Houston, Dallas top country in new office buildings

Houston and Dallas have been the top office construction markets so far in 2014, according to a new report.

In the first nine months of this year, Houston had office building completions totaling almost 3 million square feet. In the Dallas area, builders finished about 1.9 million square feet of space, according to the report by commercial real estate firm Cushman & Wakefield Inc.

Its the first time since the 1980s boom that the two big Texas markets have so dominated the office building market.

At the end of the third quarter, 5.4 million square feet of office space was still under construction in the Dallas-Fort Worth area. Thats up from only about 1.1 million square feet in third quarter 2013.

The economic recovery and a rapidly evolving workforce have pushed the office market into a positive trajectory that has held steady through the first nine months of the year, said Cushman & Wakefields head of research, Maria T. Sicola. Corporate America is actively expanding and working to position itself for the millennial workforce, which by 2020 is expected to make up more than half of the labor pool.

Cushman & Wakefield said the nationwide downtown office vacancy rate fell to 12.6 percent at the end of the third quarter, the lowest level since early 2009.

Downtown Dallas office vacancy in September was about twice that rate.

Nationwide suburban office vacancies were at 16.6 percent, compared with 18.6 percent in the D-FW area.

Cushman & Wakefield said net office leasing in the country is expected to reach its highest level since 2007, with 31.9 million square feet in occupancy gains year to date. That compares to 14.9 million square feet last year at this time.

The absorption levels both central business districts and suburban are dramatic, Sicola said. In the non-CBD markets, growth was spurred by occupancy gains in suburban Dallas, Houston, Los Angeles Metro and San Francisco.

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Houston, Dallas top country in new office buildings