office market beat - tcn worldwide · 2019-10-23 · shortages. the dallas-fort worth (dfw) labor...

Q3 2019 OFFICE

MARKET BEAT

The market terms, definitions, and statistics in this report are based on CoStar Group, Inc. office statistics. The information contained is gathered from multiple sources considered to be reliable. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price,

rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2019 Whitebox Real Estate, LLC | Data from CoStar, Inc

1 DFW OFFICE MARKET OVERVIEW

Office Market Overview Office Market Statistics

2 DALLAS CENTRAL CORE

Preston Center Central Expressway

Uptown/Turtle Creek Dallas CBD

3 UPPER CENTRAL EXPRESSWAY

Allen/McKinney Plano

Richardson

4 FAR NORTH DALLAS

Frisco/The Colony Upper Toll/West Plano Quorum/Bent Tree

West LBJ East LBJ

5 LAS COLINAS

DFW Freeport/Coppell Office Center/West LBJ Ext

Urban Center/Wingren

6 FORT WORTH

Fort Worth CBD

MARKET BEAT

TABLE OF CONTENTS

820183

35W 35E

30

20

3

4 5

2

6

7

8

9

10

14

16

17

635/LBJ

75/CentralExpressway

121/Sam Rayburn

Tollway

DallasNorth

Tollway

PresidentGeorge Bush

Turnpike114

36020

820

183

35W 35E

30

45

20

3

4 5

2

1

6

7

8

9

10

15

14

13

16

17

12

1315

635/LBJ


121/Sam Rayburn

Tollway

DallasNorth

Tollway


Turnpike114

360

DFWOfficeMarketOverview

1 - Dallas CBD

Legend

2 - Uptown/Turtle Creek

3 - Stemmons Freeway

4 - Preston Center

5 - Central Expressway

6 - LBJ Freeway

7 - Far North Dallas

8 - Las Colinas

9 - Richardson/Plano

10 - East Dallas

11 - Southwest Dallas

12 - South Ft Worth

13 - North Ft Worth

14 - Lewisville/Denton

15 - Mid-Cities

16 - Northeast Ft Worth

17 - Ft Worth CBD

DFW Airport

N

Ft Worth CBD Dallas CBD

20

820183

35W 35E

30

35E

45

20

3

4 5

2

1

6

7

8

9

10

11

15

14

13

16

17

12

635/LBJ


121/Sam Rayburn

Tollway

DallasNorth

Tollway


Turnpike114

360

Love Field

1



MARKET BEAT

OFFICE OVERVIEW

OFFICE OVERVIEW| Q3 2019

- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$25.20

$25.40

$25.60

$25.80

$26.00

Q32018

Q42018

Q12019

Q22019

Q32019

Leasing Activity

$25.20$25.40$25.60$25.80$26.00

0.0%5.0%

10.0%15.0%20.0%

Q32018

Q42018

Q12019

Q22019

Q32019

Vacancy Vs Rental Rate

Vacancy Rental Rate

400 S Record Street Suite 1100

Dallas, TX 75202

(214) 380-4540 [email protected]

201 Main Street Suite 600

Fort Worth, TX 76102

(817) 502-1518

5830 Granite Parkway Suite 100

Plano, TX 75024

(214) 380-4540

Economic Overview The Texas economy continued to grow for yet another quarter, and August marked the 112th consecutive month for positive growth of nonfarm employment in the State of Texas, according to the Texas Workforce Commission. 10 of 11 major industries are experiencing positive annual growth, the same as the previous quarter. The private sector continues to be a growth engine for the state, and the growth rate has remained relatively flat at 2.8% (down from 2.9% the previous quarter, but up from 2.5% a year ago). Unemployment for the State of Texas held flat at 3.4%. This is the lowest unemployment rate since 1976 (when the date series began). The United States unemployment rate also remained unchanged at 3.7%. The Dallas Federal Reserve reported, “moderate expansion”, and noted expansions in manufacturing and the service sectors. The outlooks were positive for manufacturing, but they were “softened” in service, energy, and agricultural. Yet, again, employment continued to expand in spite of labor shortages. The Dallas-Fort Worth (DFW) labor market grew by 2.95% by adding 110,515 jobs over the last 12 months (302 per day). The unemployment rate for DFW has held relatively flat at 3.3% (up 0.1% from the previous quarter). Dallas-Plano-Irving continues to stay in the top three for fastest growing MSA in the state (on a percentage basis at 3.53% -- 89,200 jobs added over the last 12 months). The greater DFW Metroplex leads the state at a collective average of 2.95% growth over the past 12 months.

