Published: 28 September 2014 09:31 PM
Updated: 29 September 2014 11:14 AM
Downtown Dallas has seen a big jump in office leasing this year.
And a new report by commercial real estate firm JLL says that the central business district leads the area in net office occupancy gains.
Expanding and relocating tenants leased about 558,000 square feet of office space downtown through the third quarter of 2014, according to preliminary data from JLL.
That’s more than five times the total downtown net leasing in all of 2013 and the highest office space absorption number downtown in years.
Far North Dallas, which includes the busy Dallas North Tollway corridor, was second on JLL’s top office market list, followed by Las Colinas and the North Central Expressway.
So far in 2014, net office leasing in the Dallas area totals 1.75 million square feet, according to JLL.
Overall office vacancies in the Dallas area have dropped to 19.5 percent, the lowest level in more than a decade.
Downtown Dallas’ office market has been boosted this year by major leases by companies including Santander Consumer USA, Active Network and Omnitracs.
Developers and the city of Dallas have spent billions of dollars on upgrades in the downtown area during the last 10 years.
“We have rebuilt the platform to not only attract new tenants to the center city and have been able to keep what we have through a number of major lease renewals,” said John Crawford, CEO of the economic development group Downtown Dallas Inc.
“The statistics very clearly spell out the importance of a downtown business address and that downtown is making significant revitalization progress as the largest commercial office center in North Texas.”
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With a flurry of redevlopment projects underway, the city’s urban core is finally getting its due. More than 5 million square feet in office leases will come up for renewal in downtown buildings during the next four years or so.
BY CHRISTINE PEREZFROM D CEO SEPTEMBER 2014
Huge corporate campuses are being built in the northern suburbs, and Uptown office buildings are securing record-breaking rental rates. But the biggest commercial real estate story in Dallas may be the revitalization of the city’s urban core, where a staggering number of redevelopment projects are setting the stage for a major transformation.
Activity is focused on the city’s center, the area between Pacific Avenue and Main, Commerce, and Elm streets. Sales volume in the core is “off the charts,” says Jon Altschuler, partner at Altschuler and Co. Even more noticeable, he says, are the capital improvements new property owners are making. “When I step out of Thanksgiving Tower and head in either direction, it feels like I should be wearing a hard hat,” he says. “There is so much construction activity. Welding, banging, building—you can tell it’s going to be a different streetscape in 18 months.”
A number of factors are driving interest in the core: a growing downtown residential base, the popularity of new destinations like Klyde Warren Park and the Perot Museum (which are luring people to the city), the proven success of Headington Cos.’ redevelopment of The Joule hotel and its ongoing retail work along Main Street, bargain sales prices for vacant or troubled office buildings, investor eagerness to deploy capital, and the highly sought-after millennial workforce, which prefers an urban live-work-play environment.
Many of the renovation projects would not be happening without city support, says John Crawford, president of Downtown Dallas Inc. “Public-private partnerships have been crucial,” he says. “The city is putting in a lot of money to support the revitalization of downtown—$50 million to 1401 Elm, $44 million into the Statler Hotel project, and $12.5 million for 1600 Pacific. This isn’t chump change. But at the end of the day, it’s going to grow the tax base.”
The timing couldn’t be better for redevelopment in the core, as more than 5 million square feet in office leases will come up for renewal in downtown buildings during the next four years or so. “It’s a perfect storm, with everything falling in this window of time,” says Phil Puckett, executive vice president with CBRE and an expert in the Uptown and downtown Dallas markets. “We’re looking at 800,000 to more than 1 million square feet a year. Normally, you don’t see that kind of hit. The question becomes, will the tenants stay in the core—or move?”
Puckett says the redevelopment activity is “very positive” for downtown Dallas, but two challenges remain: improving the streetscape and adding parking. “Parking is an issue that’s really going to come into play, with the higher-density workplace of the future,” he says.
