OFFICE Q1 2022 MARKET REPORT DALLAS/ FORT WORTH
P ro p er t y : Cus ter Co ur t
w w w.h o l t l u n s fo rd .co m
TABLE OF CONTENTS
04
DFW Office Submarket Coverage
05
DFW Office Market Experts
09
DFW Office Facts & Figures
10
Submarket Intelligence
DALLAS 5950 Berkshire Lane, Suite 900 Dallas, Texas 75225 T 972.241.8300 | F 972.241.7955
FORT WORTH 1200 Summit Avenue, Suite 300 Fort Worth, Texas 76102 T 817.710.1110 | F 817.810.9017
www.holtlunsford.com
04 Q1 2022 DFW OFFICE MARKET REPORT
DFW OFFICE
Submarket Coverage
OTHER SUBMARKETS
TUR
1 FORT WORTH CBD 2 NORTHEAST FORT WORTH 3 PRESTON CENTER 4 UPTOWN/TURTLE CREEK 5 DALLAS CBD 6 STEMMONS FREEWAY 7 LBJ PONDER 8 CENTRAL EXPRESSWAY
DENTON
FAR NORTH DALLAS
McKINNEY PRINCETON
ALLEN/MCKINNEY FRISCO
LEWISVILLE/DENTON
ALLEN
JUSTIN
THE COLONY
BOYD
LEWISVILLE
RICHARDSON/PLANO
NORTH FORT WORTH
PLANO
FLOWER MOUND
WYLIE
ROANOKE
HASLET
CARROLLTON GRAPEVINE
KELLER
COPPELL LAS COLINAS
ADDISON
RICHARDSON
SOUTHLAKE FARMERS BRANCH
DFW INTERNATIONAL AIRPORT
7
GARLAND
ROCKWALL ROWLETT
LAS COLINAS
8
COLLEYVILLE
3
SAGINAW DALLAS LOVE FIELD AIRPORT
BEDFORD EULESS FORT WORTH MEACHAM INTERNATIONAL AIPRORT
RICHLAND HILLS
HURST
WHITE SETTLEMENT
6
IRVING
2
EAST DALLAS
4
MID-CITIES
SUNNYVALE
5
1
DALLAS
MESQUITE
FORT WORTH
FORNEY
GRAND PRAIRIE ARLINGTON
DALLAS EXECUTIVE AIRPORT
BENBROOK DUNCANVILLE
HUTCHINS
CRANDALL
WEST-SOUTHWEST FORT WORTH
CEDAR HILL
DESOTO
LANCASTER
MANSFIELD
SOUTHWEST DALLAS
BURELSON
N
RED OAK
SOUTHEAST FORT WORTH MIDLOTHIAN
WAXAHACHIE
CLEBURNE ENNIS
Q1 2022 DFW OFFICE MARKET REPORT 05
DFW OFFICE
Market Experts
MATT CARTHEY
JOHN DICKENSON
TYLER HOWARTH
DAVID CASON
Partner, Managing Principal Fort Worth mcarthey@holtlunsford.com 817.710.1111
Managing Principal Dallas jdickenson@holtlunsford.com 972.421.1971
Managing Principal Tenant Representation thowarth@holtlunsford.com 972.280.8302
Vice President Fort Worth dcason@holtlunsford.com 817.810.9137
JAKE NEAL
MASON PRITCHER
JACK BEARE
VIC MEYER
Vice President Fort Worth jneal@holtlunsford.com 817.710.1112
Market Director Dallas mpricher@holtlunsford.com 972.280.8320
Market Director Dallas jbeare@holtlunsford.com 972.265.0128
Market Director Fort Worth vmeyer@holtlunsford.com 817.710.1113
HUNTER HEDRICK
MICHAEL BURTON
OLIVIA BARNES
QUINN HANFORD
Market Associate Dallas hhedrick@holtlunsford.com 972.421.1973
Market Associate Fort Worth mburton@holtlunsford.com 817.710.7058
Market Analyst Dallas obarnes@holtlunsford.com 972.265.0135
Market Analyst Dallas qhanford@holtlunsford.com 972.265.0124
JOHN ARMES
JAMIE CLYDE
Market Analyst Dallas jarmes@holtlunsford.com 972.381.3210
Market Analyst Dallas jarmes@holtlunsford.com 972.381.3210
New Listing
LINCOLN LEGACY TWO A 130,371 RSF Class A Office Building located at the southeast corner of Dallas North Tollway and Tennyson Parkway adjacent to Legacy Town Center.
New Listing
CROCKETT CORNER A 7,500 SF Class A Creative Office along the West 7th corridor in West-Southwest Fort Worth.
New Listing
STONELAKE DESIGN DISTRICT Three, newly renovated properties with high-end office space in Dallas’ Design District.
Q1 2022 DFW OFFICE MARKET REPORT 09
Facts & Figures
DFW OFFICE
OVERALL DFW
OVERALL VACANCY
20.0%
20.0%
4,000,000 17.5%
3,000,000
18.0%
14.6%
16.1%
2,000,000
16.0%
13.9%
18.0% 16.0% 14.0% 12.0%
1,000,000
10.0%
14.0% 0 12.0%
8.0% 6.0%
(1,000,000)
10.0%
4.0%
(2,000,000)
8.0%
1.4%
0.7%
2.0% 0.0%
(3,000,000) Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
ABSORPTION
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 19
Q1 22
Q2 19
VACANCY
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
DIRECT
OVERALL ABSORBTION
Q4 20
Q1 21
Q2 21
Q3 21
SUBLET
Q4 21
Q1 22
TOTAL
OVERALL CONSTRUCTION 8,000,000
12,000,000
7,000,000
10,000,000
6,000,000 5,000,000
8,000,000
4,000,000 3,000,000
6,000,000
2,000,000 1,000,000
4,000,000
0 (1,000,000)
2,000,000
(2,000,000)
