As we head into 2013, there’s a sense of momentum in the North Texas office market. Annual direct absorption for the year, 3.1 million square feet, is more than triple the 1 million square feet of space absorbed in 2011, according to preliminary stats from Cushman & Wakefield.
The direct vacancy rate stands at 18.2 percent, an appreciable drop when compared to 20.5 percent at the end of 2011. The overall vacancy rate, which includes sublease space, stands at 91.1 percent, compared to 21.4 percent in 2011.
In terms of overall annual absorption, top-performing submarkets include Far North Dallas (995,743 square feet), Far North Central (527,974 square feet), and Turtle Creek/Uptown (552,608 square feet). Only five submarkets suffered absorption losses, compared to 11 last year. And the losses weren’t substantial. Las Colinas fell the most (39,916 square feet), followed by Northeast Dallas, Southwest Dallas, North Central Expressway, and East I-30.
Lease rates ticked down a bit, to $20.07 per square feet from $20.35 per square foot.
Construction activity jumped to 1.3 million square feet in 2012, up from 484,000 square feet last year. Starts were concentrated in Legacy/Frisco (782,333 square feet).
Here are some notes on office activity from C&W:
• Tenants occupying more than 75,000 square feet of space during 2012 included PFS Web, Alcon Laboratories, EnCana Oil and Gas, EMCare, Christus Health, Wingspan, NTR Metals, Safety Kleen, Nationstar Mortgage, and United Health.
• At 15 million square feet, year-to-date office leasing activity (new leases signed) for 2012 was up 22.5 percent compared to the same period last year. More than 4 million square feet was leased during both the third and fourth quarters of 2012, with State Farm, VHA, United HealthCare Group, Vericrest Financial, TEK Systems, Celanese Corp., HKS, and Wingspan all leasing more than 50,000 square feet.
• State Farm signed the largest office lease ever recorded in Dallas, and will be located in a new KDC project in Richardson that’s expected to break ground during 2013.
• Leasing activity reached the highest level since year-end 2008 (16.6 million square feet).
• Sublease space on the market totaled 3.0 msf year-to-date, a drop of 6.2% compared toyear-end 2011 totals. Larger sublessors include Bank of America, CoreLogic, Nexen, Centex, Comtel, Denbury Resources, Verizon, Horizon Healthcare, and Haggar Clothing.
• EnCana Oil & Gas completed its 320,000-square-foot build-to-suit in Legacy during third quarter 2012. Six speculative buildings under construction total 528,940 square feet; five build-to-suit projects under way total 770,000 square feet.