Tenant Outlook Net absorption for the third quarter totaled 2,728,634 SF, up 163.79% from the previous quarter. The average quoted rental rate increased 1.43% from the previous quarter to $26.26/SF. The Class A office market rose $0.59/SF to a DFW average quoted rate of $30.01/SF. This is the first time it has surpassed $30.00/SF. The CBD average Class A quoted rate is $27.25/SF vs. an average of $30.95/SF for Class A suburban office product. The vacancy rate in DFW declined slightly to 14.7%, but it has remained relatively flat over the last six quarters (within 0.2%) since the end of 2017.



The Class A vacancy rate decreased from 18.1% at the end of the previous quarter to 17.6% at the end of the third quarter of 2019. Class A CBD vacancy rates were recorded at 23.6%, significantly higher than the 16.2% for suburban Class A office product. Vacant sublease space decreased by over 300,000 SF for the second straight quarter to 2,999,029 SF from 3,224,471 SF at the end of the second quarter. Sublease vacancy in the CBD represents 19.5% of the available sublease space on the market while the market only constitutes 11.9% of the overall DFW office market. Class A vacant sublease space decreased to 2,107,124 SF from the 2,207,389 SF at the end of the second quarter of 2019. 2,574,749 SF of new construction was delivered in the third quarter of 2019. There is an additional 9,359,152 SF currently under construction. The largest active construction projects are build-to-suits for Pioneer Natural Resources, a 1,125,000 SF facility in Las Colinas, and expansion of JP Morgan Chase’s Legacy West Campus by 540,000 SF (a 12-story building) in the Upper Tollway/West Plano Submarket.

Investor Outlook Office building sales continue to see an increase in price and compression of cap rates on trophy assets. Irrespective of the trophy assets, as a whole, cap rates have slightly increased and averaged 7.6% for the previous 12 months at an average price of $194.00/SF compared to 7.2% for the previous quarter, 7.5% for the first quarter of 2019, 7.23% at the end of 2018, 6.54% for the end of the third quarter, and 6.94% from 15 months ago. The most prominent sale transactions for the last 12 months were the sale of Burnett Plaza, a 1,024,600 SF office building in the Fort Worth CBD for $263,159,128 or $257.00/SF at a 5.3% cap rate and 1900 Pearl, a 261,400 SF new office development in the Dallas CBD submarket for $183,000,000 or $700.00/SF. Looking Forward Three quarters of the way through the year, 2019 has been better than expected. DFW growth has continued to increase. DFW still struggles to find labor, and that is the biggest strain on the economy at the present time. There is a true war for talent, and we continue to monitor this closely. Trade tariffs and slowed oil & gas activity continue to be a concern; however, there is enormous interest from coastal markets on the relocation front and the investment from (New York, Boston, Los Angeles, San Francisco), the economy continues to grow, and we feel the fundamentals for Dallas-Fort Worth continue to be positive and the 4th quarter of 2019 is expected to be exceptional.


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

MARKET BEAT

OFFICE OVERVIEW



Existing Inventory Vacancy YTD Net YTD Under

Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF

Allen/McKinney 540 9,637,750 890,334 959,990 10.0% 300,012 334,279 452,986

Alliance 181 4,272,087 166,982 174,725 4.1% 215,616 219,281 117,108

Arlington/Mansfield 977 13,851,557 1,333,090 1,369,967 9.9% (10,364) 81,864 38,326

Central Expressway 280 15,090,248 1,645,412 1,759,943 11.7% 43,037 38,848 0

Dallas CBD 144 33,861,126 7,035,140 7,574,989 22.4% (61,692) 104,119 60,230

Delta County 3 6,141 0 0 0.0% 0 0 0

Denton 441 4,644,040 431,446 438,146 9.4% 8,925 81,436 13,600

DFW Freeport/Coppell 233 15,152,037 1,676,161 1,872,408 12.4% 202,382 254,700 1,238,786

