Metroplex payroll employment increased by 3,400 jobs – 0.1% – over the 12 months ending May 2010. By comparison, national employment declined by 1.1% over this same period.  The Education/Health sector remains strong and has added jobs through the entire recession and recovery.

The Dallas/Fort Worth unemployment rate declined to 8.2% in April 2010, from 8.7% in January, but is up from 7.1% a year earlier. The national unemployment rate was 9.9% in April 2010, and declined to 9.7% in May 2010.

Market Conditions Weaken

The Dallas/Fort Worth office market continued to slide through the spring, as companies held off on adding space until the recovery is on stronger footing.  However, if employment growth continues over the next several months, demand for space will resume and market conditions will firm.  A good indication that market conditions may already be firming:  Office asking rents held steady in the second quarter, in spite of rising vacancy, which may indicate that more companies are looking at space options.

• Net absorption: Negative 550,000 SF in the Metroplex during the 2nd quarter of 2010, compared to negative 683,000 SF in the 1st quarter.
• Sublease space: Increased by 200,000 SF in the 2nd quarter of 2010.  There is currently 2.9 million SF of sublease space on the market – 1% of the standing inventory.
• Overall vacancy rate: 18.5% at mid-year 2010, up from 18.0% in the 1st quarter and 16.9% a year ago. The direct office vacancy rate rose to 17.5% at mid-year 2010, from 17.1% in the 1st quarter and 16.0% a year ago.  The sublease vacancy rate increased by 10 basis points in the 2nd quarter.
• Office space under construction or renovation: 1.1 million SF at 1st quarter 2010, down from 1.9 million SF at year-end 2009 and 5.2 million SF a year ago. 55% is pre-leased, down from 68% at year-end 2009, but the same as a year ago.
• Space delivered: 1.4 million SF was delivered in DFW in the 1st half of 2010, compared to 2.5 million SF in the 1st half of 2009.  Space delivered in the 1st half of 2010 was 84% leased upon delivery, compared to 28% a year ago.
• Rents: Office asking rents for all classes of office space began to level off in the 2nd quarter of 2010.
• Investment sales volume: We recorded $124 million of office investment sales in the 1st half of 2010, compared to $136 million in the 1st half of 2009. Sales prices averaged $119/SF in the Metroplex in the 1st half of 2010, compared to $84/SF in 2009.

The Dallas/Fort Worth industrial market experienced a modest comeback in the 2nd quarter of 2010.

• Net absorption: 492,000 SF during the 2nd quarter of 2010.   YTD net absorption totals 836,000 SF, compared to negative 1.0 million SF in the 1st half of 2009.
• Sublease space: 4.2 million SF at June 2010, down from 4.5 million SF in the 1st quarter.  This represents approximately 0.5% of the standing inventory.
• Vacancy rate: Overall vacancy rate held steady at 12.2% in the 2nd quarter of 2010, but is up from 11.1% a year ago.  The direct vacancy rate edged up 10 basis points in the 2nd quarter, to 11.7%.
• Space under construction: There is just 106,124 SF under construction in the Metroplex at mid-year 2010, down from 1.6 million SF in the 1st quarter and 5.8 million SF a year ago.  Space currently under construction is 67% pre-leased.
• Space delivered: 1.5 million SF in the 2nd quarter of 2010, at 69% leased upon delivery.
• Rents: Warehouse/Distribution and Flex/High-Tech asking rents declined approximately 3% in the 1st half of 2010, due to elevated vacancy and weak demand. Meanwhile, Manufacturing asking rents rose 4% in the 1st half, due to steady activity and low vacancy.
• Investment sales: We recorded no industrial investment sales in the DFW Metroplex in the 2nd quarter of 2010.  A handful of sales occurred, but the particulars have not been made public.  We recorded just $17.9 million in the 1st quarter of 2010.

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