Suburban Lease-up Shows Strength of Dallas Office Market

The latest vital sign of Dallas’ office market is leasing activity in the suburbs.

Dallas had its best first quarter since 2019, according to JLL, and much of that activity comes from top-tier office properties in suburban submarkets like Far North Dallas and Las Colinas.

“Our urban markets have been healthy and performing already, and to see the suburbs turn on — and not just focus on sublease — was exciting,” JLL’s Blake Shipley said.

He cited Granite Park 6 in Plano, which was delivered in 2023 and is now 58 percent occupied. Simpson Strong-Tie Company, a California-based manufacturer of construction fasteners and connectors, was the latest company to sign a deal at the property. It’s leasing 38,000 square feet. Similarly, Sally Beauty recently shared plans to relocate from its longtime headquarters in Denton to a 140,000-square-foot spot at 7900 Windrose Avenue in Plano’s Legacy West.

Shipley credits the absorption of the market’s best sublease space, return-to-office mandates and the fact that the election is in the rearview mirror.

There’s probably not much left of the boost from return to work mandates, JLL’s Micah Rabalais said. That’s because Sun Belt markets like Dallas-Fort Worth got back to the office pretty quickly after the onset of the pandemic.

“If you look out at traffic, it feels pretty close to what it did in a pre-pandemic world,” he said.

Despite the strong performance in the first quarter, the area’s office vacancy rate remains stubbornly high at 27.7 percent, but conditions are ripe to start chipping away at that number, Shipley said.

First, office buildings delivered in the last decade are filling up in urban and suburban submarkets, while office development has slowed. There are only two speculative office projects left in DFW’s pipeline.

“We’re going to begin to see demand push down into that next tier of assets. Those have been some of our chunkier vacancies on the market,” he said. Some buildings from the late ’90s and early aughts are “beautiful and ready to go.”

Meanwhile, companies that downsized four years ago are adding space to accommodate full-time return to office. This more incremental leasing activity doesn’t always make headlines, Shipley said. But right-sizing is having an impact.

“It seems like companies know what they are now,” he said.

Across the Metroplex in Fort Worth, there are fewer clouds for the office market.

Cowtown experienced positive net absorption in its office market in the first quarter. The market hasn’t posted a positive figure for that indicator since 2019. Total vacancy for Fort Worth’s office market was just 17.8 percent in the first quarter.