Population and employment growth has been driving demand for new space. The region added 130,100 residents in 2019, more than any other metropolitan area in the country. During the same period, the region added 81,800 new jobs, leading the nation in this category as well. The region's competitive cost of living, accessibility, and highly educated workforce have made it a hotbed for corporate relocations and expansions. Uber has announced that it will open an office of at least 3,000 employees in Deep Ellum, and it plans to turn Dallas into its largest hub outside of its San Francisco headquarters. Joining Toyota, Samsung, and McKesson, which have all recently found a home in Dallas-Fort Worth, many more have announced plans or are looking to expand.
Strong economic underpinnings and a diverse economy have fostered a healthy office market. Annually, the market has absorbed 220,000 SF. Construction activity remains robust, with 6.3 million SF delivered last year and 8.3 million SF of space currently underway. Even with the building, vacancies should remain stable due to a significant portion of new space being preleased. Several large build-to-suits accounted for the lion's share of positive absorption, including American Airlines moving into its new 1.7-million-SF headquarters in Fort Worth and Charles Schwab moving into its 580,000-SF Westlake Campus. Rent growth remained positive at 2.5%, with many of the premier submarkets ranging from 4%-6% as tenants continue to clamor for new space in their flight to quality.
Corporate relocations and expansions continue to drive office demand in Dallas-Fort Worth. A highly skilled labor force, low business costs relative to coastal markets, and a central location make Dallas attractive. Add in the accessibility and competitive incentive packages offered by the State of Texas and local municipalities, and the region is a hotbed for corporate expansion and relocations.
While many markets have realized a steady stream of corporations migrating from suburbs to the urban core as they chase the millennial workforce, the suburbs of Dallas have been thriving. In early 2020, an Australian-based tech company moved to Plano. Appen, Inc. signed a 50,000 SF lease in Apex building on the Bush Turnpike for its first Texas office. In late 2019 the Credit Union of Texas moved into its new headquarters in Allen's Watters Creek development. The financial institution leased more than 51,000 square feet in the new One Bethany East office building.
Before deciding to move, the lender was based in North Dallas, at the intersection of LBJ Freeway and US Highway 75. Allstate Insurance is planning a significant expansion in Irving and expects to invest $11 million while adding 1,300 new jobs. Also, in Irving, construction of Pioneer Natural Resources' new campus has been completed, totaling over 1 million SF, and it will sit within two towers connected by a central hub that will help bring the company's nearly 1,100 employees together. McKesson Corp., the nation's largest pharmaceutical distributor, announced in late 2018 that it would relocate its headquarters from San Francisco to Irving. The company ranks sixth on the Fortune 500 list, making it the second-largest company by revenue based in North Texas and surpassing AT&T.
While suburban submarkets have benefited from most of the significant corporate moves, the urban core has attracted some sizable relocations and expansions, as well. Uber has announced that it will open an office of at least 3,000 employees in Deep Ellum, and it plans to turn Dallas into its largest hub outside of its San Francisco headquarters. Salesforce has consolidated workers from across North Texas to The Union in Uptown, leasing just over 100,000 SF. The Beck Group moved 200 employees to its new 81,000-SF headquarters at Thanksgiving Tower in November 2019. AT&T continued to revamp its Downtown headquarters to accommodate 2,000 new hires. The carrier is investing over $100 million in an "urban tech center" that will be known as the AT&T Discovery District, featuring shopping, dining, and relaxation opportunities for employees, residents, and visitors.
Annually, the Dallas-Fort Worth market has experienced over 220,000 SF of positive net absorption, the second-most in the U.S., while much of the demand came in the form of build-to-suits for large single tenants, multi-tenant activity picked up in 2020. This trend has been particularly true in 4 & 5 Star assets, which have accounted for around 70% of the net absorption over the past 12 months, reinforcing the flight-to-quality trend.
The information contained herein was obtained from CoStar; however, Bradford Companies makes no guarantees, warranties, or representation as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease or withdrawal without notice.