East LBJ Freeway 171 17,560,858 3,751,018 3,950,891 22.5% 89,077 0 0

East Northeast Ft Wo. 348 5,465,884 753,316 753,316 13.8% 494,745 0 0

Ellis County 275 1,778,243 83,616 83,616 4.7% (2,307) 16,330 45,000

Frisco/The Colony 357 8,363,082 1,146,462 1,157,506 13.8% 46,934 63,968 588,829

Ft Worth CBD 123 12,643,136 1,507,554 1,553,678 12.3% (104,725) 0 0

Garland 297 3,239,393 392,017 392,017 12.1% 45,947 0 14,000

Grand Prairie 155 4,770,321 371,878 377,986 7.9% 4,227 17,045 5,000

HEB/Mid-Cities 527 9,333,380 1,072,099 1,105,055 11.8% 1,712,493 1,760,000 127,788

Henderson County 87 294,789 13,814 13,814 4.7% (13,814) 0 0

Hood County 136 803,089 29,361 29,361 3.7% (3,325) 0 0

Hunt County 140 856,942 63,372 63,372 7.4% (19,970) 0 0

Johnson County 275 1,557,841 118,533 118,533 7.6% 43,971 22,591 9,000

Lewisville 505 8,740,349 1,056,617 1,074,098 12.3% (217,862) 86,824 338,032

Mesquite/Forney/Terr. 248 2,056,849 135,654 135,654 6.6% 9,582 6,000 47,000

Northwest Ft Worth 206 1,471,283 87,260 87,260 5.9% (16,545) 13,687 0

Office Ctr/West LBJ . 165 16,952,350 2,930,697 3,042,889 17.9% (216,954) 74,400 1,456,363

Outlying Collin Coun. 87 553,557 69,352 71,403 12.9% 3,137 9,880 43,740

Outlying Denton Coun. 56 354,228 31,365 31,365 8.9% 3,177 0 32,066

Outlying Kaufman Cou. 25 81,402 0 0 0.0% 0 0 0

Parker County 231 1,298,939 77,823 78,623 6.1% 6,949 0 61,331

Plano 384 10,120,454 1,776,332 1,808,762 17.9% 345,393 1,300 369,373

Preston Center 153 6,169,148 463,027 497,503 8.1% 40,159 118,000 305,054

Quorum/Bent Tree 392 24,195,415 4,705,660 4,969,980 20.5% (73,029) 15,623 0

Richardson 402 23,117,323 3,428,957 3,532,808 15.3% 374,079 21,000 10,000

Rockwall 193 1,745,961 123,121 129,920 7.4% (5,020) 4,997 23,040

South Irving 230 2,961,358 295,053 303,237 10.2% (17,688) 0 0

Southeast Dallas 130 1,454,384 48,311 49,811 3.4% 10,061 0 65,890

Southeast Ft Worth 211 2,568,198 123,743 123,743 4.8% 11,892 0 21,600

Southwest Dallas 594 6,306,801 442,436 449,702 7.1% 5,984 0 315,000

Stemmons Freeway 284 15,806,985 3,290,788 3,293,138 20.8% 19,841 0 17,946

Upper Tollway/West P. 438 34,322,088 4,587,795 5,193,817 15.1% 697,904 726,685 1,299,848

Uptown/Turtle Creek 310 15,966,045 2,057,568 2,208,474 13.8% 160,469 265,860 747,538

Urban Center/Wingren 65 9,813,604 1,369,672 1,514,097 15.4% 34,271 0 54,957

West LBJ Freeway 88 5,306,515 1,038,360 1,038,360 19.6% (80,391) 0 0

West Southwest Ft Wo. 1,130 16,842,701 1,280,199 1,386,682 8.2% (72,656) 55,133 115,391

Westlake/Grapevine 836 13,197,184 1,854,983 1,982,121 15.0% 698,713 644,406 951,748

White Rock 272 5,885,499 859,523 862,170 14.6% (99,092) 294,820 372,582

Wise County 54 296,516 5,488 5,488 1.9% (2,354) 0 0

Totals 13,299 387,655,209 54,413,014 57,637,485 14.9% 2,201,719 2,859,489 8,966,025

