DALLAS–The local office market has seen continuing improvement in market fundamentals in the second quarter of 2014. According to the latest report by Cushman & Wakefield tenant demand is stronger than it has been since 2006.
Direct and overall absorption has reached 2 million square feet in 2014, this is an increase of 37% compared to the 1.5 million square feet absorbed during the same time period in 2013. Major tenants who took space this year include Santander Consumer Finance, Perkins Coie, Lockton Companies, Liberty Mutual, Kohl’s, Nationstar Mortgage, Conifer Solutions, Ernst & Young, Time Warner Cable, Bell Helicopter and Trend HR.
To date there has been 8.3 million square feet of leasing activity, an increase of 9.8%. Class A space accounted for more than half of the leased space (57.3%).
Rental rates have also been rising this year. Asking full-service rental rates rose 3.9% to $21.19 per square foot. Class A space saw the greatest increase, 5.4%, rising to $26.22 per square feet.
During this period 2.5 million square feet of construction projects were completed. Of that, 1.4 million square feet were speculative projects. An additional 5.1 million square feet of office projects are currently under construction, including 12 speculative buildings, which will total 2.6 million square feet. Of this spec space, 30.7% has already been pre-leased. During the third quarter, an additional 2 million square feet of projects will break ground.