0
(3,000,000) Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
TOTAL NET
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
Q4 21
Q2 19
Q3 19
Q4 19
Q1 20
ABSORPTION
LEASING ACTIVITY
EXISTING INVENTORY SUBMARKET
Q1 19
Q1 22
Q2 20
Q3 20
Q4 20
Q1 21
DELIVERIES
Q2 21
Q3 21
Q4 21
Q1 22
VACANCY
VACANCY
# BLDGS.
TOTAL RBA
DIRECT SF
TOTAL SF
VAC. %
YTD NET ABSORPTION
YTD DELIVERIES
Dallas CBD
149
35,241,119
8,538,199
9,029,741
25.6%
(435,457)
254,902
386,323
1,244,998
Central Expressway
251
14,531,715
2,431,376
2,655,254
18.3%
(399,176)
30,000
77,189
719,393
Far North Dallas
1,306
71,544,609
14,156,971
15,719,088
22.0%
833,413
1,904,988
0
4,369,333
Fort Worth CBD
121
11,217,220
1,539,761
1,596,142
14.2%
66,321
0
615,062
246,289
Las Colinas
489
44,202,249
7,668,616
8,732,203
19.8%
(230,659)
111,805
0
2,586,620
LBJ Freeway
260
22,933,328
5,101,207
5,565,891
24.3%
(519,496)
107,000
0
1,579,825
2,916
47,411,628
6,005,619
6,236,100
13.2%
93,216
175,640
0
569,077
North Fort Worth
810
8,376,821
525,563
747,729
8.9%
(191,117)
98,017
0
207,373
Preston Center
176
7,322,858
799,761
829,667
11.3%
116,695
297,000
1,447,052
496,938
Richardson/Plano
834
33,997,259
5,574,007
5,961,791
17.5%
277,815
62,100
0
1,541,862
SW Fort Worth
1,179
17,438,234
1,765,762
1,887,826
10.8%
(50,620)
50,439
186,000
899,280
Stemmons
310
16,095,408
3,268,601
3,397,971
21.1%
259,906
0
109,500
404,152
Uptown/Turtle Creek
304
17,918,642
2,794,257
3,076,791
17.2%
200,256
656,453
0
1,118,533
9,105
348,231,090
60,169,700
65,436,194
18.8%
21,097
3,748,344
2,821,126
15,983,673
Mid-Cities
TOTALS
UNDER YTD LEASING CONSTRUCTION SF ACTIVITY
SOURCE: COSTAR 1Q 2022 OFFICE REPORT
10 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
DALLAS CBD CURRENT EVENTS Trammell Crow Center on Ross Avenue sold for one of the highest prices ever paid for a Dallas commercial property. While terms of the purchase were not disclosed, brokers estimate the iconic downtown tower and the retail and garage building across the street went for more than $600M. The sale of the 37-year-old high rise comes after the previous owner, JPMorgan Asset Management, spent more than $180M on upgrades. Regent Properties bought the iconic Trammell Crow Center for a new investment fund. Law firm Stinson LLP is moving to downtown Dallas. The Kansas City based firm expanded to Dallas in 2018 and will lease 14K SF on the 29th floor of Chase Tower. Stinson is the most recent of several office tenants making the move downtown, including Lerma Advertising, Imaginuity, and Integrity Marketing Group. Gensler will design the law firm’s new workspace. The Dallas Regional Chamber has decided to keep its offices in the landmark downtown Dallas skyscraper, Ross Tower. The economic development organization just renewed its 25,436 SF lease on the 26th floor of the 45-story high-rise. Built in 1982, Ross Tower has other major tenants including Walter P. Moore & Associates, Frank Recruitment Group, Perkins Coie LLP, Willis Towers Watson, and Munsch Hardt. Bank of America plaza has leased more than 44K SF in the last six months. The largest leases were by law firm Ziegler, Gardner, Bell PLLC, which leased 7,504 SF of space, and field examination firm 3W Inc., which leased 6,863 SF. The 1.8M SF Main Street skyscraper opened in 1985 and has been owned by Metropolis Investments Holdings since 1998. Atlanta-based Portman Holdings has purchased the block of land at 2500 Ross Avenue and Routh with plans to develop an office tower. Along with the 400K SF office building, Portman Holdings will build two (2) residential towers with 700 apartments. Los Angeles-based 5+ Design is masterplanning the block and construction could begin as early as next year. Sterling Bay has plans to build an office high-rise just east of downtown along Indiana Street at Malcolm X Boulevard. Called The Assembly, the 460K SF project was designed by Dallas’ HKS. Construction is set to begin this summer, at a cost of more than $100M, according to new planning documents filed with the state. The development would deliver in late 2024.
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(61,647)
(19,367)
118,790
26.0%
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
25.0%
24.8%
24.0%
25.6% U/C SF
25.5% vs. Prev. Qtr
vs. 12 Mths Ago
-
60,230
254,902
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
60,230
194,672
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$27.49
$27.12
$26.98
TOP LEASE TRANSACTIONS
300,000 200,000 100,000 0 (100,000)
23.0%
(200,000) 22.0%
(300,000) (400,000)
21.0%
(500,000)
20.0%
(600,000)
19.0%
(700,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
DELIVERIES
Q2 21
Q3 21
Q4 21
Q1 22
VACANCY
LARGE EXISTING VACANCIES
• The Richards Group has signed a 101K SF lease in The Stack.
• Fountain Place | 1445 Ross Avenue – 585,395 SF
• Dallas Regional Chamber has signed a 25.4K SF renewal in Ross Tower.
• Renaissance Tower | 1201 Elm Street – 534,390 SF
• Crossplaine Capital Management has signed a 7.3K SF lease in Saint Paul Place.
