North Texas is bucking the trend in office development.
Dallas-Fort Worth leads the nation with more than 6 million square feet of office space under construction, accounting for nearly 10 percent of the country’s under-construction office projects, the Dallas Morning News reported, citing a year-end study by Cushman & Wakefield.
The construction boom in DFW can be attributed to numerous corporate developments, including Goldman Sachs’ $500 million campus near Dallas’ Victory Park neighborhood and Wells Fargo’s 800,000-square-foot campus in Irving.
Speculative buildings, which typically require significant pre-leasing to get off the ground, also make up a large chunk of DFW’s office pipeline. Among these are a 500,000-square-foot development in Uptown Dallas of which Bank of America plans to occupy roughly half, and tax firm Ryan’s 23-story, 400,000-square-foot office tower in Plano’s $3 billion Legacy West.
“Some of the spec buildings currently under construction that kicked off before mid-2022, when lending requirements were more lax, did not have any pre-leasing,” Cushman & Wakefield’s Robbie Baty told the outlet. “Of those spec buildings that did not have pre-leasing, the well-located buildings in Uptown are having the best results, while there is a glut of new, vacant space in the Legacy/Frisco submarket.”
Other large-scale office projects in Uptown Dallas include the 626,000-square-foot 23Springs, the $200 million 2401 McKinney Tower, and the 386,000-square-foot building at 2702 McKinney Avenue.
About half of the office space under construction in North Texas already has committed tenants. Yet, the overall office vacancy rate in DFW is nearing a record-high of 30 percent, with millions of square feet of available sublease space, the outlet reported.
Nationwide, about 59 million square feet of office space was under construction at year end. That’s down roughly 30 million square feet from one year prior.
—Quinn Donoghue