Months on market stable, suggesting demand for modern office space will remain strong in Dallas
Office vacancy has moved down considerably through this cycle.
October 16, 2019
- Office vacancy has moved down considerably through this cycle. As of the third quarter, Class A vacancy averaged 20.6 percent in Dallas.
- For some of the submarkets seeing significant new development, this rate is even lower. Uptown, Las Colinas, and Central Expressway have Class A vacancy in the mid-teens, with Preston Center coming in at sub-10 percent.
- One important market driver is that these rates have been stable for several years at this point in the cycle.
- A byproduct of this “tightness” is that the time space sits on the market for lease has declined.
- As we have reported in the past, some of Dallas’ space built in the 1980s and 1990s is functionally obsolete by today’s tenant standards – and sits unleased for extended periods.
- Modern space, however, is in high demand. Larger Class A buildings, developed since 2005, have space on the market available for lease averaging just 12 months, with popular submarkets that have seen significant new development at 7 to 10 months (Las Colinas and Far North Dallas).
- While higher than 2008 levels due to the significant new development now taking place, months on market has been very stable the last few years, even as new projects have delivered in these submarkets.
- Importantly, time on market can be viewed as a “leading indicator”. This stability suggests that, in the newer Class A buildings, current tenant demand is keeping pace with current market availabilities.
Source: JLL Research