Having just celebrated Thanksgiving and with 2017 coming to a close it is time to reflect on how much we have to be grateful for in Texas, and particularly Dallas-Fort Worth.
One of the most important things shaping the metroplex is how strong our economy has been. Job growth continues to be one of the top stories in our region. DFW added 95,000 positions in the last 12 months, putting us at the top of all U.S. metros.
And, this is not a one and done! Since 2010, we have added more than 750,000 jobs to DFW. That puts us behind only the traditional top markets New York City and Los Angeles. Atlanta is next in line with 516,000 jobs added, 46% behind the powerful DFW economic engine.
Why are we seeing this level of growth? Well, we talk about it all the time—it is our business friendly economy, low cost of doing business, central time zone, DFW Airport and Love Field, affordable cost of living compared to comparably sized markets, and a deep labor pool. All of these continue to make it attractive for companies to do business.
New Friends and Neighbors
This year we welcomed a new wave of neighbors to North Texas. This year saw strong absorption with 4.4 million square feet through the third quarter, driven by large corporate users like Toyota and JPMorgan Chase who opened their doors to their new campuses. The last of the major campuses in Legacy, Liberty Mutual, has been finished and will starting filling up in early 2018, adding another 1.1 million square feet to our net absorption.
To give you some historic perspective on what that means, since 2010, office absorption has totaled 23 million square feet across Dallas and Fort Worth. That’s the size of the entire Richardson/Plano submarket.
Organic Growth for Our Friends
In addition to our new neighbors, companies in our region are prospering and expanding thanks to our strong economic fundamentals. I am amazed and impressed with the high percentage of our clients that are doing so well! This has translated into office occupancy that is close to the tightest conditions seen in Dallas since the late 1990s tech boom.
Landlords are benefiting, as well, as demand for quality office space and relatively tight conditions are driving rents. High demand submarkets like Preston Center, Uptown, Central Expressway, and Las Colinas have seen annual rent gains of close to 10% or higher at points over the last year or two.
Affordability Quality of Life
Although our office rental rates have been increasing over the last few years, when compared to top tier markets across the U.S., Dallas-Fort Worth remains one of the most price competitive. A recent study by JLL highlighting the Most Expensive Streets in the U.S. found that San Francisco and New York are averaging full service office rents of $119 and $116 per square foot in their top submarkets. Dallas’ Uptown, by comparison, is seeing rents around $51 per square foot through the third quarter of 2017.
This affordability also extends to our local housing market, and is especially something for which we can be thankful. Although we have seen our home values and apartment rents increase over the years, we are still relatively inexpensive compared to other areas. This ultimately gives us more money in our pockets to enjoy our families and activities. After all, we have a very high quality of life with sports, culture, and arts that compete with any other metro area in the U.S.
New Product on the Way
We also can be thankful that the economic growth we are seeing will continue. New developments are under construction and coming online, providing cutting-edge amenities and creating some of our metro’s dynamic markets. This is encouraging owners of existing buildings to get creative with new and existing tenants—making a better built environment for us all. And, can you believe that of 7.8 million square feet of office space underway that 4 million square feet is located in North Dallas/Greater Legacy area?
As we look toward 2018, the future continues to be bright. We’ve been very fortunate to have an established foundation on which to build, reliable leadership within the industries and municipalities guiding the way, having vision, and creating long-standing partnerships within our communities. These activities will help us take the next step in advancing DFW as, perhaps, the premiere destination to do business.
We do have much to be thankful for! Let’ all take a moment to think of our families, friends, and our community.
Steve Thelen is Managing Director of JLL’s Dallas office and leader of its office tenant representation team.