• Santander Tower | 1601 Elm Street – 324,411 SF
DEALS IN THE MARKET • Plaza of the Americas – a 1,146,524 SF class A two-building project • The Luminary – a 104,119 SF class A office building
NEW DEVELOPMENTS • Field Street District – Future Phase | 1100 McKinney Avenue – a 722K SF class A office district (proposed) • Field Street Tower | 2012 North Field Street – a 534K SF class A office tower (proposed) • 555 South Pearl | 555 South Pearl Expressway – a 486K SF Class B office tower (proposed) • Two Arts Plaza | 1900 Routh Street – a 283K SF class A office tower (proposed)
• Bank of America Plaza | 901 Main Street – 314,729 SF • Two Arts Plaza | 1900 Routh St – 283,153 SF • 1700 Pacific | 1700 Pacific Avenue – 270,822 SF • Bryan Tower | 2001 Bryan Street – 224,916 SF • Chase Tower | 2200 Ross Avenue – 193,102 SF • Harwood Center | 1999 Bryan Street – 186,096 SF • 300 South Pearl Expressway – 183,754 SF • Comerica Bank Tower | 1717 Main Street – 148,025 SF • 2100 Ross Avenue – 136,335 SF
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 11
CENTRAL EXPRESSWAY CURRENT EVENTS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(160,359)
(26,884)
(112,923)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
18.3%
18.0%
16.2%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
Delivered SF -
VITAL STATS 19.0%
200,000
18.0%
150,000
17.0%
100,000
16.0%
50,000
15.0%
0
30,000
14.0%
(50,000)
13.0%
(100,000)
vs. Prev. Qtr
vs. 12 Mths Ago
12.0%
(150,000)
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$34.41
$32.93
$31.86
TOP LEASE TRANSACTIONS • Airspace has signed a 3.3K SF lease in 4131 NCX.
HLC DEAL
• Charette Cosmetics has signed a 3K SF lease in 5445 La Sierra.
HLC DEAL
• SRS Real Estate has signed a 2.3K SF lease in Walnut Glen Tower.
NEW DEVELOPMENTS • The Central – a 500K SF class A office tower (proposed) • Energy Square 4 – a 400K SF class A office tower (proposed) • The Shops at Park Lane – a 352K SF class A office tower (proposed) • The Tower at Preston Hollow Village – a 260K SF class A office tower (proposed)
11.0%
(200,000)
10.0%
(250,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
DELIVERIES
Q3 21
Q4 21
Q1 22
VACANCY
LARGE EXISTING VACANCIES • 8080 NCX – 100K SF • Cityplace Tower – 95K SF • Energy Square 2 – 71K SF
The Richards Group building, which overlooks North Central Expressway, has sold to Hunt Realty Investments, Angelo Gordon, and OliveMill Holdings. The partnership bought the tower from SBR Real Estate Holdings LP, a company created by the Richards Group to develop the building. The 250K SF office high-rise was built in 2015 and housed the Richards Group headquarters. Terms of the deal have not been disclosed; however, the building originally cost $45M and was recently valued for taxes at more than $60M.
12 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
FAR NORTH DALLAS CURRENT EVENTS Gateway at Legacy, an eight-story office tower in Legacy Business Park, has sold to an affiliate of Lincoln Property Co. Philadelphia based Equus sold the building after spending $2.5M in renovations. After upgrading to best-in-class amenities and making capital improvements, Equus brought new tenants to the building and the property is now 95.8% leased. JLL marketed the building for sale and terms of the transaction have not been disclosed.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(112,778)
95,959
(1,223,616)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
22.0%
21.7%
21.0%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,836,467
1,804,081
2,117,239
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
82,350
183,962
301,561
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$33.82
$33.38
$32.13
TOP LEASE TRANSACTIONS • HDR Engineering has signed a 39K SF renewal and expansion in Amber Trail Office Park. • Buff City Soap has signed a 18.6K SF lease in The Offices at Prestonwood Place. • Pursuant has signed a 13.4K SF lease in Tollway Towers.
HLC DEAL
• Dallas Insurance Exchange has signed a 13.4K SF renewal in Tollway Towers.
HLC DEAL
• Tesla has signed a 12.5K SF lease in 5800 Democracy Drive. • Burns & Wilcox has signed a 7.3K SF renewal in Providence Towers.
DEALS IN THE MARKET • The Campus at Legacy – a 394,405 SF class A two-building project • The Princeton – a 377,821 SF class B office building
VITAL STATS 30.0%
1,250,000
750,000 25.0% 250,000
(250,000) 20.0% (750,000)
15.0%
(1,250,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
DELIVERIES
Q2 21
Q3 21
Q4 21
Q1 22
VACANCY
• 6301 Headquarters | 6301 Headquarters Drive – a 304K SF class A office building (proposed) • The Star - Phase IV | 17 Cowboys Way – a 299K SF class A office building (under construction) • International Business | 6275 W Plano Parkway – a 240K SF class A office building (under construction) • Fourteen555 – South Building | 14545 North Dallas Parkway – a 239K SF class A office building (proposed) • Plaza at Legacy II | 5465 Legacy Drive – a 200K SF class A office building (proposed)
LARGE EXISTING VACANCIES • 5400 Legacy Drive – 1,587,458 SF • 5320 Legacy Drive – 483,743 SF • 6100 Reata Pharmaceuticals - 327K SF • Legacy Commons – 296,433 SF • 6400 Legacy Drive – 227,577 SF
NEW DEVELOPMENTS • The Link at Fields Frisco | Legacy Dr & PGA Parkway – a 2M SF class A office complex (proposed) • The Offices at The Gate | 4205 Dallas Parkway – a 1M SF class A office complex (proposed) • Two Legacy West | 7950 Legacy Drive – a 414K SF class A office building (proposed)
• Liberty Mutual Campus – 208,602 SF
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 13
FORT WORTH CBD CURRENT EVENTS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
115,608
148,201
(47,186)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.2%
15.3%
16.3%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$28.07
$28.20
$27.64
TOP LEASE TRANSACTIONS
VITAL STATS 18.0%
200,000
16.0%
150,000
14.0%
100,000
12.0%
50,000
10.0%
0
8.0%
(50,000)
6.0%
(100,000)
4.0%
(150,000)
2.0%
(200,000)
0.0%
(250,000) 1Q 19
2Q 19
3Q 19
4Q 19
ABSORPTION
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
DELIVERIES
2Q 21
3Q 21
4Q 21
1Q 22
VACANCY
LARGE EXISTING VACANCIES
• Pope Hardwick has signed a 11,259 SF renewal in First on 7th.
• 115 West 7th Street – a 186,684 SF class B vacancy
• An undisclosed tenant has signed a 8,716 SF lease in Frost Tower.
• The Tower Annex – a 68,136 SF class B vacancy
• GJM Partners, Inc. has signed a 8,668 SF lease in the Chase Bank Building.
