Dallas-Fort Worth’s long-term office supply & demand perspective illustrates how disruptive this cycle has been

Graph of Dallas-Fort Worth’s office absorption, deliveries, and vacancy 1980–2023 and effects of historical cycles
  • DFW’s office sector has historically been a boom town with periods of bust. Back in the 1980s, DFW added close to 100 msf of office space before the energy price collapse and savings and loan and commercial real estate bust of 1990. While that may seem like too much space to build, the expansion was well supported with DFW adding almost 500,000 jobs, or fully a third to its job base over that period.  
  • Importantly, DFW saw no real negative office absorption during that severe down cycle. DFW merely “overbuilt” the market as the CRE downturn was advancing and, as a result, saw vacancy climb to close to 29%.  
  • Vacancy gradually recovered as the tech boom began, paving the way for a new development cycle.  DFW overbuilt again. But this time, the combination of overbuilding and the severe tech downturn resulted in 5.6 msf of negative absorption and pushed vacancy to +22%.    
  • After this cycle, the market became more stable. Demand came back strong, and overbuilding did not occur going into the Great Recession.  DFW remained insulated from much of the volatility and saw little negative absorption (900,000 sf) during the downturn, although vacancy did rise into the 20% range again.  
  • In the latest cycle, DFW’s recovery has been exceptional. In the last 3½ years, net new office employment grew by 196,000, or 18.4%. At the same time job demand was racing ahead, the region saw a disruptive level of negative absorption for the first time. As of 2Q, this negative demand pushed vacancy to 25.7% and resulted in more than 7 msf of lost office occupancy due to the global shift to remote and hybrid work models.

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