MEET Dallas-Fort Worth - Cushman & Wakefield - …/media/marketbeat/201… · · 2017-04-24Q1...
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cushmanwakefield.com I 1 Dallas-Fort Worth Office Q1 2017 MARKETBEAT Economy The Dallas-Fort Worth-Arlington economy continues to thrive, as increases in total population and overall employment endure. According to Moody’s Analytics population increased by ±142,000 year-over-year, reaching ±7.3 million people at the end of Q1 2017, equating to an average of 395 new residents each day. During the same time period, the Dallas-Fort Worth-Arlington employment base increased by ±125,000, dropping the unemployment rate by 10-basis-points (BP) and closing the first quarter of 2017 at 3.8%. Out of the ±125,000 jobs added, 29% (37,000 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 62% of the entire office sector employment and is the leading indicator for office space demand. Market Overview At the close of Q1 2017, office vacancy in the Dallas-Fort Worth market stood at 16.5%. This marks a slight 10 BP decrease from the 16.6% rate that was in place three months ago. The Dallas-Fort Worth office market began 2017 on a strong note, absorbing more than 1.5 million square feet (MSF) during the first quarter. Occupancy growth took place in 13 of Dallas-Fort Worth’s 22 office submarkets in Q1. The Las Colinas submarket (12.4% vacancy) led the way with more than 609,000 square feet (SF) of net absorption, due in large part to CoreLogic moving into its new 327,000 SF build- to-suit (BTS) space and Caliber Home Loans occupying all 183,000 SF in Point West I. The Far North Dallas submarket (14.9%) followed with a net gain of over 413,000 SF, which can largely be attributed to Shelton School occupying the 317,000 SF former State Farm space in Dallas. During the first quarter of 2017, the Dallas-Fort Worth office market experienced a 21% (213,000 SF) increase in sublease space, primarily due to local companies “right-sizing.” A recent trend has emerged that has businesses implementing workplace strategies that better leverage space, work patterns, technology, and HR policies to support the changing nature of their work, while increasing productivity and reducing costs. Currently, sublease space accounts for DALLAS OFFICE Overall Vacancy Overall Net Absorption/Overall Asking Rent 4QTR TRAILING AVERAGE Market Indicators (Overall, All Classes) Q1 16 Q1 17 12-Month Forecast Vacancy 16.0% 16.5% Net Absorption (SF) 2.1M 1.5M Under Construction (SF) 6.5M 5.9M Average Asking Rent* $25.44 $26.15 Economic Indicators Q1 16 Q1 17 12-Month Forecast DFW Employment 3,470 3,595 DFW Unemployment 3.9% 3.8% U.S. Unemployment 4.9% 4.8% *Rental rates reflect gross asking $PSF/year $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 0.8 0.6 0.4 0.2 0.0 1.6 1.4 1.2 1.0 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 $16.00 Q1 2017 Net Absorption, MSF Asking Rent, $ PSF Millions 15% 16% 17% 18% 19% 20% 21% 22% Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Historical Average = 18.8%
Transcript of MEET Dallas-Fort Worth - Cushman & Wakefield - …/media/marketbeat/201… · · 2017-04-24Q1...
cushmanwakefield.com I 1
Dallas-Fort WorthOffice Q1 2017
MARKETBEAT
EconomyThe Dallas-Fort Worth-Arlington economy continues to thrive, as increases in total population and overall employment endure. According to Moody’s Analytics population increased by ±142,000 year-over-year, reaching ±7.3 million people at the end of Q1 2017, equating to an average of 395 new residents each day. During the same time period, the Dallas-Fort Worth-Arlington employment base increased by ±125,000, dropping the unemployment rate by 10-basis-points (BP) and closing the first quarter of 2017 at 3.8%. Out of the ±125,000 jobs added, 29% (37,000 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 62% of the entire office sector employment and is the leading indicator for office space demand.
Market OverviewAt the close of Q1 2017, office vacancy in the Dallas-Fort Worth market stood at 16.5%. This marks a slight 10 BP decrease from the 16.6% rate that was in place three months ago.