MARKET BEAT

Total Office Submarket Statistics


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

DallasLoveField

Preston Center

Legend

Central Expressway Submarket

Uptown/Turtle Creek

Dallas CBD

NorthwestHighway


WoodallRodgersFreeway

DallasNorth

Tollway

3035E

DallasCentralCore

N



Market Snapshot Rental Rates Vacancy

Construction Deliveries

Market Statistics Inventory Total

Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under

Construction Rates - All

Classes Rates - Class A

Preston Center 6,169,148 SF 497,503 SF 8.06% 40,159 SF 117,999 SF 305,054 SF $42.01/SF $44.13/SF

Dallas/Fort Worth Total 387,655,209 SF 57,637,485 SF 14.87% 2,201,719 SF 2,859,489 SF 8,966,025 SF $25.89/SF $29.42/SF

MARKET BEAT

OFFICE SUBMARKET REPORT

Market Insights: The Preston Center Submarket ended the 3rd quarter of 2019 with a vacancy rate of 8.06%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 40,159 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $42.01/SF across all classes, increasing from $38.16/SF in the previous quarter. New construction deliveries increased from no deliveries to 117,999 SF, and there is currently 305,054 SF under construction in the submarket. Preston Center is a premier submarket, with a highly educated labor pool to draw from. The area boasts 165 restaurants and plenty of high-end shopping. It boasts the second-highest rents in the market, which is impressive considering that 60% of the building stock was constructed before 1990 but still command an average rental rate of nearly $38.00/SF. The submarket contains predominately Class A assets.

Preston Center | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(150,000) (100,000) (50,000)

- 50,000

100,000 150,000 200,000 250,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$34.00$36.00$38.00$40.00$42.00$44.00

Q32018

Q42018

Q12019

Q22019

Q32019

Gross Asking Rents/SF

$34.00$36.00$38.00$40.00$42.00$44.00

6.0%

7.0%

8.0%

9.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Central Expressway 15,090,248 SF 1,759,943 SF 11.66% 43,037 SF 38,848 SF 0 SF $29.90/SF $31.72/SF


MARKET BEAT


Market Insights: The Central Expressway Submarket ended the 3rd quarter of 2019 with a vacancy rate of 11.66%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 43,037 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $29.90/SF across all classes, increasing from $29.63/SF in the previous quarter. New construction deliveries remained at 38,848 SF, and there is currently no construction in the submarket. Though vacancies in Central Expressway have risen in recent quarters, they are still near all-time lows. With vacancies this low, landlords have pushed rents at one of the fastest rates in the metro over the past few quarters. The submarket is usually heavily traded and volume has picked up in the last 12 months with about $326M in sales; however, a significant portion of recent volume was due to the sale of the 1.35 million SF Cityplace Tower, the largest asset in the submarket.

Central Expressway | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(300,000)

(200,000)

(100,000)

-

100,000

200,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$27.50$28.00$28.50$29.00$29.50$30.00$30.50

Q32018

Q42018

Q12019

Q22019

Q32019


$27.00$28.00$29.00$30.00$31.00

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Uptown/ Turtle Creek 15,966,045 SF 2,208,474 SF 13.83% 160,469 SF 265,860 SF 747,538 SF $39.94/SF $42.00/SF


MARKET BEAT


Market Insights: The Uptown/Turtle Creek Submarket ended the 3rd quarter of 2019 with a vacancy rate of 13.83%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 160,469 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $39.94/SF across all classes, increasing from $39.63/SF in the previous quarter. New construction deliveries increased from 34,762 SF to 265,860 SF, and there is currently 747,538 SF under construction in the submarket. Uptown/Turtle Creek is the premier office submarket in Dallas-Fort Worth, with some of the highest rents in DFW. It offers the transportation, infrastructure, & amenities of a CBD and the submarket is a premiere live/work/play spot, home to over 200 restaurants and 160 shops. It is one of the most pedestrian-friendly places in Texas. Nearly 75% of the submarket’s office buildings are Class A, several considered trophy assets.

