DFW Office Continues Strong March Into 2017

Paris says there is a strong undercurrent for the remainder of the year and leading into 2017.

DALLAS—Average asking rents in the Dallas/Fort Worth Office market are setting all-time highs, as the market averages surged by 4.5% year-over-year to $22.89 per square foot, according to the CBRE Research Q1 2016 DFW Office MarketView. The Dallas/Fort Worth office market absorbed 1,584,820 square feet during the first quarter, while five projects totaling 1.3 million square feet were added to the market due to completed construction and four properties totaling 830,178 square feet completed renovations. The total vacancy rate decreased year-over-year by 10 basis points to 18.1%. However, this decrease still represents a 40 basis points increase in vacancy from fourth quarter 2015 that can be primarily contributed to the vacant three-building Galatyn Commons Business Park that became available after a completion in its renovations. Class-A gross asking rents continued to experience growth, increasing by approximately 4.4% year-over-year to $28.18 per square foot in first quarter 2016. Class-B average asking rents experienced a marginally higher rate of growth, increasing by 4.9% during the same timeframe to $19.44 per square foot. The construction pipeline in Dallas/Fort Worth continues to amplify as six new projects broke ground this quarter, bringing 1.5 million square feet of new construction to the DFW Metroplex. This influx of construction brings the current count of projects under construction to 30, totaling 7.2 million square feet with approximately 46.2% already preleased. The bulk of this activity is located in the Far North Dallas and Uptown/Turtle Creek submarkets, with 2.9 million and 1.7 million square feet under construction, respectively. Lauren Paris , senior research analyst at CBRE tells GlobeSt.com: “The Dallas/Fort Worth office market is still well into the expansion phase of the current cycle given the nearly 1.6 million square feet in Q1 2016 net absorption, unprecedented lease rates and current construction level that is still above the 7 million-square-foot mark. Office-using employment growth within the key sectors of professional and business services, financial activities and information remained particularly strong for the start of 2016, adding 28,800 jobs year-over-year as of February, for a robust growth rate of 3.2%. This is a strong undercurrent and key forward-looking indicator of office market performance for the remainder of the year and leading into 2017.”