MARKETBEAT
OFFICE SNAPSHOT
DALLAS-FORT WORTH, TX
Q1 2015
A Cushman & Wakefield Research Publication
ECONOMIC OVERVIEW
The Texas economy continues to grow, but
some metros are beginning to experience a
deceleration, especially those where energyrelated jobs make up a large percentage of
employment. The Texas Workforce
Commission reported in March that the Dallas-Fort Worth (DFW)
labor market grew 3.6% by adding 115,800 nonagricultural jobs over
the last 12 months (317 net jobs per day). First quarter job growth
was mixed with the largest gains in the leisure & hospitality, trade,
transportation & utilities, and information sectors. The largest
decrease occurred in the construction & mining sector, falling 4.7%,
followed by professional & business services. The DFW labor market
is slowly tightening with unemployment at 4.0%, the lowest level since
April 2008 and well below the U.S. rate of 5.5%.
OUTLOOK
Overall market fundamentals continue to remain strong in DFW. The
metro area has enjoyed healthy growth for several years, however
uncertainty surrounding the price of crude oil and long-term interest
rates are creating some headwind. Depressed crude oil prices are not
expected to significantly impact the area’s real estate market at this
point, as the local economy is diversified enough to weather any
short-term shocks. However, companies that support those in the
energy industry, especially small and mid-sized firms, face an unknown
future, and that is beginning to affect leasing activity within those
sectors.
STATS ON THE GO
Q1 2015
Y-O-Y
CHANGE
17.8%
16.6%
-1.2pp
$20.73
$21.50
3.7%
3,998,424
2,877,634
-28.0%
Overall Vacancy
Net absorption remained relatively strong throughout Q1 as tenants
occupied spaces leased in late 2014. Direct net absorption reached
nearly 1.2 million square feet (msf), comparable to Q1’14 totals.
Major tenants occupying space included State Farm, Nationstar
Mortgage, SoftLayer, Richards Group, and Hilti.
Leasing activity dropped 28% to 2.9 msf compared to this period last
year with class A transactions accounting for 45% of the total
compared to 54% in 2014. Major leases signed included GE Capital,
NEC Corp, CEC Entertainment (Chuck E. Cheese), Huckabee, Top
Golf, and Travelocity.
Direct Asking Rents (psf/yr)
YTD Leasing Activity (sf)
$22.00
25.0%
$21.50
20.0%
$21.00
15.0%
$20.50
10.0%
$20.00
5.0%
$19.50
Full-service asking rental rates across all classes were $21.64 per
square foot (psf), an increase of 4.5% from Q1 2014. Class A asking
rents were at an all-time high of $26.63 psf, rising 4.9% over the last
year.
Available sublease space grew to 1.4 msf with Wingspan,
CompuCom, and Carlson subleasing nearly 0.5msf. Construction
completions totaled 831,000 sf with State Farm’s first office tower at
CityLine accounting for over half of that total. An additional 8.8 msf is
currently under construction, 43% of which is pre-leased.
$19.00
0.0%
2010
2011
2012
DIRECT GROSS RENTAL RATE
2013
2014
OVERALL OCCUPIER ACTIVITY
20.0
15.0
For more information, contact:
Ryan Tharp, Director of Research
+(1) 972 663 9649
ryan.tharp@cushwake.com
15.0
3.0
15.9
3.5
13.9
5.0
2.9
0.6
-5.0
12.3
1.6
0.0
13.0
5.0
2011
2012
2013
2014
Q1 15
-0.4
msf
Over 4.3 msf of investment office properties traded hands with a
total value of over $635 million in Q1. Two of the most prominent
transactions were the sale of the Allstate Insurance building to Select
Income REIT for $104.4 million ($236 psf) and Park Place on Turtle
Creek to Piedmont for $46.6 million ($256 psf).
Q1 15
DIRECT VACANCY RATE
10.0
INVESTOR FOCUS
12 MONTH
FORECAST
DIRECT RENTAL VS. VACANCY RATES
psf/yr
OCCUPIER FOCUS
Cushman & Wakefield of Texas, Inc.