ROSTER OF MAJOR PROJECTS
To provide a sense of the size and scope of redevelopment activity in the core, here’s a breakdown of significant projects:
1600 Pacific: After languishing for a number of years, the 32-story former LTV Building, which also fronts Elm Street, will soon become a mixed-use complex with 186 residential units and a 171-room Hilton Garden Inn Hotel. Built in 1964, the nearly 500,000-square-foot building was acquired in April by New Orleans-based HRI Properties, which is giving it an $80 million renovation. Residents will have access to the 206 self-park spaces in the building on floors 2 through 4; the hotel will use the 150 valet parking spaces in the building’s basement. Construction is expected to wrap up by the third quarter of 2015.
1700 Pacific: A block away, Olymbec Group of Canada has just acquired the 49-story, 1.3 million-square-foot 1700 Pacific building. Property upgrades reportedly are planned, although specifics were not available by press time.
Alto 211: Built in the late 1950s by Dallas developer Leo Corrigan, this 18-story aquamarine tower at 211 North Ervay is finally getting some love. It has a new owner—Alterra International Holdings—and its first new tenants in nearly 20 years (Tech Wildcatters, Health Wildcatters, and Linking the World). Alterra has made a number of significant upgrades and has even more in the works.
Bank of America Plaza: On the west side of the core, Bank of America Plaza is getting a major overhaul courtesy of its owner, Chicago-based Metropolis Investment Holdings Inc. The 1.8 million-square-foot, 72-story tower (the tallest in Dallas) sits at 901 Main Street. A new exterior lighting system was introduced earlier this year, with more than 2 miles of LED lights installed. At the building’s base, a large outdoor sculpture was removed, making way for a new valet entrance off Main Street. Ongoing work includes an outdoor gateway to Belo Garden and improvements to the lobby, building entrances, and elevator cabs. All told, renovations are expected to cost about $15 million and wrap up by October.
The Olympic: The largest redevelopment underway in the core is the former First National Bank Building at 1401 Elm Street. It’s a joint venture between BDRC and Olympic Property Partners, which acquired the 1.5 million-square-foot property in February. The $170 million conversion will transform the historic 52-story skyscraper into a mixed-use complex that takes up an entire city block, bounded by Elm, Field, Pacific, and Akard streets. When complete, The Olympic will include 500 luxury apartments, 70,000 square feet of retail space, 100,000 square feet of office space, 950 parking spots, a ninth-floor terrace with an infinity pool, and an observation deck on the 50th floor. The owners are targeting a 2016 reopening.
Fountain Place: Just north of the core on Ross Avenue and North Field Street is Fountain Place, one of the most recognizable buildings in Dallas. The 58-story tower, designed by I.M. Pei, was acquired in June by Goddard Investment Group. The new owner is planning to make a number of improvements to Fountain Place, including a new parking garage and upgrades to the lobby, elevators, exterior fountains, and landscaping.
KPMG Centre: Since acquiring this 34-story tower at 717 North Harwood Street in March, World Class Capital Group of Austin has already won two big relocations from California companies: Omnitracs and Active Network LLC. Combined, the deals will bring about 1,450 new jobs to the downtown core. The leases are expected to spark significant renovations to the 844,000-square-foot building, which was built in 1980. KPMG Centre also likely will be getting a new name, as its lead tenant has signed a deal to move to the Arts District when Craig Hall’s new tower opens in early 2015.
Mid Elm Lofts: Last fall, Brytar Cos., in partnership with RREAF Holdings LLC, announced plans to convert three historic properties at 1516, 1514, and 1512 Elm Street into live-work-play loft units. The buildings, which total 55,000 square feet, are all more than 100 years old.
One Dallas Center: Todd Interests and partners have wrapped up work on phase I of their renovation of One Dallas Center at 350 North St. Paul Street, a project that had HKS Inc. joining Greyhound as lead tenants in the building. Now work has begun on phase II, a renovation that will transform floors 15 to 30 of the I.M. Pei-designed tower to 276 luxury apartments and 13,000 square feet of amenity space. The residences are expected to be ready for occupancy this September.
