DFW Office Sector Posts Positive Absorption

DALLAS-For the first time in three years, the Dallas/Fort Worth office market has posted positive overall absorption, according to Cushman & Wakefield of Texas Inc.’s first quarter 2011 market report.

Leasing activity (new leases signed) increased 7.6% during the first quarter 2011 compared to first quarter 2010, recording 3.25 million square feet compared to roughly three million square feet, according to C&W’s report.

That activity pushed absorption into positive territory. During the first quarter, the Metroplex office market recorded 122,728 square feet of overall absorption versus 190,229 square feet of negative overall absorption for the same period last year, according to the report.

“Instead of companies contracting, companies are expanding because they’re hiring again,” says Randy Cooper, an executive director with Cushman & Wakefield’s Dallas office. “Even though the job numbers aren’t as dramatic as we’ve seen in the past, companies are planning to grow and they want to make real estate decisions now that will accommodate that. They may not have people in those chairs right now, but they’ve leased space for those people.”

At the end of February, the Texas Workforce Commission reported unemployment for the Dallas-Plano-Irving and the Fort Worth-Arlington metro divisions registered 8.2% and 8.1%, respectively, a decrease of 0.3 and 0.4 percentage points over the same period in 2010. 

Dallas-Plano-Irving and Fort Worth-Arlington gained 54,100 and 10,900 nonagricultural jobs during the past year, respectively. Corporate layoffs slowed for office using jobs (professional and business services, information and financial activities) since February 2010, reporting a gain of 23,900 jobs in Dallas-Plano-Irving and a gain of 700 jobs in Fort Worth-Arlington. 

“Companies have had their real estate decisions on hold for what seems like forever, but now they have a positive business outlook,” Cooper tells GlobeSt.com. “As a result, the market is steadily improving.”

Cooper expects the office market will continue to improve throughout 2011. “I expect the Metroplex will win some big corporate relocations,” he predicts. “The Metroplex scores so well when it comes to our labor pool. And, when companies are faced with higher taxes and union issues, they start looking at states such as Texas.”