The area ranked among the U.S. markets with the largest share of empty office space at the end of 2020.
The COVID-19 pandemic that has stalled office leasing has given Dallas-Fort Worth one of the highest office vacancy rates in the country.
At the end of 2020, D-FW ranked sixth among the country’s highest office vacancy markets, according to the latest survey by commercial property firm Cushman & Wakefield.
More than 21% of the area’s office space was empty at the end of the year — up from 18.6% at the close of 2019. Those numbers don’t include the more than 9 million square feet of empty sublease office space on the market in North Texas.
The country’s highest office vacancy was in Fairfield County, Conn., a suburb of New York. Houston was also near the top of the list with a 24.3% vacancy rate, according to Cushman & Wakefield.
Net office leasing in North Texas declined by almost 5 million square feet in 2020 — the biggest drop in decades — due to the pandemic, which kept workers at home.
More than 4 million square feet of office space was under construction in D-FW at the end of 2020. That made it the ninth-busiest metro area for office building in the U.S.
While a recent increase in North Texas office leasing has caused some optimism in the market, less than 40% of area employees are back to working in the office.
Real estate analysts are forecasting a slow recovery for the sector. A report by Moody’s Analytics is predicting another tough year for office owners, with higher vacancies and lower rents.
“The office sector will suffer more in 2021 than it did in 2020,” Moody’s researchers said in the report released this week. Moody’s projects the vacancy rate will rise to 19.4% this year, surpassing the previous high of 17.6% from 2010, then hold steady in 2022.
Office rents nationwide aren’t expected to return to pre-pandemic levels until 2026.
“Though we expect the office sector will suffer more severely in 2021 than it did in 2020, the vaccine rollout brings hope for more in-person business later this year and into 2022,” Barbara Denham, senior commercial real estate economist at Moody’s Analytics, said in the report.