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Market News and Trends
There is hope for the Landlord. The FDIC now supports a policy for “prudent commercial real estate loan workouts” that are in the best interest of both banks and creditworthy commercial real estate borrowers. Real estate loans will not be “adversely classified” just because the value of the building is less than the loan amount. Loan extensions to get landlords through this part of the cycle should be the result. Some predict that since banks and landlords will avert mass foreclosures, there will not be a fire sale on an abundance of real estate as many with buckets of cash are hoping.
President Obama’s pending Small Business Financing and Recovery Act will significantly increase SBA loan amounts for small to mid-sized businesses. The U. S. House passed this bill in late October and the Senate should pass their version in December. The maximum loan amount to buy real estate would increase from $2 million to $5 or $5.5 million. CAPSTAR has seen increasing interest from tenants that are considering buying their own building.
Several economists report that this real estate cycle will bottom out late in 2010 or sometime in 2011. On the front lines of leasing, CAPSTAR sees a recent increase in activity from both small and large tenants. Our “Big Deal List” includes 152 prospects totaling over 12 MSF, with many new prospects added monthly. Several large leases have recently been completed around the city. Tenant driven counter proposals have been extremely aggressive. Full or turn-key construction allowances are demanded. The rental rate gap between class A and B office buildings has narrowed. Class B buildings that have not been maintained or renovated like their competitors are at a great disadvantage in today’s market. The Plano/Frisco and Las Colinas submarkets are the most active locations.
Leases
• Capital One signed a 24-month renewal at Tollway Center in Far North Dallas. Rumored economics of the 120,000 SF lease were $14.75 NNN with no TI and no free rent.
• Nationstar Mortgage signed a 25-month, 25,842 SF lease at Vista Ridge II in Las Colinas. The Tenant will pay $15.50 + E effective with no TI and 1 month free rent.
• Peregine signed a 23,000 SF new lease at Rosewood Court in Uptown. The Tenant signed a 120-month lease for $31.00 + E effective with $60.00/SF in TI and no free rent. |
• Morgan Stanley, represented by Jones Lang LaSalle, signed a 12-month renewal at The Meridian in the LBJ Freeway submarket for $18.95 F/S effective with no TI and no free rent.
• Icon Solutions signed a new 5-year lease at Stone Tower in Far North Dallas. Rumored economics for the 17,698 SF deal were $19.50 + E effective with $23.00/SF in TI and no free rent.
• Total Transportation Services signed a 15,884 SF lease at 2595 Dallas Parkway in Hall Office Park in Frisco. The 84-month deal was $18.45 + E effective with $26.00/SF in TI and 5 months free rent.
• Fox Bird & Company signed an 11,800 SF lease at Coit Central Tower in the Park Central submarket. Economics for the 90-month deal were $16.71 + E effective with $25.00 in TI and 6 months free rent.
• Hallwood Group signed a 6,550 SF renewal at Regency Plaza in Uptown. Economics for the 120-month lease were $21.67 + E effective with $10.50 in TI and no free rent.
• Moncor signed a 6,160 SF new lease at Quorum North in Far North Dallas. Economics for the 65-month lease were $14.31 + E effective with $12.00 in TI and 5 months free rent.
• Encompass signed a 4,872 SF renewal at Addison Tower in Far North Dallas. Rumored economics for the 18-month lease were $16.50 + E effective with $1.50/SF in TI with the ability to apply the TI towards rent.
• RemX signed a 3,774 SF renewal at Centura Tower in Far North Dallas. The effective rental rate for the 36-month lease was $23.54 + E with no TI and 3 months free rent.
• Medicall signed a 3,624 SF new lease at Corporate Park Place in Las Colinas. The effective rental rate for the 39-month lease was $12.69 + E with $8.00 in TI and 3 months free rent.
Deals in Play
• Ann Huntington with CB Richard Ellis is in the market with an Undisclosed Company for 250,000 SF of office space in Las Colinas.
• Project Merlot is in the market for a 220,000 SF build-to-suit requirement.
• Project Heatwave (MetLife Bank), represented by Steve Thelen with Jones Lang LaSalle, is in the market for 200,000 SF.
• Project Lucy (Financial Services Company) is in the market for 200,000 SF along the North Central Expressway. Dallas is 1 of 3 cities being considered for this requirement which is expected to grow to 430,000 SF.
• XO Communications, represented by Steve Thelen with Jones Lang LaSalle, has narrowed its 150,000 SF search to 2 buildings in Richardson. |
• Pegasus, a travel tech company represented by Gianni LaBarrba with Cresa Partners, is in the market for 100,000 SF of office space in Far North Dallas. Pegasus, currently located in Campbell Center, might consolidate all offices and relocate to either Dallas or Phoenix.
• Oracle, represented by Terry Quinn with Cresa Partners, is in the market for 80,000 SF of office space in Las Colinas.
• Regions Bank, represented by Jerry Cobb with CBRE, is in the market for 70,000 SF in Uptown.
• EquiFax, represented by Lee Wagner with Grubb & Ellis, is in the market for 40,000 SF in Far North Dallas. The call center is currently down to 3 buildings.
• NBC Universal, a consolidation represented by Matt Heidelbaugh with Cushman & Wakefield, is in the market for 35,000 SF of office space in the North Central Expressway submarket or in the Dallas CBD.
• Westwood Financial, represented by Paul Whitman with Jones Lang LaSalle, is in the market for 25,000 SF of office space.
• Wyndham Jade, a represented by Alan Wood and Stephen Holley with Jones Lang LaSalle, is in the market for 25,000 SF of office space along the LBJ Freeway between Central Expressway and the Tollway.
• KVT/CBS, represented by Paul Whitman with Jones Lang LaSalle, is in the market for 15,000 SF of office space in the North Central Expressway submarket.
Investment Activity
• Addison-based Silver Tree Partners recently purchased Heritage Square at the Galleria in Far North Dallas. The two-building, 360,000 SF office complex was previously owned by Carlyle Group, a Washington, D.C.-based investment fund. Silver Tree retained CAPSTAR for leasing and management.
• TriGate Capital bought 2350 Lakeside Boulevard in Richardson after it was foreclosed upon by Wachovia Bank. Reports suggest the 8-story building was sold for $45.00/SF, which is much less than the $27.75 million that was loaned by Wachovia in 2007. Texas Capital Bank leases 40% of this Richardson office building.
• Tektronix Communications, a communication software engineering company, recently purchased Wilcox Center | 190 in Plano for $46.00/SF. This 3-story, 185,000 SF office building will be the new Tektronix headquarters housing around 475 employees. |
