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Market News and Trends
A report from the employment research firm Challenger, Gray & Christmas shows the Texas unemployment rate 2 percentage points below the national average at a rate of 7.5%. John Challenger said this makes Texas the kind of area Americans are looking to relocate to due to its strong energy sector and low unemployment.
In a National Federation of Independent Business survey of small businesses, only 7% added to their workforces in the 2nd quarter 2009, while 24% cut jobs nationally.
One upbeat note can be taken from the economic downturn, at least according to one expert. "One positive byproduct of the credit crunch was that financing for new office buildings dried up over a year ago, so the new supply pipeline was shut off in Texas before the economy turned south," said Mark Dotzour, chief economist at the Real Estate Center of Texas at A&M University.
According to many local tenant brokers, small to mid-sized tenants are asking specifically to see sublease space regardless of term left. The opportunity to potentially upgrade in a better building and have the flexibility of a shorter term, in addition to achieving a discounted rental rate is enticing to many. According to CoStar, there was approximately 2.4 million SF of sublease space available at the end of the 2nd quarter in Dallas, which is a relatively small number compared to 2003 which had 4.2 million SF of sublease space available.
Spanish banking giant BBVACompass has won the bidding for the assets of Guaranty Bank, the troubled Texas lender that was facing federal control. Guaranty is based in Austin, but many top executives office in Dallas. Guaranty has approximately 150,000 SF in Guaranty Bank Tower in Preston Center. The potential impact on the Preston Center submarket remains to be seen. Lincoln Property is completing a $2 million dollar lobby renovation at the building.
Sales of commercial real estate properties are down 80 percent in North Texas compared to last year, according to LoopNet. The price per square foot of office properties has dipped an average of 34%.
Leases
• Med Assets, represented by CB Richard Ellis, signed a 148-month new lease at 5556 Tennyson in Far North Dallas. The terms of the 100,528 SF lease were $15.00 NNN with $18.00/SF in TI and 6 months free rent. |
• Health Management Systems, represented by Transwestern, signed a 76-month, 59,426 SF renewal and a 120-month, 24,323 SF expansion at Corporate Point in Las Colinas. The tenant will pay $16.85 +E effective on the renewal and $15.30 +E effective on the expansion. Tenant will receive $30.00/SF in TI with 6 months free rent on the expansion space only.
• Headington Oil Company, represented by Grubb & Ellis, signed a 23,000 SF new lease at the Tower at Cityplace in the North Central Expressway submarket. Headington Oil signed a 10-year lease and will occupy most of the 28th floor. The Tower at Cityplace just completed a $7 million renovation which included a new health club and spa addition. The tenant also needed the building's access to the DART rail.
• Hitachi, represented by Cresa, signed a new 65-month lease at 2280 Campbell Creek in Far North Dallas for $10.52 +E. The 15,621 SF new deal received $13.00/SF in TI and 5 months free rent.
• Digestive Health signed a 12,140 SF, 90-month lease at 7610 Stemmons. The tenant will pay $10.80 F/S effective, receive $12.00/SF in TI and 18 months free rent.
• Matse & Associates, represented by Stream Realty, signed a 10,817 SF renewal at 14850 Quorum in Far North Dallas. The tenant will pay $13.92 +E on the 41-month lease with no TI and 3 months free rent.
• Republic Property Group, represented by CB Richard Ellis, signed a 9,964 SF renewal at One Lincoln Park in the North Central Expressway submarket. The 108-month deal was $27.00 +E effective with $9.43/SF in TI and no free rent.
• Randstad, represented by Colliers, signed a 6,123 SF new lease at Tollway Plaza I in Far North Dallas. Economics for the 69-month deal were $22.35 +E effective with $8.50/SF in TI and 9 months free rent.
• Engle Martin signed a 5,217 SF renewal/expansion at Dominion Plaza in Far North Dallas. Economics for the 60-month lease were $20.50 +E effective with $2.75/SF in TI and no free rent.
• Sincrest, Inc, represented by Grubb & Ellis, signed a new lease for 4,561 SF of office space at One Allen Center in Far North Dallas. Economics for the 88-month lease were $23.00 +E with $32.00/SF in TI and 4 months free rent.
• Encana signed a 4,500 SF expansion at Stanford Corporate Center in Far North Dallas. Rumored economics for the 36-month lease were $25.00 +E effective with $3.00/SF in TI and no free rent.
• Advantage Sales & Marketing, represented by CB Richard Ellis, signed a 4,351 SF new lease at Parkway Tower in Las Colinas. The effective rental rate for the 66-month lease was $15.50 +E with $16.50/SF in TI and 6 months free rent. |
• Grisham & Johnson, represented by Transwestern, signed a 2,889 SF lease at Northpark Central in the North Central Expressway submarket. The effective rental rate for the 66-month lease was $19.32 +E with $27.00/SF in TI and 6 months free rent.
Deals in Play
• Jordan Buis and Warren Willey with CB Richard Ellis are in the market with an Undisclosed Company for 100,000 SF of office space in Far North Dallas. The prospect has a 3rd quarter 2010 timing with a 5/1000 parking requirement.
• Mary Stoner with Colliers is in the market with an Undisclosed Medical Company for 85,000 SF of office space in Lewisville or Coppell. The prospect has a 6/1000 parking requirement.
• Project Coyote (Bank Tec), represented by Cushman & Wakefield, is in the market for 75,000 SF of office space in Las Colinas. They are currently in 100,000 SF with an industrial requirement coming online soon.
• Oracle, represented by Terry Quinn with Cresa, is in the market for 70,000 SF of office space in Las Colinas.
• NY Life, represented by Matt Heidelbaugh with Cushman & Wakefield, is in the market for a 65,000 SF office requirement in Uptown. Timing on the consolidation is 2nd quarter 2010.
• Qwest, represented by Calvin Hull with Jones Lang LaSalle, is in the market for a 60,000 SF requirement along the Dallas North Tollway.
• CNET (Homeland Protection), represented by Cresa Partners, is in the market for 50,000 SF of office space in Dallas.
• Nationstar Mortgage, represented by Cresa Partners, is in the market for 50,000 SF of office space in Las Colinas. The prospect has an immediate need for 25,000 SF.
• Retalix, represented by Chris Schupp with Jones Lang LaSalle, is active in Dallas for 50,000 SF of office space. The prespect is currently located at Legacy Place off the Tollway in Far North Dallas.
• Lifecare, represented by Art Green with Cresa Partners, is in the market for 40,000 SF of office space.
• NICE Systems, represented by Roseanne Myers with Colliers, is active in Las Colinas for 40,000 SF of office space. The prospect is currently located in the North Central Expressway submarket.
Investment Activity
• Westmount Realty Capital sold 6.9 acres near the northeast corner of Forest Lane and the North Central Expressway to Forest Park Realty Partners III. Economics of the deal were not disclosed but estimated at $35.00/SF for the land. Westmount still has 7.5 acres of land available on an adjacent tract. |
