Friday, May 30, 2014

Growth to bolster DFW’s office real estate market in 2014












Las Colinas: The corporate hub near the
     airport is still a positive environment for tenants, especially with new
     projects in the Las Colinas Urban District.
Submitted art
Las Colinas: The corporate hub near the airport is still a positive environment for tenants, especially with new projects in the Las Colinas Urban District.

The expectation for growth in North Texas stems from a positive 2013, when nearly 3 million square feet of office real estate in Dallas-Fort Worth was absorbed in the year, according to Jones Lang LaSalle's end-of-year research.The demand for office space in Dallas-Fort Worth is expected to grow this year as jobs funnel into the region through corporate relocations or expansions, likely triggering new office development.
Dallas-Fort Worth had a net job growth of 96,000 positions year-over-year, which coupled with the lack of new construction in the market has led to a much healthier market, Daryl Mullin, senior vice president of Jones Lang LaSalle told the Dallas Business Journal.
"When you have a healthy market, or an equilibrium between the supply and demand, it will continue to attract people that want to be in this market," Mullin told me. "When you have good quality landlords that put capital in the properties and maintain them well, it attracts new folks into the market from an investment standpoint."
With that absorption, Dallas-Fort Worth's vacancy declined to 19.6 percent, with lease rates increasing by 2 percent year-over-year, according to the data. The overall asking rent increased to $21.29 per square foot by the end of 2013.
The rising rental rates are the reason behind a number of new construction projects expected to hit the market in late 2014 or early 2015. Some of those projects: Craig Hall'slatest addition to Hall Office Park in Frisco, Granite Properties' office tower and hotel, and Bandera Ventures' project in Preston Center.
This is the second year of roughly 3 million square feet of absorption, which is three times the average annual absorption rate of 1 million, said Walter Bialas, director of research for Jones Lang LaSalle.
"The bellwether of real estate is employment; jobs are the starting point for everything," Bialas told me.
And there's no sign of that stopping, he said. After all, the cost of doing business in Dallas is still cheaper than other large metros and the region is still accessible to other large cities, Bialas told me.
Mullin agreed with Bialas, saying he expects a number of industries, such as technology, telecom, financial services, energy and health care to expand in North Texas in 2014. Want a hot submarket? Check out Mullin's submarket picks for activity this year in our attached slideshow.
Staff Writer-Dallas Business Journal