I finally feel like I have time to breathe before we enter 2019! After a flurry of calls, meetings, tours and the dust finally settling from a compressed 60-day period this fall, we’ve secured several new leases for our clients in our market. I thought it may be a good idea to reflect on some of the most recent drivers, trends and observations impacting corporate decisions! So, what did we learn?
It comes as no surprise that Lewisville, Irving, Plano, Frisco, North Dallas, and Richardson won out for these growing companies that are projected to add over 300 new jobs drawn to DFW mostly from out of state. This equates to a 16 percent average increase in these six companies’ current head counts.
On a macro level, the fundamentals that have driven Dallas-Fort Worth’s growth were undeniably confirmed by this small sampling of further commitments to our region:
- A key factor for each company was locating where their existing employee based resided and equally important where could they continue to recruit key talent.
- Building and area amenities such as covered parking, restaurants, outdoor amenity areas and common area conferencing were all important to most of these companies.
- Easy access to DFW Airport, the engine that drives the metro, was a key driver in the decision process for more than one of these companies.
Even in this small sampling of leases we continue down the path of diversity with technology, medical, investment banking, building materials, energy, and telecommunications represented in this group.
On a micro level, the observations confirm continued trends with tenants:
- Most types of businesses are creating more efficient and densely configured office space with an average occupancy of 213 square feet per person for this group of companies.
- No big surprise that construction costs continued to rise with some TI allowances exceeding $70 per square foot with a $43 per square foot average over all six leases which did include a couple of tenants in this group that elected to renew/expand in their existing office building.
- This higher cost of construction providing for greater landlord concessions coupled with continued tenant confidence drove the average lease term to just over 9 years for these companies.
- Although this real estate cycle is much longer than most with over 700,000 new DFW jobs created, there is still pressure on rents with the average net of electricity rates in this group being $30 per square foot with the highs approaching $40 per square foot in these suburbs.
This compressed sampling of leases really confirms our hunches that our region continues to benefit from growth in diverse business sectors driven by the fundamentals of a quickly growing labor force, steady supply of quality office space, the DFW Airport, affordable housing, and great quality of life.
I hope you’ve enjoyed the holidays, and I hope you get to meet some of these new neighbors moving to DFW!
