YP’s Steve Triolet Featured in Dallas Morning News Article on Uptown Dallas Real Estate
Is the office market in Uptown Dallas headed for a glut?
By Steve Brown, Real Estate Editor for the Dallas Morning News
A big new office lease in Dallas’ Uptown is good news for the booming office district just north of downtown.
Data center firm CyrusOne rented 50,000 square feet in the new Harwood No. 10 tower under construction near the entrance to the Dallas North Tollway. The tech company, the first major tenant announced for the 22-story high-rise scheduled to open this winter, is growing its headquarters by about 60 percent in a move from another Uptown building.
The lease may help calm jitters about the amount of new office space on the way for Uptown.
While the central Dallas district doesn’t have the largest share of new office development underway in North Texas, buildings there are the most expensive, with rents topping $50 per square foot.
Most of the office construction these days is in the mid-cities, Las Colinas and the Legacy/Frisco market, but three new office projects going up in Uptown are the most visible and costly. And all of them are speculative, multi-tenant buildings.
Areawide about 75 percent of office projects being built already have tenants lined up — in Uptown, about half of the new space is accounted for.
“Only Uptown is likely to see any significant softening due to new construction in the second half of 2018,” said Younger Partners’ Steve Triolet. “Keep in mind, Uptown is not a large submarket — current total inventory is 13.9 million square feet — but it has 1.2 million square feet scheduled for completion later this year.”
The new office space is coming in Trammell Crow Co.’s Park District project on Pearl Street, in the Union on Cedar Springs Road and the Harwood’s No. 10 tower.
“These three Uptown projects have a combined 654,054 square feet of space that is unaccounted for,” Triolet said.
Of course the developers in Uptown have reason to feel optimistic. Crescent Real Estate hit a home run with its $225 million McKinney & Olive office tower, which opened in 2016 with record rents and almost full occupancy.
And Lincoln Property Co.’s new 1900 Pearl high-rise on the edge of Uptown at Pearl Street and Woodall Rodgers Freeway is almost 90 percent full just months after the opening.
“Most buildings are doing pretty well right now in their leasing velocity,” said JLL’s Greg Biggs. “I don’t think it’s time to worry yet.
“There is still a lot of activity down there — both from within the market and outside the market,” Biggs said. “We get calls from companies wanting to open new offices in Uptown.”
Of course, those same companies are being wooed by downtown Dallas skyscrapers that are getting major remodels to remain competitive. And those downtown buildings are rental rate bargains compared with Uptown’s pricey properties.
“For the value, they are very competitive compared to new construction,” Biggs said. “They are going to be considered 90 percent of the time with the Uptown buildings, especially with the retrofits that the downtown buildings have gone through.”
Uptown law firms Bell Nunnally & Martin and Alston & Bird recently decided to relocate from Uptown to downtown.
“Uptown also recently lost Guidestone, which vacated roughly 200,000 square feet at 2401 Cedar Springs and moved to Pinnacle Tower” in Farmers Branch, Triolet said of the financial firm. “Taking all this into account, watch for increased concessions in Uptown in the near term as the submarket tries to fill these new speculative projects.”
Link to the article here.