are some of the major trends you're tracking?
Miller: There is a continuing decrease in vacancies making the market very competitive. However, there is significant construction in DFW. Additionally, many of our clients need additional space and require mid-term lease expansions.
GlobeSt.com: How has the market changed over the last five years?
Miller: With increased economic growth in the metroplex, we have seen increased leasing activity, but with the significant decrease in vacancies, lease rates have gone up. It is much more of a landlord's market today making it harder to negotiate good deals because there are fewer vacancies to leverage. Also, the loan market has improved giving tenants greater opportunities to purchase/invest.
GlobeSt.com: Space is tight and the market has become competitive, especially for class A space. How are you seeing this impact the deals being done?
Miller: Competition has made finding space or renewing current leases more challenging. Another result of the competitive market is that lease terms are less negotiable. It is important for our clients to start the lease or purchase process earlier to maintain a competitive edge.
GlobeSt.com: What would you say are some of the major characteristics of the 2014 market so far?
Miller: There is increased activity which includes tenants considering new spaces or existing space expansion. In addition, the decision-making process has become much faster due to the competition – clients not wanting to risk losing a great opportunity must move on a space more quickly.
GlobeSt.com: Is there anything that has surprised you so far?
Miller: Nothing has truly surprised me in 2014 thus far. Many of the current trends were similar to what we saw in the fourth quarter of 2013, and we expected those trends to continue into 2014.
GlobeSt.com: How do you foresee the market shaping up in the years ahead?
Miller: In the short term, I believe the market will remain constant with the current trends. However, due to the high amount of construction, in the next year and a half we expect the market to loosen up with increased vacancies and rate stabilization.
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