DFW High-Tech Leasing Is Healthy, Happy and Wise

For awhile, property owners had braced for the worst from the Red River to the Rio Grande. Most all had looked to Austin to see what would occur. The fall of a number of high-profile dot-coms had started to raise the red flag, but then common sense had set in. In reality, dot-coms make up only a small segment of Austin's high-tech industry.

"I wouldn't say we've been in a bloodbath. The activity's slowed to a healthy pace," John Childers, Austin-based Colliers Oxford Commercial principal, tells GlobeSt.com. "We were at the point to where people were lined up for space."

Sublease space had totaled 779,723 sf in the first quarter, according to Childers' calculations. At the close of 2000, estimates had gone as high as 1.5 million sf. And, Childers points out, some of the freed-up space won't even become available until third or fourth quarter. But at least now, tenants have choices, he says.

In the Dallas-Ft. Worth metroplex, the high-tech businesses are not generally the garden-variety startups, but rather the industry's powerbrokers. Chris Cawley, marketing representative for Dallas-based Cawley Wilcox Cos., tells GlobeSt.com "what I see happening now is you've got the guys with the credit in the market."

For the most part, tenants need a letter of credit and six months upfront rent to get the keys. Cawley's only had one recent default: a high-tech Pennsylvania firm that never got it together to fully occupy its 23,958 sf. His safety net had been the letter of credit, which salvaged $760,000 for the deal.

Cawley too says high-tech space vacancy isn't being broken out of the region's numbers. But he calculates there is 5.7 million sf of sublease space available marketwide, with one million sf resting in Dallas' CBD. Over in the region's Richardson-Plano submarkets, home to the famed Telecom Corridor, there is 599,838 sf of sublease space on the market out of a total inventory of slightly more than 3.2 million sf, says Cawley.

In a recent report, Federal Reserve economists support what the executives say about Texas. Economist John Thompson says the state didn't escape unscathed from the slowing economy. It affected almost every sector, particularly high tech, he says. But high energy prices and rising export trade with Asia "should continue to buffer the state against unfavorable economic winds," he concludes.