|
Market News and Trends
Occupancy Rules the Day
CoStar reported negative office leasing absorption in 7 of the 12 Dallas submarkets after the first quarter of 2010. The Dallas Market lost a surprising 458,000 SF of occupancy. Class A buildings suffered the most and lost ground in almost every submarket. Blue Cross Blue Shield’s huge relocation to Richardson provided the only positive number in the stats.
Tenants’ expectations for discounted renewal and new lease terms have grown considerably. Tenant driven counter proposals have become very aggressive. There is a multitude of space options for tenants to consider. Tenant rep brokers report that it is sometimes difficult to manage their client’s perception of the office market.
Maintaining or gaining occupancy has become most landlords’ primary goal with rental rates becoming secondary. The most notable example of this recent market trend is KBS’ reduction in quoted rental rates from $28.00 to a starting rental rate of $19.75 + E at The Millennium Tower and Providence Towers. Both of these class A buildings are located on the lower Dallas North Tollway. While not so vocal, deep cuts in effective rates at Lincoln Centre and The Towers at Williams Square have also been whispered in the real estate community. The market is changing faster than some Landlords anticipate.
Stress between landlords and their lenders is growing. We expect to see several buildings change hands later this year as debt problems finally come to a head.
On a positive note, leasing activity has increased at CAPSTAR buildings. Our leasing agents have been very busy with prospect and broker inquiries, building tours and proposals. Tenants are more confident about their future and know that now is the time to lock in the most favorable lease terms. Landlord’s that meet the market are winning the business today.
Leases
• Strayer University, represented by Cushman & Wakefield, signed a 15,278 SF lease at Parkway Centre IV in Far North Dallas. The economics of the 86-month new lease were $23.44 +E effective with $30.00 in TI and 2 months free rent. |
•Merrill Lynch, represented by CB Richard Ellis, signed a new lease for 14,000 SF at 600 Las Colinas in the Las Colinas Submarket. The 67-month lease was $18.72 +E effective with $7.00 in TI and 7 months free rent.
•Willowbend Diagnostic singed a 7,311 SF renewal at the Park Ventura Office Park in Far North Dallas. The 63-month renewal was $19.43 +E effective with $10.00 in TI and 3 months free rent.
• El Paso Import Company, represented by Venture Commercial, singed a 7,104 SF renewal at Parkway Centre in Far North Dallas. The economics of the 60-month renewal were $13.00 NNN effective, as-is. No free rent was given.
•Challenger Capital Group, represented by Transwestern, signed a 5,374 SF new lease at 2525 McKinnon in Uptown. The economics of the of the 68-month lease were $20.07 +E effective with $5.50 in TI and 8 months free rent.
• Penstar Power signed a 5,000 SF new lease at 3100 Monticello in the Preston Center Submarket. The economics of the 65-month deal were $20.49 +E effective with $22.00 in TI and 5 months free rent.
• US Analytic Solutions Group singed a 4,400 SF new lease at 600 Las Colinas in the Las Colinas Submarket. The 40-month lease was for $18.45 +E effective with $6.00 in TI and 4 months free rent.
• Web Safety, represented by Cresa Partners, signed a 3,400 SF expansion at Hackberry View in Las Colinas. The economics of the 61-month expansion were $17.02 +E effective with $10.00 in TI and 1 month free rent.
• LTA Investments signed a 3,250 SF renewal at 3500 Oak Lawn in Uptown. The 64-month renewal was $19.22 +E effective with $3.00 in TI and 4 months free rent.
• Thomas Bailey & Associates signed a 3,120 SF renewal at 6060 Central in the North Central Expressway Submarket. The economics of the 62-month renewal were $16.25 FS effective, as-is with 2 months free rent.
•Cintas, represented by CB Richard Ellis, singed a 3,001 SF lease at Hackberry View in Las Colinas. The economics of the 36-month new lease were $17.00 +E effective with $11.00 in TI. No free rent was given.
• CHC Services, Inc., represented by Laughlin Commercial Realty Group, signed a 2,059 SF new lease at Turtle Creek Tower in Uptown. The economics of the 63-month lease were $18.86 +E effective with $15.00 in TI and 3 months free rent. |
Deals in Play
•Locke Lord Bissell & Liddell LLP, represented by Steve McCoy and Al Harrington with Transwestern, is in the market for 150,000-175,000 SF of office space in the Central Business District.
•Intuit, represented by Steve Thelan with Jones Lang
LaSalle, is in the market for 150,000 SF of office space in Far North Dallas.
• Maxim Integrated Products, represented by Mark Miller with NAI Robert Lynn, is in the market for 150,000 SF of office space in either the Far North Dallas or Richardson/Plano Submarkets.
• Tyler Technologies, represented by Jeff Ellerman with CB Richard Ellis, is in the market for 100,000 SF of office space in Far North Dallas.
• Cumulus Broadcasting, represented by Jeff Ellerman with CB Richard Ellis, is in the market for 40,000 SF of office space in Uptown. This prospect is currently located at 3500 Maple.
•Masergy, represented by Baron Aldrine with CB Richard Ellis, is in the market for 35,000 SF of office space in Legacy. This prospect is currently located at Willowbend Office Center.
• Optech, represented by Marshall Cooper with Cooper & Associates, is in the market for 30,000 SF of office space in the Lewisville/Freeport Submarket.
• An Undisclosed Law Firm, represented by Bruce Hecht with Swearingen, is in the market for 30,000 SF of office space in either Uptown or the Central Business District.
•Dallas Productions, represented by Lee Wagner with Grubb & Ellis, is in the market for 22,000 SF of office space in either Preston Center or North Central Expressway.
• STA Travel, represented by Robert Blount with CB Richard Ellis, is in the market for 20,000 SF of office space in Far North Dallas north of the George Bush Turnpike.
•Exco Resources, represented by Kasey Jones with Jones Lang LaSalle, is in the market for 25,000 SF of office space in Park Central. This prospect is currently located at Lakeside Square.
Investment Activity
•Houston based investor Boxer Property, which already owns more than a dozen Dallas-area office buildings, has purchased Pacific Place in the Central Business District for $16.35 per SF.
•CB Richard Ellis is marketing Preston Commons and Sterling Plaza for sale on behalf of Capri Capital. |
