Dallas Is One Of The Top Cities With The Highest Office Rent Gains On The Planet
It is not London, New York City or Los Angeles. Instead, Dallas, Chicago and Sidney are sharing one common theme: prime office rental growth
Do you ever wonder which cities in the world have the highest office rent gains on the planet? Cities that typically come to mind are New York, Los Angeles, Paris, London or Sao Paolo. Try this on for size: Dallas, Chicago and Sydney. These are the names to remember as they all share one common theme: domination in the global index, having the highest office rent gains on the planet.
According to a new research published by JLL, an international commercial real estate firm, these are the three major players that have had the prime office rental growth. Dallas (10.2 percent) trails closely behind Chicago (10.4 percent) in the percent of the office rent increase, as opposed to Sydney’s impressive and other-worldly 28.9 percent in JLL’s research on the top 30 global markets.
Continuing the comparison, Dallas’ rent increases are higher than two of the United States’ real estate hubs, Los Angeles (4.4 percent) and New York, (2.3 percent). No matter its close proximity to some of the most influential places in the world when it comes to its numbers in economic growth and affordability, Dallas is still in North Texas and is much more affordable (and will always be much more affordable) than New York City.
Another important point addressed in the research affirms that rental volatility is exceptionally low by historical standards. The good news endures and the projection shown confirms that rental growth will continue as it is expected to keep a steady pace during 2017. The study points out that although rates will likely gradually slow down (up to 2 percent) but this is due to the usual development cycle peaks as more markets move into balance.
In the report, JLL mentions that the annual rental growth for prime offices across the 125 major markets covered by their Global Office Index remains firm, rising to 2.5% in Q1 2017 (from 2.3% in Q4 2016). Quarter-on-quarter, rents have risen by 0.8%, which doubled the pace of the previous quarter.
Now let’s go back to Dallas. In the JLL Global Top 30 index, Dallas has a consistent presence in five key areas: economic size, corporate presence, air connectivity, real estate investment, cross-border real estate investment and prime office rental growth. Is anybody surprised? Dallas ranks among the top twenty-two cities in all five of these categories (making the top fifteen in two of the categories), with prime office rental growth at its highest ranking, third in the world only behind Sydney and Hong Kong.
In the Dallas area, the office rents have skyrocketed almost 25 percent since 2012, making the average annual rent rise above $26 per square foot. What’s helping drive Class A rentals in Dallas? Not only the demand for office space in the particular Uptown section of Dallas, but the fact that there are numerous office buildings that are still remaining to be finalized.
With Dallas’ continued growth, this will only continue to steadily grow in its potential and promise as a fixture in the global markets for the future to come.
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