• Bank of America Tower – a 62,660 SF class A vacancy
DEALS IN THE MARKET
• Frost Tower – a 54,780 SF class A vacancy
• 307-309 West 7th Street – a 439,802 SF class B office building
• Burnett Plaza – a 52,502 SF class A vacancy
• 115 West 7th Street – a 300,347 SF class B office building
• 777 Main – a 47,862 SF class A vacancy
• 500 West 3rd Street – a 234,039 SF class B office building
• Oil & Gas | Star-Telegram Building – a 38,760 SF class B vacancy
An iconic downtown Fort Worth office building may soon become a new hotel. Transwestern Real Estate Services reported Irvingbased hotel company Icon Lodging purchased 110 West 7th Street. The building was most recently owned by XTO Energy Inc., a subsidiary of ExxonMobil, based in Spring, Texas. Transwestern executed the sale. The 11-story, 101,390 SF office building was constructed in 1910 as the First National Bank of Fort Worth and underwent a major renovation in 2005. It still features original brass doors and bronze and aluminum accents. In 2021, the building was valued at $11M, according to the Tarrant Appraisal District. Icon Lodging’s projects include the Fairfield Inn & Suites downtown, the TownePlace Suites at 3450 West Vickery Boulevard, and a Hampton Inn & Suites in Colleyville. The owners of Sundance Square, Ed and Sasha Bass, have new plans for the once-popular downtown shopping and dining district that has spiraled to empty storefronts and uncertainty. On Sunday’s Inside Texas Politics, Mayor Mattie Parker was asked whether she has spoken to the Basses about the future of this downtown centerpiece. “I have,” Mayor Parker said. “I’ve spoken to them several times about it. I’ve also talked to and worked very closely with the leadership of Downtown Fort Worth, Inc.” When asked what the Basses told Parker, the mayor said: “They have a new vision for Sundance Square. They’re trying to execute on that. You shouldn’t want me to, nor do I, have any control over private business. I think the number one factor right now is communicating whatever that vision may be to residents and visitors downtown and refocusing those efforts. Am I frustrated? Sure. Because I get a lot of questions about this. But I also have to have faith that private businesses, specifically Mr. Bass who has been an incredible visionary for downtown Fort Worth and the entire community, are allowed some time to let that vision come to fruition.” Two years ago, at the beginning of the pandemic, the Basses changed property management in the 35-block district. The relationship between property managers and tenants has spiraled ever since. COVID exacerbated it.
14 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
LAS COLINAS CURRENT EVENTS An upscale multifamily complex with a projected price tag of more than $103M is planned at a highprofile site next to the ExxonMobil corporate headquarters campus in Irving. GFF is the design firm for the project and the scope of work calls for a 364-unit, five story apartment building with 12K SF of amenity space. The estimated cost is $103,205,000, and the project is named “Peregrine.” Last month, ExxonMobil announced its corporate relocation from Irving to a campus north of Houston. The Peregrine project is scheduled to start May 15 and be completed by June 2024. National home décor retailer At Home is moving its headquarters from Plano to Cypress Waters. The company’s new build-tosuit office campus will include a 182K SF office building in addition to a 78K SF design center. The build-to-suit deal with At Home allows Billingsley to begin another speculative office building at Cypress Waters. The firm will start construction on a 300K SF office building at 3300 Olympus Boulevard in February. An aviation company that moved its headquarters from Canada to Irving is working on a new office in Las Colinas. CHC Helicopter, an international helicopter services and maintenance firm, has been in business for seven decades and is now looking at an office in the Urban Towers. The 12K SF office at 222 West Las Colinas Boulevard would open this summer, according to planning documents filed with the state. Interprise Design is the architect for the new space.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(35,645)
(117,290)
(241,485)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
19.8%
19.7%
19.0%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,641,146
1,161,146
584,682
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
14,850
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$27.38
$27.27
$27.26
TOP LEASE TRANSACTIONS • CVS Caremark has signed a 25.5K SF renewal in 750 West John Carpenter. • LendingPoint has signed a 16.4K SF lease in 3660 Regent.
HLC DEAL
• Blackhawk Claim Services has signed a 13.3K SF lease in Hills at Decker Court.
VITAL STATS 25.0%
2,000,000 1,500,000
20.0%
1,000,000 15.0% 500,000 10.0% 0 5.0%
(500,000)
0.0%
(1,000,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 22
VACANCY
LARGE EXISTING VACANCIES • 6000 Connection – 292K SF • One MacArthur Ridge – 250K SF • Regent Commons – 215K SF • Intellicenter - Dallas – 201K SF • Williams Square West – 190K SF • Horizon Way Business Park – 181K SF
DEALS IN THE MARKET • Fuller Ridge I & II – a 285,656 SF class B office campus • Two Colinas Crossing – a 181,072 SF class A office building
NEW DEVELOPMENTS • Freeport Commons – a 1.2M SF class A office park (proposed) • 9100 Olympus Boulevard – a 250K SF class A office park (proposed) • Las Colinas Corporate Center II – a 200K SF class A office building (proposed) • West Gate at Coppell – a 180K SF class A office building (proposed)
• Browning Place III – 171K SF • Las Colinas Connection – 139K SF • Las Colinas Corporate Center I – 137K SF
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 15
LBJ CURRENT EVENTS
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
55,506
(46,469)
(170,812)
30.0%
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
25.0%
24.3%
24.5%
21.9%
20.0%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
15.0%
20,000
12,000
107,000
10.0%
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$25.55
$24.92
$23.61
TOP LEASE TRANSACTIONS • USAA has signed an 11K SF lease in Pinnacle Tower. • Beacon Oral Specialists has signed a 5K SF lease in Three Forest Plaza. • Saxony Capital has signed a 4.5K SF lease in Midtown Office Center.
HLC DEAL
• Smile Doctors has signed a 3K SF lease in Lincoln Centre. • McCauley Bond Agency has signed a 3K SF lease in Midtown Office Center.
