Avison Young releases second quarter 2024 DFW office market report

Dallas-Fort Worth, TX – Today Avison Young released its Second Quarter 2024 Office Market Report for Dallas-Fort Worth (DFW).

DFW’s total job base continues to outperform the U.S. and hit new peaks, rising by more than 400,000 jobs from our pre-pandemic peak, or almost 11%. DFW remains one of the nation’s most robust markets.  In comparison, office jobs increased by 16% or 173,000 net new jobs over the period.

In the last 12 months, DFW office job growth has flattened, reportedly losing 1,500 jobs – although total growth over the last few years is 30% higher than the region’s longer-term average.

Even with this strong office job growth, the market saw availability for both direct and sublet space remain elevated due to the continued disruption of remote and hybrid work.  As of 2Q 2024, net office absorption was negative due to some Q1 2024 revisions and a slow Q2. This slowdown was driven by negative demand in the sublet market, with direct space holding modestly positive.

“Office space availability has been stable, but persistently high. Deals are being done, although leasing activity continues to be sluggish and not sufficient to take down the high level of space availability,” noted Avison Young Senior Insight Analyst, Walter Bialas.

The market saw leasing activity total 5.7 million sf through Q2 2024. This is roughly on par with Q1 2024’s pace and continues to be 35% lower than the longer-term mid-year average on a square footage basis.
As of Q2, Class B direct and sublet space impacted office absorption the most.  In comparison, Class A showed signs of renewed positive activity.

“I think we have finally reached the bottom of this cycle. Even though we saw no major turnaround in the Q2 key metrics, vacancy, availability and absorption were all stable to slightly better with a light finally emerging at the end of this long tunnel,” stated Greg Langston, Principal and Managing Director of the firm’s Dallas office. “As we have noted before, demand remains strong for top quality buildings in walkable locations, with good leasing activity among smaller to mid-size tenants, under 10,000 sf, who are returning to the office before many larger companies.”

The DFW market saw vacancy (25.9%) and availability (29.6%) no longer ratchet materially higher, staying generally stable for the last few quarters, although still the highest level since the late 1980’s real estate recession.