Dallas Office Market
4Q22
| Average Asking Rent (Price/SF) | $29.12 |
| Vacancy Rate (%) | 23.8% |
| Net Absorption (SF) | -920,927 |
The Dallas-Fort Worth office market demand declined in the fourth quarter of 2022 as tenants remained cautious due to growing economic headwinds. Net absorption dropped to negative 920,927 square feet in the fourth quarter of 2022 but ended the year at negative 108,961 square feet, bolstered by strong activity earlier in the year. Due to occupancy declines, overall vacancy rates increased by 60 basis points both quarter-over-quarter and year-over-year. Deliveries remained healthy with 1.2 million square feet of new product added to the market in 2022. The construction pipeline remained like pandemic levels, indicating a muted future inventory as occupiers await further clarity on space needs. In the near-term, a winnowing construction pipeline will lead rent and occupancy increases in submarkets with premier office product, as flight to quality persists and supply on these assets become more constrained.
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Dallas Industrial Market
4Q22
| Average Asking Rent (Price/SF) | $8.18 |
| Vacancy Rate (%) | 5.6% |
| Net Absorption (SF) | 7,069,607 |
The Dallas-Fort Worth industrial market continued to remain strong in 2022. Demand in the market closed with positive occupancy, with quarterly net absorption closing at 7.1 million square feet and yearly net absorption at 33.6 million square feet. The year ended with an all-time high of 38.1 million square feet of deliveries, outpacing demand by 4.5 million square feet. Given the strong demand, the overall vacancy rate had minimal movement, remaining at 5.6% since the third quarter of 2022 and increasing by 30 basis points year over year. Overall average asking rates continued to climb in the fourth quarter of 2022, as a result of strong demand for quality industrial product, coupled with inflation, pushing pricing up. Asking rents ended the year at $8.18/SF, reflecting an increase of 3.7% quarter over quarter and 17.4% year over year. The market closed the year at 82.2 million square feet under construction, an all-time historical high. Due to projects currently under construction, the market is expected to have a strong pipeline of new product coming on-line in 2023, likely causing vacancies and rental rates to rise. Overall, the Dallas-Fort Worth industrial market’s outlook remains positive, despite a near-term softening economy. The market’s central location and relatively lower costs will continue to make Dallas-Fort Worth an important part of many occupiers’ warehouse and distribution networks.
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