DFW Office Footprints Likely To Shrink As AI Use Increases And Companies Battle For Talent

While Dallas-Fort Worth’s growth as a financial hub has fueled the region’s flight-to-quality trend, companies are also upgrading their offices as the use of artificial intelligence grows and they compete for the best talent in the metro.

The adoption of AI could help level the playing field for smaller office users as big companies eliminate jobs and move to smaller footprints. But those reduced office footprints will also allow companies to invest in upgraded spaces with more amenities as they seek to attract and retain top talent. A highly amenitized office in a desirable metro area can be a differentiator for companies looking to stand out from the competition.  

As office square footage shrinks and AI usage increases, companies like Bradford Commercial Real Estate are shifting their focus toward multitenant buildings rather than those with large floor plates. Bradford Senior Vice President and Managing Partner Richmond Collinsworth said he believes office footprints will continue to shrink due to new technology.

"It's going to eliminate a lot of the process-oriented back office operations, and that's why the front office operations are going to be where you want to focus," Collinsworth said at Bisnow's Future of DFW Office event July 23 at Hotel Dax in Addison.

The growth of AI doesn’t have to mean an elimination of jobs. Transwestern Managing Director Billy Gannon said he's seen companies increase productivity with the technology without losing any of their existing headcount. 

Those companies have instead shifted away from hiring new people, which Gannon agreed will continue to impact office footprints going forward. He said he believes companies will increase their use of AI to become more efficient and provide more value to their customers. 

That increase in productivity could prompt employers to pay more per square foot for smaller spaces that enhance innovation and connection, according to a CBRE report on AI’s impact on the office environment from February.

"We're just in the first or second inning from an AI standpoint,” Gannon said. “If you're not using AI right now, your competitor is."

The technology won’t eliminate the need for offices, as Gensler Studio Director and principal Lillian Giering said the biggest AI users still crave time with their colleagues. Those clients are seeking more collaboration spaces from the design company. 

"Getting together with their colleagues and having those collaboration spaces to discuss their business's strategic plan is really vital," Giering said.

While she agreed that AI's reshaping of the office ecosystem is still in its early stages, things could still change in the years ahead as it hasn't had a huge impact on the way Gensler designs corporate spaces.

However, one thing that has changed in offices with the advent of AI is the requirement for server rooms. Collinswood said those former mainstays have largely disappeared as more tenants move to utilizing the cloud. It’s a change that can offer big cost savings for tenants. 

Reducing square footage also allows companies to step up in quality, which can be a big differentiator for those businesses seeking the best people, as Gannon said DFW office users are in a war for talent. 

CBRE reported in April that consolidation of operations was one of the top reasons for corporate relocations last year, with seven companies making intrastate moves to DFW to right-size their total square footage to smaller levels. 

In addition to a desirable location like Uptown, Giering said cafes and lounge spaces have also become highly requested by clients.

Since the pandemic, companies have been competing with employees’ home offices, so offering a high-end coffee experience or food options can be another differentiator for business, according to Gannon. 

He used Rosewood Court in Uptown Dallas as an example of this. The building at 2101 Cedar Springs Road has maintained a consistently low vacancy rate over the past 15 years, but its owner still invested in a high-end coffee experience to entice workers to leave their homes. 

The competition for talent has led to companies trying to one-up one another with amenities, Collinsworth said. To be competitive, buildings need a conference facility large enough for tenants to hold larger meetings as well as fitness centers, delis and upgraded corridors. 

"If you don't have an amenity that a competing property does, you're at a disadvantage,” Collinsworth said. “If you're not putting those dollars into your properties, other owners are.”

When Quadrant Investment Properties was putting together plans for its nearly $200M mixed-use project Addison Junction, founder Chad Cook said the company was very deliberate in creating experiential amenities that are actually walkable for North Texas. 

With the heat consistently blowing past 100 degrees throughout the summer, Cook said Quadrant Investment Properties focused on ensuring there were affordable amenities workers could actually use. 

"I don't care what's within a mile … What's within like 0.2 miles and does it have style and panache?" Cook said. "Those are the things that inspire people to pay a little more in rent."