The primary concern today is that sublease space is "cannibalizing" direct space, says Pratchett. More than 60% of the 6.3 million sf in sublease inventory is available in blocks of less than 10,000 sf, ideally suited to small companies that traditionally watch the checkbook.

In the next six months, leases expire for more than 1,000 tenants, representing 2.8 million sf. In a year, that will climb to 1,800 tenants and 4.4 million sf. The usual rule of thumb is 60% to 70% will stay put, but that may be changing. "It is reasonable to suppose that many of these companies will take advantage of sublease opportunities over the next two years, significantly increasing the amount of direct available space in the market and giving rise to new challenges for landlords, including probable downward adjustments in rents," according to the report. Every six months, an average of 400,000 sf of sublease space will revert to direct space. Given that anomaly, it will take 36 months "even if none is absorbed" for sublease space to reach its three million-sf norm.

Changing market conditions have made the LBJ Freeway submarket one of the best deals in town after four years of negative absorption, says Gibbons. Vacancy is still falling between 17% and 18%, but a bright note came at the Q2 close with a slight positive absorption. Gibbons says building owners are to be thanked for aggressively reacting as the groundbreaking neared for the High Five in Five multi-level road project. The submarket's average rent dropped 15% to 25% in six months, with a full-service lease now being quoted at $18.75 sf, he says. That's $2.75 per sf less than what tenants pay in Far North Dallas. Tenants who fled as the project start grew closer are now "starting to realize the reality is it's time to come back. It was the anticipation of the problem and not the reality," Gibbons reasons.