The Dallas-Fort Worth office market began 2017 on a strong note, absorbing more than 1.5 million square feet (MSF) during the first quarter. Occupancy growth took place in 13 of Dallas-Fort Worth’s 22 office submarkets in Q1. The Las Colinas submarket (12.4% vacancy) led the way with more than 609,000 square feet (SF) of net absorption, due in large part to CoreLogic moving into its new 327,000 SF build-to-suit (BTS) space and Caliber Home Loans occupying all 183,000 SF in Point West I. The Far North Dallas submarket (14.9%) followed with a net gain of over 413,000 SF, which can largely be attributed to Shelton School occupying the 317,000 SF former State Farm space in Dallas.
During the first quarter of 2017, the Dallas-Fort Worth office market experienced a 21% (213,000 SF) increase in sublease space, primarily due to local companies “right-sizing.” A recent trend has emerged that has businesses implementing workplace strategies that better leverage space, work patterns, technology, and HR policies to support the changing nature of their work, while increasing productivity and reducing costs. Currently, sublease space accounts for
DALLAS OFFICE
Overall Vacancy
Overall Net Absorption/Overall Asking Rent 4QTR TRAILING AVERAGE
Market Indicators (Overall, All Classes) Q1 16 Q1 17 12-Month
Forecast
Vacancy 16.0% 16.5%
Net Absorption (SF) 2.1M 1.5M
Under Construction (SF) 6.5M 5.9M
Average Asking Rent* $25.44 $26.15
Economic Indicators Q1 16 Q1 17 12-Month
Forecast
DFW Employment 3,470 3,595
DFW Unemployment 3.9% 3.8%
U.S. Unemployment 4.9% 4.8%
*Rental rates reflect gross asking $PSF/year
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
0.8
0.6
0.4
0.2
0.0
1.6
1.4
1.2
1.0
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016
$16.00
Q1 2017
Net Absorption, MSF Asking Rent, $ PSF
Mill
ions
15%
16%
17%
18%
19%
20%
21%
22%
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017
Historical Average = 18.8%
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Dallas-Fort WorthOffice Q1 2017
MARKETBEAT
3.4% of the total available space in the Dallas-Fort Worth market.
Throughout Q1 2017, developers added more than 1.4 MSF of new product to the Dallas-Fort Worth office market, of which 77% (1.1 MSF) was delivered in the form of speculative space. In terms of new construction, two projects broke ground totaling 516,000 SF, including Brinker International’s 216,000 SF BTS facility at Cypress Waters, in the Las Colinas submarket. Cushman & Wakefield is currently tracking more than 5.8 MSF under construction, with nearly 46% (2.7 MSF) occurring in Legacy/Frisco submarket.
Dallas-Fort Worth’s overall average asking rate continues to rise and currently stands at $26.15 per square foot (PSF), on an annual full-service basis. This marks a 1.9% ($0.48 PSF) increase quarter-over-quarter and an even more considerable increase of 2.8% ($0.71 PSF) year-over-year. The Oak Cliff ($17.15 PSF) and Mid Cities ($22.41 PSF) submarkets recorded the largest quarterly gains, increasing 12% and 6.6%, respectively. The Uptown/Turtle Creek ($38.10 PSF) and Preston Center ($37.04 PSF) remain atop all other submarkets in terms of average asking rates, and it is no coincidence that the overall Class A rates in these trade areas are also the highest in the Dallas-Fort Worth market, at $40.30 PSF and $37.77 PSF, respectively.
Sublease & Direct Trend SUBLEASE SPACE INCREASING.
THE DALLAS-FORT WORTH OFFICE MARKET EXPERIENCED A 21% (213,000 SF) INCREASE IN SUBLEASE SPACE, PRIMARILY DUE TO LOCAL COMPANIES “RIGHT-SIZING” DURING THE FIRST QUARTER OF 2017.
CLASS A Asking Rent TrendCLASS A RENTS INCREASED 1.1% IN Q1 2017.
New Supply NEW SUPPLY IN 2017 IS EXPECTED TO EXCEED THE HISTORICAL AVERAGE
BY 116%.
Outlook
• Numerous tenants are in the market exploring space options, but likely will lease less square footage due to more efficient space layouts based on new workplace design strategies.
• New construction deliveries over the next several months will put an upward pressure on vacancy rates.
