MAETBEAT Dallas-Fort Worth/media/marketbeat/201… · · 2018-04-18Q1 2012 Q1 2013 Q1 2014 Q1...
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cushmanwakefield.com I 1 Dallas-Fort Worth Office Q1 2018 MARKETBEAT Economy The Dallas-Fort Worth-Arlington economy continues to thrive, as increases in total population and overall employment persist. According to Moody’s Analytics, the region’s population increased by 136,000 year-over-year, reaching 7.5 million people at the end of March. This equates to an average of 375 new residents each day. During the same time period, the Dallas-Fort Worth-Arlington employment base increased by 87,000, dropping the unemployment rate by 60 basis points (bps) to 3.4% at the close of Q1 2018. Out of the 87,000 jobs added, 22% (19,000 jobs) can be attributed to the office sector, which includes business and professional services, information/technology, and financial activities. The business and professional services category accounts for 61% (603,000 jobs) of the entire office sector employment base (985,000 jobs) and is the leading indicator for office space demand. Market Overview The Dallas-Fort Worth office market continued to show growth during the first three months of the year. A total of 5.1 million square feet (msf) of new space was under construction at the close of Q1 2018, down slightly from the 5.5 msf for Q1 2017. Of the 5.1 msf that has broken ground, 43% (2.2 msf) is comprised of build-to-suit (BTS) projects. Completions for the quarter totaled nearly 1.5 msf, of which 33% was preleased. Looking ahead, Cushman & Wakefield is tracking nearly 3 msf of office space slated for completion during 2018, with projects spanning across the region. Office vacancy in the Dallas-Fort Worth market increased significantly in Q1 2018, climbing 120 bps to 17.7%, year-over- year. The jump in vacancy can be attributed to multiple major move-outs during the quarter. Among them was Fannie Mae, which vacated two buildings totaling 560,000 square feet (sf) in Far North Dallas and moved to Granite Park in the Legacy/Frisco submarket. Additionally, JPMorgan vacated 351,000 sf in Far North Dallas and moved into its new owner- occupied campus in Legacy/Frisco. + Occupancy growth took place in 12 of Dallas-Fort Worth’s 21 submarkets, with the Las Colinas and Arts District submarkets recording the most absorption through the first three months of 2018. Signet Jewelers moved into its newly constructed 250,000 sf office in Freeport (Las Colinas), DALLAS OFFICE Overall Vacancy Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE Market Indicators (Overall, All Classes) Q1 17 Q1 18 12-Month Forecast Overall Vacancy 16.5% 17.7% Net Absorption (SF) 1.0M 0.5M Under Construction (SF) 5.9M 5.1M Average Asking Rent* $26.15 $27.31 Economic Indicators* Q1 17 Q1 18 12-Month Forecast DFW Employment 3,565K 3,652K DFW Unemployment 4.0% 3.4% U.S. Unemployment 4.7% 4.1% *Q1 data is based on the average of January & February values *Rental rates reflect gross asking $PSF/year $16.00 $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Millions Net Absorption, MSF Asking Rent, $ PSF 14% 16% 18% 20% 22% Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 HISTORICAL AVERAGE = 18.6%
Transcript of MAETBEAT Dallas-Fort Worth/media/marketbeat/201… · · 2018-04-18Q1 2012 Q1 2013 Q1 2014 Q1...
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Dallas-Fort WorthOffice Q1 2018
MARKETBEAT
EconomyThe Dallas-Fort Worth-Arlington economy continues to thrive, as increases in total population and overall employment persist. According to Moody’s Analytics, the region’s population increased by 136,000 year-over-year, reaching 7.5 million people at the end of March. This equates to an average of 375 new residents each day. During the same time period, the Dallas-Fort Worth-Arlington employment base increased by 87,000, dropping the unemployment rate by 60 basis points (bps) to 3.4% at the close of Q1 2018. Out of the 87,000 jobs added, 22% (19,000 jobs) can be attributed to the office sector, which includes business and professional services, information/technology, and financial activities. The business and professional services category accounts for 61% (603,000 jobs) of the entire office sector employment base (985,000 jobs) and is the leading indicator for office space demand.