HLC DEAL
DEALS IN THE MARKET • Lincoln Centre – a 1,610,273 SF class A office complex • Park Central 7, 8, & 9 – a 845,919 SF class A office complex
300,000 225,000 150,000 75,000 0 (75,000) (150,000) (225,000)
5.0%
(300,000)
0.0%
(375,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 22
VACANCY
NEW DEVELOPMENTS • Park Heritage – 1.15M SF (proposed) • Four Lincoln Centre – 400K SF (proposed) • Park Tower at Dallas Midtown – 376,870 SF (proposed) • The Inwood at Alpha West – 330K SF (proposed)
LARGE EXISTING VACANCIES • Park Central 8 – 225,924 SF • Three Galleria Tower – 133,888 SF • 5525 LBJ – 120K SF • One Lincoln Centre – 100,501 SF • Pinnacle Tower – 98,412 SF • The Crossings II – 75,099 SF • The Hightower – 66,609 SF • Banner Place North – 64,674 SF • Lake Highlands Tower – 56,650 SF
The Dallas-Fort Worth area is one of the top U.S. markets for office deals as more companies push to get their workers back in the office. The surge in North Texas businesses looking at office space follows the decline in office leasing after the COVID-19 pandemic. With infection levels declining, more businesses are making plans for their future office space needs. Dallas-Fort Worth Houston, and Boston are the office markets seeing the most tenants searching for space.
16 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
MID-CITIES CURRENT EVENTS The company that made its name with the standing desk and adjustable office furnishings dove into the North Texas office market, first renovating buildings in Las Colinas and Southlake. The company formerly known as VariDesk rebranded as Vari to reflect its entire platform of workspace innovation right before the pandemic. While that timing might have been less than ideal, McCann didn’t miss a beat developing Vari’s own headquarters in Coppell—basically its own proof of concept for the idea of a “building-as-a-service.” “VariSpace Coppell is our first ‘ground up’ office building,” he said. The location, its third in DFW, will serve as Vari’s global HQ. Slated to complete in summer 2022, it will offer a flexible option for Fortune 50 enterprises and fast-growing local companies looking for a suburban location in DFW as a multi-tenant campus. McCann calls VariSpace a “living, breathing ideation lab and showroom for Vari to show building owners and operators a better way to serve their current and prospective tenants and monetize their assets.” The company’s space-as-a-service product, as it turns out, is remarkably well timed. McCann thinks the micro trend of offering fully furnished, move-in-ready space could become a standard across CRE in the near future. McCann is among the experts invited to share their thoughts on the CRE market for our recent DALLAS® magazine that focused on how DFW punches above its weight in commercial real estate. Here’s what he had to say in “View from the Top Tier.” With COVID-19 in retreat, a resurgence in demand for North Texas office space has developer Granite Properties starting two new buildings. Construction kicked off in December on a 19-story office high-rise in the company’s Granite Park business campus in West Plano. And next month, Granite Properties will break ground on a second office in its Granite Place development on State Highway 114 in Southlake. “The strategy behind starting our next phase at Granite Park and in Southlake is really a function of our demand,” said senior managing director Will Hendrickson. “As COVID restrictions are being lessened, we are starting to see more and more of our customers coming back to the office. Leasing decisions that have been put on hold are bubbling up.” Demand for office space in the Dallas-Fort Worth area plunged when the pandemic hit in early 2020 and workers took shelter at home. But starting late last year and continuing into 2022, more businesses have been recalling employees to the office and are reevaluating their space needs. Leasing agents have seen a surge in activity so far this year. “We are 95% leased at Granite Park,” which is at the southeast corner of the Dallas North Tollway and State Highway 121, Hendrickson said. “Our largest vacancy at Granite Park is only 5,000 square feet. It’s a very similar picture in Southlake,” he said. “We are 100% leased in phase one and we are getting inquires from companies that want space.” That’s why Granite Properties is starting work on the five-story, 143,500-square-foot Granite Place II building. Located next to the popular Southlake Town Square mixed-use development, the new office building is next door to the first office that opened in 2017. Dallas-based architect Corgan designed the new building, and DPR Construction is the general contractor. “The building is ideally positioned for companies drawn to Southlake, a suburb nationally recognized for its high quality of life and city-like conveniences, to help attract top talent and grow their business,” Hendrickson said. “We will also be able to accommodate current customers’ expansion needs. “We just closed purchase of the land and will break ground in April,” he said. “It’s a 10-month construction.” Hendrickson expects the new Southlake building to attract to small and mid-sized office users — the same companies that filled the first phase. “They are looking for that level of quality, and there is pretty limited competition for the customers that want to be in Southlake,” he said.
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(39,955)
107,484
86,368
16.0%
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
13.2%
13.1%
14.6%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
8.0%
-
-
155,560
6.0%
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
4.0%
-
127,640
77,664
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$20.27
$20.39
$21.06
TOP LEASE TRANSACTIONS
200,000 100,000
12.0% 0
10.0%
(100,000) (200,000) (300,000)
2.0% 0.0%
(400,000) 1Q 19
2Q 19
3Q 19
4Q 19
ABSORPTION
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
2Q 21
3Q 21
DELIVERIES
4Q 21
1Q 22
VACANCY
NEW DEVELOPMENTS
• Zenith Solar has signed a 14K SF lease in 3101 Pinewood Drive.
• Sola Boulevard – a 280,578 SF Class A Office Building
• An undisclosed Engineering group has signed a 13K SF lease in 910 South Kimbell Avenue.
• 2170 East Lamar Boulevard – a 61,500 SF class A office building
• LHC signed 5,644 SF lease in 700 Highlander.
HLC DEAL
DEALS IN THE MARKET • 9001-9003 Airport Freeway Richland Corporate Center – a 142,425 SF class A office building • 4001 Airport Freeway - DFW West – a 85,900 SF class A office building • 5244 Bear Creek Court – a 33,228 SF class B office building
• 2101 Westpark Court – a 60K SF class A medical office building
LARGE EXISTING VACANCIES • 3120 Sabre Drive – 208,841 SF • 2208 Highway 121 – 58,647 SF • 500 East Border Street – 42,668 SF & 41,863 SF • 2201 North Collins Street – 39,632 SF • 1701 East Lamar – 20,897 SF
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 17
NORTH FORT WORTH CURRENT EVENTS
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
25,844
(31,101)
82,104
26.0%
250,000
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
24.0%
200,000
8.9%
8.7%
5.5%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
18.0%
0
370,365
267,877
133,966
16.0%
(50,000)
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
50,385
22,807
65,951
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$28.38
$28.33
$27.03
TOP LEASE TRANSACTIONS
150,000
22.0%
100,000
20.0%
50,000
(100,000) (150,000)
12.0%
(200,000)
10.0%
(250,000) 1Q 19
2Q 19
3Q 19
4Q 19
ABSORPTION
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
2Q 21
DELIVERIES
3Q 21
4Q 21
1Q 22
VACANCY
NEW DEVELOPMENTS
• An undisclosed Tenant has signed a 6,300 SF lease at 522 Benson Lane.
