Office space in Dallas has truly rebounded over the past seven years. What was a Dallas office tenant’s market has become a landlord’s market. A few years ago we were getting heavy concessions for our clients int the form of free rent and very large construction allowances.
Less Concessions For Office Space In Dallas
While there is still free rent, the lengh=th of the free rent is not as long as it was seven years ago. Unfortunately the gracious construction allowances are also a distant memory. Yes, we still negotiate a good tenant improvement package for our clients but the actual amount per square foot has been reduced.
Office space in Dallas has also see a dramatic shift in the way rental rates are calculated. From our perspective the client’s price per foot includes all the expenses that they are expected to pay. This includes the base rent, prorated operating expenses property taxes and insurance and the electricity, If parking fees are charged we also calculate that expenses into the occupancy costs for our clients.
The landlords have recently made a shift in the way they are assessing operating expenses, taxes and insurance expenses (expenses). In the past, most office space in Dallas was assessed expenses by including them in the first year’s base rent and then giving the tenant a base year amount that was to be applied against future year’s expense increases. Now landlords are charging a base rental amount plus the triple net charges (Operating expenses, property taxes and insurance).
As long as the base rental amount is reduced to take int account the triple net charges this system is alright. However demand for office space has been so great that the base rental amounts have actually increased in a few Dallas office markets live uptown. This has given the landlords an opportunity to increase their net operating income and consequently the overall value of their office projects.
Unfortunately office space in Dallas is presently in high demand and as buildings are being build they are being occupied. A primary example is the Hall Arts building in downtown Dallas. It was a spec project the now is occupied by two major Dallas office tenants. KPMG and Jackson Walker are waiting to move into this project. It is expected to be completed in mid summer 2015.
KPMG is moving out of Bryan Tower but this building is going through a renovation of its own. Part of its floors are converting from office space to condominiums. Thus what could have been office vacancy in Downtown Dallas will never hit the office market.
Office Space In Dallas Is Changing
Office space in Dallas is rapidly changing. What used to be office space could be renovated and become condominiums. What once was on old parking lot is now a thriving office tower. The ways overall rental rates are calculated are not the same and tenants will be paying more for less amenities. A qualified office tenant advocate will be able to help you with your lease transaction.
Despite some of these financial changes it is still a good time to be an office tenant leasing office space in Dallas. The city is vibrant and we are still a cheaper option than many other American cities and our workforce is one of the best in the country.