This is my last blogpost for the year and what a year 2016 was for us in the Dallas office brokerage business. As a tenant representative, I saw many clients go through sticker shock when they renewed their office leases. Unfortunately for office tenants, I believe that the 2017 Dallas office market is going to be a continuation of 2016.
This is a strong market for landlords. Many buildings that are under construction are pre leased before they are completed. Without active speculative building the chance for oversupply of office space is greatly diminished.
In my opinion there are a few wild card in 2017 that can have an impact on the demand in 2017 Dallas office market:
- President Trump and Congress
- Oil and Gas Exploration
- Social Instability
As technology continues to advance some positions could be replaced with automation. Additionally the improvements in electronics and internet connectivity are allowing more people to perform larger amounts of their office tasks from home. These two factors can reduce the demand for office space.
We all know a new administration is moving into Washington January 20. President Elect Trump couldn’t be more dynamically apposed to President Obama when it comes to business. Specifically as it relates to illegal immigration. If President Elect Trump does enforce his boarder control I think it will impact labor expenses in Texas.
Lets face it. The people that are illegally working in the United States are below the radar screen to some degree. Some of these people are being paid less than they would if they were Americans. This allows companies to shift some their expense from labor to office rent. If these individuals are forced to leave, companies will need to adjust their expenses in other categories, like rent, to offset the wage increases.
President Elect Trump also appears to be a big propionate of oil and gas exploration. Since a significant sector of the Texas economy is based in this industry this is good for Texas. Primarily for Houston but the 2017 Dallas office market will benefit too. This could increase demand for office space in Dallas.
The elephant in the closet is social unrest. In 2016 we have witnessed destruction caused by people. Unfortunately some individuals think that the destruction of others property and disruption of commerce is the best way to get their political views noticed. We also have the persistent threat of Terrorism overshadowing our economy. Either of these two factors could have a negative impact on office space.
I remember in 2001 what happened to our economy when the World Trade Center was attached. If a similar event occurred again all bets are off for the economy. Hopefully this will not be an issue.
I think 2017 should be a continuation of the same market we experienced in 2016. The 2017 Dallas office market remains healthy and strong for landlords. For tenants you need to position yourself to be in the best possible position. Don’t go into this market on your own. Hire a professional Dallas office broker to help you find and negotiate your office lease.