DFW Office Market Q4 2020 Shows Negative Absorption
In March of 2020, everyone went home. Everyone. And for the most part, we have stayed home. In November, the election turned the world upside down. And continued to do so for the last 60 days of the year. A vaccine exists, but it seems as if it’s near impossible to get. Combine these factors and it’s pretty easy to explain why the DFW office market logged negative absorption for four straight quarters.
MarketView – CBRE
CBRE recently released a MarketView for the DFW Office Market Q42020. Their report shows a 23.4% vacancy rate and 1,413,235 in Net Absorption. The absorption rate was slightly improved from Q3, but still negative. When J.C. Penney vacated their 1.2 million sq. ft headquarters in the Legacy business hub, they contributed in large part to the negative net absorption.
Although the sublease space has been a contributing factor, it did slow slightly in Q4. According to the recently CBRE report, sublease space in the DFW Office Market now totals 8.8 million square feet. Interesting to note, nearly two-thirds of active subleases are 25,000 or larger. A couple of significant leases were signed near the end of Q4. CBRE took almost 132,000 square feet in the Richardson/Plano area and Southwestern Health Resources occupied 150,000 sq. ft in Las Colinas.
As we neared the end of 2020, 4.2 million square feet of new office space was under construction in the DFW market. However, about 45% of that new space was already leased according the CBRE. It will be interesting to see how the remaining 55% of the new construction affects the DFW office market negative absorption rate.
Looking To The Future
As of this writing, 60% of DFW office employees are still working from home. At the current rate of vaccination, it will likely be at least mid-year before businesses are comfortable having staff return to the office. It is expected that some companies will never return to the office; their employees will remain remote. The general consensus at this point is that the office market will begin to improve, but no one knows for sure what that will look like yet.
At Kurz Group, we are continually watching property values and all of the factors that go into determining your taxable value. We would love to discuss how we can make sure you are only paying your fair share of property taxes. Contact one of our professional consultants here.