Office Freeze Thawing As DFW Posts Positive Absorption For First Time Since 2022
While Dallas-Fort Worth has been experiencing near-freezing temperatures of late, the Metroplex’s office market is starting to warm up.
Leases were signed on 3.8M SF of DFW office space in the fourth quarter, the highest volume since 2022. And the region’s total net absorption of more than 189K SF was the first time that metric has been out of the red in more than two years.
Far North Dallas led the way with absorption of more than 294K SF in Q4, but strong leasing throughout the Metroplex contributed to the region’s showing, according to JLL’s latest market report.
“Momentum is definitely trending upward,” JLL Managing Director Cribb Altman said. “We're poised for a really good run in 2025.”
About 3.4M SF of new office product was delivered in DFW during 2024, but for the second quarter in a row, there were no new starts during Q4.
Even so, the Metroplex has another 3.4M SF on the way, which is the second-largest construction pipeline in the country behind only New York City. Nearly all of DFW’s new construction is in the Uptown area of Dallas, which Altman said is the most walkable submarket in the area.
“It's just where a majority of companies want to be,” Altman said of Uptown. “There's just a lack of quality Class-A real estate down there that’s coming online.”
The area is rife with financial institutions and law firms, which Altman noted are the two industries with the most need for traditional office space right now. However, that could change as more companies follow big DFW employers like AT&T, State Farm and JP Morgan with return-to-office orders for their employees.
For all of 2024, DFW recorded more than 13M SF of office space leased, a more than 15% increase over the previous year’s total of 11.1M SF. JLL expects lease totals to continue to rise in 2025, especially leases for larger office spaces. The Metroplex recorded a 100% year-over-year increase among deals of 100K SF and above during 2024.
“Over the last couple weeks, [we] have seen a noticeable increase in requirements for tenants looking for north of 50K SF,” Altman said. “There's been a lot of groups on the sidelines that are waiting this out, but if we can get some big decisions coming out this year, that'll certainly help with leasing activity.”
Merit Energy announced in December it will move its headquarters to Two Lincoln Centre just south of Interstate 635. The Dallas-based oil and gas company leased 104K SF of Class-A office space and will occupy three floors of the 19-story building.
“We believe the amenities that the complex offers will provide our employees with an elevated work experience,” Merit Energy Vice President Melanie Lane said in an email. “Once we toured the complex, we knew that Lincoln Centre was where we wanted to be.”
Leasing activity along the Dallas North Tollway from Interstate 635 up to Plano has been strong, Altman said. He’s also seen an uptick in activity in submarkets like Preston Center, Uptown, Los Colinas and the Legacy-Frisco area.
Q4’s total vacancy rate of 27.1% was up slightly over Q3, and JLL is forecasting that it could take time for that to start dropping. Altman expects vacancy to remain stable in the months ahead, but the rate for Class-A office space could start falling first as no new supply is slated to come online soon.
“We typically have a lot of movement later in the year, so I imagine it'll be by the end of 2025 [that] we see that number come down on the Class-A side,” Altman said.