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
www.cushmanwakefield.com/knowledge
Q1 2014
2010
LEASING ACTIVITY
ABSORPTION
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
1
DALLAS-FORT WORTH, TX
SUBMARKET
INVENTORY
OVERALL
VACANCY
RATE
DIRECT
VACANCY
RATE
YTD LEASING
ACTIVITY
UNDER
CONSTRUCTION
YTD
CONSTRUCTION
COMPLETIONS
YTD DIRECT
NET ABSORPTION
YTD OVERALL
NET ABSORPTION
OVERALL WTD. AVG
ALL CLASSES GROSS
RENTAL RATE*
DALLAS CBD
26,651,220
21.8%
21.6%
281,248
454,500
0
258,337
258,337
$22.51
DIRECT WTD.
AVG.
CLASS A GROSS
RENTAL RATE*
$25.33
North Central
12,012,020
21.6%
19.6%
169,359
0
208,383
6,952
-231,629
$22.96
$ 26.49
Preston Center
3,425,870
9.6%
9.2%
27,094
190,000
0
(21,844)
(21,844)
$34.61
$37.65
Uptown/Turtle
Creek
10,369,899
12.9%
12.2%
116,013
802,000
0
(19,761)
(69,143)
$31.00
$34.31
9,575,400
22.8%
22.3%
87,305
0
0
26,832
26,832
$14.62
$19.91
556,534
6.1%
6.1%
11,974
0
0
9,285
9,285
$14.53
N/A
18,180,082
23.3%
23.2%
319,067
0
0
21,244
24,975
$18.41
$ 24.76
3,084,526
30.7%
30.6%
34,617
0
0
(25,888)
(25,888)
$14.88
$ 16.96
Las Colinas
29,032,439
15.6%
15.3%
574,248
631,220
164,784
297,666
297,666
$22.20
$ 25.20
Far North Dallas
17,614,529
14.8%
14.3%
206,908
0
0
(40,052)
(75,408)
$21.44
$ 27.46
Far North Central
17,523,342
13.7%
13.4%
580,408
2,219,084
458,000
465,889
453,310
$20.04
$ 23.49
Mid Cities
7,862,479
19.8%
18.4%
112,580
0
0
-825
(48,407)
$20.90
$ 28.50
Arlington
6,026,417
13.8%
12.5%
82,943
0
0
7,993
5,288
$17.52
$ 20.82
Far North
Stemmons
3,788,818
6.6%
6.6%
18,947
230,964
0
(18,586)
(18,586)
$16.15
$ 20.80
490,374
19.2%
19.2%
5,512
0
0
1,499
1,499
$14.94
$ 21.70
1,207,051
8.4%
8.4%
7,187
0
0
600
600
$17.83
$ 34.30
16,845,743
15.9%
12.5%
63,817
3,952,041
0
91,646
(121,624)
$28.46
$ 32.67
DALLAS SUBURBS
157,595,523
16.9%
16.1%
2,417,979
8,025,309
831,167
802,650
206,926
$21.29
$26.76
DALLAS TOTAL
184,246,743
17.6%
16.9%
2,699,227
8,479,809
831,167
1,060,987
465,263
$21.51
$26.44
11,658,902
10.1%
10.1%
135,475
0
0
90,615
90,615
$27.43
$29.66
East Fort Worth
2,291,748
6.1%
6.1%
11,393
0
0
(12,770)
(12,770)
$15.20
N/A
North Fort Worth
3,854,046
15.3%
15.3%
10,000
357,214
0
46,407
46,407
$19.88
$ 24.81
South Fort Worth
2,834,151
2.0%
2.0%
10,396
0
0
0
0
$19.00
N/A
West Fort Worth
2,939,731
4.3%
4.3%
11,143
0
0
289
289
$21.50
$ 24.90
FW SUBURBS
11,919,676
7.6%
7.6%
42,932
357,214
0
33,926
33,926
$19.34
$24.38
FORT WORTH
TOTAL
DFW TOTAL
23,578,578
8.9%
8.9%
178,407
357,214
0
124,541
124,541
$23.74
$28.70
207,825,321
16.6%
16.0%
2,877,634
8,837,023
831,167
1,185,528
589,804
$21.64
$26.65
Stemmons Freeway
Oak Cliff
LBJ Freeway
Northeast Dallas
Southwest Dallas
East I-30 Corridor
Legacy Frisco
FW CBD
* RENTAL RATES REFLECT ASKING $PSF/YEAR
Cushman & Wakefield of Texas, Inc.
