- High-quality office space in submarkets like Uptown, Las Colinas, and Far North Dallas remains in short supply, as CBRE closes multiple 100 KSF leases.
- Return-to-office mandates drive a “race to the top” for premium office amenities, compelling landlords to compete aggressively.
- Despite Class A growth, overall office occupancy in DFW remains high at 27%, reflecting the ongoing struggles of older vintage buildings.
As corporate giants and the federal government push for employees to return to offices, North Texas is emerging as a clear winner, as reported by The Real Deal.
But while Class A office space in Dallas-Fort Worth continues to see high demand, older Class B and C properties continue to face high vacancy rates.
Tale of Two Markets
Right now, North Texas is telling a tale of two cities in its office market.
On one hand, Class A office properties are thriving thanks to corporate relocations and return-to-work mandates. On the other hand, Class B and C buildings face an uphill battle, with overall occupancy stuck at a challenging 27%.
Notably, CBRE closed three significant 100 KSF leases YTD across Uptown, Las Colinas, and Far North Dallas, showcasing the surging demand for premium office spaces.
“Class A office space is so in demand that it’s hard to come by,” said Robert Blount, vice chairman of CBRE’s office team.
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What Workers Want
With employers vying to attract workers back to the office, premium spaces with top-notch amenities are naturally in high demand.
“How do you compel your workforce to return to the office five days a week?” Blount asked. “Landlords are in a constant race to keep up with the evolving trends and deliver the desired service offerings to stand out from the competition.”
This competition benefits tenants, as landlords compete to offer more tenant improvement allowances and upgraded amenities. However, the development of new Class A properties has slowed down due to high interest rates, leaving limited supply.
Class B/Class C Challenges
While Class A properties are thriving, older buildings in the Class B and C segments continue to struggle. Many lack the modern amenities and appeal required to draw tenants back to the office, leaving them with persistently high vacancies.
Blount notes that demand challenges will likely continue until capital markets normalize, allowing for more redevelopment and repositioning of outdated properties.
RTO Ripple Effect
The return to in-office work has also created a ripple effect throughout the DFW office market. Federal RTO mandates have led big employers to follow suit, particularly in DFW.
- Corporate mandates: AT&T called its workforce back to the office this month, while JPMorgan Chase will require nearly 19K DFW employees to return to in-person work starting in March.
- Federal push: President Trump issued a memo requiring federal workers to return to offices. At the same time, he pledged to cut two-thirds of the federal government’s office footprint.
Of course, these return-to-office announcements from large employers and the federal government influence smaller businesses to follow suit. With DFW’s popularity for corporate relocations, these mandates are expected to keep fueling demand in the region.
Why It Matters
The return-to-office trend, coupled with DFW’s status as a relocation hotspot, has cemented the region as a key beneficiary of shifting workplace dynamics.
However, the gap between high-demand Class A properties and struggling Class B and C buildings highlights the uneven recovery of the office market.
