Dallas – Fort Worth Office Market | Q1 2024

Key Takeaways

• In the first part of 2024, the DFW office market saw positive absorption of 175,290 square feet, with contributions from all classes.
• Class A and B vacancy rates, currently at their highest levels in ten years, saw no movement from the previous quarter.
• For the first time in several quarters, the rental rates for Class A and B properties experienced a slight decline.
• Sublease space, which encompasses more than 10 million square feet, remains a significant influence in the market.

Dallas – Forth Worth Office Market Highlights

Moving into the early months of 2024, the Dallas-Fort Worth office market is dealing with contrasting economic signs, yet it continues to shine despite significant hurdles. The vacancy rate has edged up to 20.6%, marking a 20-year high, potentially signaling a plateau, while over 10 million square feet, or roughly 2.3% of total office space, remains available as sublease. Rental rates, having seen consistent rises in the past, are now experiencing a slight decline for the first time in several years. Nevertheless, DFW continues to draw new businesses, offering financially attractive and varied office options to incoming companies. This influx of companies relocating to DFW is a bright spot in the market, affirming its reputation as a resilient and cost-effective business environment. Despite the high vacancy and the leveling off of rental rates, the region provides robust options for businesses looking to establish or expand their presence. The current landscape, with its high vacancy and available sublease space, may offer leverage to tenants seeking favorable lease terms, positioning DFW to potentially transform these challenges into opportunities for revitalization and growth as the year progresses.

Throughout the last decade, the market has seen the delivery of 47 million square feet and the absorption of 21.9 million square feet. A marked preference for quality is evident, as over 88% of the absorbed space was in Class A buildings.