• 201 North Rupert Street– a 35,097 SF class A office building for sale
• Bancorp has signed a 5,534 SF lease at 111 NW 24th Street.
• 3349 Golden Triangle – a 27K SF class A office building, set to deliver October 2022
DEALS IN THE MARKET • 201 North Rupert Street – a 35,097 SF class B office building • 8224 White Settlement Road – a 27,716 SF class B office building • 5637 North Tarrant Pkwy – a 23,671 SF class B office building
• 3800 North Tarrant Parkway – a 19K SF class B office building, set to deliver May 2022
LARGE EXISTING VACANCIES • 13650 Heritage Parkway – 164,333 SF • 13601 Heritage Parkway – 68,399 SF • 14600 Heritage Parkway – 50K SF (sublease) • 4700 Alliance Gateway Freeway – 47,644 SF
The commercial real estate sectors hit hardest by the pandemic – office, hospitality and retail – are slowly bouncing back, but with new innovations to reflect changes in the market. That was the consensus at the 2021 Tarrant County Commercial Real Estate Forecast on July 27, presented by the Real Estate Council of Greater Fort Worth. The office market was initially hit hard by the pandemic as the labor force that could do so began working remotely. Now, as workers return to the office, they may find it a different place than the one they left, several speakers said. Companies are beginning to ask employees to come back to the office in many cases, panelists said, although many companies are adopting a hybrid model. “Hybrid is here to say,” said Cannon Camp, senior vice president at JLL in Fort Worth, who presented at the event. Business and professional services were likely to return more quickly to the office environment while the technology industry, which was already doing remote work prepandemic, was likely to maintain that remote work option for longer, Camp said. But some companies may have to offer the virtual option to keep personnel, he said.Some companies have already adopted a hybrid model. In mid-2021, Capital One announced it will be a hybrid work company with employees spending some time in the office and some working virtually. That will impact the financial services giant’s more than 5,000 employees in the Dallas-Fort Worth area. The in-office experience of the future will likely be more open campuses on large tracts of land with landscaping and walking paths. Amenities will include cafes, workout facilities and lounges, Camp said. Camp noted three new office projects recently announced demonstrate the continued economic strength of the area. The three are: The Crescent Fort Worth project from Crescent Real Estate with 168K SF of office space, The Van Zandt on West 7th Street from Goldenrod Companies with 109K SF of office space, and Hillwood Commons II, a 135,295 SF office project from Hillwood in the AllianceTexas area. All three are expected to open in 2023. Sticker shock is the word of the day for many office users. Tenant improvements are taking longer and costing more, which could have a range of impacts on the North Fort Worth office market. Pre-pandemic TI costs ranged between $60 to $70 per SF to finish out a shell space. These costs have since jumped to between $80 to $100 per SF, depending on the configuration. TI costs and elongated timelines have contributed to rising rental rates and lengthened lease terms. The usual suspects are to blame. Supply shortages and escalating material pricing are behind the rising costs and longer lead times in tenant improvement. “We’ve seen it go up quite a bit, and landlords generally have not been able to bridge that gap,” said Ryan Matthews, managing director at JLL. Timelines on leases have been extended because of the increased time it takes to finish out space. On the average deal, lease terms jumped from about five years pre-pandemic to about seven years today. Tenants need to be cognizant of how much term is left on an existing lease before they wind up in a situation where they don’t have time to go through the full lease transaction process and finish out a new space before their existing lease hits its expiration date, Matthews said. According to data provided by Transwestern, landlords have offered higher tenant improvement allowances to help tenants finish out space. Transwestern analyzed recent leases and found that the average TI package increased $7 per SF or 20% over the last two years.
18 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
PRESTON CENTER CURRENT EVENTS After more than two years of construction, Weir’s Plaza has opened its doors fully leased. Designed by Dallas architect GFF, the high-rise includes 12K SF of retail space along Knox with 250K SF of offices above. The top-class office space has attracted major tenants, including law firm Kirkland & Ellis, Fortress Investment, and Arctos Sports. Weir’s Plaza is one of only three office projects opening their doors north of downtown Dallas this year. With demand for offices rebounding, developers are scrambling to start work on projects to meet expected demand. The Bluffview Towers have been purchased by Pillar Commercial. The 200K SF office complex was built in 1985 and has undergone millions of dollars in upgrades since. Bluffview Towers are over 70% leased and major tenants include H-E-B/Central Market, Sewell, and JLB Partners. Dallas’ Woods Capital is working on two towers that would be built along McKinney Avenue north of Knox Street. The plans include one 180K SF office tower and one residential tower. Demand for office space in the Knox Street area has increased as Class A office space becomes less and less available.
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
63,619
89,492
(24,270)
14.0%
300,000
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
12.0%
250,000
10.0%
11.3%
12.8%
9.9%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
329,066
329,066
626,066
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
297,000
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$40.40
$39.87
$42.84
COMING TO MARKET • Weir’s Plaza – a 250K SF Class A office building
TOP LEASE TRANSACTIONS • Tolleson Wealth Management has signed a 44K SF lease in 5500 Preston Road.
200,000 150,000
8.0%
100,000 6.0%
50,000
4.0%
0
2.0%
(50,000)
0.0%
(100,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
DELIVERIES
Q3 21
Q4 21
Q1 22
VACANCY
NEW DEVELOPMENTS • 8111 Douglas – a 318K SF class A office building
LARGE EXISTING VACANCIES • Bluffview Towers – West – 70,214 SF • 8343 Douglas at Douglas Center – 64,278 SF
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 19
RICHARDSON/PLANO/ALLEN/MCKINNEY CURRENT EVENTS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
112,644
251,956
(295,622)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
17.5%
17.7%
18.3%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
229,392
275,392
56,100
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
54,000
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$23.65
$23.76
$23.90
TOP LEASE TRANSACTIONS
VITAL STATS 19.0%
400,000
18.0%
200,000
17.0%
0
16.0%
(200,000)
15.0%
(400,000)
14.0%
(600,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 22
VACANCY
NEW DEVELOPMENTS
• Stonebriar Financial Group has signed a 52.4K SF lease in Granite Park Six.
• Palisades Central – a 1M SF class A office complex (proposed)
• Smart Autocare has signed a 41K SF lease in 1125 East Campbell.
• The Campus at CityLine – 600K SF class A office complex (proposed)
• Review Wave, LLC has signed a 35K SF lease in 300 East Davis.
• Legacy Central 5 – a 300K SF class A office building (proposed)
• Dog Star has signed a 4.9K SF lease in CityView Corporate Center.
• One Heritage Creekside – a 250K SF class A office building (proposed)
HLC DEAL
• Cross Architects has signed a 3K SF lease in CityView Corporate Center.
HLC DEAL
• FNR Solutions has signed a 2.9K SF lease in Promenade Tower.
HLC DEAL
DEALS IN THE MARKET • Lakeside Campus – an 870,860 SF class A two-building office complex • 3400 CityLine – a 313K SF class A office building
LARGE EXISTING VACANCIES • 601 Data – 423K SF • 2200 George Bush – 177K SF • Lookout Park I – 156K SF • 3400 CityLine – 142K SF • The Tower Lakeside Campus – 104K SF • Creekview I – 101K SF
HLC DEAL Avatar Financial Group is providing $30M in financing to upgrade CityView Corporate Center in Plano. Built in the 1980s, the property includes a 10-story tower and two four-story buildings with almost 300K SF. CityView Corporate Center is owned by Dallas investor MoxieBridge and is leased by Holt Lunsford Commercial. The office center is just west of where developers are spending $1B to turn the former Collin Creek Mall into a new mixeduse project with housing, retail, offices, and entertainment venues.
A Dallas-based real estate investor has snapped up two office buildings in Richardson’s Telecom Corridor. Built in 1983, the Greenway Plaza office campus includes almost 150K SF of space. Tenants in the properties include Sherwin Williams, Qualcomm and American United Life Insurance. Harrier Partners LP, an affiliate of Dallas real estate investor EY Ventures, bought the buildings from local owners that held the property for more than a decade. Plano’s International Business Park has landed another tenant. QBE Insurance is leasing more than 20K SF in 6400 International Parkway. The office is scheduled to open this spring and is being designed by Dallas’ Entos Design. International Business Park includes 11 buildings with 1.4M SF and houses more than 100 businesses. A Washington, D.C. property investor is seeking tenants to kick off a new Plano office project. PRP Real Estate disclosed its plans last fall for office space in the $3B Legacy West development. The 300K SF building is in the works near FedEx’s office at Headquarters and Legacy drives. PRP Real Estate has owned the FedEx building since 2017 and the project would more than double the amount of space on the site. Dallas architect HKS has drawn up plans for the project and the Headquarters Drive building is one of several new office projects in the hunt for tenants.
20 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
SOUTHWEST FORT WORTH CURRENT EVENTS A rapidly growing community west of Fort Worth will soon become home to a $35M medical office park aimed at improving healthcare access in the area. Willow Park is the second-largest city in Parker County, an area that saw its population increase by 27% between 2010 and 2020, according to the U.S. Census Bureau. The 8.5-acre site acquired by real estate investment firm Velocis is located in the Interstate 20 corridor between Fort Worth and Weatherford, where a network of doctors has emerged to meet growing demand for medical care in the community. “Our building is there to serve what I would call an underserved community,” Velocis co-founder and partner Mike Lewis told Bisnow. “The doctors are telling us that they have the patients, but the patients are driving to Fort Worth. This is giving an opportunity to serve them in their community instead of them going elsewhere for healthcare.” According to census data, 86% of residents in Parker County were insured as of 2020. This high rate of healthcare coverage, along with the diverse mix of ages in the community, was appealing to Velocis.“It’s a very stable community with good incomes,” Lewis said. “It’s not an area that you would go in and build and worry about patients not being able to afford healthcare.” Sticker shock is the word of the day for many office users. Tenant improvements are taking longer and costing more, which could have a range of impacts on the Fort Worth office market. Pre-pandemic TI costs ranged between $60 to $70 per SF to finish out a shell space. These costs have since jumped to between $80 to $100 per SF, depending on the configuration. TI costs and elongated timelines have contributed to rising rental rates and lengthened lease terms. The usual suspects are to blame. Supply shortages and escalating material pricing are behind the rising costs and longer lead times in tenant improvement. “We’ve seen it go up quite a bit, and landlords generally have not been able to bridge that gap,” said Ryan Matthews, managing director at JLL. Timelines on leases have been extended because of the increased time it takes to finish out space. On the average deal, lease terms jumped from about five years pre-pandemic to about seven years today. Tenants need to be cognizant of how much term is left on an existing lease before they wind up in a situation where they don’t have time to go through the full lease transaction process and finish out a new space before their existing lease hits its expiration date, Matthews said.
VITAL STATS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(69,516)
(22,459)
(927)
12.0%
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
10.0%
10.8%
10.5%
10.6%
8.0%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
6.0%
168,034
151,651
91,944
4.0%
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
24,834
-
4,500
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$26.46
$25.90
$25.59
TOP LEASE TRANSACTIONS • Marsh McLennan has signed a 23,837 SF lease in First Cash Plaza.
HLC DEAL
• An Undisclosed Tenant has signed a 11,822 SF lease in 3880 Hulen Street. • Concept Connections has signed a 10,550 SF renewal in 4201 Bridgeview.
