Not since the Great Recession has downtown Fort Worth seen so much office space available for sublease, and we have the plunge in oil prices to thank for that, according to real estate professionals.
“There have been a number of oil and gas companies that have put sublease space on the market, especially downtown,” said Todd Burnette, managing director of the Fort Worth office of JLL commercial brokerage. “There’s about 150,000 square feet available downtown today. Look for as much as another 100,000 square feet to hit the market this year.”
Burnette’s comments were made at the 2016 Tarrant County Commercial Real Estate Forecast hosted by the Real Estate Council of Greater Fort Worth.
Companies began offering space for sublease about six months ago, Burnette said, including four floors in the 777 Main office tower by FTS International, an energy services firm that had expanded in 2012.
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Five years ago, energy companies gave a boost to the central business district, leasing a good deal of vacant space, market reports showed. Now, the vacant space equates to 34 full floors in downtown office buildings, with another six floors likely to be empty by the end of the year, Burnette said. The companies have either moved out or downsized in the wake of the lower oil prices, he said.
But Fort Worth should be fine because the city has done many things in the last 25 years to change its dependence on the oil and natural gas industry, Burnette said.
The energy downturn impacts activity, and while energy remains an important driver in Fort Worth, the higher level of diversity insulates it from the swings felt in other Texas locations.
“The energy downturn impacts activity, and while energy remains an important driver in Fort Worth, the higher level of diversity insulates it from the swings felt in other Texas locations,” he said.
Energy jobs account for 2.2 percent of all jobs in Fort Worth, compared to Midland, where energy jobs account for 25 percent of its job base, Burnette said.
Moreover, Fort Worth had 17,915 energy jobs in the second quarter of 2015, the latest figure available, down 13.4 percent from the second quarter of 2014 with 20,679 jobs.
Population and job growth will continue to drive retail and multifamily development, the professionals said.
“Fort Worth is absolutely on the radar,” with developers and investors, said Drew Kile with Institutional Property Advisors in Fort Worth.
David Berzina, executive vice president of economic development at the Fort Worth Chamber of Commerce, said 2015 was a high water mark for commercial development in the city.
Last year, commercial construction permits totaled 16.4 million square feet of space and residential permits totaled 10.7 million square feet, figures show.
Permits issued in 2014 totaled 11,131 and carried $2 billion in value, compared to 11,320 permits issued and with a $2.3 billion value in 2015.
A lot has happened and continues to happen. We do not know of a community anywhere in the country the size of Fort Worth that has this many projects announced and underway.
David Berzina, executive vice president for economic development, Fort Worth Chamber of Commerce
Berzina highlighted two upcoming projects, including a 200-unit multifamily project planned for the first completed channel section of Panther Island, the $910 million flood control and economic development project that began several years ago. A formal announcement is expected by the end of March, he said.
Also, an $11 million, 100-room Hampton Inn and Suites is planned for the east side of Interstate 35W in the Rosedale and Evans urban village, the first time in many years a nationally-recognized hotel chain will develop in the fledgling near southeast Fort Worth community.