Uptown/Turtle Creek | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

- 50,000

100,000 150,000 200,000 250,000 300,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$38.00$38.50$39.00$39.50$40.00$40.50

Q32018

Q42018

Q12019

Q22019

Q32019


$38.00$38.50$39.00$39.50$40.00$40.50

13.4%13.6%13.8%14.0%14.2%14.4%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Dallas CBD 33,861,126 SF 7,574,989 SF 22.37% -61,692 SF 104,119 SF 60,230 SF $25.96/SF $26.84/SF


MARKET BEAT


Market Insights: The Dallas CBD Submarket ended the 3rd quarter of 2019 with a vacancy rate of 22.37%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -61,692 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $25.96/SF across all classes, increasing from $25.17/SF in the previous quarter. New construction deliveries increased from 81,711 SF to 104,119 SF, and there is currently 60,230 SF under construction in the submarket. The Dallas CBD is the metro’s primary office node, but it has struggled for some time. Its vacancy rate is among the highest in the metroplex because its inventory contains primarily older towers that are not competitive with new assets in other prominent office submarkets. Still, the submarket’s low rents, transit amenities & central location have helped keep a core group of tenants rooted here, and fundamentals have improved in recent years.

Dallas CBD | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000)

-

200,000

400,000

600,000

800,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$24.00$24.50$25.00$25.50$26.00$26.50

Q32018

Q42018

Q12019

Q22019

Q32019


$24.00$24.50$25.00$25.50$26.00$26.50

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate

Allen/McKinney

Legend

Plano

Richardson

UpperCentralExpressway

N

78

205

380

121/Sam Rayburn

Tollway



Turnpike






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Allen/ McKinney 9,637,750 SF 959,990 SF 9.96% 300,012 SF 334,279 SF 452,986 SF $26.60/SF $30.37/SF


MARKET BEAT


Market Insights: The Allen/McKinney Submarket ended the 3rd quarter of 2019 with a vacancy rate of 9.96%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 300,012 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $26.60/SF across all classes, decreasing from $27.05/SF in the previous quarter. New construction deliveries increased from 325,486 SF to 334,279 SF, and there is currently 452,986 SF under construction in the submarket. Allen/McKinney is a fast-growing suburban submarket in the northeastern corner of DFW. Most of its office properties are located along the North Central Expressway in Allen, in the southern half of the submarket. While large office product in McKinney is relatively limited, there is a strong presence of insurance companies. Both Allen and McKinney are often ranked among the best places to live in the country for their high-quality schools, low crime rates, and affordable homes.

Allen/McKinney | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-

100,000

200,000

300,000

400,000

500,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$26.00

$26.50

$27.00

$27.50

$28.00

Q32018

Q42018

Q12019

Q22019

Q32019


$26.00$26.50$27.00$27.50$28.00

8.0%9.0%

10.0%11.0%12.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Plano 10,120,454 SF 1,808,762 SF 17.87% 345,393 SF 1,300 SF 369,373 SF $25.57/SF $29.10/SF


MARKET BEAT


Market Insights: The Plano Submarket ended the 3rd quarter of 2019 with a vacancy rate of 17.87%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 345,393 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $25.57/SF across all classes, decreasing from $25.92/SF in the previous quarter. New construction deliveries increased to 1,300 SF, and there is currently 369,373 SF under construction in the submarket. The Plano Submarket encompasses east Plano, and most of its office inventory is along the North Central Expressway or President George Bush Turnpike. The submarket's inventory primarily comprises Class B product, which is reminiscent of office stock in submarkets like Lewisville and HEB/Mid-Cities. Rent growth has slowed in recent quarters to less than 1% year-over-year growth.

Plano | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-200,000

-150,000

-100,000

-50,000

0

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$25.20 $25.40 $25.60 $25.80 $26.00 $26.20 $26.40

Q32018

Q42018

Q12019

Q22019

Q32019


$25.00

$25.50

$26.00

$26.50

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Richardson 23,117,323 SF 3,532,808 SF 15.28% 374,079 SF 21,000 SF 10,000 SF $23.12/SF $25.53/SF


MARKET BEAT


Market Insights: The Richardson Submarket ended the 3rd quarter of 2019 with a vacancy rate of 15.28%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 374,079 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $23.12/SF across all classes, decreasing from $23.32/SF in the previous quarter. New construction deliveries held steady at 21,000 SF, and there is currently 10,000 SF under construction in the submarket. Richardson is the home of the Telecom Corridor, which contains a number of the world’s largest telecom companies: TI, Cisco, and Fujitsu to name a few. Despite the moniker, Richardson has a diverse tenant base, with healthcare and insurance firms taking up a large portion of the submarket's office space. The submarket provides a highly talented labor force to draw from, with 58% of the population possessing a bachelor's degree or higher.

