Boosted by relocations, expansions, a diverse economy, and job growth, demand for office space is stronger than at any point since 2006. And things aren’t expected to slow anytime soon.
That’s the word from Cushman & Wakefield of Texas, which recently released its fourth-quarter and year-end 2014 statistics. (See charts below.)
Overall vacancy for the year came in at 16.6 percent, compared to 17.9 percent last year. Average lease rates climbed to $21.39 from $20.59. And overall absorption reached nearly 5 million square feet, compared to about 3.5 million square feet in 2013.
To no one’s surprise, Uptown/Turtle Creek, Legacy/Frisco, and downtown Fort Worth are showing the biggest squeeze on space, with vacancies hovering between 11 percent and 12 percent. LBJ Freeway has experienced significant tightening, with vacancy dropping from 27.2 percent to 23.5 percent.
Here are additional market notes from Cushman & Wakefield:
• Landlords are continuing to aggressively push rates and offer fewer lease concessions.
• Most submarkets are experiencing strong demand and absorption, including downtown Dallas.
• Overall absorption totaled 4.9 million square feet in 2014, an increase of 42 percent over 2013.
• Major tenants occupying space in 2014 include Nationstar Mortgage, Omnitracs, AAA, ACTIVE Network, Grant Thornton, and USHEALTH Group.
• Major leases signed include EnLink Midstream, Locke Lord, Southwest Airlines, and Polsinelli.
• Large sublessors include Encana, CoreLogic, and CompuCom.
• Currently, 6.1 million square feet of office space is under construction; eleven speculative buildings totaling 2.5 million square feet and seven build-to-suit projects totaling 3.6 million square feet.
• Twenty-one buildings totaling 2.7 million square feet are expected to begin construction during 2015; 40 percent of that space in the Legacy/Frisco submarket.
Here are additional statistics:
