The Dallas office market has been active over the past year. The amount of Dallas office space for lease is at record amounts over the lease twelve months. This high demand is creating tension for Dallas office tenants that are trying to find lower priced office space in Dallas.
How can a Dallas office tenant position their business to find the best Dallas office space for lease? There are a few tactics that we use that help our clients realize less expense when leasing Dallas office space. It is helpful to understand the four major factors that are driving the present Dallas office space market. Since you are focused on high rental rates I am assuming that you are interested in the more expensive Dallas office markets. The higher priced markets, in the City of Dallas, include Dallas CBD, Preston Center, Central Expressway, Turtle Creek/Uptown, and the Quorum/ Bent Tree office markets. My comments below will pertain to these markets.
4 Market Conditions Affecting Dallas Office Space for Lease:
Construction of New Space: In Dallas, there are only 128,0000 square feet of new office space being constructed in the top markets. The total amount of office space in these markets is 103.2 million square feet. Obviously, 128,000 square feet will not make a significant increase in available square footage.
Several acres of land was being warehoused for the Amazon relocation and no that that decision is made the property is available for development. It has just been announced that the old Dallas Morning News facility in the Dallas CBD has been purchased. It is safe to assume that new development will be coming online and additional office space will be available.
The problem for tenants looking for cheap Dallas office space for lease is that any new developments will require higher rental rates to obtain financing. Presently these new buildings are commanding an office rental rate of $42.00 plus NNN charges. There is not much rent relief.
Business Failures: Due to the robust economic activity in Dallas. The Dallas Federal Reserve has reported very low numbers of business failures in 2018. Therefore many of these businesses are not vacating office space and some are expanding. This creates more demand for office space and is driving rental rates higher.
Absorption/Expansion: Over the past years these Dallas office markets have experienced net absorption of 985,000 square feet. Exceeding the amount of square footage constructed in the same period. The demand for Dallas office space for lease is much higher than the amount of square footage constructed.
Business Migration: There is presently rumored thirty companies currently considering relocation to the Dallas office market. A few of these relocations are for a significant amount of square footage. The bulk of them is for mid-sized relocations. Again, there are a lot of companies looking for limited amounts of office space.
If you are looking for Dallas office space for lease and you want to have a lower rental rate then there are two suggestions I have:
2 Ideas for Cheaper Dallas Office Rent
East LBJ & West LBJ office market: Both of these markets have not experienced the high demand for office space that the other Dallas markets have realized. Both of these markets have experienced negative absorption and the landlords are more aggressive to make a lease.
Subleasing: If you can accept a space with no modifications, unless you want to pay for them, you can generally get a below-market lease with a sublease. There are tricks to getting a good sublease so I suggest you read our blog post on finding a good office sublease.
Please contact us if we can answere any of your Dallas office space for lease questions. We have helped many Dallas, Plano, Frisco, Allen and Richardson office tenants find the perfect office space for their business. We can help you too.