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Monday, October 20, 2014
Houston, Dallas top U.S. in office building
Almost 2 million feet of new office space has opened in North Texas so far this year. (Steve Brown)
Houston and Dallas have been the top office construction markets so far in 2014, according to a new report by Cushman & Wakefield Inc.
Houston had office building completions totaling almost 3 million feet and the in the Dallas area builders finished about 1.9 million square feet of space in the first nine months of this year, according to the report.
At the end of the third quarter, 5.4 million square feet of office space was still under construction in the Dallas-Fort Worth area – up from only about 1.1 million square feet in third quarter 2013.
“The economic recovery and a rapidly evolving workforce have pushed the office market into a positive trajectory that has held steady through the first nine months of the year,” said Cushman & Wakefield’s head of research Maria T. Sicola. “Corporate America is actively expanding and working to position itself for the millennial workforce, which by 2020 is expected to make up more than half of the labor pool.
“Companies are seeking to establish lifestyle-focused urban operations and/or retrenching in transit-oriented, amenity-rich suburban settings.”
Cushman & Wakefield said the nationwide downtown office vacancy rate fell to 12.6 percent at the end of the third quarter, the lowest level since early 2009.
Downtown Dallas’ office vacancy in September was about twice that rate.
Cushman & Wakefield said net office leasing in the country is expected to reach its highest level since 2007, with 31.9 million square feet in occupancy gains year to date, compared to 14.9 million square feet last year at this time.
“The absorption levels – both CBD and suburban – are dramatic,” Sicola said. “For the CBDs, Manhattan, Chicago and San Francisco combined were responsible for about two-thirds of total absorption. In the non-CBD markets, growth was spurred by occupancy gains in suburban Dallas, Houston, Los Angeles Metro and San Francisco.”
Dallas-area office net leasing has totaled about 2.3 million square feet so far this year.
Cushman & Wakefield said that the Dallas area ranks second in the country only to Los Angeles for total suburban office leasing.