A surge in fourth-quarter leasing made Dallas-Fort Worth the top office market in the country for 2017.
Expanding and relocating companies net-leased almost 4.7 million square feet of North Texas office space in 2017, according to a just-released study by commercial real estate firm Cushman & Wakefield Inc.
Last year's net office leasing — or absorption — was more than 38 percent ahead of the 2.9 million square feet of local office space businesses occupied in 2016. D-FW office demand was more than twice the 10-year average last year.
"Dallas continues to hit on all cylinders," said Cushman & Wakefield executive managing director Johnny Johnson. "We led the country in absorption in 2017, which says a lot.
"The engine continues to be job growth and a very diverse economy," Johnson said. "A significant percentage of the new jobs created in Texas are coming to Dallas."
Along with D-FW, the country's other top office leasing markets in 2017 included New York, Seattle and Boston, Cushman & Wakefield reports.
Combining all of the New York metro markets would total more office leasing than North Texas, but the year-end study wasn't figured that way.
The largest volumes of office leasing in D-FW last year were in the West Plano-Frisco market, in Las Colinas and in downtown Dallas.
Large fourth-quarter office deals by Gartner Inc. in Irving, Berry Appleman and Leiden LLP in Richardson and Winston & Strawn LLP in Uptown contributed to 651,472 square feet of net leasing for the final quarter of 2017.
"Companies continued to take down traditional multi-tenant space at a very healthy rate, as compared to years past," Johnson said.
More than 3 million square feet of new office projects opened in 2017, including major projects for Toyota, JPMorgan Chase and State Farm Insurance.
"There's approximately 5 million square feet of new projects underway," Johnson said. "Given the size of our market of approximately 225 million square feet, it accounts for just 2 percent of our total supply."
Construction projects for companies including Pioneer Natural Resources, Brinker International and Charles Schwab will keep the development sector busy through 2018.
With overall office vacancies in North Texas staying below 17 percent, Cushman & Wakefield is predicting another strong year in the office business.
"Leasing activity in 2017 kept pace with previous years and showed no signs of a slowdown," managing director Dean Collins said. "Momentum is continuing into 2018.
"Demand is keeping pace with new office construction."
Overall quoted office rents in D-FW rose just more than 3 percent last year from 2016 levels. But rent hikes were larger in some business districts, including the Telecom Corridor and Preston Center in North Dallas.
"I would expect lease rates to remain flat in 2018 or to slightly climb up," Collins said. "We aren't seeing any indication that they will fall."
Top D-FW office leasing districts for 2017
Net leasing totals for each market:
1. West Plano-Frisco 1,153,292 square feet
2. Irving-Las Colinas 853,094 square feet
3. Downtown Dallas 790,685 square feet
4. Telecom Corridor 595,241 square feet
5. Far North Dallas 490,805 square feet
D-FW area 4,680,156 square feet
SOURCE: Cushman & Wakefield
Top nationwide office leasing districts
Ranked by net office leasing in 2017:
Dallas-Fort Worth 4,680,156 square feet
New York Midtown 3,651,293 square feet
Seattle 3,088,523 square feet
Boston 2,148,217 square feet
Brooklyn, N.Y. 2,122,373 square feet
SOURCE: Cushman & Wakefield
Presented by Dallas Morning News, January 4, 2018