Office landlords in Dallas-Fort Worth are continuing to struggle with occupancy in their buildings, as tenants move out of their spaces. In the first quarter, negative absorption totaled almost two million square feet, well up from the -350,000 square feet seen in the same period a year ago, a CBRE market report finds.
Class A product struggled the most, posting 1.7 million square feet of negative absorption. Since the first quarter of 2023, DFW office's negative absorption has totaled 6.8 million square feet.
Leasing overall was down 26.9 percent year-over-year to 8.3 million square feet on a rolling basis. The weakest activity was seen in the Lewisville/Denton submarket (17,000 square feet), followed by South Fort Worth (18,000 square feet).
The weak demand in the first quarter was a result of "move-out activity overtaking move-ins." Also, vacancy in the first quarter shot up by 110 basis points year-over-year to 28.5 percent and has risen 390 basis points since Q3 2023.
"Much of the swing in net absorption and vacancy was due to one large tenant vacating a space that was put on the sublease market in Q1 2025," CBRE explained.
Yet, rents showed resilience, surging by 5.3 percent from a year ago to $34.46 per square foot on average. Class A properties saw even more growth, climbing by 7.2 percent to $39.07 per square foot.
Deliveries were down 17,000 square feet and construction dropped by 24,000 square feet to 2.8 million square feet.
"Uptown/Turtle Creek and Far North Dallas account for the highest under-construction volumes, with 1.3 million sq. ft. and 451,036 sq. ft., respectively, led by the 800,000 sq. ft. Goldman Sachs project and the 451,036 sq. ft. Fields West development," CBRE said.
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