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DFW Office Listings Hit 5-Year High As Investors Search For Yield In Secondary Markets

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Investors suffering sticker shock when shopping for office assets in New York and San Francisco are scoping out secondary markets like Dallas-Fort Worth for yield-worthy assets, CoStar said in a new report. 

As a result, the number of DFW offices placed on the sales block climbed to a five-year high in 2019 with the average office asking price shooting up 12% from last year, a study from CoStar Director of Research and Market Economist Paul Hendershot said. 

Hendershot said DFW has 1,000 offices for sale in the region today. Of those, 94 are considered Class-A and trophy office listings, up 47% from 64 assets last year. 

Class-B office listings jumped 54% from this time last year. 

Meanwhile, the average office asking price hit a five-year high at roughly $170 per SF, according to CoStar. 

“There are opportunities for investors across the Metroplex,” Hendershot wrote in his latest report.

North Dallas — Frisco, Allen and McKinney — has 23% of the listings, though they are smaller listings averaging just over 5K SF, according to CoStar. Those average $284 per SF and spend 6.5 months on the market before being snapped up, compared to the Metroplex average of 7.6 months on the market.

Hendershot also pointed to a flight-to-quality trend with leasing increases tied to higher-end office buildings accounting for 52% of all leasing activity this year. 

“As these buildings lease-up, more offices are set to hit the market, as a fully leased building is a trigger for many owners to list a property on the market,” Hendershot wrote in his report.