"There's some stability as well as sustainability that's inherent in these numbers," Mark Fewin, senior managing director of CB Richard Ellis, tells GlobeSt.com. "It's been gradual over a long period of time so it shows a level of stability."

CBRE's Q2 report, which rolls out today, shows the metroplex isn't totally out of the woods as yet despite a market-wide absorption of 709,314 sf or 318,054 sf more than Q1's closing tally. The 181.6-million-sf inventory is 20.36% vacant, up just 0.12% from Q1, and there's 4.65 million sf under construction. Still, the across-the-board rent gains produced a 17-cent spread that pushed the Q2 average to $18.60 per sf.

Marty Neilon, CBRE's research coordinator, says the readings for vacancy, absorption and average rents are "getting pretty close" to 2000 and 2001 levels. Submarkets still trailing their 2001 rent levels are Central Expressway, Far North Dallas, Las Colinas, Lewisville/Denton and Richardson/Plano.

The region's pulse is always taken in the Dallas CBD. Its vacancy is 24.20%, second only to Detroit in the nation. Second-quarter activity in the 26.36-million-sf Downtown whittled 0.10% off the vacancy rate with 126,805 sf of absorption. There's also 824,839 sf of sublease space on the market. Yet, the CBD's per-sf average rent rose to $18.40 per sf from $18.13 per sf in the quarter-to-quarter analysis, marking the fourth time in two years for a 27-cent jump or more. In 2001, the CBD's rent averaged $17.51 per sf.

The rent gains are the dichotomy of Q2's closing numbers in all categories. "It's not a singular event. What was unique this quarter was it was across the board," says Steve Triolet, senior research coordinator.

Uptown's 1.3 million sf of under-construction space once had marketwatchers concerned about the fallout, not only on its 8.35 million sf of existing space, but the region at large. Ironically, Uptown's construction, which is 44.07% preleased, is getting most of the credit for driving up rents border to border. "To see that much square footage from an office standpoint and it's preleased bodes well for the strength of our market now," Fewin says.

Uptown's new space is carrying quotes of $34.50 per sf plus electric, just a shade under the submarket's prima donna, the Crescent. "From a historical standpoint, the Crescent was the only one before that could quote those rates," Fewin says.

To Uptown's credit, its vacancy is 8.5%. There is 203,971 sf of sublease space on the market. Today's average is $25.05 per sf versus $22.50 per sf in 2001.

"What I'm hearing, with the new construction coming on line in Downtown and Uptown with $35 and $36 rents, is it's pulling everyone else up," says David Richards, managing director and senior vice president of Grubb & Ellis Co.'s Dallas office. "$24 [per sf] at Lincoln Centre doesn't look too bad."

Richards says rents will have to continue to rise or cap rates drop, which isn't too likely, so private buyers, who paid top dollar and used high leverages to acquire the deeds, can support their IRR analyses and exit plans. "I wouldn't be surprised if in the next 12 to 18 months that we see private buyers be replaced by all-cash buyers looking at office buildings that were overpaid," he predicts. "The rental rates will have to go up or people will have a tough time keeping their buildings."

According to Richards' calculations, buying at a 7% cap rate in Dallas and selling at an 8% cap rate means a 14.29% rent hike would be needed just to achieve the original sale price. "From a national perspective, people are looking to Dallas to have a lot of growth over the next five years. Could we have that kind of rent growth? Sure," he says. "But, it's not a sure thing."

Meanwhile, the "for sale" list continues to swell. The latest prize to hit the street is the 1.3-million-sf bought in mid-June 2006 at 2200 Ross Ave., which was bought in mid-June 2006 for a rumored $260 million by a Dallas joint venture between Stream Realty Partners LP and Highland Capital Real Estate Fund. And, Hines' 218,943-sf Citymark at 3100 McKinnon St., bought in August 2005 for $27.9 million, could be next.