Time for a mid-year audit – DFW’s office availability weighed down by both old and new product

“Obsolete” office space driving up vacancy and space availability is a popular media topic. In DFW, average vacancy is currently running 26.1%. In comparison, total availability is 29.5% and accounts for 69.4 msf market wide, up from 52.3 msf at the end of 2019.

For recently delivered product, the story is more nuanced. Since 2015, 34 msf has been delivered. Of that space, 21.5 msf came online between 2015 and 2019.

At the end of 2019, only 2.2 msf of the region’s newest space was available, equating to an availability of 10.2%. Currently, those buildings have performed solidly. Even with the remote and hybrid work disruption, availability in those assets now totals 2.8 msf, which is not all that much higher than at the end of 2019.

In fact, for the 2017 and 2018 assets, availability actually improved by close to 500,000 sf. This is likely due to the marketing momentum they had going into the downturn; the completion of their initial lease-up; and new, longer-term leases at favorable rates – all credited to keeping the buildings more stable from a leasing perspective. For the newer stock, the biggest challenge has been the lease-up of space delivered since 2019. 12.6 msf of deliveries hit the market just as the economic slowdown occurred. While some buildings, like the 2023 delivery of 8111 Douglas (16.8% available), stabilized quickly, most remain in initial lease-up.

Combined, these newest deliveries added 4.8 msf to DFW’s total availability. This equates to 28% of the increase from year-end 2019.