Courtesy of Merriman Anderson/Architects Inc.

Business

Sorry, Dallas Businesses, Your Rent Isn’t Getting Cheaper Anytime Soon

Don't look now, but you're in for some serious sticker shock.

If you work in real estate in Dallas, you’re likely looking at the world through rose-colored glasses thanks to banner years with low vacancies, corporate relocations, and rent growth. But if you’re a business owner or leader, you’re likely looking at office options and suffering from serious sticker shock.

At $27.31 per square foot, Dallas-area rents are the highest they’ve ever been, according to real estate firm JLL. “If you signed a lease in 2012 or 2011, you’re suddenly looking at your lease coming due, and it’s dramatically more expensive than it was in the past,” JLL’s research manager Walter Bialas says. “For the first time in a while, Dallas has had stable demand and a lower vacancy rate. So the question becomes, what happens over next couple of years? I’m not sure tenants can get a lot of solace.”

Vacancy rates in Dallas’ most prominent submarkets are hovering near historic lows at an average of 19 percent empty, according to JLL research. And with no new construction starts in 2017’s final quarter, coupled with continued strong demand of tenants averaging 50,000 square feet and below (and all tenants, really), rents are not likely to come down anytime soon.

“If you look at the long haul of Dallas’ history, you have these fluctuating rent cycles that go way up and then back down,” Bialas says. “Dallas has matured to a point where those ups and downs will be more moderated.”

Comments

  • Matt Hogsett

    My client was in this situation. They needed to double their 5,000 sf footprint, but their renewal letter came in and rent jumped from $18/sf to $30!! I helped them relocate to a large penthouse space, built to their specs, off Stemmons AND their per square foot number was halved.

    Stemmons is going to continue to be a value driven sub market.

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