DFW Office Rents Fairly Static, But Occupancy Up 4%

But still occupancy is being skewed by a 14 million-sf inventory in class-C buildings, a goodly portion of which are situated in less than desirable locations, says George Roddy Sr. of Roddy Information Services in Dallas. "Unless they flat tear down those buildings, we still run the risk of running with a lower than desirable occupancy," Roddy tells GlobeSt.com. "The problem is there are some buildings that don't move up more in occupancy and that drags down all the numbers. We run the risk for the near future of always having this deficiency in occupancy."

Roddy's recent calculations place class-A occupancy at 88%, class B at 80% and class C at 68% for an overall 83%. In first quarter 2000, class A had been riding 80%, class B was 79% and class C, 73% for an overall 79%. For those who wonder what the economy is doing to the area's economy, consider that in 1987 that overall occupancy had been just 66%.

Roddy says the only positive absorption had been in the class-A segment, which came in at more than 1.8 million sf. Class B structures reflected a minus 643,000 sf and class C, a minus 202,000 sf. Class A has remained a positive factor in the metroplex's absorption for 30 consecutive quarters, he reports. The other two classifications have shown a negative absorption rate for the last two quarters. Roddy says the upswing in class A is due to the availability of new space and relocations to higher-end buildings. "Even though we're seeing a lot of construction, most of that space is being absorbed," he says.

Meanwhile, first quarter 2001 rent is averaging $21.89 per sf in comparison to Q1 2000's $21.72 per sf. Class A rent has slipped a shade, says Roddy, who pegs Q1 2001 at $24.45 per sf in comparison to last year's $24.73 per sf. But class B has risen from $18.55 per sf to $18.77 per sf and class C has gone from $14.42 per sf to $14.80 per sf.

Roddy's numbers are calculated on the tracking of 2,400 buildings representing an inventory of 132 million sf. In a breakdown, there is 76 million sf of class-A office space; 42 million sf of class B and 14 million sf of class C. There are another 54 million sf tied up in single-tenant buildings in the metroplex.