Richardson | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-

100,000

200,000

300,000

400,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$20.00 $22.00 $24.00 $26.00 $28.00 $30.00

Q32018

Q42018

Q12019

Q22019

Q32019


$22.00$22.50$23.00$23.50$24.00

0.0%5.0%

10.0%15.0%20.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate

Quorum/Bent Tree

Legend

West LBJ Freeway

Frisco/The Colony

Upper Tollway/West Plano

East LBJ Freeway

FarNorthDallas

N

35E635/LBJ

DallasNorth

Tollway


Turnpike

121/Sam Rayburn

Tollway







Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Frisco/ The Colony 8,363,082 SF 1,157,506 SF 13.84% 46,934 SF 63,968 SF 588,829 SF $33.69/SF $34.65/SF


MARKET BEAT


Market Insights: The Frisco/The Colony Submarket ended the 3rd quarter of 2019 with a vacancy rate of 13.84%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 46,934 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $33.69/SF across all classes, increasing from $33.21/SF in the previous quarter. New construction deliveries increased from having no deliveries in Q2, to 63,968 SF, and there is currently 588,829 SF under construction in the submarket. Frisco/The Colony is DFW’s up-and-coming submarket. Since the early 2000s, the submarket’s office inventory was less than 700,000 SF, but today it exceeds 8 million SF, the majority being office product is located just off the Dallas North Tollway. More than 2 million SF of this submarket is in the 162-acre Hall Park, which is still expanding, and other projects along the North Platinum Corridor ($5 Billion Mile) could deliver up to 20 million SF of office space at full build-out.

Frisco/The Colony | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$32.80 $33.00 $33.20 $33.40 $33.60 $33.80

Q32018

Q42018

Q12019

Q22019

Q32019


$32.80$33.00$33.20$33.40$33.60$33.80

0.0%5.0%

10.0%15.0%20.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Upper Tollway/ West Plano 34,322,088 SF 5,193,817 SF 15.13% 697,904 SF 726,685 SF 1,299,848 SF $31.77/SF $34.66/SF


MARKET BEAT


Market Insights: The Upper Tollway/West Plano Submarket ended the 3rd quarter of 2019 with a vacancy rate of 15.13%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 697,904 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $31.77/SF across all classes, slightly increasing from $31.58/SF in the previous quarter. New construction deliveries increased from 458,728 SF to 726,685 SF, and there is currently 1,299,848 SF under construction in the submarket. The Upper Tollway/West Plano has emerged as one of the most dynamic office submarkets in Dallas-Fort Worth. The submarket has some of the newest office stock in the metro and access to a deep and well-educated labor pool. More than half of all adults have at least a bachelor’s degree, and the school districts are consistently rated among the best in the state. Additionally, the submarket is willing to give generous incentives to relocating companies.

Upper Tollway/West Plano | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-

500,000

1,000,000

1,500,000

2,000,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$30.60$30.80$31.00$31.20$31.40$31.60$31.80$32.00

Q32018

Q42018

Q12019

Q22019

Q32019


$30.50

$31.00

$31.50

$32.00

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Quorum/ Bent Tree 24,195,415 SF 4,969,980 SF 20.54% -73,029 SF 15,623 SF 0 SF $26.11/SF $30.17/SF


MARKET BEAT


Market Insights: The Quorum/Bent Tree Submarket ended the 3rd quarter of 2019 with a vacancy rate of 20.54%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of -73,029 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $26.11/SF across all classes, increasing from $25.69/SF in the previous quarter. New construction deliveries held steady at 15,623 SF, and there is currently no construction in the submarket. The submarket emerged in the 1980s when its inventory grew by 10 million SF. Occupancies have taken a major hit in recent years, but most of that was due to JPMorgan Chase and Fannie Mae moving to new build-to-suits in the Upper Tollway/West Plano submarket. The Quorum/Bent Tree includes the town of Addison, with a residential population of about 15,000, and a daytime population estimated at more than 100,000.

