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Market Information: Dallas/Ft. Worth

 

Economy
Office
Industrial



Economy:  Year-End 2009

DFW Among Nation's Leaders, But Employment Lags

Metroplex payroll employment decreased by 59,100 jobs – 2.0% – over the 12 months ending October 2009. By comparison, national employment declined by 4.0% over this same period.  While most core sectors of the local economy continued to experience job losses, the Education/Health sector remains strong, adding 22,300 jobs over the 12 months ending October 2009. 

The Dallas/Fort Worth unemployment rate was 8.3% in October 2009, unchanged for the third consecutive month, but up from 5.3% a year earlier and above the previous cyclical high of 7.4% in June of 2003. The national unemployment rate was 10.2% in October 2009 and 10.0% in November. 

 

Office Market:  Year-End 2009

Market Contraction Slows

Activity in the Dallas/Fort Worth office market remained lethargic during the 4th quarter of 2009, as demand for office space remained weak. Vacancy rates held steady and rental rates continued to edge down. 

Highlights:

  • Net absorption: Negative 103,000 SF in the Metroplex in the 4th quarter of 2009, compared to a revised negative 1.0 million SF in the 3rd quarter. For the year, DFW net absorption for all space totaled negative 35,000 SF.
  • Sublease space: Increased by 412,000 SF in the 4th quarter of 2009 and 474,000 SF over the past 12 months.  There is currently 3.1 million SF of sublease space on the market – 1.1% of the standing inventory.
  • Overall vacancy rate: 17.7% at year-end 2009, unchanged from the 3rd quarter, but up from 17.2% a year ago. The direct office vacancy rate edged down to 16.6% at year-end 2009, from 16.7% in the 3rd quarter, but is up from 16.3% a year ago.  The sublease vacancy rate rose 20 basis points in 2009.
  • Office space under construction or renovation: 1.9 million SF at year-end 2009, down from 2.8 million SF in the 3rd quarter and 6.6 million SF a year ago.  68% is pre-leased, compared to 60% in the 3rd quarter and 59% a year ago.
  • Space delivered: 957,000 SF was delivered in DFW in the 4th quarter of 2009, bringing the annual total to 4.1 million SF, down from 5.9 million SF in 2008.  Of space delivered in 2009, 28% was leased upon delivery, compared to 45% a year ago.
  • Rents: Office rents continued to decline in Dallas/Fort Worth during the 4th quarter of 2009, and have fallen 4.8% since year-end 2008 for all classes of office space combined.
  • Investment sales volume: $176 million in 2009, compared to $1.6 billion in 2008. Sales prices averaged $84/SF in the Metroplex in 2009, compared to $195/SF in 2008 and down 20% to 25% from values recorded in 2001 through 2007.

 

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Industrial Market:  Year-End 2009

Market Contraction Continues

Highlights:

  • Net absorption: Negative 1.0 million SF in the 4th quarter of 2009.  Net absorption totaled negative 5.5 million SF in all of 2009, compared to positive 10.8 million SF in 2008.
  • Sublease space: 4.6 million SF at year-end 2009, representing 0.7% of standing inventory.  This figure is up from 4.4 million SF a year ago.
  • Vacancy rate: Overall vacancy rate is 12.3% at year-end 2009, from 12.1% in the 3rd quarter and 9.8% a year ago.  The direct vacancy rate inched up to 11.6%, from 11.5% last quarter and 9.2% a year ago.  The sublease vacancy rate rose 10 basis points in 2009.
  • Space under construction: 1.3 million SF at year-end 2009, down from 2.0 million SF in the 3rd quarter and 13.3 million SF a year ago.  79% is pre-leased, compared to 23% a year ago.
  • Space delivered: 13.1 million SF in 2009, compared to 20.2 million SF in 2008. Space delivered was 26% leased upon delivery, compared to 14% in 2008.
  • Rents: Rents for all flex/industrial product types experienced significant declines in 2009.  Warehouse/Distribution rents average $3.64/SF, IG and have fallen 14.8% since year-end 2008.  Flex/High-Tech rents average $7.25/SF, NNN, and dropped 8.2% in 2009.  Manufacturing rents are down 3.1% over the past year, to $3.38/SF, IG.
  • Investment sales: We have recorded just $67 million of industrial investment sales in the DFW Metroplex in all of 2009, compared to $452 million in 2008.  The average sale price in 2009 was $29/SF, compared to $55/SF in 2008.

 

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