"With the anticipation of recession, everyone at C-level took astep back. It was a hiccup in the decision-making process," DaleRay, managing director in Dallas for Chicago-based Jones LangLaSalle, tells GlobeSt.com. "We're actually starting to seecompanies take action and sign. We're now seeing progress in dealsgetting done." He believes the uptick will continue or at leasthold steady for the rest of the year.

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The sudden spurt most likely is a "false start. There'sdefinitely a false sense of security out there," says Greg Bennett,vice president and research director for Dallas-based SwearingenRealty Group LLC. "From a landlords' perspective, they have to havea positive outlook. There are definite opportunities for tenantscoming and it should show pretty soon."

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But for now, the Q1 analysis shows some cause for optimism, amuch-needed respite from the gloom and doom of national reports forthe industry and economy alike. The Stemmons submarket, longdowntrodden due to a road project, led the market in absorptionwith 248,268 sf. However, its 9.44 million sf of buildings arestill shouldering a 34.1% vacancy. Class A rent averages $17.73 persf and class B is ringing up $14.52 per sf. The pocket has 112,144sf of sublease space and 3.1 million sf of open direct space. Aswould be expected, there were no deliveries and no starts inQ1.

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According to JLL's research, Greater Dallas absorbed 579,704 sfin Q1. The 150.7-million-sf inventory is 23.85% vacant. The suburbsoverwhelmingly control completions, construction and subleasespace. In Q1, there were 2.8 million sf under construction, 2.42million sf of sublease and 768,736 sf in completions.

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"The underlying pace of transaction volume was surprisinglybetter in first quarter 2008 than we anticipated," Ray says. "Withan equal pace continuing throughout the year, the market should seeoffice vacancy just below 20%."

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Last week's US Census count also offered a glimmer of hope,according to Ray. Dallas leads the nation in population growth,which eventually will translate into more office and residentialspace.

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Until the nation's economy perks up, Ray predicts Dallas rentswill slow down in some markets and toe the line in others. He'salso predicting "concessions will continue to decrease."

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[IMGCAP(2)]Bennett doesn't dispute that absorption was solid inQ1, but he's confident concessions are going to climb as willsublease space later in the second quarter. He will start collatingdata next week for a Q1 report, which will give the lay of the landfrom the tenants' side.

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Bennett says the big question is the impact on the office sectorfrom give-backs by companies of all types related to theresidential sector. Fort Worth is waiting to see what DR Horton Inc. will dowith its 160,000-sf headquarters in City Center Tower II at 301Commerce St. Dallas already has been hit by Centex Corp., which hasmore than 100,000 sf on the sublease market in Uptown. Still tocome is a decision by the Calabasas, CA-based Countrywide FinancialCorp. about its many locations not just in Greater Dallas, but allaround the state.

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As the region waits to see the full impact from the residentialfallout, Bennett says Downtown is poised for a sharp drop inabsorption because new buildings in Uptown are raiding its ranks.He believes Downtown will dip into the red for absorption by year'send or early 2009 due to shifting tenants who are leaving behindclass A blocks from 48,000 sf to nearly 450,000 sf. And, he saysthere's no preventive medicine "unless there's another Comerica outthere that comes in very quickly."

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As a result, Bennett believes rents will stabilize or possiblydrop and concessions like tenant improvement packages will increaseand free rent return to the bargaining table. He says the $1 per sfto $3 per sf rent hikes that become commonplace last year resultedfrom out-of-state US and foreign investors who perceived Dallas'rates as too low in comparison to its metro peers.

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"If landlords want to get their buildings filled, they are goingto have to give up some concessions," Bennett says. "The tide isslowing turning in the tenants' favor again with the economy andthe shape it's in."

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Jones Lang LaSalle tracks the Dallas CBD and its suburbs, notventuring into Fort Worth or its immediate neighbors. However, Raysays the plan is to add Fort Worth to the list this year. Also,JLL's team monitors only multi-tenant, class A and class Bbuildings, 15,000 sf or larger. And, it only includes tenants whohave moved into their spaces, setting up a scenario that some 2007signings didn't make it into the numbers until Q1 2008. Ray saysthat is done so space being vacated can be included in theanalysis. Parameters vary by brokerage house so they are key tounderstanding the findings.

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In the CBD, absorption totaled 132,441 sf. The 24.18-million-sfinventory is 23.98% vacant. Rent averaged $21.09 per sf in class Astock and $14.83 per sf for class B buildings. There is 17,454 sfof sublease space and 5.78 million sf of open direct space. And,there were no completions and no buildings under construction.

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Oak Lawn/Uptown's 8.4 million sf's 9.69% vacancy is the lowestof JLL's nine submarkets. But, its absorption was in the red, down54,882 sf from a year ago. Class A rent averages $32.03 per sf;class B, $22.71 per sf. There is 130,828 sf of sublease space and683,593 sf of direct space on the market. No buildings delivered inQ1, but there is 1.95 million sf pushing out of the ground.

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In Preston Center, vacancy is 12.69% in a 3.41-million-sf stock.It too fell into the red in absorption by 23,027 sf. Class A rentaverages $31.59 per sf; class B, $25.90 per sf. The prestigiouspocket has 76,709 sf of sublease space and 356,747 sf of opendirect space. Again, there were no deliveries, but there is 140,047sf rising.

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In the suburbs' big picture, absorption rang up 447,293 sf. The126.5-million-sf inventory is 23.82% vacant. Class A rent isfetching $24.65 per sf and class B is getting $18.96 per sf, onaverage. Open direct space totals 27.7 million sf.

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