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
www.cushmanwakefield.com/knowledge
For more information, contact:
Ryan Tharp, Director of Research
+(1) 972 663 9649
ryan.tharp@cushwake.com
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
2
MARKET HIGHLIGHTS
SIGNIFICANT 2015 LEASE TRANSACTIONS
SUBMARKET
TENANT
BUILDING CLASS
Riverside Commons
Las Colinas/DFW
Freeport
GE Capital
A
148,270
Royal Ridge Center V
Las Colinas/DFW
Freeport
NEC Corporation of America
B
119,610
Granite Tower
LBJ Freeway
CenseoHealth
A
65,516
Westway One
Las Colinas/DFW
Freeport
CEC Entertainment (Chuck E.
Cheese)
B
55,260
Burnett Plaza
Fort Worth CBD
Huckabee
A
44,580
Richardson Office Center
Farn North Central
Avnet
B
36,560
Northpark Central
North Central
Expressway
Top Golf
A
36,220
Comerica Bank Tower
Dallas CBD
Bickel & Brewer
A
35,580
SIGNIFICANT 2015 SALE TRANSACTIONS
SUBMARKET
BUYER
PURCHASE PRICE / $PSF
Allstate Insurance Building
Las Colinas/DFW
Freeport
Select Income REIT
$104,435,200/$236
443,450
Park Place on Turtle Creek
Turtle Creek/ Uptown
Piedmont
$46,600,000/$256
182,000
3131 McKinney
Turtle Creek/ Uptown
Invesco
$39,000,000/$257
151,740
Citymark
Turtle Creek/ Uptown
Bradford
$38,900,000/$169
229,800
6000 Connection Drive
Las Colinas/DFW
Freeport
Gramercy
$36,419,245/$125
292,500
3900 North Dallas Parkway
Legacy/Frisco
Cinemark Holdings
$26,200,000/$217
120,750
Richardson Commons – Building 1
Far North Central
Gladstone
$24,700,000/$160
154,380
The Offices at Valley Ranch
Las Colinas/DFW
Freeport
Select Income REIT
$22,657,080/$239
95,000
Willow Bend Center
Legacy/Frisco
CFT Developments
$20,750,000/$169
123,000
SIGNIFICANT 2015 CONSTRUCTION
COMPLETIONS
CityLine 3
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Far North Central
State Farm
Q1 2015
458,000/100%
2801 North Central Expressway
Turtle Creek/ Uptown
Richards Group
Q1 2015
250,000/100%
8840 Cypress Waters Boulevard
Las Colinas/DFW
Freeport
Speculative
Q1 2015
165,000/25%
The Shops at Park Lane
North Central
Speculative
Q1 2015
122,000/0%
Preston Hollow Village
Legacy/Frisco
Conifer Health Solutions
Q1 2015
65,800/24%
SIGNIFICANT PROJECTS UNDER
CONSTRUCTION
Toyota Motor Corp.
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Legacy/Frisco
Toyota
Q4 2016
1,787,000/100%
State Farm Build-to-Suit (3 buildings)
Far North Central
State Farm
Q2 2015
1,628,000/100%
McKinney @ Olive
Turtle Creek/Uptown
Gardere Wynne Sewell
Q3 2016
530,000/46%
Raytheon Build-to-Suit
Far North Central
Raytheon
Q4 2015
489,000/100%
KPMG Plaza at Hall Arts
Dallas CBD
KPMG
Q2 2015
454,500/59%
3200 Hackberry (Cypress Waters)
Las Colinas/DFW
Freeport
7-Eleven
Q4 2015
325,000/100%
Granite Park V
Legacy/Frisco
Speculative
Q4 2015
306,200/17%
Cushman & Wakefield of Texas, Inc.
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
www.cushmanwakefield.com/knowledge
For more information, contact:
Ryan Tharp, Director of Research
+(1) 972 663 9649
ryan.tharp@cushwake.com
SQUARE FEET
SQUARE FEET
BUILDING SQUARE FEET
(% LEASED)
BUILDING SQUARE FEET
(% LEASED)
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
3