LOCAL ECONOMIC SNAPSHOT | COMMERCIAL REAL ESTATE
North Texas ofﬁce market bouncing back
By STEVE BROWN
Real Estate Editor [email protected]
By TROY OXFORD
Staff Artist [email protected]
The North Texas ofﬁce market has roared out of the recession with new construction and a resurgence in leasing. With Dallas-Fort Worth at the top of the list of the country’s fastestgrowing job markets, expanding and relocating businesses are scrambling to lock in additional ofﬁce space. Rents are rising in most local business districts as the supply of available space is shrinking. While developers are rushing to build ofﬁce projects, the amount of construction is still small compared with previous building cycles.
Ofﬁce building construction is at its highest level since 2007 and is expected to increase further. 5.4 million square feet
Where’s the new ofﬁce space?
Most of the ofﬁce space under construction in North Texas is in the Telecom Corridor and along Dallas North Tollway in West Plano and Frisco.
Total square footage of space under construction in each business district
Top ofﬁce leasing markets
6 million square feet
West PlanoFrisco 1.4 million
Las Colinas-Irving 333,515 Preston Center 190,000
Telecom Corridor 1.8 million North Central Expressway 250,000
The Telecom Corridor and West Plano and Frisco are the top business districts for net ofﬁce leasing increases in 2013.
Total square footage net leased
UptownTurtle Creek 154,000
Net ofﬁce leasing in North Texas is on track this year to be the strongest since 2006.
Net change in occupied ofﬁce space
5 million square feet 4 3 2 1 0 -1 -2 -3 ’02 ’13
Overall ofﬁce vacancy for each year.
30% 25% 20% 15% 10% 5% 0 2000
North Texas average ofﬁce rents haven’t regained everything lost in the recession, but rental rates are higher in some districts.
Average price per square foot
$25 $20 $15 $10 $5 $0 ’13 ’02 ’13
Top construction projects
The largest ofﬁce developments in the Dallas-Fort Worth area as of third quarter 2013.
1. State Farm Insurance regional campus • 1.5 million square feet • Plano Road and Bush Turnpike, Richardson • Developer: KDC
2. Hall Arts Center • 500,000 square feet • Ross Avenue in the Arts District in downtown Dallas • Developer: Hall Financial
3. Legacy Tower • 342,000 square feet • Dallas North Tollway and Legacy Drive, Plano • Developer: Trammell Crow
4. Granite Park IV • 300,000 square feet • Near Dallas North Tollway and State Highway 121, Plano • Developer: Granite Properties
5. 3001 Dallas Parkway • 200,000 square feet • Dallas North Tollway at Gaylord Drive, Frisco • Developer: Hall Financial
NOTE: 2013 ﬁgures are for third quarter; SOURCE: Cushman & Wakeﬁeld of Texas.
The bottom line
“We know there is going to be quite a bit of construction. There are 17 speculative buildings coming up. Construction is the highest since 2008. And I think you will see people who have been talking about building a building go ahead.” “I think we are in the fourth inning of a solid nine-inning game. We have had very robust ofﬁce leasing activity and have ﬁlled up lots of the big blocks of space. We’ve got two or three more years of solid, robust growth.” “The North Texas ofﬁce building market is in a sweet spot right now. Business demand is growing with our economy, and development activity is unlikely to get out of hand. As long as job growth is strong, the ofﬁce sector will do well.”
Bill McClung, executive vice president, Cushman & Wakeﬁeld
Jeff Ellerman, vice chairman, CBRE Group
Steve Brown, real estate editor, The Dallas Morning News