This article originally appeared in the fall 2017 edition of the DFW Real Estate Review. An excerpt has been reprinted below.
An unprecedented building boom is underway across the globe, and North Texas is playing a significant role. A new report from Cushman & Wakefield predicts that more than 700 million square feet of office space will deliver globally between 2017 and 2019. Dallas is projected to rank No. 1 in office completions in the Americas, at 20.5 million square feet.
Dallas has gotten into trouble in the past for overbuilding. That doesn’t seem likely for this cycle, however, as the region is expected to create 92,700 office jobs during the same period. This puts it at No. 2 in the U.S., slightly behind New York City, which is nearly twice the size of Dallas.
“Job growth is expected to continue keeping pace with construction,” says Curtis Hornaday, Dallas Market Research Director for Cushman & Wakefield. “Typically, space planners allocate about 200 square feet per employee, which adds up to more than 18.5 million square feet.”
Cushman & Wakefield is currently tracking 59 companies looking for office space in the region, for a total of more than 5.6 million square feet.
The firm’s study revealed that Dallas ranked No. 6 in the world for rent growth during 2014-2016, at 9.9 percent. It’s expected to slow and stabilize to 1.9 percent between 2017 and 2019. Overall, Dallas is expected to maintain a “neutral” status over the next several years, striking a healthy balance between tenant-favorable and landlord-favorable conditions.
In the United States, newly built space has accounted for 65 percent of all office absorption since 2012. Developers are hoping that trend continues. They are “certainly placing some big bets on new product, but the bulk of it is concentrated in the major global cities, which is precisely where the greatest appetite is for these shiny new buildings,” says Kevin Thorpe, Cushman & Wakefield’s Global Chief Economist.
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