Dallas-Fort Worth Office Marketview
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MARKETVIEW Dallas/Fort Worth Office, Q3 2018 Market fundamentals trend upward across the board 20.8% $25.03 PSF (FSG) 847,191 SF 1.4 MSF 4.0 MSF Figure 1: Historical Absorption and. Vacancy Rate *Arrows indicate change from previous quarter. Net Absorption (MSF) Vacancy Rate (%) 6 22 5 21 4 20 3 19 2 18 1 17 0 16 (1) 15 (2) 14 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 Total Annual Absorption Vacancy Rate Source: CBRE Research, Q3 2018. NEW DELIVERIES UP ABSORPTION MOST SQ. FT. DELIVERED IN 2018 DFW JOB MARKET REMAINS STOUT ASKING RENTS SEE SLIGHT INCREASE Q3 2018 CBRE Research © 2018 CBRE, Inc. | 1 MARKETVIEW DALLAS/FORT WORTH OFFICE Figure 2: Dallas/Fort Worth Office Market Statistics Average Net Total Total Under Q3 2018 2018 YTD Asking Deliveries Submarket Rentable Vacancy Availability Construction Net Net Rate FSG (SF) Area (%) (%) (SF) Absorption Absorption ($/SF/YR) Central Expressway 10,678,256 14.4 20.2 28.48 - - 151,663 (31,585) Class A 7,101,825 14.6 19.7 32.05 - - 126,238 (78,425) Class B 3,463,543 14.1 21.7 25.40 - - 26,703 45,364 Dallas CBD 26,183,962 28.0 33.6 25.49 163,025 - 88,759 298,033 Class A 20,922,462 29.6 35.5 28.16 163,025 - 142,784 456,899 Class B 4,824,143 23.3 28.1 20.74 - - (54,025) (178,074) East Dallas 2,130,164 14.7 17.4 19.40 294,820 - (18,425) (56,304) Class A 110,000 5.9 5.9 - 294,820 - (6,500) (6,500) Class B 1,668,863 16.7 19.1 18.23 - - (11,925) (90,656) Far North Dallas 42,300,279 20.1 25.7 26.76 858,387 240,000 449,022 (188,261) Class A 28,125,582 20.2 26.2 32.44 858,387 240,000 192,282 (43,245) Class B 14,174,697 20.1 24.9 21.46 - - 256,740 (137,607) Las Colinas 31,264,586 19.1 25.8 25.82 1,591,400 364,500 (117,696) 79,012 Class A 17,783,812 16.8 26.2 29.87 1,591,400 250,000 71,402 571,940 Class B 12,875,419 22.7 25.4 22.23 - 114,500 (190,361) (465,602) LBJ Freeway 19,512,524 22.2 26.9 21.22 - - (211,796) (114,810) Class A 10,712,557 20.5 26.8 24.58 - - (120,941) (11,979) Class B 8,630,405 24.5 27.3 19.59 - - (92,935) (113,059) Lewisville/Denton 3,402,455 11.2 14.5 22.04 - - 219,774 (50,055) Class A 189,124 21.5 29.8 25.00 - - - (35,553) Class B 3,147,579 10.8 13.8 20.86 - - 219,774 (14,502) Preston Center 4,134,520 12.3 14.7 38.85 119,000 - 38,185 106,474 Class A 3,508,506 12.1 15.1 41.40 119,000 - 36,338 112,878 Class B 558,336 14.6 14 30.73 - - 1,847 (6,404) Richardson/Plano 23,031,902 23.1 26.5 22.17 90,000 145,000 (94,924) 49,894 Class A 11,983,728 28.1 30.7 25.79 - 145,000 (5,053) 126,953 Class B 10,730,469 18.1 21.5 19.21 90,000 - (92,050) (92,124) SW Dallas 1,503,736 10.3 10.9 20.25 - - 8,339 61,009 Class A 280,592 11.1 12.8 31.00 - - - - Class B 1,037,490 12.0 12.1 19.16 - - 8,339 54,109 Stemmons Freeway 9,056,184 28.0 30.2 16.60 - - (8,578) (77,764) Class A 4,230,561 20.5 23.8 19.51 - - 47,806 (29,902) Class B 4,380,694 36.2 37.5 15.40 - - (63,103) (88,062) Uptown/Turtle Creek 11,857,856 15.0 21.6 45.16 649,230 624,300 309,175 251,335 Class A 9,906,926 14.3 20.7 47.90 649,230 624,300 297,058 243,578 Class B 1,813,046 20.1 28.1 35.71 - - 12,117 7,757 Q3 2018 CBRE Research © 2018 CBRE, Inc. | 2 MARKETVIEW DALLAS/FORT WORTH OFFICE Figure 2: Dallas/Fort Worth Office Market Statistics (continued) Average Net Total Total Under Q3 2018 2018 YTD Asking Deliveries Submarket Rentable Vacancy Availability Construction Net Net Rate FSG (SF) Area (%) (%) (SF) Absorption Absorption ($/SF/YR) Fort Worth CBD 8,628,287 15.1 15.9 26.42 - - (62,965) 95,318 Class A 6,182,699 16.2 