Dallas The area has a steady stream of expansions and relocations.
DALLAS—The DFW office market is showing no signs of slowdown from its growth mode, as large expansion and relocation announcements become more common. Verizon Corp. and KDC are planning a mixed-use development that would include three million square feet of office space at Las Colinas, JP Morgan Chase plans to begin construction on 1.4 million square feet at Legacy West, Charles Schwab is awaiting ground-breaking on its 1.2 million-square-foot campus at Circle T Ranch, and build-to-suits are in planning stages for Fannie Mae (330,000 square feet at Granite Park) and Interceramic USA (330,000 square feet at Austin Ranch), among others. The DFW office market ended the quarter with a net 717,419 square  feet of direct absorption, bringing its trailing 12-month total to nearly 4.5 million square feet of space, according to a report by PMRG . Corporate expansions within the market were the driving force behind the demand witnessed during the quarter. Occupancy rates in DFW have been approaching the highest levels since 2002, which has given developers confidence in breaking ground on new product, while encouraging tenants to secure long-term leases as large space options dwindle. Kurt Cherry , executive vice president with PMRG tells GlobeSt.com: “DFW’s office market has strong momentum going into 2016 coming off its best year of direct absorption growth since 2000. Strong office-using employment growth continues to spur leasing demand but there are early signs that construction deliveries could slightly outpace demand due to a surge in construction activity within the past year. Looking ahead, a steady influx of new product will provide tenants numerous opportunities to upgrade or expand their space. Although a significant percentage of DFW’s office construction is significantly pre-leased, roughly 54% of the 4.9 million square feet slated to deliver in 2016 hasn’t been spoken for, which will likely cause direct occupancy rates to stabilize in the year ahead.” During the quarter, class-A properties absorbed a net 395,222 square feet of direct space, compared to 269,032 square feet in the class-B sector. Despite positive quarterly absorption, class A occupancy rates declined 100 basis points to 82.2%–largely due to State Farm ‘s pending move into Building D (500,000 square feet) of its new campus developed by KDC. Meanwhile, class-B occupancy rates appreciated 20 basis points to 82.4% and have grown 80 basis points during the prior 12 months. Class-B occupancy is higher than class-A rates for the first time since mid-2000, however this trend will likely be short lived as tenants move into newly delivered class-A space.  

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.