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News release


Location, new construction and reinvestment defines Dallas Skyline

JLL’s 2017 Skyline report reveals creative tenants returning to downtown offices

DALLAS, July 18, 2017 – When it comes to premium office space across the United States and Canada, creative firms are doing what they do best: driving change. JLL's 2017 Skyline shows that creative's boomerang to this coveted space and the eighth straight year of occupancy growth are contributing to record rents and a landlord-friendly market. While Dallas' downtown has seen an increase in creative space, the Skyline buildings tend to be occupied by more traditional office tenants.  In downtown Dallas, capital investments in assets are attracting the attention of prospective tenants and investors alike.

Skyline is JLL's annual look at the highest quality office space in some of the tallest buildings in 57 markets across North America. Some Dallas highlights from this year's edition include: 

  • Skyline vacancy within Dallas remains steady at around at 25 percent, with vacancy in Trophy buildings – those ultra-premium office towers within the Skyline – at 19.3 percent
  • Rents within Dallas' newest Skyline buildings hit a record $50.50 per square foot, compared to an average of $29 per square foot for the Dallas Skyline assets
  • Buyers, on the hunt for higher investment returns, have noticed Dallas' exceptional economic growth and are looking to reinvesting in the downtown
  • The construction pipeline remains healthy, but shows some signs of slowing within the downtown

"Professional services, financial institutions, and law firms are the main drivers of leasing activity within Skyline buildings," said Walter Bialas, JLL Dallas Research Director. "To compete with new offerings, owners are reinvesting in downtown assets to attract the new and future generations of employees."

Buyers selectively target the skyline

"Investments within downtown Dallas are a tale of two cities," said Jack Crews, Managing Director, JLL Capital Markets.  "Assets along Ross Avenue in the CBD and to the north in nearby Uptown, have taken on a higher profile with strong development and redevelopment of buildings and parking lots, with new street level retail, along with hotel and residential uses. This may lead to be the most dynamic development area over the next five years. While not directly part of our Skyline, recent developments in the southern part of the CBD along Main Street and its adjoining streets are being noticed by investors after being positioned to become part of the area's growing dynamic 'live, work, play' environment. Users here seem to seek lower economics, so the rents and corresponding investments have a lower profile, value-add perspective."

So, just how much do investors love the Skyline properties nationally and in Dallas?

  • In Dallas, Skyline acquisitions were up to $1.1 billion in 2016.
  • Investors are increasingly looking to secondary markets for Skyline acquisitions. Ten secondary markets surpassed $300 million of total volume (not just Skylines) in 2016. Atlanta, Dallas and Miami led the way.
  • Offshore investment increased to 40.3 percent of total Skyline volume in the first quarter of 2017.
  • Forty-two Trophy assets were traded in 2016, including five in Dallas, increasing volume by $7.2 billion year-over-year.

Landlords on top nationally, for now

The net change in occupied space, also called net absorption, jumped to 8.3 million square feet – more than five times what it was a year ago. However, we expect eight straight years of Skyline occupancy growth to ease soon as the market prepares for several large blocks of space to become available.

Nationally, Skyline vacancy sits at 12.9 percent – well below the overall national average of 14.5 percent. Just 10 percent of Trophy space (think Chicago's Willis Tower and New York's One World Trade Center) is available, giving landlords the upper hand. But that may change as we see a slow rise in vacancy in 2018.

A rising tide lifts all boats

Tenants still want that Skyline caché, which is why rents are at $28.91 per square foot on average in Dallas.  In  those coveted few Trophy spaces, that premium goes to $33.57 per square foot. By comparison, New York stands above all others with an average Skyline rent of $87.90.

"Competitive office rates in downtown Dallas are enticing tenants to explore relocating or establishing a presence within the Dallas Skyline," said Jeff Eckert, Managing Director, JLL Agency Leasing. "Owners are investing capital in downtown assets, revitalizing workspaces and adding attractive amenities for employees. The Uptown area continues to provide a premium product as vacancy remains tight. There have been some very positive things happening downtown."

Getting quieter on the construction front

A healthy 1.4 million square feet of Dallas Skyline office space remains in the construction pipeline. The delivery of these projects by the end of 2018 or early 2019 and a tightening in construction lending may point to a slowdown in construction within downtown Dallas. We expect the Skyline to shift to tenant favorable territory for landlords and tenants by 2019.

About the Skyline

Investors and tenants can access JLL's Skyline via a digital platform. The interactive website features JLL's exclusive market insights regarding office supply, demand, rents, leverage and investment into 57 markets across the United States and Canada. It gives users the ability to compare and contrast individual markets or multiples of markets, as well as individual properties or portfolios. In addition, the site offers videos and infographics, all of which are available via mobile access.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit