Surging Office Occupancies Forcing Tenants to Strike Quickly

For the first time in over five years, there is a race for space in Dallas and tenants are regularly engaging in bidding wars to secure office space, says Cushman & Wakefield Dallas director of brokerage services Robbie Baty (center between colleagues Christy Shows and Susie Webb). From 2008 to 2012, tenants took their time making decisions, forcing landlords to “sweat it out,” which resulted in building owners ultimately capitulating with more attractive financial packages. (If you've ever had to sweat it out, you know it does a number on your clothes.)

But, Robbie tells us, in today's market, tenants that let grass grow under their feet are losing out on spaces that other users are willing to lease more quickly, and often times at higher prices. (There's a joke about procrastination that should go here, but we'll write it later.) With the improving economy, tenants are growing across the board and vacant blocks of spaces are being leased rapidly. The overall vacancy (including sublease space) is at its lowest point (17.8%) since year-end 2000, when it was 16.5%. Even with spec construction adding vacancies, it’s occurring in submarkets that lack large blocks of available Class-A space. 

DFW is in its Golden Age right now (with a Stetson), Robbie says, with unprecedented population growth, economic growth, and cultural improvements, pushing us to become a top tier city. Subsequently, the office market is surging, too. Robbie says last week, a client was in lease negotiations with a landlord in a building on the Tollway in Plano when the landlord agent called to let him know that a larger tenant was “bumping” his client to another floor. We had the option of either taking the larger space, or focusing on another floor, Robbie says. Because of deals like this, he’s advising clients to enter the market with a clear idea of their requirements, so when the right space is found, he can strike quickly to get them the best lease terms.