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DALLAS-It is what it is…a tenants’ market and everyone knows it’s going to stay that way for a good while. Free rent, some above six months for the right name, higher TI dollars and parking charge waivers are keeping the deals rolling for office building owners.

The first of the third-quarter reports is out and the surprises are few and far between, according to Julien J. Studley Inc.’s regional office analysis. For the first time, the report includes trophy properties, which have for some time been considered the darlings of the market with occupancies in the upper brackets. The five-building, trophy-class inventory in the Dallas CBD has 540,000 sf sitting empty, said the Studley research team.

“Class AA have really tried to hold their rates firm, but they’re now reducing rates,” Greg Biggs, Studley’s Dallas leader, tells GlobeSt.com. He’s not talking to the specifics of the drops, but confirmed the cuts definitely are there. The class AA average is $25.13 per sf.

Studley tracks its numbers slightly different than some, factoring in the tenant after it occupies the space. Therefore, the highly publicized 182,000-sf lease for KPMG, announced last year, is just now making its way into Studley’s calculations, which pegged the Dallas CBD third-quarter leasing activity at 298,191 sf. KPMG moved into 717 Harwood and exited the class AA Crescent in Uptown. Researchers said activity region wide accounted for 3.7 million sf being filled.

Looking at the numbers from the vacancy side, Dallas-Fort Worth’s 184.6-million-sf inventory is 26.9% empty or 49.7 million sf, an increase of 1.2% from Studley’s Q2 close-out number. Another 771,153 sf of direct space was added in the last three months and another one million sf of sublease space rolled into the 9.3-million-sf total that Studley said was there at the end of Q2. The Dallas CBD has 5.6 million sf standing empty while Fort Worth’s downtown has 631,063 sf dark.

The average rent is $18.34 per sf. Class A properties are quoted at an average of $20.75 per sf while class B and the under-fire class C buildings posted at $16.34 per sf. But, as everyone knows, those rates are just door openers. “I have not seen anybody give me a first quote that has not been negotiable in every single major economic area,” Biggs says.

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