Quorum/Bent Tree | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000) (150,000) (100,000) (50,000)

- 50,000

100,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$24.50

$25.00

$25.50

$26.00

$26.50

Q32018

Q42018

Q12019

Q22019

Q32019


$24.50$25.00$25.50$26.00$26.50

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



West LBJ Freeway 5,306,515 SF 1,038,360 SF 19.57% -80,391 SF 0 SF 0 SF $18.85/SF $20.66/SF


MARKET BEAT


Market Insights: The West LBJ Freeway Submarket ended the 3rd quarter of 2019 with a vacancy rate of 19.57%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of -80,391 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $18.85/SF across all classes, increasing from $18.73/SF in the previous quarter. As with last quarter, there were no new deliveries in Q3, and there is currently no construction in the submarket. The West LBJ Freeway Submarket has seen little office development in recent years, which is likely to remain the case even with the new LBJ Express lanes drastically relieving highway congestion in the area. There are two major office nodes in this submarket, one at the Centre Office Park, and the other near the intersection of the LBJ and Stemmons freeways. The majority of the inventory in the submarket is Class A & B stock built in the 1980s.

West LBJ Freeway | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000) (150,000) (100,000) (50,000)

- 50,000

100,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$18.00

$18.50

$19.00

$19.50

$20.00

Q32018

Q42018

Q12019

Q22019

Q32019


$18.00$18.50$19.00$19.50$20.00

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



East LBJ Freeway 17,560,858 SF 3,950,891 SF 22.50% 89,077 SF 0 SF 0 SF $23.48/SF $27.40/SF


MARKET BEAT


Market Insights: The East LBJ Freeway Submarket ended the 3rd quarter of 2019 with a vacancy rate of 22.50%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 89,077 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $23.48/SF across all classes, increasing from $23.33/SF in the previous quarter. As with last quarter, there were no new deliveries in Q3, and there is currently no construction in the submarket. The East LBJ Freeway Submarket divides northern Dallas from the suburbs of Addison and Richardson. Although it is one of the smallest submarkets by land area, it is one of the densest in the metroplex, ranking in the top five for total office inventory. The average building size in the submarket is over 100,000 SF, the third largest in the metro. Most tenants are related to finance, insurance, real estate or business services. More than half the stock here is rated Class A, even though it is mostly 80's era inventory.

East LBJ Freeway | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(400,000) (300,000) (200,000) (100,000)

- 100,000 200,000 300,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$22.80

$23.00

$23.20

$23.40

$23.60

Q32018

Q42018

Q12019

Q22019

Q32019


$22.80$23.00$23.20$23.40$23.60

0.0%

10.0%

20.0%

30.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate

DFW Freeport/Coppell

Legend

Office Ctr/West LBJ Ext

Urban Center/Wingren

LasColinasOfficeMarket

N

114PresidentGeorge Bush

Turnpike

635/LBJ

121/Sam Rayburn

Tollway

DFWAIRPORT






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



DFW Freeport/ Coppell 15,152,037 SF 1,872,408 SF 12.36% 202,382 SF 254,700 SF 1,238,786 SF $23.74/SF $26.13/SF


MARKET BEAT


Market Insights: The DFW Freeport/Coppell Submarket ended the 3rd quarter of 2019 with a vacancy rate of 12.36%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 202,382 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $23.74/SF across all classes, increasing from $23.42/SF in the previous quarter. New construction deliveries decreased from 504,700 SF to 254,700 SF, and there is currently 1,238,786 SF under construction in the submarket. The submarket's central location has fostered a groundswell of recent construction. Led by the emergence of the Cypress Waters master-planned mixed-use development, since 2016, DFW/Freeport/Coppell has added about 20 new buildings. Since so many of the new Cypress Waters office buildings were build-to-suits, vacancies have remained low. This trend should persist in the near term, as most of what is underway is already accounted for.

