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Market News and Trends
Landlords are focusing on tenant retention as vacancy rates climb above 20%. Some landlords are reducing rent and granting downsizing as a concession. Asking rates in North Dallas have dropped as much as $2 per SF in recent weeks.
The $4 billion construction project on LBJ Freeway is scheduled to begin in early 2010 and will contain 6 sunken lanes called HOT lanes, "High Occupancy Toll" lanes, that will guarantee at least a 50 mph speed. Tolls in the HOT lanes can reach up to $11 each way depending on the level of traffic. Developers will meet regularly with business owners to ensure that the real estate lining LBJ will experience very little inconvenience caused by the construction.
According to the Texas Workforce Commission, January incurred the highest one month job loss since 1990 (the first year in TWC's database). About 75,800 jobs were lost, increasing the unemployment rate in Texas to 6.4%, a 2% increase since January 2008 but still lower than the National rate of 7.6%. Dallas/Ft Worth only added 2,500 jobs in 2008 instead of the 43,000 predicted while the whole state added 93,700 instead of the 153,600 predicted. Although job growth slowed in Texas, any job growth is a positive considering the US as a whole lost 3 million jobs last year.
According to the US Environmental Protection Agency, the Dallas/Ft Worth metroplex is 5th on the list for the most energy efficient buildings based on the EPA's "Energy Star" designation. Dallas' 126 buildings totalling 32.4 million SF came in 5th behind Los Angeles, San Francisco, Houston and Washington DC.
Texas was ranked as the best state to do business for the 4th year in a row by Chief Executive magazine. The states are ranked by 543 CEOs on natural resources, regulation, tax policies, quality of living, education and infrastructure along with several other categories. Texas ranked number one in the economy and transportation categories as well as scoring high in access to capital and technology and innovation.
There is currently 909,000 SF of sublease space available in Las Colinas. This amount of sublease space represents 60 subleases, 31 (52%) which will expire between now and 2011 and 15 which have been on the market for over 12 months.
Leases
• BDO Siedman signed a 10-year, 47,500 SF lease at Plaza of the Americas in the Dallas CBD. The tenant will pay $19.75 +E and receive $40.00/SF in TI with no free rent. |
• Gromatzky, Dupree & Associates signed a 90-month lease at Victory Plaza West in Uptown for $32.50 +E. The 22,691 SF new deal received $40.00/SF in TI and 7 months free rent. They will move 75 employees into the space in April.
• Zelle Hoffman Voelbel Mason & Gette signed a new lease for 22,678 SF at Bank of America Plaza in the Dallas CBD for 10 years. Economics were $18.72 +E, $46.00/SF in TI and 5 months free rent.
• MHT signed a 12,000 SF, 10-year lease at 2000 McKinney in Uptown. The tenant will pay $35.00 +E and receive $45.00/SF in TI on this new deal. No free rent was given.
• Marquette Financial Services signed a 38-month lease at Premier Place on North Central Expressway for $24.16 +E. The 9,296 SF lease had $5.00/SF in TI and 2 months of free rent.
• Accretive Solutions signed a new 7,400 SF lease at Tollway Plaza I in Far North Dallas. Economics for the 5-year deal were $24.29 +E, $17.00/SF in TI and 3 months free rent.
• Oracle Resources, represented by NAI Robert Lynn, signed a new lease for 3,521 SF at Millennium Tower in Far North Dallas. The 4-year deal was $22.69 +E effective with $6.00/SF in TI and 7 months free rent.
• FutureWei Technologies, a wireless technology company, subleased 20,468 SF from KS Realty Advisors at Plano Corporate Center II in Plano. The 154,689 SF, Class A office building was constructed in May 2001 at 2301 W. Plano Parkway.
• Avnet, Inc, represented by John Aldrich, leased 59,256 SF of office space at 2021 Lakeside in Richardson. Economics for the 5-year lease were $14.25 +E with 5 months of free rent.
• Titan Engineering signed a 10,175 SF lease at Hall Office Park (2801 Network) in Far North Dallas. Rumored economics for the direct 5-year lease were $23.00 +E with $15.00/SF in TI and 4 months free rent.
• Oppenheimer Funds, represented by Cushman & Wakefield, signed a 17,015 SF renewal at Two Galleria in the North Dallas Tollway submarket. The effective rental rate for the 7-year lease was $28.90 +E with $17.00/SF in TI and 4 months free rent.
Deals in Play
• Credit Solutions, represented by Kevin Finch, is in the market for 125,000 SF of office space. They are currently located in the Nortel sublease at 2370 Performance Drive in Richardson.
• Project Newco is in the market for 100,000-150,000 SF and represented by Nathan Lawrence of CB Richard Ellis. The tenant is looking for office space and a medical back office in Lewisville or Las Colinas. |
• Union Standard, a 100,000 SF tenant with a mid-2010 expiration represented by Jones Lang LaSalle, is looking to lease office space in Las Colinas. Union Standard currently occupies 50,000 SF in 122 West John Carpenter Freeway.
• CVS Caremark, represented by Kelly Kackley of Jones Lang LaSalle, is looking for a 65,000 SF call center space for lease in Richardson. The building must be able to support 8/1000 parking.
• EFG Companies, currently located at 122 West John Carpenter and represented by Alan Wood and Jeff Staubach of Jones Lang LaSalle, is in the market for 35,000 SF in Las Colinas.
• Jeff Ellerman with CB Richard Ellis is in the market with Project Hawkeye, seeking 170,000 - 190,000 SF, in Las Colinas or Far North Dallas.
• Arthur J Gallagher, represented by Robert Deptula of Transwestern, is active in Dallas for 40,000 SF of office space. Arthur J Gallagher is likely to renew and expand at their current location in JP Morgan International Plaza III.
• Matt Heidelbaugh with Cushman & Wakefield is representing the Willis Insurance Company for 40,000 SF of office space in Far North Dallas.
• Affirmative Insurance, currently in Carrollton and represented by Cresa Partners, is looking for 50,000 SF of call center space in Far North Dallas.
• Broadlane, currently located in Galleria North Tower II, is in the market for 150,000 SF of office space.
• AVEX, represented by Lincoln Property Company, is in the market for 30,000 SF of office space on the Tollway north of 635.
• Jackson Cooksey is in the market with McCurley Orsinger Nelson & Downing looking for 20,000 SF in Preston Center. The law firm is currently located at 5950 Sherry Lane. Timing is 2nd Quarter 2010.
Investment Activity
• Newkirk Realty Trust, which was acquired by Lexington Realty Trust in 2007, sold its 209,000 SF office building at 1900 L. Don Dodson Drive in Bedford, Texas to State National Insurance Company. The 3-story, Class B office building was constructed in 1983 on 18 acres in Tarrant County. The building had approximately 156,000 SF of space available for lease at $17.50 +E at the time of the sale. As a result of the sale, 30,000 SF will be available after State National moves in.
• Dallas/Ft Worth commercial property sales have dropped by 32% since 2007, according to Roddy Information Service based out of Addison, Texas. In the office category only 138 buildings traded hands in 2008, which is a 34% drop since 2007. Commercial property foreclosures increased by 56% since 2007 (78 buildings in Dallas County and 80 in Tarrant County). |
