Fort Worth’s Record Office Demand Upends Projections
While the energy sector slowdown of 2014/2015, and relocations by XTO to Houston and DR Horton to Arlington were headline stories, downtown has weathered the perceived storms, JLL observes.
FORT WORTH—Coming out of the Great Recession, a new high of 1.1 million in total employment hit the record books, specifically since 2010. In that timeframe, the Fort Worth office market has experienced demand totaling 2.7 million square feet.
In response, the Fort Worth office market began its current positive absorption trend the following year, with a new high point of 1.3 million square feet of net absorption at year-end in 2018, according to a recent report by JLL Research. Downtown has averaged 43,000 square feet in positive net absorption since 2010, with 2018 being no different.
Frost Tower was completed last year–the first high-rise to deliver since 2004–helping the submarket to stay on par with average annual absorption during the same time span. While the energy sector slowdown of 2014/2015, and relocations by XTO to Houston and DR Horton to Arlington were headline stories, downtown Fort Worth has weathered the perceived storms, JLL observes.
In suburban Fort Worth, deliveries and relocations have created new opportunities. During the same period, the West/Southwest Fort Worth submarket had the largest net gain with 1.3 million square feet in absorption. This pushed asking rents to mirror downtown and vacancy rates to below 7% for both class-A and B at year-end 2018. The market-wide average has been nearly 450,000 square feet annually, with West/Southwest Fort Worth accounting for 50% of the market total.
Higher vacancy rates in North Fort Worth created expansion opportunities in the local market for an aerospace company, thanks in part to a few large block vacancies.
“By most metrics, 2018 was a record year for Fort Worth’s office market highlighted by the highest net absorption Fort Worth has seen in the last 10 years and double-digit percentage rent growth. Of particular note was the North Fort Worth submarket, which recorded net absorption over 500,000 square feet or more than 40% of the net absorption of the entire market,” Matt Montague, JLL vice president, tells GlobeSt.com. “The West/Southwest submarket is now at or near its all-time high occupancy which has begun to cause pressure on downtown vacancies as well as rents in our core submarkets.”
Continued absorption of remaining large vacancies in North Fort Worth and downtown as well as continued rent growth are expected for the remainder of the year, says Montague.
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