DFW Office Market Still Has 9M SF Of Sublease Space, But Pace Of Absorption Is Accelerating
Sublease space in the Dallas-Fort Worth metro has hovered at about 9M SF for a year running. But in what could be an early sign of future downward movement in DFW office vacancy, a new report from Transwestern indicates more of that space is beginning to be absorbed.
According to the report, 635K SF of sublease space was removed from the market in September — the most in a single month since the beginning of the coronavirus pandemic by more than 150K SF.
Though total sublease space remains at 9.1M SF and has hovered around that point for 12 consecutive months, Transwestern said it would have declined to 8.5M SF in September if numbers had not been skewed by two huge listings hitting the market. California-based ride-hailing firm Uber put 473K SF up for lease following an announcement in July it would dramatically downsize plans to bring more than 3,500 new workers to the Epic tower in Deep Ellum. Meanwhile, fleet management company Omnitracs is trying to rent 114K SF at its downtown Dallas office in the 717 Harwood building after being acquired by asset management solutions provider Solera and laying off 30% of employees.
Transwestern said that of the 8.9M SF of sublease space listed since the start of the pandemic, 19%, or 1.7M SF, has been leased and 29%, or 2.6M SF, has been withdrawn and likely reoccupied. A further 7% representing 636K SF has expired or been subject to early termination.
Transwestern Research Analyst Andrew Matheny said Uptown/Turtle Creek and Preston Center are leading the recovery and enjoying sustained downward trends on their sublease supply. Despite the needle not moving on overall available sublease space, he said the fact absorption surged this month is a positive sign.
“Sublease availability often telegraphs future movement in vacancy rates,” Matheny said. “With more tenants re-entering the market and making leasing decisions, office vacancy may begin declining in the next [one to three] quarters as the economy continues to recover.”