The overall office market in the Dallas area is seeing one of the best years it has had in decades. Existing office tenants are positive about the economy and they are confident that the economy is expanding and they are looking of additional rental space. According to Price Waterhouse Dallas is seeing one of the best landlord markets in thirty years.
Many new companies are moving into Dallas. They are seeing a diverse educated workforce in markets that offer multiple types of living opportunities to attract skilled labor. For example. One of the key decision points for Toyota to move their headquarters to Plano was that the location gave their employees the option to choose to live in five different cities offering five different amenity options. This gives companies the ability to attract various types of personnel to join their team.
The Uptown office market has an overall vacancy rate of eleven percent. This market is directly north of downtown. It is one of the most expensive markets in the Dallas area. An interesting phenomena in the uptown market is that the 4,000 – 6,000 square foot user that is looking for an additional 1,500 square feet to expand into within their building cannot find it. The space simply isn’t available.
The overall downtown Dallas office market is growing but what about downtown Dallas office space? Because downtown is close to Uptown and the fact that the downtown Dallas office market still has a higher vacancy rate some of these midsize companies may consider relocating to the towers in the Dallas CBD. They are still relatively close to the office market they are familiar with but they also take advantage of more flexible downtown Dallas office space.
The Kyle Warren Park has had a positive impact upon office buildings that line it’s boarder. Office buildings that are on Ross Avenue have seen an increase of rental rates up to thirty percent over the past two years. Building closer to the park have experience rental rate increase up to sixty percent.
Another exciting development in the Dallas CBD is the redevelopment of existing office product. Some of the towers are being transformed from office use to mixed use. It has recently been announced that the top fifty percent of Bryan Tower’s space will be converted from office use to residential. Additionally, the Adolphus Tower has been purchased by FAQ Capital LLC and they are going to give the sixty year old building a new exterior and rebuild the ground floor for real and restaurant use.
Thanksgiving Tower (Santander Tower) is presently going through thirty million dollars worth of renovation. Last year they signed one of Dallas’s largest office leases with Santander Consumer USA Inc. bringing approximately four thousand new employees to the building.Gardere Wynne Sewell and Petro-Hunt are leaving the building giving this project one of the largest contiguous spaces available in downtown. With the number of large users looking for space in Dallas this could be a huge opportunity for the right office tenant.
Downtown Dallas achillies heal has traditionally been parking. However with the conversion of some office space into residential condominiums and the development of apartments and condominiums in close proximity to downtown parking is not nearly the issue that it once was for office tenants. Additionally services like Uber have simplified the task of catching a short term ride from one location to another.
I think the downtown Dallas is going to continue to see a reduction in its overall vacancy rate and will continue to have more residential development along with an increase of new companies moving into present vacant space. It is a good time to be an office landlord in Dallas, Texas.