DFW’s office market – where’s the best deal for nice space?

In the last few years, office rents for top-quality space in DFW have been increasing rapidly. For the popular Uptown submarket, NNN rents of $60 to $70 psf are becoming common, which translates into full service rents of $85 to $95 psf. This scale of increase is also happening across our suburban submarkets.

One driver of these rising rents is the tight availability in the more modern class A assets. While total availability in class A averages 29.5% and older vintage stock is mostly in the low 30% range, the more modern properties have limited available space by DFW standards. For example, properties built between 2010 and 2015 are now coming in at 14.5% available and for 2015-2020 buildings an even tighter 12.6%. Average full service asking rents in these properties are $41-$46 psf.

For the newest buildings, those delivered between 2020 and 2024, availability averages 35%. This higher rate is because many of these recently delivered buildings are still in initial lease-up. In fact, for properties that came online from 2020-2022, which should be nearing stabilization, total availability is not much better at 33.6% – suggesting that the attenuated lease-up is due to the return to office disruption.

Even with that slack leasing, these newest properties command an average asking rent premium of 10-20%+ over the 2010-2020 vintages due to their desirable locations and tenant inspired space features. So where is the best deal today? It depends on the type of space a tenant is targeting.

Clearly, if price sensitivity exists, older stock has much greater availability and lower base rates, which suggests that tenants have a better chance of driving a hard deal. On the other hand, if new, premium space is preferred to make a corporate statement or attract staff back to the office, then expect limited negotiation range with a much higher base rent (although an opportunity to obtain free rent and tenant improvements may exist to balance the higher rent).