As we see strong job growth in North Texas, and housing inventory remaining low, it follows that office vacancies should be affected by economic conditions in the area.
A new report issued by Cushman & Wakefield confirms this, stating that only 16 percent of DFW’s office space was empty at the end of 2014. This is the lowest vacancy rate in over a decade.
The lowest level of vacancies was found in North Dallas, averaging less than 9 percent during the year.
Cushman & Wakefield’s report says DFW had the highest net leasing in more than 15 years during 2014, translating to about 5 million square feet of office space rented.
There’s plenty of room for more growth: area developers are currently building more than 6 million square feet of office space, which is the largest volume in North Texas since the 1990s. Much of it is happening at the CityLine development in Richardson. That master plan calls for more than 5 million square feet of office space, as well as 300,000 square feet of retail, and 4,000 residential units.
More construction will begin in 2015, like the initial phase of development at Frisco Station along the Dallas North Tollway, which calls for 4 million square feet of office space at buildout and 2,400 multifamily residences.
Steve Everbach, Senior Managing Director at Cushman & Wakefield’s Cedar Springs office, told Steve Brown at the Dallas Morning News that more than a third of the office space currently under construction is already leased out.
As Candy wrote earlier today, Dallas real estate values are at their highest ever, fueled by jobs and population growth. We’ve also got a statewide job growth rate that’s the highest rate recorded for total nonfarm employment in Texas since May 1998. So it makes sense we’d also be seeing a tight market for office space as businesses expand and relocate to the area. It will be exciting to see how the market responds to the millions of square feet of office space being built around DFW and how prices change in 2015.