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Market News and Trends
According to the Real Estate Center at Texas A&M University, the number of commercial real estate deals posted for foreclosure has grown more than 10% this year. Many are concerned that this is just a preview of what’s to come since a vast majority of buildings bought after 2005 have lost up to 30% of value. There could be hundreds of millions of dollars in foreclosures in commercial real estate in 2010. However, unlike previous real estate crashes, oversupply is not the primary issue this time around.
DFW office construction has fallen to its lowest level in 4 years, and analysts anticipate that development will be non-existent during 2010. Only 1.4 million SF of office construction is underway in the area. New office building development has fallen by about 75% since 2007. More than 1 million SF of the total building activity is in Richardson at the Blue Cross Blue Shield of Texas Headquarters building, which will deliver in December. Another 345,000 SF of space is being completed in Uptown.
The DFW office market continued to weaken during the 3rd quarter 2009. Vacancy rates have increased and there has been downward pressure on rental rates in the overall market. However, CAPSTAR is currently tracking over 10 million SF of active tenants in the Dallas and surrounding submarkets. These leases will be won by well sponsored, quality assets, with creative and responsive teams.
Leases
• Future Wei signed a 90-month lease at Legacy Place II in Far North Dallas. Rumored economics of the 103,000 SF lease were $21.50 +E effective with $47.00/SF in TI and 6 months free rent on the entire space with an additional 2 years free on 1 full floor.
• Omniflight signed a 72-month, 26,882 SF renewal at Addison Tower in Far North Dallas. The tenant will pay $16.00 +E effective with $8.50/SF in TI and 10 months half rent. |
• Coach America signed a 23,000 SF new lease at Campbell Centre in the North Central Expressway submarket. The tenant signed a 90-month lease for $14.75 +E effective with $20.00/SF in TI and 6 months of free rent.
• Southwest Credit, represented by Jones Lang LaSalle, signed a new 90-month lease at 4120 International Parkway in Far North Dallas for $17.00 +E effective. The 21,817 SF new deal received $25.00/SF in TI and 6 months free rent.
• Alliance Data Systems signed a new 10-year lease at One Legacy Circle in Far North Dallas. Mike Wyatt with Cushman & Wakefield was the broker. Rumored economics for the 84,000 SF deal were $25.50 +E effective with $35.00/SF in TI and 12 months free rent.
• Allied Solutions signed a 19,576 SF renewal at Parkway Centre II in Far North Dallas. The 66-month deal was $19.00 +E effective with $5.00/SF in TI and 4 months free rent.
• Wagner Eubanks signed a 8,693 SF renewal at 5950 Berkshire in Preston Center. Economics for the 13-month deal were $26.75 +E effective with no TI and 1 month free rent.
• Bucher, Willis & Ratliff, represented by Jackson Cooksey, signed a 8,113 SF new lease at Coit Central Tower in the Park Central submarket. Economics for the turn-key, 120-month lease were $16.90 +E effective with 6 months free rent.
• Angel Reyes signed a 5,400 SF new lease at 5950 Berkshire in Preston Center. Economics for the 54-month lease were $24.75 +E effective with no TI and 4 months free rent.
• Primus Global signed a 4,126 SF new lease at 1431 Greenway in Las Colinas. Rumored economics for the 39-month lease were $14.90 +E effective with $9.00/SF in TI and 3 months free rent.
• American Eagle signed a 3,300 SF new lease at Hackberry View in Las Colinas. The effective rental rate for the 39-month lease was $18.90 +E with no TI and 3 months free rent.
Deals in Play
• Prime Therapeutics is in the market for 100,000 SF of office space. Jeff Ellerman with CB Richard Ellis is representing the prospect. |
• Siemens, represented by Mike Cleary with CB Richard Ellis, is currently in the market for 75,000 SF in Legacy.
• Project JW (United Surgical Partners, Inc) has narrowed their 65,000-90,000 SF search to two buildings, Galleria and Colonnade.
• Bank of Texas, represented by Peery Wood, is in the market for 50,000 SF of office space in the Preston Center or Uptown submarkets. Bank of Texas is currently located in Sherry Lane Place in Preston Center.
• Project Vortex is in the market for 50,000 SF of office space for 300-500 employees.
• Bret Hefton with Cresa Partners is in the market with an Undisclosed Software Company for 40,000 SF of office space north of 190. Timing on this prospect is 3rd quarter 2010.
• Ecolabs, represented by JR Tomlinson with Jackson & Cooksey, is coming to the market with a 30,000 SF requirement in Las Colinas.
• Study Island, represented by Greg Langston with Cresa Partners, is in the market for a 30,000 SF office requirement in Uptown. The prospect is currently located in 3400 Carlisle.
• Razor Business Consultants, represented by Jeff Ellerman with CB Richard Ellis, is in the market for 30,000 SF of office space. The prospect is currently located in the Madison in Far North Dallas.
• Paragrin Systems, represented by Russell Cosby, is in the market for 25,000 SF of office space in Uptown.
Investment Activity
• Universal Technical Institute of Texas LLC purchased 5151 Regent Blvd. in Irving for $9.1 million or $83.64/SF. The new office building delivered in 2006 and was bought in “shell” condition. After the finish out is completed, UTI will have approximately 95,000 SF of space expected to accommodate 750 students. Grand opening is scheduled for summer 2010. |
