DALLAS—A strong tech sector and the effects of a robust construction pipeline influenced US office fundamentals during 2017's third quarter, according to Cushman & Wakefield. The commercial real estate services firm's statistics demonstrated that national markets remained stable during the past three months.

“More and more, the office market's fortunes in 2017 are linked to the rise of the tech sector,” said Cushman & Wakefield's Revathi Greenwood, head of research, Americas. “The flow of tenants into new construction is beginning to impact fundamentals in some markets. Developers delivered more than 11 million square feet of office space nationwide during the third quarter. The pipeline of new product is and will remain an important influence on the US office market for the balance of 2017 and beyond.”

Overall, though, the strength of top markets–including Midtown Manhattan and Dallas–was offset by significant negative absorption elsewhere. Out of the 87 markets tracked by Cushman & Wakefield, 27 markets posted a combined total of 5.3 million square feet of negative absorption during the third quarter, a third more than the 3.4 million square feet of negative absorption recorded in the second quarter.

Currently, Cushman & Wakefield tracks approximately 104 million square feet of new office development–representing 2% of total US office inventory–in 87 US markets. That figure is down from nearly 109 million square feet at mid-year, but it still marks the sixth consecutive quarter that the pipeline has exceeded 100 million square feet. Markets with significant square footage under construction include Midtown Manhattan (9.5 million square feet), Dallas/Fort Worth (6.3 million square feet), Washington, DC (5.3 million square feet), San Francisco (5.1 million square feet) and Boston (5 million square feet).

“The 12 most active markets for new development housed 55.9 million square feet of construction,” noted Ken McCarthy, Cushman & Wakefield principal economist. “Not only does this represent 54% of the total US development pipeline, it also represents 3.6% of total inventory in these markets. While these regions have been among the healthiest office markets in the nation throughout the current cycle, several are experiencing rising vacancy rates as new product comes online faster than it can be absorbed.”

A recent example of the rise of the tech sector was the lease renewal and expansion for Alkami Technology, a Plano, TX-based provider of online and mobile banking solutions for US financial institutions, at Granite Park Three in Plano, GlobeSt.com learns. Alkami will occupy approximately 90,000 square feet after a 55,000-square-foot expansion at 5601 Granite Pkwy., according to CBRE.

Alkami will occupy an additional two floors following the expansion to support the company's growing employee base. With a current employee base of 275 people, the technology company plans to significantly expand its employee count in the next few years.

“It is thrilling to seize the opportunity to do that (work) in a location that we have called home for more than four years. As one of the fastest growing software companies in the US, delivering digital and mobile banking solutions to our clients, we have grown more than eight-fold since first planting our roots in Granite Park. I am so glad we can continue to grow right here in one of the best locations in North Texas,” said Mike Hansen, CEO of Alkami.

Granite Park is a 3-million-square-foot mixed-use master-planned development, home to six class-A office towers, a 300-room Hilton Hotel and more than 80,000 square feet of retail space. Granite Park Three is a 14-story 362,000-square-foot class-A office building located at the intersection of State Highway 121 and the Dallas North Tollway. Gensler has been hired to design the new space for Alkami.

“Alkami is one of the fastest growing tech companies in North Texas, and we are very pleased that we were able to find the perfect solution for them, especially in this tight market,” said Clay Vaughn, senior vice president, CBRE.

Jeff Ellerman, vice chairman, Vaughn and Preston Lynn with CBRE in Dallas represented Alkami in lease negotiations. Robert Jimenez, Aarica Mims and Avery Bush with Granite Properties in Dallas represented the landlord, Granite Properties. Scott Eldredge and Kris Hopson with CBRE Project Management will oversee construction with a completion date in the first quarter of 2018.

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