There’s no better way to start off the new year than by
taking a look back and reviewing the one we just had. While the Dallas
commercial real estate market as a whole had a strong 2014, nowhere was this
success more notable than in the region’s nation-leading office market.
According to DTX, Dallas had the fourth highest amount of net office leasing in the country last year.
With over 4 million sq-ft of office space leased, the Dallas market grew at an
average rate of 5.5 percent, with growth ramping up further during the fourth
quarter. Overall, there is more than 6 million sq-ft of office space currently
being constructed in North Dallas, which is the highest figure for the region
since the ‘90s.
“If one annualizes the second half of 2014, the office sector
has been absorbing space at nearly twice its historical average,” says
economist Kevin Thorpe.
On a similar note, last year saw record low vacancy rates. By the end of the
year, Dallas office vacancy rates were down to 16 percent, with overall
commercial vacancy in North Dallas hovering around 9 percent. This comes
thanks, in no small part, to record-breaking leasing numbers: 2014’s total of
nearly 5 million sq-ft of leased space was the region’s highest in fifteen
years.
Overall, the Dallas office market had a stellar year, with
leasing and construction rates both nearing record levels. Furthermore, the
notable acceleration of growth that began in the second half of the year seem
to point to another strong year of growth for the region.
That being said, some analysts are cautious about projecting a repeat year of
record growth. In a piece for the Dallas Morning News, Steve Brown points to two
major factors that could limit further growth in the region. The first is a
potential federal interest rate hike that could place a damper on new
construction. The second is perhaps more worrying: falling energy prices. While
the energy sector has been a boon for the region over the past several years,
falling oil prices could have a broad negative effect on the local economy.
Regardless of these factors, the Dallas office market
experienced a top-notch 2014, with all indicators leaning positive. While it
remains to be seen if this growth continues, record-breaking vacancy and
construction numbers reflect the rising economic fortunes of the D-FW market.
