First-quarter momentum tapers as market uncertainty rises

Occupier apprehension stemming from the COVID-19 pandemic has caused a significant slowdown in leasing activity, as decision makers wait for more market and economic clarity before committing to office space. Prior to the outbreak, the metroplex saw a healthy start to the year as first-quarter leasing activity totaled 3.2 million square feet (msf), 64.5% of which occurred in Class A product. However, strong leasing activity seen in the first two months of Q1 2020 lost momentum in March, as stay-at-home orders began to shift occupiers to a remote work environment. Prior to COVID, demand was highest in the North Dallas Corridor submarket which saw 964,000 square feet (sf) of leases signed, 60.0% of which were in Class A product. Also notable, the LBJ submarket posted 486,000 sf of activity - the submarket's highest quarterly total since mid-2017. Even with relatively strong demand, the market saw a 30-basis-point increase in overall availability over the year, now at 24.2%.

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