Market Overview
The Dallas-Fort Worth office market continued to show growth during the first three months of the year. A total of 5.1 million square feet (msf) of new space was under construction at the close of Q1 2018, down slightly from the 5.5 msf for Q1 2017. Of the 5.1 msf that has broken ground, 43% (2.2 msf) is comprised of build-to-suit (BTS) projects. Completions for the quarter totaled nearly 1.5 msf, of which 33% was preleased. Looking ahead, Cushman & Wakefield is tracking nearly 3 msf of office space slated for completion during 2018, with projects spanning across the region.
Office vacancy in the Dallas-Fort Worth market increased significantly in Q1 2018, climbing 120 bps to 17.7%, year-over-year. The jump in vacancy can be attributed to multiple major move-outs during the quarter. Among them was Fannie Mae, which vacated two buildings totaling 560,000 square feet (sf) in Far North Dallas and moved to Granite Park in the Legacy/Frisco submarket. Additionally, JPMorgan vacated 351,000 sf in Far North Dallas and moved into its new owner-occupied campus in Legacy/Frisco.+
Occupancy growth took place in 12 of Dallas-Fort Worth’s 21 submarkets, with the Las Colinas and Arts District submarkets recording the most absorption through the first three months of 2018. Signet Jewelers moved into its newly constructed 250,000 sf office in Freeport (Las Colinas),
DALLAS OFFICE
Overall Vacancy
Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE
Market Indicators (Overall, All Classes) Q1 17 Q1 18 12-Month
Forecast
Overall Vacancy 16.5% 17.7%
Net Absorption (SF) 1.0M 0.5M
Under Construction (SF) 5.9M 5.1M
Average Asking Rent* $26.15 $27.31
Economic Indicators*
Q1 17 Q1 18 12-Month Forecast
DFW Employment 3,565K 3,652K
DFW Unemployment 4.0% 3.4%
U.S. Unemployment 4.7% 4.1%
*Q1 data is based on the average of January & February values
*Rental rates reflect gross asking $PSF/year
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
0.0
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0.6
0.8
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Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018
Milli
ons
Net Absorption, MSF Asking Rent, $ PSF
14%
16%
18%
20%
22%
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018
HISTORICAL AVERAGE = 18.6%
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Dallas-Fort WorthOffice Q1 2018
MARKETBEAT
which largely contributed to the submarket’s over 600,000 sf of absorption for the quarter. The Arts District absorbed 245,000 sf—nearly 80% of the total occupancy growth in the Dallas CBD. Goldman Sachs made up a significant amount of this, occupying 175,000 sf at Trammell Crow Center.
Dallas-Fort Worth’s overall average asking lease rate continues to climb, closing the first quarter of 2018 at $27.30 per square foot (psf) on an annual full-service basis. This marks a 3% ($0.81 psf) increase from Q4 2017 ($26.49) and a 4.4% ($1.15) increase from a year ago. During Q1 2018, Cushman & Wakefield began tracking Dallas’ central business district in three micro-markets, due to the distinct characteristics of the Arts District, the West End, and CBD Core. Additionally, Uptown and Turtle Creek were split, in order to show competing markets more clearly. With the new construction and multimillion-dollar redevelopments along Ross Avenue, the Arts District boasts Class A rates of $43.40 psf—second only to Uptown ($47.24 psf). These rents are a stark contrast to Class A rates in neighboring submarkets, the CBD Core ($26.61 psf) and West End ($31.84 psf). Overall, lease rates in downtown Dallas climbed an impressive $2.74 psf in the past year (from $28.03 psf to $30.77 psf), an increase of 9.8%. Other big year-over-year movers were Preston Center, up $3.70 psf (from $37.04 to $40.74) and Legacy/Frisco, up $1.38 (from $32.95 to $34.44).
Sublease & Direct Trend SUBLEASE SPACE INCREASED 37% YEAR-OVER-YEAR
Class A Asking Rent TrendCLASS A RENTS DECREASED 1.7% DURING THE FIRST QUARTER OF 2018.
CUSHMAN & WAKEFIELD IS TRACKING NEARLY 3 MSF OF OFFICE SPACE SLATED FOR COMPLETION DURING 2018, WITH PROJECTS
SPANNING ACROSS THE REGION.
New Supply NEW SUPPLY IN 2018 EXCEEDED THE HISTORICAL AVERAGE BY 40%.
