Yesterday I was looking for some low priced Dallas office space for one of my clients. As you know, I specialize in low priced office space and I have been very successful achieving this goal for my clients. It looks to me like the market is changing rather dramatically and now the Dallas office space market is squarely in the hands of the landlords.
I will give you an example describing what I am talking about. In the spring of 2013 two buildings were purchased by KBS Realty. This is an excellent landlord that I have placed several tenants into their building. Like I tell all my clients the reason investors purchase buildings is because they see an opportunity to increase the value of the asset.
How To Increase Dallas Office Space Value
In commercial office space the way the office building’s value is increase is by increasing the rent, lowering operating expenses and getting higher credit office tenants. When KBS purchased the Sterling Plaza and Preston Commons in Preston Center the rental rates were from $22.00 to $27.00 per square foot respectively.
So I placed a call to the new landlord’s agent for these properties a few weeks ago looking for a new Dallas office space for one of my clients. I am very serious when I say I almost fell out of my chair. The rates quoted were $33.00 per foot plus electricity, which was estimated to be $2.50 per foot. Now I have been a tenant representative for many years and the first thought in my mind was how will my clients be able to afford these high Dallas office space rental rates.
It is my thought that we are going to see some tenant migration from the Preston Center office market to the Central Expressway and LBJ office markets over the next year. While many individuals and firms like the Preston Center location there are other Dallas office markets that will offer more value.
The Central Expressway office market is already be inning to see an increase in occupancy. Like the Preston Center market the Uptown Dallas office market is also seeing a significant increase in rental rates. Several buildings in this market are now at forty dollars a foot plus electricity. Like Preston Center some of the tenants in this market are moving into the Central Expressway office market.
Dallas Office Brokers Say Now Is The Time
The construction on the LBJ Freeway is moving along rapidly. The estimation is that it will be completed by the fall of 2015. The area located east of Hillcrest Avenue is almost complete. Now is a good time to pursue renting office space in the Park Central market before the rental rates increase. Currently there are opportunities ranging from $13.00 to $22.00 per foot plus electricity in this market. Many Dallas office brokers are expecting to see increases in these markets rental rates in the near future.
If you are in the unfortunate position of seeing a significant increase in your office rental rate you still have an opportunity to locate a fabulous office space in the Central Expressway or the LBJ office market. The important consideration is to be one of the first to lease space in these markets before demand increases the rental rates.
I don’t expect to see the rates as high as Preston Center or Midtown. However, when LBJ is completed I know we will see higher rates in this market. Many office buildings have been sold or are in play at this time. As stated before the reason investors buy buildings is to increase their value and you know how they do that.
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