Office Vacancy Rate at 21%

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DALLAS-Vacancy rates in the Dallas/Fort Worth metropolitan area are continuing a yearlong trend of slow improvements, shows a recent third-quarter office report by CB Richard Ellis. The overall vacancy rate at the end of the quarter stands at 21.18%, a “modest” decline of 0.23% from the second quarter vacancy rate of 21.18%, the brokerage firm notes.

Class A space shows a vacancy rate of 19.37%, seven basis points lower than in the second quarter. Class B space ended the quarter with a vacancy rate of 22.99%, while class C space stood at 21.58%.

The Fort Worth Central Business District and the Preston Center submarkets have the lowest vacancy with rate s of 4.97% and 8.94%, respectively, the report notes. Fort Worth has a total of 8.7 million sf in 42 building and Preston has 32 buildings with a total of 3.6 million sf, tracked by CBRE.

The Lewisville/Denton office submarket, with 56 buildings totaling 3.5 million sf, has the highest vacancy rate in the Metroplex at 32.97%. Although still high, that submarket is showing an improvement; during the second quarter the vacancy rate was at 35.55%.

In the third quarter, the overall market absorbed 218,950 sf. “Although still positive, it pales in comparison to the second-quarter absorption of 1.77 million sf,” the report notes. Another way to look at it: Overall absorption fell 87.1% from the second quarter. Class A space absorbed 111,502 sf in the third quarter, a drop from the 791,267 sf in the second quarter; class B space absorbed 111,238 sf, substantially less than the 1.01 million sf absorbed in the second quarter; and class C space showed negative absorption of 3,790 sf during the quarter.

Meanwhile, average lease rates have remained flat at $17.32 per sf, virtually unchanged form $17.36 in the second quarter. Class A space, on average, leased for $19.58 per sf; class B rates averaged $15.68 per sf; and class C space averaged $13.06 per sf, according to CBRE.