Is DFW Overbuilding Big Blocks of Office Space?
By Younger Partners Director of Research Steve Triolet
On a regular basis, I get asked why is the market building so much office product in the Dallas/Fort Worth market? Our total vacancy rate typically runs twice or more the national average and yet our construction pipeline is greater than almost every other major office market in the country, on any given year, for the past 40 years. If you look at the inventory of available space and where it is concentrated, you quickly see that DFW doesn’t have so much of an overbuilding problem as it does of a demolition problem. Simply put, unlike most large office markets (which typically have substantially higher land prices) we don’t tear down old inventory, we just expand northward and build more new product.
The chart below is a breakdown of the approximately 30 million square feet of existing big blocks of space available by age categories. The newest properties (built in five years or less) make up only 3% of the large blocks of space currently available, while the 80s vintage properties make up almost half (47%).