17.5 30.76 - - (59,443) 128,628 Class B 2,343,213 12.8 12.4 20.33 - - (3,522) (33,310) Mid Cities 13,430,652 22.7 24.2 19.18 - - (63,116) 87,724 Class A 4,598,530 34.3 34.9 23.12 - - (26,543) 131,679 Class B 7,936,834 16.8 18.7 18.16 - - (45,123) (33,115) North Fort Worth 1,576,540 17.7 31.8 25.24 200,000 - (20,047) 46,687 Class A 930,044 19.1 38.2 24.38 200,000 - 2,543 2,543 Class B 608,778 16.7 24.0 19.69 - - (22,590) 44,144 NE Fort Worth 2,757,063 47.5 46.2 19.01 - - 33,816 189,177 Class A 415,921 74.2 60.0 21.47 - - (1,432) (1,432) Class B 2,188,608 44.5 45.5 18.82 - - 32,248 179,104 South Fort Worth 6,149,270 9.6 13.3 22.66 - - 146,005 209,330 Class A 2,205,534 6.7 13.6 28.17 - - 145,506 210,042 Class B 3,565,411 11.5 13.7 21.94 - - (8,373) 4,018 Dallas Total 185,056,424 20.9 26.0 25.71 3,765,862 1,373,800 813,498 326,978 Class A 114,855,675 21.1 27.0 31.31 3,675,862 1,259,300 781,414 1,306,644 Class B 67,304,684 21.1 24.8 20.97 90,000 114,500 21,121 (1,078,860) Fort Worth Total 32,541,812 20.1 22.2 20.95 200,000 - 33,693 628,236 Class A 14,332,728 22.4 25.0 25.94 200,000 - 60,631 471,460 Class B 16,642,844 18.8 20.5 19.15 - - (47,360) 160,841 DFW Total 217,598,236 20.8 25.5 25.03 3,965,862 1,373,800 847,191 955,214 Class A 129,188,403 21.3 26.8 30.72 3,875,862 1,259,300 842,045 1,778,104 Class B 83,947,528 20.7 23.9 20.44 90,000 114,500 (26,239) (918,019) Source: CBRE Research, Q3 2018. *Although Class C is not shown, totals are inclusive of all classes of data. Figure 3: Significant Leases / Sales of the Quarter Figure 4: 2018 Signed Leases by Industry Lease (Tenant) Building Name Address Total SF 15% Fossil Fossil Headquarters 901 S Central Expy 535,731 21% The Sound at Cypress Nokia 3100 & 3201 Olympus Blvd 350,000 Waters 16% Common Desk Trammell Crow Center 2001 Ross Ave 52,000 Sale (Buyer) Building Name Address Total SF 12% 36% Highland Capital Cityplace Tower 2711 N Haskell Ave 1,350,267 Management Dundon Capital Financial Services Business Services One AT&T Plaza 208 S Akard St 965,800 Retailers/Wholesalers Information/Technology Partners Other Source: CBRE Research, Q3 2018. Source: CBRE Research, Q3 2018. Q3 2018 CBRE Research © 2018 CBRE, Inc. | 3 MARKETVIEW DALLAS/FORT WORTH OFFICE CONTACTS CBRE OFFICES DEFINITIONS Average Asking Rate Direct Annual Lease Rates, NNN, Modified Gross and/or Full Service Gross, dependent upon Submarket. Availability All existing space being marketed for lease. Total Vacancy Rate Direct Vacancy + Sublease Vacancy. CBD Central Business District; consists of Dallas’ Central Business District only. SURVEY CRITERIA CBRE’s market report analyzes existing single- and multi-tenant office buildings that total 30,000+ sq. ft. in Dallas / Fort Worth, excluding owner-occupied buildings. CBRE assembles all information through telephone canvassing, third-party vendors, and listings received from owners, tenants and members of the commercial real estate brokerage community. Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. Vacancy Rate Avg. Asking Rate Net Absorption Deliveries Under Construction The first quarter of 2018 proved to be a muted version of the The development pipeline is pacing with demand as booming market Dallas/Fort Worth (DFW) has been three new projects broke ground over the quarter, characterized by in recent years. Coming off the heels of the adding 543,000 sq. ft. of new construction to the tally first quarter with negative absorption in nearly a decade, now underway, bringing the current total count to 20 DFW’s fundamentals have rebounded with charisma.