Once upon a time, the Dallas general purpose, multi-tenant office market with its large oil and gas sector tenant base would shiver and quake at the prospect of declining oil prices—with good reason (witness the mid-1980s catastrophe). But while the market continues to host a substantial energy sector tenant base, the recent drop in oil prices, which hit the Houston market hard for example, has had little effect in Dallas (statistically speaking, at any rate). Indeed, the local market stands on other pillars: the longstanding success achieved by the suburban north, Plano and Richardson in particular, as a major target for relocating and expanding corporations continues. Major national firms including Toyota North America, FedEx, Liberty Mutual Insurance, JPMorgan, and State Farm Insurance have recently completed, are now building or soon will be building major single-tenant facilities in these locales. Dallas' Uptown submarket also sees significant activity. The Dallas/Fort Worth office market ended the third quarter 2016 with a vacancy rate of 18%. This represents a decrease in vacancy rate over the prior quarter. The building boom is under way in the 3rd Quarter with 8,697,799 square feet under construction in the Dallas/Ft. Worth office market.
Gangbusters. The Dallas area industrial market, supported by the strong local economy, a large stock of affordable land (concentrated most heavily in south Dallas County), and by the emergence of e-commerce retailing with its hot demand for big-block distribution space, is running full steam ahead. With 271.5 million square feet of existing inventory, the local warehouse/distribution market is huge. And it's been growing larger rapidly: more than 21.7 million square feet of new space completed construction over the two-year span 2014-2015. The first half of 2016 followed with 4.6 million. Demand, meanwhile, has been similarly robust. With a number of new major projects moving forward, construction and construction planning remain vibrant. The Dallas/Fort Worth industrial market ended the third quarter 2016 with a vacancy rate of 6.5%. This vacancy rate represents a decrease over the prior quarter. Another building boom is well under way on the industrial side with 1,434,410 square feet under construction at the end of the 3rd quarter.
Steady as she goes. The Dallas/Fort Worth retail market is staying steady with a slight decrease in vacancy and strong absorption. At Home relocated to 13307 Midway while Walmart and Kroger both occupied new spaces this quarter. Rents are starting to see a slight steady increase quarter to quarter and currently sit around $15.70 per square feet. That's up almost a dollar over the end of 2015. Retail construction is king in the market, with 70 retail buildings totaling 1 089,234 square feet being delivered in the 3rd quarter and an additional 4,854,935 still under construction. The retail market experienced a strong positive 1,740,601 square foot absorption in the 3rd quarter. This presents a string of 3 quarters with over 1,000,000 sf each in absorption.
Market data compiled from Reis Reports and
Costar Advisory Reports.
October 19, 2016
