Tech Tenants Play Sublease Musical Chairs In Plano
A reshuffling of tech tenants in Plano has set off a domino effect that is absorbing sublease space in some areas while creating new vacancies in others.
Companies including Aventiv Technologies, Splunk and JBB Advanced Technologies have all moved into Plano offices formerly occupied by fellow tech companies. This helped put a dent in the vast sublease space on the DFW market, which at the end of 2023 totaled 10.3M SF, a 2% quarterly decline, CBRE reported.
“These tech companies are very volatile as far as number of employees they have to how much square feet they need,” said Steve Triolet, senior vice president of research and market forecasting at Partners Real Estate. “Some of them are shrinking, some of them are expanding — they’re doing musical chairs of sublease space.”
When Aventiv, the parent company of Securus Technologies, took over 63K SF of software company Splunk’s space at The Campus at Legacy in Plano, it left behind a 160K SF hole at 4000 International Parkway in Plano. That space was eventually backfilled by artificial intelligence company JBB, Triolet said.
Splunk then took four floors at Gateway at Legacy, a 208K SF Class-A building in Plano. Toward the end of 2022, the company put three floors up for sublease, and a year later they were backfilled by LiquidAgents Healthcare.
The trend, while not profoundly helpful in reducing sublease availability, means tenants can lease luxury space at a discount.
The departure of LiquidAgents left a 28K SF hole at 5801 Tennyson in Plano, which Cushman & Wakefield is marketing at a triple-net rate of $25.50 per SF, a 20% discount from the direct rate of $32 per SF.
The Splunk space that LiquidAgents moved into was marketed at a 15% discount. This is about on par with the discount offered for other office subleases in DFW, but it is also not uncommon for the deals to include free or discounted furniture, Triolet said.
“The old rule of thumb was a 15% to 25% discount to like direct space, but in extreme cases, there have been subleases at [a discount of] 50% or more,” Triolet said, adding that at one point Energy Plaza had sublease availability at just $9 per SF.
Direct and sublease activity has trended in a positive direction over the last couple of months.
Deloitte announced in January that it signed a deal to take four floors at the 23Springs development underway in Uptown Dallas. The 626K SF project also secured a 118K SF commitment from global law firm Sidley Austin earlier this week. Bank of America plans to take nearly half of the future 500K SF Parkside tower, also in Uptown Dallas.
Triolet attributed the uptick in leasing activity to seasonality as well as companies needing to make decisions after spending months in limbo.
“The common denominator is that leasing activity has picked up between the end of last year and the beginning of this year,” he said. “Whereas there was a big holding pattern for a lot of these companies, it seems like from a leasing activity standpoint, things are picking up.”
