Downtown Fort Worth Office Vacancy is 11.5%

It’s going to be an exciting year for JLL’s Geoff Shelton.

He’s responsible for leasing up one of Fort Worth’s rarest resources: new Class A office space.

The firm has been tapped by Nebraska-based developer Goldenrod Companies, which is putting its stamp on Fort Worth in the form of two mixed-use projects in the city’s Cultural District. Between One University and the Van Zandt, Goldenrod is expected to add 218,000 square feet of office space to the market by the end of 2026.

Since companies have struggled to make working in the office more appealing than working from home, the latest office movement trend is “flight to quality.” But in Fort Worth, that means “a very focused flight to neighborhood … where tenants have gravitated toward certain neighborhoods that have these quality new assets,” Shelton said.

Not only are tenants seeking out premium office space; they’re also looking to be surrounded by amenities, like restaurants and luxury hotels.

Right now, those hot neighborhoods are: West Bend, Clearfork and the Cultural District.

In less than a decade, more than a billion dollars has been invested in the area just west of downtown Fort Worth that includes Dickies arena, the city’s museums and nightlife destinations.

In 2023, Dallas-based Crescent Real Estate opened a $275 million mixed-use development whose offices are already mostly leased. Next door, luxury hotel brand Auberge Resorts Collection opened the Bowie House hotel in December.

“It’s kind of our Uptown Dallas,” Shelton said.

Healthy fundamentals

Amid warning cries of the office apocalypse, Fort Worth’s market is writing a different narrative.

Downtowns across the country are grappling with high office vacancy, but that’s not the case for Fort Worth’s central business district. It has a vacancy rate of just 11.5 percent, Partners’ Steve Triolet said. Thirty miles away on Interstate 30, downtown Dallas’ vacancy rate is 26.4 percent.

Plus, the sublease market makes up just half of a percent of the vacancy in Fort Worth’s CBD.

Fort Worth is also seeing rent increases. The city’s central business district saw a 10 percent jump in rents between the first quarter of this year and the first quarter of last year.

Triolet attributes that in part to the fact that downtown property is largely owned by a few entities, like the billionaire Bass family. Less competition gives landlords a bit more control.

If all goes according to plan, the forthcoming Goldenrod properties will help prop up the city’s rent numbers.

Goldenrod is expecting to lease space at Van Zandt at $48 per square foot triple-net, and $52 per square foot at One University, Shelton said.

The two sides of low inventory

When companies relocate to Dallas-Fort Worth, more often than not, they’re looking for new product or offices built to suit.

The Goldenrod projects will certainly make a splash, but they’re pretty much on their own when it comes to new upscale office space in Fort Worth.

“There’s really not much coming in the grand scheme,” Triolet said.

For its strong fundamentals, downtown Fort Worth’s absorption is “kind of quiet,” he said. In the first quarter of this year, the city’s CBD saw 1,000 square feet of positive absorption, which Triolet called “basically a rounding error.”

That’s why Shelton doesn’t think that these two developments will be just flash-in-the-pan successes.

Take the Stack over in Dallas’ Deep Ellum neighborhood. That highly anticipated project from Hines, Westdale Real Estate Investments and Management, and Ivanhoe Cambridge was fully leased one year after delivery; now, more than a third of the building is on the sublease market.

To Shelton, Fort Worth’s low inventory makes this kind of outcome unlikely.

“We’re essentially starting with a blank canvas of new delivery,” he said.

Betting on Fort Worth

Goldenrod isn’t the only developer betting on demand for premium office space in Fort Worth.

Less than six months after opening, the offices at the Crescent in Fort Worth are 90 percent leased. Phase two of the project will add 170,000 square feet of office space. It’s located just a few blocks from the Goldenrod sites.

Crescent Offices East is expected to be delivered in 2026, the same year One University and the Van Zandt are also expected to open.