• Due to increasing operating expenses, asking lease rates are expected to raise throughout 2017.
33.432.9
34.0
35.3 35.1
1.0
1.0
1.1
1.0 1.2
31
32
33
34
35
36
37
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Millio
ns
0
1
2
3
4
5
6
2002 2005 2008 2011 2014 2017
Millio
ns
New Supply Historic Average
Historical Average = 2.3 MSF
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
$31.00
$33.00
2002 2005 2008 2011 2014 2017
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Dallas-Fort WorthOffice Q1 2017
MARKETBEAT
*Rental rates reflect gross asking $PSF/year
SUBMARKETTOTAL
BLDGSINVENTORY
SUBLET
VACANT
DIRECT
VACANT
VACANCY
RATE
Q1 NET
ABSORPTION
2017 YTD NET
ABSORPTION
UNDER
CONSTRUCTION
OVERALL RATE
(ALL CLASSES)
OVERALL RATE
(CLASS A)
Dallas CBD 61 26,593,111 91,625 6,370,229 24.3% 97,360 97,360 261,400 $28.03 $32.53
North Central Expressway 72 11,519,168 22,738 1,656,436 14.6% 25,162 25,162 0 $28.46 $30.96
Preston Center 34 3,628,132 29,063 421,468 12.4% -80,193 -80,193 186,257 $37.04 $37.76
Uptown/Turtle Creek 72 11,034,506 77,747 1,350,722 12.9% -102,350 -102,350 1,296,193 $38.10 $42.15
West Love Field 71 10,270,858 46,073 2,069,919 20.6% -25,057 -25,057 0 $16.17 $21.96
Oak Cliff 9 555,564 0 32,714 5.9% -6,761 -6,761 0 $17.15 N/A
LBJ Freeway 108 18,174,870 122,875 3,811,555 21.6% 78,441 78,441 0 $24.61 $31.81
Northeast Dallas 39 3,056,170 4,300 670,423 22.1% -3,703 -3,703 0 $16.91 $22.45
Las Colinas 193 31,609,426 221,382 3,701,889 12.4% 609,293 609,293 702,038 $24.87 $29.90
Far North Dallas 140 18,229,539 163,092 2,558,350 14.9% 413,113 413,113 0 $24.89 $32.20
Richardson/Plano 175 21,715,467 88,273 4,291,029 20.2% 129,580 129,580 358,441 $25.56 $26.12
Mid Cities 101 8,780,932 94,026 1,713,147 20.6% 43,889 43,889 113,840 $22.41 $27.80
Arlington 78 6,031,571 48,891 783,974 13.8% -52,934 -52,934 0 $18.65 $21.37
Lewisville/Carrollton 50 3,870,692 0 297,301 7.7% 935 935 0 $17.08 N/A
Southwest Dallas 15 501,230 0 96,151 19.2% -3,193 -3,193 0 $17.42 $26.55
East I-30 Corridor 20 1,213,236 0 86,817 7.2% 6,361 6,361 0 $21.11 $34.30
Legacy/Frisco 150 20,142,531 106,962 2,908,811 15.0% 284,201 284,201 2,688,704 $32.95 $35.96
DALLAS SUBURBS TOTAL 1,327 170,333,892 1,025,422 26,450,706 16.1% 1,316,784 1,316,784 5,345,473 $25.71 $31.40
DALLAS TOTAL 1,388 196,927,003 1,117,047 32,820,935 17.2% 1,414,144 1,414,144 5,606,873 $26.16 $31.65
Fort Worth CBD 101 11,722,573 11,891 1,040,502 9.0% -6,270 -6,270 278,000 $30.17 $33.86
East Fort Worth 39 2,217,451 100,000 135,157 10.6% 6,397 6,397 0 $16.04 N/A
North Fort Worth 36 3,831,888 0 794,090 20.7% 30,486 30,486 0 $21.36 $20.48
South Fort Worth 39 3,208,738 0 240,130 7.5% 76,550 76,550 0 $31.16 $33.69
West Fort Worth 44 3,020,881 5,507 109,113 3.8% 0 0 0 $27.46 $24.93
FW SUBURBS TOTAL 158 12,278,958 105,507 1,278,490 11.3% 113,433 113,433 0 $23.16 $24.08
