Dallas Rental Rates Reach Historic Highs

Annual full-service asking rental rates increased to a historical high of $29.66/SF, a 1.3% increase year over year, that’s according to Newmark’s quarterly examination of the Dallas office scene. Occupancy declined, increasing overall vacancy rates by 130 basis points year over year to 24.5%. The under-construction pipeline continued to remain steady, with 2.9 million square feet in progress. Total leasing activity closed the quarter at 3.2 million square feet, reflecting slowing leasing activity contributed by smaller deals being done. Leases signed averaged 4,197 SF per deal, increasing the deal size by 1.6% quarter over quarter but declining by 15.0% year over year.

As for this year, the Dallas office market will likely continue suppressed growth this year. Office investment activity will continue to remain low in the near future due to elevated inflation and the steeper cost of debt.