As everybody knows 2104 was a fantastic year for the Dallas office market. However what does the Dallas office market 2015 have in store? The positive trend established in 2014 is going to continue into 2015.
I am more bullish today about the Dallas Fort Worth office market than I have ever been. The fundimentals for this marketplace for big corporations is outstanding. It is easy to say it is because of the tax rates but when it comes down to it there are a number of factors.
If you spend time in other marketplaces across the country particularly the northeast it astounding how costly it is for large corporations to do business in those marketplaces. It can be as much as a two or a three times multiplier. So the math is simple, if you continue to place pressure on corporations to reduce costs and increase profitability they will continue to look at ways to reallign themselves. Thats what is driving this positive office absorption trend in Dallas. Real estate costs are a component of it. The big costs come in the wage components and the quality of life. Corporations are looking at more than just real estate costs they are also considering taxes, workforce, quality housing, good public schools
Far north Dallas and Dallas Uptown markets are seeing speculative development. Big build to suits and large projects in Richardson and North Dallas. A lot of it is driven by the labor force and were people are wanting to live.
When you look at Atlanta it is a lot like Dallas in a number of ways. There is a new emerging millennial workforce which wants to be in a more urban type of environment. They like the sense of community they like to be together in big groups and that is what is driving the Uptown marketplace.
If a company wants to hire a millennial workforce you need to be in the uptown area. Conversly, once you hit a certain point you start having kids you cannot live in the Uptown environment. So the far north Dallas office market appeals to these people.
Toyota came to the Legacy at the intersection of the North Dallas Tollway and the Sam Rayburn Tollway and there are five different cities that a person can choose to live in all within ten miles from work. Those cities have their own police and fire. They have their own school systems. So Toyota could give their employees choice. Each city has different philosophy on how they do things and it creates a dynamic environment.
There are a wide range of housing opportunities. In the northern suburban Dallas market people have a wide range of choice because of the smaller cities being close to each other. As the millennials begin to have family they will gravitate toward these markets.
The net of it is that we have different types of marketplaces in Dallas. The core markets of Dallas have reached their equilibrium . As you move out the newer markets are more speculative. The cost factors that larger corporations are looking for are not in those markets yet. That is not to say that they will not be in the future but they are not at this time. The Dallas office market 2015 looks strange with healthy positive absorption of the new space coming on to the market.