FORT WORTH TOTAL 259 24,001,531 117,398 2,318,992 10.2% 107,163 107,163 278,000 $26.13 $28.75
DFW TOTAL 1,647 220,928,534 1,234,445 35,139,927 16.5% 1,521,307 1,521,307 5,884,873 $26.15 $31.37
CLASS TYPETOTAL
BLDGSINVENTORY
SUBLET
VACANT
DIRECT
VACANT
VACANCY
RATE
Q1 NET
ABSORPTION
2017 YTD NET
ABSORPTION
UNDER
CONSTRUCTIONOVERALL RATE DIRECT RATE
Class A 372 100,822,306 707,031 14,713,292 15.3% 860,087 860,087 5,862,873 $31.37 $31.41
Class B 779 91,343,732 500,229 16,223,823 18.3% 741,358 741,358 22,000 $23.17 $23.19
Class C 496 28,762,496 27,185 4,202,812 14.7% -80,138 -80,138 0 $18.37 $18.34
Total 1,647 220,928,534 1,234,445 35,139,927 16.5% 1,521,307 1,521,307 5,884,873 $26.15 $26.13
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Dallas-Fort WorthOffice Q1 2017
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. 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. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients’ ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2017 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.
OFFICE SUBMARKETS DALLAS-FORT WORTH
ROANOKE
KELLER
LANCASTERLANCASTER
BALCHSPRINGS
MURPHY
NORTHRICHLAND
HILLS
HALTOMCITY
DE SOTODE SOTO
ALLEN
FRISCO
EULESS
COLLEYVILLE
SAGINAW
FOREST HILL
CORINTH
WHITESETTLEMENT
BEDFORD
DUNCANVILLE
LITTLE ELM
BENBROOK
FARMERSBRANCH
HIGHLANDPARK
ADDISON
HIGHLANDVILLAGE
CARROLLTON
DALLAS
FORT WORTH
MESQUITE
ARLINGTON
GARLAND
PLANO
DALLASLOVE FIELD
DALLAS / FORT WORTHINTERNATIONAL AIRPORT
GRAPEVINE
78TEXAS
78TEXAS
244TEXAS
12TEXAS
352TEXAS
352TEXAS
12TEXAS
75
75
75
75
75
75
75
175
67
30
30 635
30 80
635
635
635
20
20
175
20
45
45
17520 35E
35E
635
635
289TEXAS
289TEXAS
35E
35E
35E
354TEXAS
35E
35E
3030
114TEXAS
114TEXAS
183TEXAS
183TEXAS
348TEXAS
342TEXAS
360TEXAS
360TEXAS
20
360TEXAS
183TEXAS
97TEXAS
30
20
303TEXAS 303
TEXAS
360TEXAS
303TEXAS
360TEXAS
360TEXAS
180TEXAS
303TEXAS
820
20
30
820
820
287
287
287
20
287
10TEXAS
180TEXAS
121TEXAS
121TEXAS
37735W
820820
35W
35W
35W
30
3030
121TEXAS
360TEXAS
377
170TEXAS
114TEXAS
114TEXAS
114TEXAS
35W
35W
114TEXAS
114TEXAS
287
287
287B U S
377
820
199TEXAS
199TEXAS
199TEXAS
199TEXAS
183TEXAS
183TEXAS
20
20
20
30
820377
377
580TEXAS
287B U S
287B U S
170TEXAS
377
26TEXAS
121TEXAS
121TEXAS
635
121TEXAS
35E
35E
121TEXAS
377
407
North Fort Worth
South Fort Worth
Fort Worth CBD
Northeast Fort Worth
Mid-Cities
Southlake/Westlake
Southwest Dallas
Dallas CBD
Uptown/Turtle Creek
West Love Field
Las Colinas/DFW Freeport
Preston Center
Central Expressway
East Dallas
LBJ Freeway
Richardson/Plano
Legacy/Frisco
Far North Dallas
Lewisville/Carrollton
Cushman & Wakefield2021 McKinney Ave, Suite 900Dallas, TX 75201cushmanwakefield.com
For more information, contact:Curtis Hornaday Market Research Director - DallasTel: +1 972 663 [email protected]
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