The Dallas-Fort Worth Office Market Adapts to New Norms
Key Takeaways
- The total absorption for the fourth quarter was an impressive 501,854 square feet, culminating in an annual total of -50,178.
- Class A vacancy held steady at 24%, while class B dropped 20 basis points to 17.9%.
- Rental rates trended higher again, setting a new record of $31.05.
- Available sublease space has continued to surpass the ten million square feet mark for the fifth consecutive quarter.
Rightsizing Reshapes Tenant Spaces
Navigating economic challenges, DFW’s resilient economy thrived, boasting record-high employment and population growth. Vacancy rates and sublease space are beginning to flatten out while rental rates continue to climb to record high levels. Despite climbing rental rates, DFW secures a spot in the top 10 nationwide office markets, transacting a remarkable 15 MSF in leases in 2023. However, the influx of vacant spaces and the rise of hybrid work models pose challenges to rental rates, currently standing at $31.05 as of Q4 2023.
Corporations’ ongoing reassessment of space needs further complicates the landscape. Q4 2023 witnessed a continuous increase in available DFW direct and sublet space, reaching a total availability of 66.7 MSF and an overall vacancy rate of 20.4%. Despite sluggish leasing activity, newer property owners are experiencing sustained demand due to a discernible flight to quality. To stand out, older properties must embrace trends towards creative space or offer better TI packages and lower rental rates.
Challenges persist in the form of tenant rightsizing, obsolescence concerns, concessions pressure, rising insurance premiums, and fluctuating underwriting standards. Navigating these obstacles requires strategic solutions and a proactive approach in the DFW’s dynamic commercial real estate arena.
DFW Office Market Statistics | Q3 2023
Click here to download the full report as a PDF
The post Dallas – Fort Worth Office Market | Q4 2023 appeared first on Coy Davidson – The Tenant Advisor.
Source:
https://coydavidson.com/dallas-fort-worth-office-market-q4-2023/
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