Q1 2019: DFW Office Market Report
In 2017, Toyota moved to Legacy West in Plano from Torrance, CA (L.A. metro), and Erlanger, KY (Cincinnati metro), as part of a nationwide consolidation. Also, in Legacy, Liberty Mutual added 5,000 jobs at its new 1-million-SF campus, and JPMorgan Chase just finished a major regional campus as well. Other companies, such as FedEx Office, Fannie Mae, and Charles Schwab provide further examples of major tenants opting for large build-to-suits in the northern suburbs.
AT&T announced that not only is it staying at its headquarters in the CBD, but it is adding 1,500 jobs there in the next few years, and Jacobs Engineering added hundreds of jobs at its Downtown Dallas location as it relocated its headquarters from Southern California. In other major moves, Goldman Sachs consolidated most of its D-FW operations into 175,000 SF at the Trammell Crow Center, Steward Health relocated from Boston into 67,000 SF at 1900 Pearl, and Salesforce agreed to lease 100,000 SF at The Union.
McKesson, the nation’s largest pharmaceutical distributer and sixth largest company is relocating from San Fransico to Irving. The distribution giant has over 75,000 employees worldwide.
The PGA is relocating its headquarters from Florida to a $500M, 600 acre development in the Dallas suburb of Frisco. Completion is scheduled for 2022 and will include a 500-room Omni Hotel, a 127,000 SF conference center, two championship golf courses, a short course, practice areas and a clubhouse.
Core-Mark, the nation’s second largest distributor to the convenience store market, will also be moving its corporate headquarters to Dallas-Fort Worth in the coming year.
8.6 M SF Under Construction – While robust compared to many markets, this statistic extends a 3-year trend of gradual decline and represents the lowest quarterly total since Q4 2015.
2.1% Annual Rent Growth – Rent growth remains above DFW’s historical average and is poised to remain relatively strong due to robust demand and a tame speculative construction pipeline.1.3 M Q1 Net Absorption – Nearly all the net absorption in recent years has come in 4 & 5 Star assets, signifying a strong flight-to-quality trend.
- Population growth in DFW is more than double the US average. Net migration continues to rank among the highest in the country and inmigration continues to help spur office-using employment growth.
- Corporate relocations and expansions continue to drive office demand in the Metroplex. The Metroplex is benefiting from an influx of large tenant moves thanks to its low business costs relative to coastal markets, incentive packages offered by the State of Texas and local municipalities, and its central location nationally.
- While suburban submarkets have benefied from the lion’s share of large corporate moves, more submarkets have also attracted sizeable relocations and expansions.