In its latest national report, Transwestern says that the U.S. office market showed continued growth over the first three months of 2018 as vacancy remained stable for the sixth consecutive quarter. Direct and overall (sublet) vacancy ended the quarter at 9.7 and 10.3 percent, respectively.
As for North Texas, the Dallas-Fort Worth area is, unsurprising, doing well. DFW ranks just behind Silicon Valley in net absorbtion over the past 12 months. DFW is No. 2, just behind New York, when it comes to office space under construction, with 8.2 million square feet headed to the market.
The report says that average asking office rents in North Texas were up 2.6 percent year over year to $25.31 per square foot. For office space, the first-quarter national average asking rental rate of $25.66 per square foot marked the 20th consecutive quarterly increase.
Overall, 22 of the 48 Transwestern reporting markets registered improvements in office direct vacancy while 30 of the markets recorded increases in overall vacancy (direct and sublet) over the period.
“Although well below both three- and five-year running quarterly averages, net absorption in the office sector for the first quarter of 2018 slightly outpaced the five-year average first-quarter performance of 14 million square feet,” said Stuart Showers, director of Research for Transwestern’s Houston office. “As a result, average asking rental rates continued to climb at a modest pace.”
Continued restraint in the development of new office product helped the sector. After cresting at
147.6 million square feet a year ago, the construction pipeline has begun to recede with early 2018 marking the fourth straight quarter of declines. New York, Dallas-Fort Worth, Washington, D.C., and Seattle led the 141.1 million square feet of new construction starts in first quarter 2018. Dallas-Fort Worth reported 8.3 million square feet of office space under construction.
“When examining vacancy and rent growth by market, we see a number of metros still in a stage of recovery or market correction for a variety of reasons,” Showers said. “But these are more than offset by metros we consider stabilized or peak performers.”