Office demand in the Dallas-Fort Worth area has taken a tumble in recent months.

Net office leasing in the area is down more than 50 percent from the same time last year, according to preliminary numbers from Cushman & Wakefield of Texas.

Expanding and relocating office tenants have rented about 311,000 square feet of additional office space in the area, compared with more than 800,000 square feet of net leasing in the first six months of 2007.

Leasing agents say that the slowdown reflects a mood of caution in the real estate market.

"With the upcoming election and the national economy in the state it is, companies have become much more conservative," Greg Biggs, Cushman & Wakefield executive director, said Monday.

Several office districts -- including Far North Dallas and Las Colinas -- have seen sizable net declines in office occupancy this year because of business consolidations or moves to other local markets.

The biggest increases in office leasing have come in the Frisco-West Plano area and in downtown Dallas.

Office occupancy in the central business district has risen almost 400,000 square feet so far in 2008, helped by Comerica and other tenants.

D-FW office vacancy rates inched down in the second quarter, reaching an average of 19.6 percent -- a percentage point lower than in mid-2007.

The overall sharp decline in office leasing couldn't come at a worse time for developers and building owners. More than 5 million square feet of office space is under construction in Dallas-Fort Worth.

And more than 67 percent of what is being built is speculative, said Cushman & Wakefield researcher Cynthia Jeter.

About 1 million square feet of new office space has already been completed this year.

The drop in office demand in North Texas has coincided with a cooling in employment growth in the area.

Job creation in Dallas-Fort Worth has fallen from about 83,600 in 2007 to a 66,100 gain for the 12 months ending in May.

Even so, the steep slide in office leasing surprised Federal Reserve Bank of Dallas economist D'Ann Petersen.

"I had heard it had slowed but didn't expect that big of a decline," Ms. Petersen said. "The sectors that usually drive office leasing have still seen positive growth, although I expect the financial sector has been a factor."

While office leasing has fallen, rental rates haven't. Currently, average office rents are up more than 5 percent from June 2007.

"One thing that continues to increase is the rental rates. A lot of that has to do with operating expenses," Mr. Biggs said. "Electricity has become a huge number."

With some businesses shutting or downsizing, the amount of vacant sublease space on the market in North Texas has also risen.

About 2.5 million square feet of empty sublease space is on the market -- 25 percent more than a year ago, Cushman & Wakefield estimates.

"The vast majority of it is related to the slowdown in the economy," said Randy Cooper, Cushman & Wakefield executive director.

The marked softening in the office market has occurred in just the last few months.

At the end of the first quarter, leasing in the D-FW area was running 75 percent ahead for the year.

But year-to-date net leasing has actually declined by more than 150,000 square feet since then as the local economy has slowed.

One positive is that many leases in buildings under construction won't be counted until the projects open later this year and in early 2009. Office statistics typically don't count a lease until the tenant moves into the space.