Saturday, January 10, 2009

Dallas office rents among cheapest in the country

Dallas has some of the cheapest office rents of any major city, according to a new survey.

It's no wonder, then, that Big D also had the lowest average office building sales prices in 2008.

Overall rents for first-class office space in the Dallas area were $25.52 per square foot last year, according to a report by real estate broker Grubb & Ellis Co.

Dallas ranked dead last for office sales prices, with an average of $169 per square foot. And that's with a 39 percent increase in 2008, Grubb & Ellis said.

Don't be surprised if both building costs and rental rates across the country come down this year because of falling demand and the weak economy, analysts say.

Grubb & Ellis reports that office building sales volumes were down almost 67 percent last year because of the credit crunch and economic worries.

"The market for investment office properties in Dallas could remain sluggish in 2009 as investors take a wait-and-see approach," said Grubb & Ellis' Scot Farber.

And with few recent sales, "investors are struggling to understand market pricing for investment properties."

Grubb & Ellis estimates that about $1.7 billion in office properties were sold in the Dallas area last year. That's down from more than $3 billion in 2007.

Dallas had some of the lowest office rents and sales prices per square foot in the country in 2008. Changes are compared with prices in 2007.
City Price Change
New York $798 + 13%
Washington $574 + 11%
San Francisco $393 NA
Los Angeles $311 -3%
Boston $263 + 21%
Chicago $197 NA
Atlanta $184 + 16%
Houston $174 + 20%
Dallas $169 + 39%
City Price Change
New York $87.19 + 6.6%
San Francisco $42.22 -8.7%
Boston $40.82 + 9.1%
Washington $40.61 + 7%
Los Angeles $40.08 + 7.7%
Houston $33.27 + 21.1%
Chicago $32.88 + 4.7%
Dallas $25.52 + 5%
Atlanta $24.22 + 7%