2nd Quarter DFW office rental rates increased to $26.19/sf.The first half of 2017 is behind us and the Dallas/Fort Worth office market continues to outperform other major markets around the country. Below are highlights from the first half of the year and predictions for the remainder of 2017.
1st Half 2017 Highlights
- Record Rental Rates: For the first time ever in DFW, rental rates in the most expensive buildings have reached $60 per square foot (sf) in Uptown. To put this in perspective, in 2013, the max rates in DFW were $40.00/sf, and in 2010 the highest priced buildings were around $30.00/sf.
- Continued Population Growth: Over the past year, an average of 400 new residents moved to the DFW area each day which increased the employment base by 106,000, primarily in office jobs. The unemployment rate has increased by 40-basis-points to 4.3% due to people joining the labor force.
- New Construction: Currently 6.1 million sf of office buildings are under construction, with 62% of the buildings scheduled to complete construction in 2017. Fourteen555 North, The Epic Deep Ellum and our client, Brinker International’s new headquarters building have all broken ground, totaling over 780,000 sf. .
- Value Submarkets: There are still several pockets around town that provide great values for real estate requirements. LBJ Expressway, Park Central (LBJ and Tollway) and lower Central Expressway (Central south of Mockingbird) are all competitively priced markets that are well below the current market rate of $26.19/sf.
2nd Half 2017 Highlights
Looking forward to the remainder of 2017, keep an eye out for the following trends and predictions:
- Efficient Offices: In response to the rising rental rates, companies are building more efficient, collaborative offices with less square feet per employee to keep their real estate expenses down.
- Increasing Vacancy Rates: With the new buildings scheduled to complete construction over the next six months, there is expected to be an upward pressure on vacancy rates. 64% of office space under construction will be speculative space without pre-leasing.
- Upward Rent Trend: Asking lease rates are expected to continue to raise throughout the end of 2017.
- Texas Coaching Turnover: By the end of the 2017 football season, one of the following coaches will be fired for their subpar record: Kliff Kingsbury, Kevin Sumlin or Jason Garrett.
With the continued improvements in the DFW office market, it is now more important than ever to partner with a real estate professional to mitigate the rapidly escalating rental rates. Here are 5 Strategies To Maximize Your Negotiation Leverage to secure the most favorable office lease transactions possible. Please contact us if you would like us to review your lease to determine how your lease compares to the current market conditions.
Enjoy the rest of the summer!