DALLAS—Buoyed by double-digit tech-sector employment growth, Dallas-Fort Worth was among the top US markets for rising office rents during the past two years, according to CBRE's annual Tech 30 report, which measures the tech industry's impact on office rents in 30 leading US and Canadian tech markets. Dallas-Fort Worth had the sixth greatest rent growth on the list.

“Dallas-Fort Worth is identified as one of five markets with the greatest growth potential. The depth of a market's talent pool is even more important to employers than the cost of doing business, and DFW is the largest tech labor market in Texas,” said Jeff Eiting, first vice president, CBRE. “Our large labor pool attracts the tech companies, and tech workers are attracted to the market because of the diverse job opportunities we offer.”

The influence of tech job creation on office market rent growth is pervasive, with 13 of the US/Canadian Tech 30 markets posting rent growth of 10% or more between second quarter 2015 and 2017. Dallas-Fort Worth's high-tech employment grew 12.5% from 2015 and 2016, with average office asking rents rising 15.7% to $24.01 from second quarter 2015 to 2017.

“The creation of new market opportunities via disruption and a growing number of industries integrating technology into their business models support an optimistic outlook for continued growth ahead. Commercial real estate investors should benefit from the trends that have given the tech industry greater stability and a wide economic base compared with previous economic cycles,” said Chris Ludeman, global president, capital markets, CBRE.

According to the report, the willingness of tech companies to pay a premium for office space in the hottest tech submarkets is starting to spill over into neighboring submarkets as available space in tech hotspots is dwindling. As a result, adjacent submarkets and traditional downtowns with skylines—rather than the brick-and-beam buildings tech companies have demonstrated a preference for—are primed to benefit, creating opportunity for commercial real estate investors, GlobeSt.com learns.

Moreover, with regard to tech appeal and as Dallas-Fort Worth's most popular submarket, Far North Dallas has a vacancy rate of 16.1% with an average asking rent of $25.54, says CBRE.

“Far North Dallas is very attractive to tech companies because there's plenty of new class-A space available and the price point is much more attractive than some of the other big tech cities,” said Clay Vaughn, senior vice president, CBRE.

From an investor's perspective, markets that are attractive to occupiers and offer the best combination of low office rents and a growing high-tech labor pool have the greatest growth potential. Those markets include Portland, Raleigh-Durham, NC; Dallas-Fort Worth, Charlotte and Nashville, GlobeSt.com learns.

Some recent examples of the demand for office investments include the sale of the FedEx Office headquarters at Legacy West, a class-A office building located in Plano's Legacy submarket, according to CBRE capital markets' institutional properties. Completed in 2015, the four-story 263,621-square-foot office building includes above-market surface parking. The building's on-site amenities include a fully equipped fitness center and sports court, conference center, upscale kitchen and dining facilities, and a mock store on the ground floor.

PRP LLC purchased the asset from KDC Real Estate Developments and Investments for an undisclosed price. CBRE's Gary Carr, John Alvarado, Eric Mackey, Evan Stone, Jared Chua and Robert Hill arranged the transaction on behalf of the seller.

“Investors were motivated by the opportunity to establish a significant presence within Legacy, one of DFW's hottest submarkets,” said Carr.

Another sale was of Canal Centre, a class-A office building located in the Las Colinas Urban Center at 400 E. Las Colinas Boulevard in Irving, TX, according to CBRE capital markets' institutional properties. The asset is a 10-story 237,894-square-foot office building with a six-story parking garage.

Canal Centre Investors LLC purchased the asset from Libitzky Property Companies and Sunwest Real Estate Group for an undisclosed price. Mackey, Carr, Alvarado, Stone, Chua and Hill arranged the transaction on behalf of the seller. Bruce Marshall from Sperry Van Ness represented the buyer. The equity from Hong Kong and Honolulu was secured by YH Professionals.

“Canal Centre's Urban Center location has become a vibrant live-work-play environment with exciting new developments such as the Irving Convention Center, Toyota Music Factory and Water Street,” said Mackey.

Canal Centre is 90% leased to a diverse base of creditworthy tenants, including Power Line Services, PeopleFluent, Parallon Workforce Management (subsidiary of HCA Holdings) and Volkswagen. On-site amenities include a fitness center, café, conference center and garage parking.

Moreover, with regard to tech appeal and as Dallas-Fort Worth's most popular submarket, Far North Dallas has a vacancy rate of 16.1% with an average asking rent of $25.54, says CBRE.

“Investors were motivated by the opportunity to establish a significant presence within Legacy, one of DFW's hottest submarkets,” said Carr.

Instant Insights /

Diverse Opportunities Draw Tech Workers to DFW

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