Tuesday, September 11, 2007

Dallas Office Leasing Report - It's OK

Tenants leased only about 800,000 square feet of additional office space in the first half of 2007, representing about one-third of the 2.4 million square feet in net leasing in the same period of 2006, according to statistics from Cushman & Wakefield of Texas.

However, the average quoted office rents have increased by more than 5 percent from a year ago, and overall vacancy rates are at their lowest level in more than five years.

"The repricing of risk has shut down the lending market temporarily," said Dr. Mark Dotzour, chief economist with the Real Estate Center at Texas A&M University. "When it reopens, the cost of money will be higher, and developers will have to put more skin in the game. Higher rates and more skin means less deals, less chance for overbuilding."

Midyear, about 5.5 million square feet of area office space was under construction, about 50 percent more than during the same time last year. (Dallas Morning News)