Office tower owners are investing in upgraded amenities.
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In 2024, more and more workers were in the office at least a few days per week and some returned full-time as employers adjusted hybrid work policies and leased space accordingly.
In the Dallas-Fort Worth market, this resulted in many office tower owners and developers investing in upgrades — including more robust amenities such as fitness centers, delis, coffee shops and even pickleball courts — to make them more appealing.
The office space outlook seems more optimistic at the end of 2024 and heading into 2025, according to commercial real estate professionals, underscored by DFW’s recent No. 1 position in a ULI ranking of real estate markets.
“Return-to-office momentum is building for institutional users, and since the election, there’s been an uptick in leasing velocity,” T.D. Briggs, executive managing director of JLL, said in a statement. He said JLL predicts the office sector will see positive absorption in 2025, meaning more space is being leased than vacated.
Briggs noted capital markets are also experiencing positive demand and vacancy in office conversion projects is decreasing.
Many companies solidified work schedules and office space decisions in 2024, said Robbie Baty, Cushman and Wakefield’s vice chairman in DFW and office tenant representation leader for the market. Some have even mandated up to five days a week in the office. AT&T and Amazon have most recently begun clamping down on remote work, a trend expected to continue in the new year.
The Metroplex will end 2024 with negative absorption, Baty said, as companies decided to lease a smaller amount of space. Even though office leases may lean smaller than they used to be, deals are still going through at a steady pace. That could actually be a good thing in the long term.
“A lot of (deals) are smaller than they used to be, but they are right-sizing and correcting their space … instead of sitting on hold and doing short-term deals,” he said.
Baty said negative absorption isn’t a sign of a bad market — companies are just choosing to take a different-sized space.
Additionally, 2024 made it even more clear that the newest office buildings in desirable, walkable locations are the cream of the crop for office space. Baty predicted buildings in places like Uptown Dallas, Legacy in Collin County, Las Colinas in Irving and downtown Fort Worth will perform well in 2025.
Office buildings in suburban areas that lack amenity offerings struggled to secure leases in 2024, Baty said, and these properties will likely continue to face a tough time.
“It’s no surprise Uptown is the clear winner in the market over the last few years,” he said.
But space is tight in Uptown, as new buildings quickly fill up with leases, which could push deal activity to other areas.
“There’s not a lot of vacancy in Uptown,” Baty said. “And there won’t be because it’s very tight and it’s very desirable.”
This could encourage office users to turn elsewhere, including in the Las Colinas and Legacy areas, which are home to newer buildings with more space available.