Dallas-Fort Worth Economic Indicators

The Dallas–Fort Worth economy slowed in June as employment fell and unemployment rose. Despite the slowing, second-quarter job gains outpaced the first quarter. Apartment demand slowed in July following robust gains in the second quarter. Office-market activity remained weak in the second quarter, while industrial absorption strengthened.

Labor market

Payrolls contract in June

DFW employment contracted an annualized 1.7 percent (-6,000 jobs nonannualized) in June following two months of strong job growth (Chart 1). Payrolls in Dallas dipped 2.8 percent (-7,400), while employment in Fort Worth grew 1.3 percent (1,400). Meanwhile, Texas job growth slowed to -0.2 percent in June after increasing 3.2 percent in May. The unemployment rate ticked up to 3.9 percent in DFW, though it remained below Texas’ jobless rate of 4.0 percent, which was unchanged for the third straight month.

Job growth solid in second quarter

DFW job growth strengthened in the second quarter following sluggish first-quarter gains (Chart 2). Leading the growth were construction and mining and manufacturing. Job growth also picked up in the metro’s largest sectors—trade, transportation and utilities and professional and business services—following declines in the first quarter. Employment contracted in information, leisure and hospitality, and other services in the second quarter.

Commercial real estate

Apartment demand moderates in July

DFW apartment absorption slowed in July following strong demand in the second quarter. Net absorption was 8,600 units from April through June, with 4,800 units being absorbed in June alone (Chart 3). Net absorption moderated to 950 units in July. Despite strong demand in the second quarter, effective monthly rents in DFW were relatively stable at $1,476 per unit in July compared with year-end 2023 and were down 3.0 percent from year-ago levels. Occupancy rose to 88.9 percent in July but was 1.3 percentage points below year-ago levels. An elevated level of apartment completions continues to weigh down occupancy and rents.

Office vacancy continues to creep up

Demand for office space in DFW remained weak in second quarter 2024. Net absorption was negative for the fifth straight quarter at just over 1 million square feet, pushing up the vacancy rate to a multiyear high of 25.9 percent, according to data from CBRE Research (Chart 4). The metroplex had 59.5 million square feet of vacant office space at the end of the second quarter. Availability of sublease space dipped again to 9.3 million square feet, with Class A properties accounting for 75 percent of the metro area’s sublease space. Construction activity fell further to 4.3 million square feet.

Industrial leasing stays solid, but vacancy climbs further

Positive momentum in industrial leasing continued in the second quarter, driven primarily by demand from wholesale and manufacturing. Net absorption was 6.9 million square feet, outpacing the first quarter, according to CBRE (Chart 5). The South Dallas, North Fort Worth and DFW Airport submarkets were the most active in terms of leasing demand last quarter. The vacancy rate climbed to 9.8 percent due to the elevated level of deliveries that totaled 8.5 million square feet. Space under construction dropped from 18 million to 14.3 million square feet.