2022 Office Space Report: Dallas-Fort Worth, TX
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
The commercial real estate office sector in Dallas-Fort Worth has grown significantly in the past few decades.
The area is now one of the top locations for companies to open new offices and house their employees, as well as an attractive option for businesses to relocate to from other parts of the country.
The average cost for Class A office space in Dallas is $34.58 per square foot. This is lower than the state average of $35.41 a square foot.
In this Dallas-Fort Worth, TX office space report, learn more about the current state of the office sector and future projections as an investment opportunity.
Dallas-Fort Worth, TX Office Space Highlights
Some highlights of this Dallas-Fort Worth office space report include:
- The Dallas-Fort Worth metropolitan area has a large pool of educated workers and accessible office space.
- Dallas-Fort Worth ranked 15th in the nation for the most affordable asking rates for offices.
- It is one of the best markets for tech talent.
Dallas-Fort Worth is expected to be a good investment opportunity for the office sector for many years to come.
The Pacing of Office Space Rents in Dallas-Fort Worth, TX
The U.S. vacancy rate for office space is 15.4%.
However, the Dallas-Fort Worth area has a higher vacancy rate than this.
Some important considerations about this market are:
- The average asking rent in Dallas is $30.36 a square foot.
- The vacancy rate for office rentals is 20.68% in the Dallas area.
- The average change in asking rent in Dallas is 3.62% YOY.
Despite the high vacancy rate, Dallas-Fort Worth is a growing market that should stabilize as more years pass from the start of the COVID-19 pandemic and more companies go back to in-person office operations.
Long-Term Changes in Rent
Dallas-Fort Worth is a top destination for companies seeking access to talent, business infrastructure, and other economic advantages.
Commercial real estate investors in Dallas-Fort Worth have seen a significant increase in demand for office space from businesses seeking to expand and relocate their operations.
Short-Term Changes in Rent
Office space in Dallas-Fort Worth has seen prices rise significantly over the last few years.
The main driver of this increase is related to inflation and changes in real estate prices, particularly in downtown areas.
As demand for office space increases, tenants have to pay more to be able to rent office space.
Dallas and Fort Worth have a strong economic profile, with a diverse economy and a low risk of business interruption due to factors such as government restrictions.
Major companies headquartered in the DFW Metroplex include American Airlines, Texas Instruments, AT&T, 7-Eleven, and Kimberly-Clark.
Office Space Sales in Dallas-Fort Worth, TX
Dallas-Fort Worth is a compelling market for changes in 2022. Some interesting sales and acquisitions within the office market sector for commercial real estate include the following.
Notable Acquisitions So Far
In early 2022, Regent Properties purchased the Trammell Crow Center for an undisclosed amount.
The high-rise office building has more than 1.2 million square feet of space and 50 stories. The sale was assisted by J.P. Morgan Global Alternatives, and includes several other structures in the deal.
In early 2022, Icon Lodging purchased the 100-year-old office building at 110W 7th Street for an undisclosed amount. Icon plans to turn the building into a luxury hotel for its architecture style and unique stay experience potential. The seller was not disclosed.
In mid 2021, Menashe Properties purchased Heritage One and Two, a two-office complex for an undisclosed amount.
Heritage One and Two were recently updated with new amenities and efforts to modernize the facility. It is centrally located, giving it an advantage in drawing in tenants.
Notable Sales So Far
In late 2021, an undisclosed buyer represented by NAI Robert Lynn sold a commercial real estate complex to CanTex Capital for an undisclosed amount.
The complex will likely be redeveloped for industrial purposes and covers 330,000 square-feet of existing office space.
In 2022, a 57,000 square-foot commercial office building was sold to Kennington Commercial for an undisclosed amount.
Gutow Co. sold the building with the assistance of partners from Younger Partners who brokered the deal.
Market Forecast for the Rest of 2022
Commercial real estate investors that track the office sector will see a stable or increasing demand for commercial space in Dallas-Fort Worth.
This growth rate is expected to continue for the rest of the year.
The Dallas-Fort Worth office market should stabilize and show slow, but steady, growth in coming years due to this stable demand by businesses.
As more companies go back to in-person operations, the vacancy rate should drop.
General Investor Activity: Where is the most money flowing?
Investing in Dallas-Fort Worth is a very attractive option for many investors who are looking to put their money into the right kind of property.
Investors who select Dallas-Fort Worth as an investment target have the benefit of a stable economy and talented workforce.
Dallas-Fort Worth is home to major companies in the oil and gas industry, telecommunications, high-tech manufacturing, and other sectors that are poised for growth.
Takeaways for Office Space Investors
Landlords in the Dallas-Fort Worth region will do well to maximize their office space. This is due to the steady demand that comes from companies going back to in-person operations.
In addition, the region has a good mix of high-rise office buildings, large and small office buildings, and multi-tenant industrial properties.
This makes it a good place for real estate investors seeking a diverse portfolio. Most importantly, the Dallas-Fort Worth real estate market is stable and has strong long-term fundamentals.
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