Community Impact has a detailed story on empty office buildings in Richardson. 85.2% of the square feet of office buildings in Richardson is leased. Eleven buildings comprising 1.4 million square feet are totally vacant. Is that good or bad? Community Impact doesn't really say.
Community Impact does offer a comparison with neighboring cities. North Dallas Central Expressway is 11.4% vacant. Plano is 17.9% vacant. East I-635 is 22% vacant. By that metric, Richardson sits right in middle. Not good, not bad. Relatively, at least. But absolutely? Who knows? Community Impact doesn't provide much in the way of historical comparison. It does say that "The city’s office vacancy rate spiked in 2015 after State Farm and Raytheon cleared their satellite offices." Is it increasing or decreasing now? Who knows?
Even though Community Impact avoids offering any kind of judgment, it does allow John Jacobs, executive vice president of economic development at the Richardson Chamber of Commerce, to try to convince us that everything is fine. "These commercial vacancies are more a sign of success than failure, said John Jacobs...'The analogy I make is if I'm running a car dealership, I want my parking lot full of cars ready to sell,' he said." That's a terrible analogy. The cars on the dealer's lot are new cars coming from the manufacturer. Most of the real estate in Richardson is stock returned by tenants vacating existing office buildings. A car dealership in that situation is in trouble. Community Impact doesn't say how much of Richardson's vacancy numbers are due to growth of new office space and how much is due to vacating tenants. That's important. One can infer that the vacancies are more a sign of failure when the Chamber of Commerce rep says, "There is a good and a bad side [to vacancies]," Jacobs said. "Hopefully in time we lease all that vacant space, and that encourages developers to build more." A story built on "hope" is not a success story.
Before closing, let me say that Community Impact is a welcome addition to the Richardson information scene. The Dallas Morning News pretty much quit covering Richardson years ago. My only advice is that they resist becoming a mouthpiece for the officials they should be reporting on. Steve Brown, the real estate editor for The Dallas Morning News, is the role model for what to avoid. His articles read more like press releases for developers than objective journalism. Don't limit your interview subjects to just those whose salaries depend on providing the rosy side of the story.
I agree that John's comment was a weird analogy. Richardson isn't a car dealership.
ReplyDeleteI seem to remember about 7 years ago when I was regularly looking at the commercial vacancy rates that Dallas is a national anomaly with a historical 17% vacancy rate on office space.
This article from last year said DFW was up 0.9% to 20.5%. So Richardson's 15% vacancy is fine. There's really no story there and no explanation is needed unless you want to try to explain DFW's overall anomaly status.
https://www.bizjournals.com/dallas/news/2018/04/12/cbre-report-dfw-office-leasing-shrinks.html