U.S. Top Metros Snapshot: Dallas, Houston and corporate relocations

The overall vacancy rate for these market areas fell to 11.5 percent, down 10 basis points (bps) from 3Q and 40 bps from a year ago.

Absorption trends were generally positive, with leasing in the core areas in seven of the ten markets high or level this quarter.

Rents are still below their prior peak Class A asking rent in six of the ten markets (at the metro level), while seven of the ten are still above their prior trough in vacancy rates, suggesting room for continued gains.

Corporate relocations remain one of the main drivers in Dallas—over 500 companies have relocated their corporate headquarters to Texas over the last five years— and combined with general population growth, massive development is being driven in to DFW. 

Looking forward, vacancy rates are anticipated to rise in Houston as major energy firms leave leased space and move into new owner-occupied developments that continue to work through the construction pipeline.

This leaves opportunity for firms seeking to upgrade their offices at an affordable price as landlords are renovating many of these vacated buildings to attract new tenants.