As we enter the fifth year of the latest "tech boom," there are some pretty compelling signs that the "party is almost over."
The LBJ Corridor has not benefitted from the same level of activity as it’s North Texas counterparts since 2013. This is largely due to the LBJ Express Project which began in early 2011, and was completed in 2015. Many of the buildings within the LBJ Corridor are outdated and inefficient, making companies hesitant to relocate into the region.
The North Central Expressway Sub-Market has seen a remarkable decrease in the Direct Class A vacancy from 20.00% at the end of first quarter 2015 to 13.9% at the end of the first quarter 2016.
The Upper Tollway Sub-Market is currently a hub of office real estate activity in Dallas and has become one of the most attractive sub-markets in the D/FW Metroplex. With relocations of large corporate campuses, like Toyota and JP Morgan Chase, the area is becoming even more appealing and has led to an increase in rental rates and construction. This recent construction has resulted in an increasing vacancy rate but the new vacancies are filling up quickly.
Class A Product along the Lower Tollway has been in high demand, with rental rates increasing 12% in the past year, and 20% in the previous two years. The Lower Tollway’s Class A vacancy is down from 12.7% in the first quarter of 2015 to 12.0% at the first quarter 2016. To put this into perspective, a market is considered to be in a “boom cycle” when vacancy rates near 15%.