Outlook• A large number of office tenants will continue to
renegotiate leases throughout 2018, as many 10-year leases were signed during the downturn in 2008 and 2009.
• Landlords will continue to update older buildings and add amenities to keep up with tenant demands and compete with newer product.
• The Dallas market is still seeing a good balance of corporate relocation activity and organic growth from existing company expansions.
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1
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2003 2006 2009 2012 2015 2018
Mill
ions
New Supply Historic Average
35.3 35.1 34.334.8
36.01.0
1.21.4
1.5
1.4
313233343536373839404142
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Milli
ons
Direct Sublease
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
$31.00
$33.00
2003 2006 2009 2012 2015 2018
HISTORICAL AVERAGE = 2.3 MSF
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Dallas-Fort WorthOffice Q1 2018
MARKETBEAT
*Rental rates reflect gross asking $PSF/year+ Cushman & Wakefield does not include owner-occupied buildings in inventory
SUBMARKETTOTAL BLDGS
INVENTORYSUBLET VACANT
DIRECT VACANT
VACANCY RATE
Q1 NETABSORPTION
2018 YTD NET ABSORPTION
UNDERCONSTRUCTION
2018 YTD COMPLETIONS
OVERALL RATE (ALL CLASSES)*
OVERALL RATE (CLASS A)
CBD Core 37 18,616,007 9,928 4,546,704 24.5% -10,694 -10,694 35,710 0 $27.17 $28.61
Arts District 9 6,094,382 15,775 1,270,619 21.1% 245,581 245,581 0 261,400 $43.40 $43.40
West End 19 3,610,478 22,087 947,881 26.9% -45,837 -45,837 102,315 0 $30.82 $31.84
DALLAS CBD TOTAL 65 28,320,867 47,790 6,765,204 24.1% 189,050 189,050 138,025 261,400 $30.77 $32.37
Uptown 45 7,886,620 183,306 556,625 9.4% -32,686 -32,686 1,283,243 0 $40.48 $47.24
Turtle Creek 39 4,047,979 19,104 545,301 13.9% 52,904 52,904 18,000 0 $36.18 $37.39
Preston Center 34 3,925,769 40,589 529,721 14.5% 4,281 4,281 85,000 0 $40.74 $42.42
Legacy/Frisco (Far North Dallas North)
192 24,110,522 233,220 3,592,975 15.9% 82,958 82,958 405,600 300,000 $34.33 $36.76
Far North Dallas South 173 19,771,268 257,210 3,841,404 20.7% -859,514 -859,514 240,000 0 $25.92 $28.95
Las Colinas 239 32,184,432 384,618 4,086,548 13.9% 604,258 604,258 2,085,900 250,000 $25.96 $29.58
North Central Expressway
81 12,735,395 31,864 1,941,819 15.5% -11,768 -11,768 0 0 $31.10 $32.60
Richardson/Plano 240 23,984,110 288,223 4,352,795 19.4% 233,505 233,505 240,000 249,514 $24.85 $27.71
LBJ Freeway 136 18,782,648 105,622 4,161,585 22.7% 10,807 10,807 0 0 $24.29 $28.88
Southlake/Westlake 75 5,214,274 17,317 1,355,288 26.3% 2,589 2,589 48,400 0 $26.46 $26.82
West Love Field 77 10,280,386 5,265 2,208,797 21.5% -3,608 -3,608 0 0 $17.45 $20.92
Mid Cities 132 9,787,308 25,353 1,556,103 16.2% 8,134 8,134 0 0 $18.99 $21.04
Lewisville/Carrollton 83 4,785,978 0 612,523 12.8% -32,363 -32,363 20,000 0 $21.19 $27.75
Southwest Dallas 39 1,763,003 0 168,064 9.5% 0 0 0 0 $18.77 $26.55