HLC DEAL
DEALS IN THE MARKET • 3880 Hulen Street – a 69K class B office building • 101 South Jim Wright Freeway – a 55K SF class B office building • 108 South Freeway – a 41,427 SF class C office building • 111 Boland Street – a 40,080 SF class A office building
250,000 200,000 150,000 100,000 50,000 0 (50,000) (100,000)
2.0%
(150,000)
0.0%
(200,000) 1Q 19
2Q 19
3Q 19
4Q 19
ABSORPTION
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
2Q 21
DELIVERIES
3Q 21
4Q 21
1Q 22
VACANCY
NEW DEVELOPMENTS • The Van Zandt – 111,228 SF class A office building set to deliver December 2023 • 1320 Hemphill Street – a 48,594 SF class A office building set to deliver December 2022 • Triune Centre – a 30K SF class A office building set to deliver December 2022 • 4000 Bryant Irvin – a 18,194 SF class A office building set to deliver May 2022
LARGE EXISTING VACANCIES • 405 West Loop 820 – a 101,043 SF class B vacancy • Western Place II – a 69,257 SF class B vacancy • One Ridgmar Centre – a 51,038 SF class A vacancy • Western Place I – a 21,407 SF class B vacancy
SUBMARKET INTELLIGENCE
Q1 2022 DFW OFFICE MARKET REPORT 21
STEMMONS CURRENT EVENTS
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
178,348
(70,534)
(191,550)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
21.1%
22.2%
22.7%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$20.77
$20.88
$20.37
NEW DEVELOPMENTS • West Love | 1345 Mockingbird Lane – a 600K SF class A office building (proposed) • West Love | 2345 Mockingbird Lane – a 250K SF class A office building (proposed) • The Design District Tower – a 243,100 SF class A office building (proposed) • 1333 Oak Lawn Avenue – a 122,768 SF class A office building (proposed) • 1400 West Mockingbird Lane – a 66,504 SF class A office building (proposed) • 111 Glass Street – a 30K SF class B office building (proposed)
VITAL STATS 24.0%
200,000 150,000
22.0%
100,000 50,000
20.0%
0 (50,000)
18.0%
(100,000) (150,000)
16.0%
(200,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 22
VACANCY
LARGE EXISTING VACANCIES • Pegasus Park – 152,071 SF • The Connection at 8600 – 101,530 SF • 8777 North Stemmons – 76,968 SF
After suffering declines in office space demand from the pandemic, the Dallas-Fort Worth area was one of the country’s top leasing markets in the final months of 2021. The D-FW area had the third-highest net office leasing in the nation, behind Boston and San Jose. More than 150M SF of office space was under construction nationwide at the end of 2021. The D-FW area ranked fifth nationally for new developments, with 6.2M SF of new office space on the way.
22 Q1 2022 DFW OFFICE MARKET REPORT
SUBMARKET INTELLIGENCE
UPTOWN CURRENT EVENTS Billions of dollars in high-rise building projects are in the works along Field Street connecting downtown with Uptown. Woods Capital plans to begin construction later this year on the first of two towers in their $1B mixed-use project. The development will begin with a new office building and residential high-rises. Hunt Realty Investments also plans to begin construction on its Field Street development which will include office, residential, and retail space. In addition to these projects, Stonelake Capital Partners, Harwood International, and Hillwood Urban all have plans to develop properties along the Field Street thoroughfare. Construction has begun on the Quadrangle development in Uptown. The project was originally set for an opening late this year, but the pandemic delayed the start. Omniplan is designing the project, which has been rebranded as The Quad. The new 335K SF office building will include a club on the top floor and an amenity center with a tenant lounge, a conference center and a terrace overlooking downtown Dallas and Uptown. At the corner of the block next to the office tower, there will be a group of retail “bungalows” with 15K SF of space for retail and restaurant tenants. The development will also include several outdoor areas, which are more important since the advent of COVID-19. Dell’s MSD Partners is providing construction loans for the $100M Quadrangle project in Uptown. Built in 1966 as a Southwesternstyle compound of unique shops and small office spaces, the mixeduse project on Routh Street near Turtle Creek has gone through several renovations. The new development is set to open Q1 2024 and the Quadrangle is one of two major Dallas real estate developments Dell’s MSD Partners is backing.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
118,995
206,048
(43,656)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
VITAL STATS 700,000 18.0%
17.2%
17.9%
15.5%
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
834,076
494,914
1,016,367
12.0%
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
10.0%
-
656,453
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
$40.80
$41.17
$41.39
TOP LEASE TRANSACTIONS • Bank of the Ozarks has signed a 120K SF lease in 23 Springs. • Houlihan Lokey has signed a 74.8K SF lease in The Link at Uptown. • Newmark Knight Frank has signed a 40K SF lease in The Link at Uptown. • S2 Capital has signed a 25K SF lease in Harwood No. 14. • Shearman and Sterling has signed a 23K SF lease in The Link at Uptown. • Accordion Partners has signed a 5K SF lease in Parkview at 1920 McKinney. • Essential Realty Partners has signed a 4K SF lease in Park Place on Turtle Creek.
NEW DEVELOPMENTS • 2401 McKinney – a 673K SF office building (proposed) • 2323 Cedar Springs Road – a 623K SF office building (proposed) • Harwood XII – a 542K SF office building (proposed) • Victory Center | 2371 Victory Avenue – a 466K SF office building (proposed) • Harwood No. 14 – a 360K SF office building (under construction) • The Quad | 2699 Howell Street – a 340K SF office building (under construction) • 2727 Turtle Creek – a 260K SF office building (proposed) • McKinney & Lemmon – a 82K SF office building (proposed) • The Fairmount Building – a 63K SF office building (proposed)
575,000 450,000
16.0%
325,000 200,000 75,000 (50,000) (175,000)
8.0%
(300,000) Q1 19
Q2 19
Q3 19
Q4 19
ABSORPTION
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
DELIVERIES
Q4 21
Q1 22
VACANCY
LARGE EXISTING VACANCIES • Parkside Tower – 111,728 SF • 2501 Cedar Springs – 110,415 SF • The Centrum – 108,021 SF • The Link at Uptown – 74,805 SF • 2401 Cedar Springs – 57,118 SF • 1845 Woodall Rodgers – 51,468 SF
DALLAS 5950 Berkshire Lane, Suite 900 Dallas, Texas 75225 T 972.241.8300 | F 972.241.7955
FORT WORTH 1200 Summit Avenue, Suite 300 Fort Worth, Texas 76102 T 817.710.1110 | F 817.810.9017
www.holtlunsford.com
HOUSTON 11451 Katy Freeway, Suite 300 Houston, Texas 77079 T 713.850.8500 | F 713.850.8550
