Delta Associates

Market Information: Dallas/Ft. Worth

Economy

Office

Industrial

Economy: First Quarter 2008

Growth Remains Solid

The Dallas/Fort Worth area continues to add a significant number of new jobs. Metroplex payroll employment increased by 2.9% – 83,500 jobs – over the 12 months ending January 2008. By comparison, national employment growth was 0.7% over this period. Average annual job growth for the Metroplex in 2007 totaled 83,600 jobs. Most core sectors of the local economy experienced growth in 2007. However, the Trade/Transportation/Utilities and Hospitality sectors continue to fuel job growth in the Metroplex, adding 12,300 and 12,200 jobs, respectively, over the 12 months ending January 2008.

The Dallas/Fort Worth unemployment rate was 4.2% in December 2007, slightly up from 4.0% a year earlier, but still well off a cyclical high of 7.4% in the summer of 2003. The national rate was 5.0% in December.

Office Market: First Quarter 2008

Market Expansion Continues

The Dallas/Fort Worth office market saw continued expansion during the 1st quarter 2008. Vacancy rates fell slightly and absorption was strong because of increased demand for Class B space in Dallas. Rental rates continued to increase.

Highlights:

Net absorption: 1.3 million SF in the 1st quarter 2008.
Sublease space: Remained unchanged in the 1st quarter of 2008, after increasing by 560,000 in 2007. There is 2.7 million SF of sublease space on the market –1.0% of the standing inventory.
Overall vacancy rate: 16.9% in the 1st quarter of 2008, down from 17.1% at year-end 2007 and 17.5% a year ago. The direct office vacancy rate fell to 15.9% in the 1st quarter of 2008 from 16.1% at year-end 2007 and 16.5% a year ago.
Rents: Continue to increase during the 1st quarter of 2008.
Office space under construction or renovation: 8.9 million SF in the 1st quarter of 2008, down from 9.0 million SF at year-end 2007 and up from 7.5 million SF a year ago. 48% pre-leased, compared to 45% a year ago.
Space delivered: 1.4 million SF in the 1st quarter of 2008, with 44% leased upon delivery.
Investment sales volume: $283 million in the 1st quarter of 2008, compared to $1.5 billion a year ago. Sales prices averaged $206/SF in the 1st quarter of 2008, compared to $126/SF in 2007.

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Industrial Market: First Quarter 2008

Strong Expansion Continues

The Dallas/Fort Worth industrial market continued to perform well in the 1st quarter of 2008.

Highlights:

Net absorption: 5.9 million SF in the 1st quarter of 2008, compared to 5.5 million SF a year ago.
Sublease space: 2.8 million SF in the 1st quarter of 2008, down from 4.1 million SF a year ago.
Vacancy rate: 8.7% in the 1st quarter of 2008, down from 9.9% a year ago.
Space under construction: 18.6 million SF in the 1st quarter of 2008, down from 20 million SF at year-end 2007 and up from 11.3 million SF a year ago. 14% pre-leased, compared to 29% a year ago.
Space delivered: 4.1 million SF was delivered in the 1st quarter of 2008, the same as the 4th quarter of 2007 but up from 2.8 million SF a year ago. 14% leased upon delivery, compared to 33% a year ago.
Warehouse/Distribution rents: Rose slightly in the 1st quarter of 2008. Flex/High-Tech and Manufacturing rents increased by an annualized 2.0% and 2.5% respectively.
Investment sales: Totaled $68 million in the 1st quarter of 2008, compared to $212.6 million a year ago. The average sale price was $54/SF, compared to $79/SF in all of 2007.

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