National Office Update & Office Tenant/ User Strategies PodCast
Original Air Date:    4/2/11

Very informative broadcast about the office market and office space strategies for office space tenants.

"The office user show provides a national office market update and best practices for corporate office users. Chris Macke, Senior Real Estate Strategist with CoStar Group provides an update on national office market performance including top cities for investment and markets prime economically for corporate headquarters. He also shares market advice for office users and expectations for 2011 and 2012.

Show host Michael Bull and industry leading guests cover current topics important for office users including strategic lease provisions for tenants, protecting lease rights before foreclosure, prevalent lease situations in this economy and the guests share best practices when renewing leases and securing new locations.

If your company uses office space or you advise companies that do, you will find this show very informative and enlightening."

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Dallas, Texas, a thriving business hub, is part of the Greater Dallas-Fort Worth metro region and home to over six million people from a multitude of cultures. Office space for lease in Dallas can provide any business, whether expanding or start-up, a great location for enterprise.

Over 20 four-year universities and colleges are located in the Dallas-Fort Worth metropolitan area, providing an abundance of graduates skilled in all arenas of business and skilled labor. This city’s cost of living is typically slightly below the national average and much lower than the major metro areas along the west coast and eastern seaboard, making it a great place to live. The Dallas Fort Worth International Airport is a major airline hub and offers direct and connecting flights anywhere you could wish to visit.

Dallas offices include the homes of 24 Fortune 500 companies. Projections indicate that the year 2013 may well see a Gross Area Domestic Product of $389 billion for this area.  Dallas is considered a great place to live and work.

People often think that Dallas office space is mainly oil and gas tycoons or others associated with that industry. This is simply not the case; Dallas-Fort Worth is one of the richest high-tech regions that it is often considered the Lone Star State’s “Silicon Prairie”. There are also large bases in finance, real estate services, insurance, biotechnology, information technology, and manufacturing.  Transportation, warehousing, and logistics are growing markets.
 
Currently, the rental office space in the Dallas Fort Worth metro area is a total of just over 226 million square feet. The average vacancy rate is 20 percent and the annual cost for office space averages $18.22 per square foot. New construction of commercial real estate spaces is significantly down due to the plentiful vacancies available.
 
Small businesses account for nearly 80% of the businesses in Dallas-Fort Worth. These small businesses employ about 40% of the workforce and play a key in the growing tax base.  Small business is defined as having less than 20 employees.

The economy in the DFW metro area is quite stable making commercial real estate is very popular for establishing and conducting business, weathering economic ups and downs much better than many other cities.
 
The commercial real estate market in Dallas is so strong that the year 2010 ended on a positive note as deal volume and tenant confidence combined to buoy leasing activity.  With so many metro areas in extremely soft commercial markets, this is a significant signal that Dallas-Fort Worth will be going strong during the upcoming economic recovery period. The Dallas metro area ranked as the 11th most active real estate investment market in the U S during the past year.  With economic improvements beginning to appear in many larger cities, you can expect DFW to be on the forefront of growth since it is one of the most resilient markets in the country, experiencing smaller impacts from economic downturns than less diverse metro areas.

If you are considering opening a satellite office, Dallas office space is both plentiful and affordable. You are certain to find the commercial office space which meets your needs. If you are starting a small business in Dallas or Fort Worth, you’ll find office spaces suitable for small companies and plenty of space to grow into as your operation expands.

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More on Dallas Office Space

Dallas office space Market Information

POLICOM releases annual rankings for the 366 metropolitan areas and 576 so-called micropolitan areas nationwide.

The Top Ten Economies

1.Seattle-Tacoma-Bellevue, Wash.
2. Washington Metropolitan Area
3. Denver-Aurora-Broomfield, Colo.
4. Houston-Sugar Land-Baytown, Texas
5. Sacramento-Arden-Arcade-Roseville, Calif.
6. Salt Lake City
7. Des Moines-West Des Moines, Iowa
8. San Diego-Carlsbad-San Marcos, Calif.
9. Madison, Wis.
10. Dallas-Fort Worth-Arlington, Texas

Understanding the Rankings

Download the complete report

With their stronger economies, these are the office space markets that we would expect to lead the recovery.

Federal Reserve Beige Book Summary
"Reports on commercial real estate markets indicated that demand for space remained weak and that construction continued to decline in all Districts. Atlanta, Philadelphia, Richmond, and San Francisco reported that vacancy rates increased, while rates held steady in the Boston and Kansas City Districts and were mixed in New York. Boston, Dallas, Kansas City, Philadelphia, and Richmond commented that the demand for space remained weak. Commercial rents declined according to Boston, Chicago, New York, Philadelphia, and Richmond. Rent concessions were reported in the Richmond and San Francisco markets, and Richmond noted that some landlords had postponed property improvements in an effort to conserve cash. Construction remained at very low levels, with modest improvements noted in public construction in the Chicago, Cleveland, and Minneapolis Districts."

OfficeFinder does not expect much improvement in occupancy until the employment figures turn very positive and positive office absorption can take place again.  We are hoping to see some improvements by the middle of 2011.

If you need an office space, it’s as easy to find as your keyboard and mouse!
For more information, visit www.OfficeFinder.com.

Texas is certainly taking some hits while the economy in the US as a whole is suffering.  It is certainly not hurting to the same extent.  DFW is the 4th largest metro in the US, but it created 83,600 new jobs in 2007 (3rd in the nation) and 54,300 from September 2007 to September 2008 (2nd in the nation).  Unemployment stood at 5.3% while the country as a whole was around 6.1%.  These numbers may be adjusted later as often happens, but they show that it’s a good time to be in Texas.

Costar reported that the 3rd quarter of 2008 ended with 16.6% vacancy in the office market – a slight 0.1% increase over the 2nd quarter’s ending rate.  While absorption year-to-date posted a positive 2.8 million square feet, vacancy is expected to increase as the economy slows and 6.2 million square feet of new properties are delivered.  Subleases are becoming more of a factor as well with 2.6 million square feet now available.  As sublease space increases, greater pressure is put on landlords to decrease direct rental rates to compete.

What does this mean for corporate tenants?  There will be more options for tenants for sure.  And it probably makes sense to start testing where the bottom is for rental rates.  For example, I recently completed a transaction where the landlord originally quoted $11.20 per square foot.  When I told him that the high-credit, international tenant was focused on another building he continued to pursue the deal anyway and eventually made an offer at $9.05 with a construction allowance 25% higher than the original offer.  He got the deal.”

Posted by one of our top Dallas Tenant Reps
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