After a slight rebound in 2023, leasing activity softened in the first quarter. Lower levels of leasing have resulted in smaller-sized leases. At 31.2 percent, the vacancy rate ranks among the highest in the nation. However, it is in line with historical trends. Elevated sublet availability, with nearly 11.3 million square feet of sublease space available, also weighs on the DFW market.
Leasing demand continues to be split between the urban core and suburban submarkets. Office demand is expected to remain tepid in the near term as firms continue to assess their office utilization.
Similar to 2023, the pace of construction holds steady with about 8.5 million square feet underway, concentrated in high-quality submarkets like Uptown/Turtle Creek and Frisco/The Colony and Upper Tollway. Conversions are also occurring, with major projects like downtown Dallas’ Bryan Tower becoming a 100 percent conversion to multi-family and suburban properties like 4000 Horizon being demolished to make way for industrial development.
Despite sluggish activity, DFW’s economy has shown signs of vitality, particularly after adding 150,000 new residents in 2023, leading the nation in population growth. DFW’s beneficial business climate, in-migration growth, and stable job growth are all encouraging signs to support the office sector
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