posted on April 22, 2010 21:47
Office building lease rate declines are expected to moderate this year in the Dallas-Fort Worth area as the economy improves and the employment market gains traction, according to research by real estate investment services firm Marcus & Millichap.
Average asking rents are forecast to slip 5.2 percent to $18.38 per square foot, while effective rents — the amount actually paid — will fall 5.6 percent to $14.38 per square foot, the study says.
Dallas is expected to lead the nation in job gains this year, adding 66,000 positions, a 2.3 percent gain. Office-using employers are projected to add 16,000 jobs, a 2.1 percent gain.
Development of office space will drop to 1.6 million square feet in 2010, according to the study. Last year, 1.7 million square feet hit the market.
Vacancy is on pace to reach 24.2 percent by year end, up 1 percent from 2009 and 2.7 percent above the 10-year average, according to the M&M research.
The availability of sublease space will be the most significant hurdle for office building owners and operators, but most of the attractive locations should be absorbed by mid-summer, said Tim A. Speck, first vice president and regional manager of Marcus & Millichap’s Dallas office.
In coming months, investors are expected to use differing strategies in deciding whether to buy office buildings, and which ones are the best deal, he said.
"Many local buyers are targeting assets on a price-per-square foot basis to define opportunities,” Speck said.
Dallas Business Journal - by Bill Hethcock Staff Writer | Thursday, April 15th, 2010