The first quarter has closed, and Dallas-Fort Worth’s office market continues to percolate.
Research from JLL shows that year-to-date absorption came in at about 1.1 million square feet; development underway declined to 3.9 million square feet after an uptick in deliveries and a slowdown in starts; vacancy rose a tad to 20.5 percent; and rental rates crept up to $28.20 per square foot.
JLL indicates that that healthy job creation created the demand for the more than 1.1 million square feet in leased in first quarter, much of which came from growth in the business and professional services sector.
Torrey Littlejohn, senior vice president of tenant representation at JLL, points to the national trend of companies hedging against a recession through consolidation as one of the tailwinds driving demand.
“When we talk about low cost, of course we’re talking about real estate, but we’re also talking about labor, and then when we’re also talking about labor, we’re talking about attrition and about retention,” Littlejohn says. “I think Dallas has done very well for all those things that combined make up for the calculus of it being a low-cost market.”
Far North Dallas and downtown/Uptown are still the hottest points on the map in terms of overall absorption and rental rates. Las Colinas came in with a strong quarter, too, posting 219,360 square feet of absorption in Q1, second in square feet only to Far North Dallas.
Las Colinas also has the most office product underway in the metro, with 2,2 million square feet in the pipeline. North Texas comes in second with a substantially lower number: 831,266 square feet.
Littlejohn says Dallas is laying the groundwork to be in a strong position for the foreseeable future:“I think a lot of people have a pessimistic view of the slowdown. I think we’re going to look back and think that this, right now, is quote-unquote, the ‘slowdown,’ for Dallas.”
“I don’t think we’re going to fall off,” Littlejohn says. “I just think we’re going to have a little bit slower velocity and maybe make the growth a little more manageable and a little more easy to digest for the entire economy.”