DFW Freeport/Coppell | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-

100,000

200,000

300,000

400,000

500,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$22.00

$22.50

$23.00

$23.50

$24.00

Q32018

Q42018

Q12019

Q22019

Q32019


$22.00$22.50$23.00$23.50$24.00

0.0%5.0%

10.0%15.0%20.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Office Center/ West LBJ Ext 16,952,350 SF 3,042,889 SF 17.95% -216,954 SF 74,400 SF 1,456,363 SF $25.44/SF $27.79/SF


MARKET BEAT


Market Insights: The Office Center/West LBJ Ext Submarket ended the 3rd quarter of 2019 with a vacancy rate of 17.95%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of -216,954 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $25.44/SF across all classes, increasing from $25.37/SF in the previous quarter. New construction deliveries held steady at 74,400 SF, and there is currently 1,456,363 SF under construction in the submarket. Because of its proximity to the airport and its highway access, this submarket has remained a popular destination for major corporations, and the submarket is home to several regional hubs and HQ’s. The office product here caters to larger tenants, and the average building is bigger than 100,000 SF. The tenant mix primarily includes retailers, telecommunications companies, and financial services firms.

Office Center/West LBJ Ext | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$22.00

$23.00

$24.00

$25.00

$26.00

Q32018

Q42018

Q12019

Q22019

Q32019


$22.00$23.00$24.00$25.00$26.00

0.0%5.0%

10.0%15.0%20.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Urban Center/ Wingren 9,813,604 SF 1,514,097 SF 15.43% 34,271 SF 0 SF 54,957 SF $30.15/SF $32.03/SF


MARKET BEAT


Market Insights: The Urban Center/Wingren Submarket ended the 3rd quarter of 2019 with a vacancy rate of 15.43%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 34,271 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $30.15/SF across all classes, increasing from $29.70/SF in the previous quarter. As with last quarter, there were no new deliveries in Q3, and there is currently 54,957 SF under construction in the submarket. About 85% of total office inventory in this submarket was added during the building boom of the 1980s, but the majority of that space is high-quality, Class A & B stock. The focus here of late has been on improving transit amenities as well as creating more of a live/work/play environment. The area has seen significant multifamily development in this cycle, as more than 2,500 units have delivered since 2013.

Urban Center/Wingren | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(150,000) (100,000) (50,000)

- 50,000

100,000 150,000 200,000

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$29.00$29.20$29.40$29.60$29.80$30.00$30.20$30.40

Q32018

Q42018

Q12019

Q22019

Q32019


$29.00

$29.50

$30.00

$30.50

13.0%14.0%15.0%16.0%17.0%18.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate

FortWorthCBD

N

35W

121

30

30

Belknap St/Weatherford

St

West ForkTrinity River

HendersonSt






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Ft Worth CBD 12,643,136 SF 1,553,678 SF 12.29% -104,725 SF 0 SF 0 SF $27.58/SF $30.30/SF


MARKET BEAT


Market Insights: The Ft Worth CBD Submarket ended the 3rd quarter of 2019 with a vacancy rate of 12.29%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -104,725 SF to finish Q3 2019. Rental rates ended the 3rd quarter at $27.58/SF across all classes, decreasing from $27.76/SF in the previous quarter. As with last quarter, there were no new deliveries in Q3, and there is currently no new construction in the submarket. The Fort Worth CBD is home to several energy companies, leaving it exposed to energy price swings. At 12.29%, vacancies are well below the metro average and have been trending down. Frost Tower, the 280,000 SF office building delivered in early 2018 was already about 70% leased just one year after opening. The building has the highest rents in downtown Fort Worth at $40.00/SF, and there are very few buildings in the submarket that are close to this mark.

Ft Worth CBD | Q3 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(120,000) (100,000) (80,000) (60,000) (40,000) (20,000)

-

Q32018

Q42018

Q12019

Q22019

Q32019

Net Absorption

$27.00

$27.50

$28.00

$28.50

$29.00

Q32018

Q42018

Q12019

Q22019

Q32019


$27.00$27.50$28.00$28.50$29.00

0.0%

5.0%

10.0%

15.0%

Q32018

Q42018

Q12019

Q22019

Q32019


Vacancy Rental Rate

5830 Granite ParkwaySuite 100

Plano, TX 75024

(214) 380-4540www.whiteboxrealestate.com

400 S Record StreetSuite 1100

Dallas, TX 75202


201 Main StreetSuite 600



office market beat - tcn worldwide · 2019-10-23 · shortages. the dallas-fort worth (dfw) labor...

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