East Dallas 73 2,668,909 0 309,061 11.6% 0 0 251,354 0 $19.10 -
DALLAS SUBURBS TOTAL
1,658 181,928,601 1,591,691 29,818,609 17.3% 59,497 59,497 4,677,497 799,514 $26.65 $30.83
DALLAS TOTAL 1,723 210,249,468 1,639,481 36,583,813 18.2% 248,547 248,547 4,815,522 1,060,914 $27.41 $31.22
Fort Worth CBD 77 11,229,742 13,016 1,135,386 10.2% 146,767 146,767 0 280,489 $30.34 $33.89
East Fort Worth 28 1,527,459 42,645 146,063 12.4% 57,355 57,355 0 0 $14.94 -
North Fort Worth 21 2,068,910 0 783,601 37.9% 0 0 328,354 0 $21.35 $20.47
South Fort Worth 21 1,694,918 0 118,801 7.0% 47,714 47,714 0 0 $28.65 $33.59
West Fort Worth 32 2,609,733 0 109,526 4.2% 0 0 0 0 $27.76 $25.16
FW SUBURBS TOTAL 102 7,901,020 42,645 1,157,991 15.2% 105,069 105,069 328,354 0 $21.87 $22.33
FORT WORTH TOTAL 179 19,130,762 55,661 2,293,377 12.3% 251,836 251,836 328,354 280,489 $25.50 $28.29
DFW TOTAL 1,902 229,380,230 1,695,142 38,877,190 17.7% 500,383 500,383 5,143,876 1,341,403 $27.31 $31.07
CLASS TYPETOTAL BLDGS
INVENTORYSUBLET VACANT
DIRECT VACANT
VACANCY RATE
Q1 NETABSORPTION
2018 YTD NET ABSORPTION
UNDERCONSTRUCTION
2018 YTD COMPLETIONS
OVERALL RATE DIRECT RATE
Class A 503 133,009,767 1,103,421 23,559,892 18.5% 421,974 421,974 4,697,022 1,221,889 $31.07 $31.13
Class B 1,205 87,674,357 589,357 14,102,451 16.8% 95,228 95,228 446,854 119,514 $21.69 $21.66
Class C 194 8,696,106 2,364 1,214,847 14.0% -16,819 -16,819 0 0 $16.89 $16.90
Total 1,902 229,380,230 1,695,142 38,877,190 17.7% 500,383 500,383 5,143,876 1,341,403 $27.31 $27.33
Dallas-Fort WorthOffice Q1 2018
MARKETBEAT
OFFICE SUBMARKETS DALLAS-FORT WORTH
35W
35W
35W
35W
35E
35E
35E
35E
35E
35E
35E
B U S
DA L LAS
FO RT WO RT H
D E N TO NM C K I N N E Y
G A R LA N D
A R L I N GTO N
G RA P E V I N E
M A N S F I E L D
I RV I N G
F LOW E R M O U N D
G RA N DP RA I R I E
L E W I SV I L L E
CA R R O L LTO N
P LA N O
A L L E N
LU CAS
SAC H S ER I C H A R DSO N
A D D I SO N
H I G H LA N D PA R K
SO U T H LA K E
CO P P E L L
M E SQ U I T E
H U TC H I N S
W I L M E R
LA N CAST E RD E SOTO
D U N CA N V I L L E
E V E R M A N
B E N B R O O K
W H I T ES E T T L E M E N T
N O RT HR I C H LA N D
H I L LS
H A LTO M C I TY
H U R ST
E U L E SS
H AS L E T T
R OA N O K E
DALLAS CBD - MICRO MARKETS
ARTS DISTRICT
UPTOWN
TURTLE CREEK
CBD COREWEST END
35E
LBJ FREEWAY
DALLAS CBDUPTOWN
TURTLE CREEK
EAST DALLAS
WESTLOVE FIELD
CENTRALEXPRESSWAY
SOUTHWESTDALLAS
MID-CITIES
PRESTONCENTER
LAS COLINAS
LEWISVILLE/CARROLLTON
LEGACY/FRISCO
FAR NORTHDALLAS
RICHARDSON/PLANO
SOUTHLAKE/WESTLAKE
FORTWORTH CBD
NORTHEASTFORT WORTH
NORTHFORT WORTH
SOUTHFORT WORTH
For more information, contact:
Curtis Hornaday Market Research Director - Dallas+1 972 663 [email protected]
Eleanor SkinnerResearch Analyst+1 972 663 [email protected]
Brett FrickeResearch Analyst+1 972 663 [email protected]
Cushman & Wakefield2021 McKinney Ave.Suite 900Dallas, TX 75201
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About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
