DALLAS—Dallas' office market has been one of the strongest in the country due to its diversified economy and strong growth across all sectors. This level continued at the start of 2020 as vacancy moved down slightly, from 20.1 to 19.7%, according to the latest office report by JLL.
This activity was driven by solid first quarter absorption of almost 1.2 million square feet. For context, Dallas absorbed an average of 2.8 million square feet annually during this last cycle, excluding the largest corporate campuses that delivered, says the report.
Its most popular suburban submarkets, Far North Dallas, Las Colinas and US-75, drove first-quarter absorption, accounting for 65% of demand. The downtown area, comprised of the CBD and Uptown, also contributed almost 250,000 square feet to the first quarter totals.
In the last year, rent growth slowed in Dallas, coming in at 2.6% for class-A and -B space. This is not a surprise given the extended period of rapid growth during this cycle.
"We were encouraged by the overall leasing activity and believe the momentum will continue as Dallas continues to open up," TD Briggs, JLL Dallas agency leasing co-lead/managing director, tells GlobeSt.com. "We have a very talented team, and we are leveraging new and creative ways to stay connected with our clients and prospects in the post-COVID environment. Our technology partners have put us out in front on virtual tours and other creative collateral material. Our entire inventory is virtual- tour ready and being used daily to provide virtual tours for our clients and prospective tenants."
Construction remains strong in the market, although at this juncture, there are no large corporate campuses under development. However, build-to-suits for JPMorgan Chase (540,000 square feet) and Uber (469,000 square feet) are underway.
The JLL report says the US economic slowdown due to the coronavirus will certainly be felt in Dallas. But overall, Dallas has performed well during recessionary periods, tending to fall later and recover faster than most markets.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
