As Vacancies Hit a Pandemic Peak in Q3, Rents Remain Stable

But the vacancy rate is similar to highs in the dot-com crisis and the peak of the Great Recession.

uptown dallas office rents

While the Dallas-Fort Worth office market continues to show evidence of a pandemic recession in the number of vacancies, asking rents remain unchanged in most area submarkets, according to a report from Transwestern.

Direct lease vacancies are at 16.2 percent for the region, and net absorption for the 12-month period ending Sept. 30 was at negative 2.25 million square feet. The vacancy rate is similar to highs in the dot-com crisis in the early 2000s and the peak of the Great Recession in 2010.

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The available sublease space likely peaked at 8.9 million square feet in Q3 2020, a 50 percent increase compared to a year ago. While new sublease listings peaked in August, they began to drop rapidly through September and early October, which may indicate that the market is starting to recover.

Most areas saw little change in direct rents, with the exception of Uptown/Turtle Creek and Upper Tollway/West Plano, which saw increases in average rents as sublease space came available in more expensive properties.

Leasing activity for Q3 was similar to the previous quarter finishing at about 2.3 million square feet. One positive trend was an increase in new leases and pre-lease transactions for large and mid-size office users.

Notable leases include private mortgage lender Caliber Home Loans taking 159,320 square feet at Cypress Waters in Coppell and Haynes and Boone, DFW’s largest corporate law firm, signing a pre-lease deal for 124,000 square feet at Harwood No. 14 in Uptown.

New office construction is down slightly, with 5.82 million square feet currently under construction. Without preleasing, the current economy squelches speculative development. 

A version of this story first published in the Fall 2020 edition of the Dallas-Fort Worth Real Estate Review.

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