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'Unprecedented' 9.5M SF Of Sublease Space Floods DFW Office Market

Millions of square feet of Dallas-Fort Worth office space hit the sublease block in the past 12 months, creating fear of a much larger office market disruption in 2021. 

"It is unprecedented," Younger Partners Corporate Services Director Bob Acuff told Bisnow in an interview. "It is probably double what we would typically see in the marketplace, and I don't think any of us right now know how we are going to be affected next year, or even the year after, by all of that space because there is so much uncertainty."


Total sublease space in the DFW office market is sitting at a record range of 9.2M to 9.5M SF, data from CoStar Group and brokerage firm Younger Partners shows. That is a huge spike from the 6.2M SF of sublease space CoStar recorded on the market in early 2020.

Younger Partners predicts another 300K to 600K SF will hit the DFW sublease market in the coming months as Pioneer Natural Resources lists additional space in its former DFW headquarters. The addition of this one listing will bring the sublease market to roughly 10M SF, according to Younger Partners. 

"Given past subleasing activity over the past two cycles, there is a four- to five-year supply of sublease space available," Acuff said. 

While it's unknown if this growing backlog of sublease space will impact office prices in 2021, Acuff said a little softening in rent wouldn't surprise him if some of these subleases are returned to their landlords for direct leasing in the coming year. 

"I don't think the demand is out there to eat up a four- or five-year supply of sublease space," he said. "The asking rates are probably going to be fairly stable, but some landlords may try to get out in front of it and try to reduce them."

Acuff is managing the largest sublease listing in the DFW office market, the former Thryv Holdings headquarters at 2200 West Airfield Drive at DFW Airport. As part of the listing, Acuff has the challenge of filling 449K SF of office space inside a five-building complex, either by finding a single corporate tenant or by slicing up the property to accommodate numerous tenants. 

Finding either to fill such a large block will be hard in a real estate economy disrupted by a pandemic and a surge in office competition.

CoStar organized a list of the largest DFW office subleases on the books to date and found two potential bellwethers for the state of the DFW office market. 

"I think the one that definitely jumped out to me was The Epic," CoStar Director of Market Analytics Paul Hendershot said of the Deep Ellum spec office building.

Shortly after being selected to house part of Uber's Dallas office in 2019, The Epic office building suffered a blow when Uber put some of its space on the sublease market last year. 

"That 115K SF is in a brand-new building. And if that is the canary in the coal mine of things to come regarding technology companies, it might not bode well for new builds or new spec properties coming online," Hendershot said. 

What's happening with Fossil's headquarters in Richardson, where the retailer put 215K SF up for sublease, is a potential harbinger for office space tied to retail outlets, Hendershot added. 

"That is a company that is shedding space possibly as a result of the slowdown in retail and that's another red flag of possible trouble in that industry," he noted. 

The former Thryv Holdings headquarters at DFW Airport is the largest DFW office asset on the sublease market.

CoStar in early January released a full list of DFW office assets with space on the sublease market. The list includes several relatively new office buildings along with iconic assets spread across affluent Dallas suburbs and the central business district.

Below are the 14 largest active office subleases in the Metroplex, based on CoStar data.

1. 2200 West Airfield Drive

    Submarket: Westlake/Grapevine (DFW Airport)

    Total Space Up For Sublease: 340K to 449K SF

2. Fossil Headquarters / 901 South Central Expressway

    Submarket: Richardson

    Total Space Up For Sublease: 215K SF

3. Fountain Place Office Tower / 1445 Ross Ave. 

     Submarket: Dallas Central Business District

     Total Space Up For Sublease: 214K SF

4. 8000 Bent Branch Drive, Building A

    Submarket: DFW Freeport/Coppell

    Total Space Up For Sublease: 139K SF

5. Duke Bridges II / 7624 Warren Parkway

    Submarket: Frisco/The Colony

    Total Space Up For Sublease: 125K SF

6. The Terraces At Solana, Building 2 / 1500 Solana Blvd. 

     Submarket: Westlake/Grapevine

     Total Space Up For Sublease: 124K SF

7. Eighty-Eighty Central / 8080 North Central Expressway

    Submarket: Central Expressway

    Total Space Up For Sublease: 122K SF

The Epic - Deep Ellum

8. The Epic / 2550 Pacific Ave.

    Submarket: Dallas-Deep Ellum

    Total Space Up For Sublease: 115K SF 

9. 3400 CityLine / 3400 North Central Expressway

    Submarket: Richardson

    Total Space Up For Sublease: 106K SF

10. One Legacy West / 7950 Legacy Drive 

      Submarket: Plano

      Total Space Up For Sublease: 101K SF

11. Three Galleria Tower / 13155 Noel Road

      Submarket: East Lyndon B. Johnson Freeway

      Total Space Up For Sublease: 97K SF

12. Collonade III / 15305 North Dallas Parkway

       Submarket: Quorum/Bent Tree

       Total Space Up For Sublease: 92K SF

13. Element Towers East / 3030 Lyndon B. Johnson Freeway

      Submarket: West LBJ Freeway

      Total Space Up For Sublease: 85K SF

14. Richardson Office Center I / 3101 East President George Bush Highway

      Submarket: Richardson

      Total Space Up For Sublease: 81K SF