Dallas-Fort Worth office leasing has rebounded from the pandemic.
But the recent uptick in demand for local offices has so far not put a dent in the huge supply of surplus sublease space up for grabs in North Texas.
At the end of the second quarter, companies were peddling more than 10 million square feet of sublease office space in the D-FW area. That’s offices businesses are paying for and no longer occupy, according to commercial property firm Transwestern.
They are hoping to find other firms that will fit in their excess workspace.
The sublease market ballooned during the COVID-19 pandemic when most companies sent their workers home.
While more businesses have called their workers back to the office, so far it hasn’t had a meaningful impact of the supply of this surplus space.
“I think it is unlikely that sublease space makes significant headway as work from home is prolonging recovery,” said Andrew Matheny, Transwestern’s research manager. “We expect sublease space to remain around 9 million to 10 million square feet this year.”
Matheny said sublease office totals have remained high even though some companies – including investment firm Vanguard which leased a large block of offices in Plano – have moved into subleased offices.
The remaining lease terms on some of the biggest subleases offices on the market in North Texas range from three years to as long as 13 years, according to Transwestern.
The largest blocks of sublease offices up for lease include more than 475,000 square feet offered by transportation firm Uber on the eastern edge of downtown Dallas and more than 444,000 square feet of space marketed by Thryv Inc at DFW International Airport.
Reata Pharnaceuticals is also hunting a tenant to take over its new 327,400-square-foot office in Plano and Allstate Insurance has more than 236,000 square feet of excess office space on the market in Irving.
Other big D-FW subleases are offered by Tenet Healthcare in downtown Dallas and Steward Health in Richardson.
The supply of empty sublease office space available is greater than the 7.1 million square feet of offices currently under construction in North Texas.
And the supply may increase. Layoffs at local mortgage firms is now adding to the sublease market.
The growing sublease totals put a cloud over the good news of more than 2 million square feet of net office leasing in North Texas in the first half of 2022.
“The D-FW office market has yet to fully recover from the 2020 recession,” Matheny said. “Sublease space may rise again when the economy re-enters recession, but it will likely be a more moderate move upwards.”