One Main Place: Built in the late 1960s, this 1 million-square-foot fortress got a savior when KFK Group of New Orleans bought the half-empty building this past spring. The 32-story project takes up a full city block, bounded by Main, Field, Elm, and Griffin streets. KFK Group has yet to announce specific plans for its new buy, but brokers speculate that the company will redevelop the top floors into residential or hotel space. One Main Place also includes 65,000 square feet of retail space and a 20,000-square-foot recessed plaza that connects to Dallas’ underground pedestrian tunnel system.
Statler Hilton: Centurion American Development Group purchased this historic property at 1914 Commerce Street in May, after winning $46.5 million in TIF financing from the city of Dallas. Mehrdad Moayedi, Centurion’s president, said plans for the $175 million renovation include apartments, a flagship hotel, restaurants, office space, and a movie theater.
Thanksgiving Tower: This 1.4 million-square-foot, 50-story icon at 1601 Elm Street was acquired last summer by Woods Capital, led by Jonas Woods. In short order, the building won a huge lease from Santander Consumer USA, which now occupies 14 full floors in Thanksgiving Tower. A $100 million renovation is in the works—one that will add 16,000 square feet of ground-floor retail space. Woods selected Gensler and New York architect James Carpenter to oversee the redesign. In an interview with D CEO earlier this year, he said his goal is to have most of the work done this year.
Tower Petroleum, Corrigan Tower: In the summer of 2012, Kirtland Realty Group announced plans to renovate these adjacent buildings at 1907 Elm Street and 1900 Pacific Avenue into residential towers—a $45 million redevelopment project. Now, according to Downtown Dallas Inc., the latest plans call for a hotel use instead. The Art Deco Tower Petroleum was built in the early 1930s. Developer Leo Corrigan acquired the building and added Corrigan Tower in the early 1950s.
Malcolm Shaw, past master of Tannehill Masonic Lodge 52, took a photo of a 1913 Dallas Morning News that was buried in a time capsule that was opened Saturday.
Published: Sunday, March 30, 2014
By: Nanette Light
It took longer than expected to crack.
For several hours Saturday, a group of Freemasons, a centuries-old fraternal order, stood at Main and Pearl streets downtown waiting to uncover an entombed time capsule buried 100 years ago in the cornerstone of an old Masonic lodge.
“We were supposed to have it out by now, but when they laid it, they laid it well,” Bowen Florsheim, treasurer of Tannehill Lodge 52, said in the morning.
By mid-afternoon, the crowd of Masons had dwindled to a lucky three who were present when the time capsule was finally opened.
Among the uncovered items taken inside to a table in the lobby of Jason Babb’s law practice was a button cover, a Masonic lapel pin, a rusty pocket knife, tattered record books — one with worms living between the pages — and at least nine worn-down coins, including one Indian head penny.
Also inside was an Aug. 23, 1913, edition of The Dallas Morning News. It included an article on the building’s construction along Main Street and the Masons’ plans to place a capsule in the cornerstone that day.
“Wow, this is so cool. That’s the building we’re standing in now,” said Scott Hill, worshipful master for Tannehill Lodge 52 as he peered over the yellowed article.
Because the copper capsule was buried at street level, severe water damage was inflicted on many of the items, such as an unreadable copy of the Dallas Times Herald.
And that’s a shame, said Malcolm Shaw, past master for Tannehill Lodge 52.
Stone mason Gilbert Puente and his brothers began the work of opening the cornerstone Friday morning. The stone was to be rededicated in a ceremony Saturday morning, but Puente’s team was still hammering and chiseling away in the afternoon.
Puente credited the team’s difficulty to the use of concrete mortar, rather than a softer material, to hold the cornerstone in place. The workers also were leery of applying too much pressure for fear of cracking the cornerstone.
After the team broke through, Puente removed items one by one from the capsule, which remained trapped in the cornerstone.
“It was so disappointing,” said Puente, shaking his head as he surveyed the mostly destroyed contents. “But my main mission was to preserve the stone.” This was the fifth capsule he’d been involved in recovering, he said.
Tannehill Lodge 52 and Dallas Lodge 760 placed the cornerstone for the building Aug. 23, 1913. The Masons first met in the lodge almost a year later, and it remained Tannehill’s headquarters until July 1919, when it was leased to Western Union.
Ken Good of Good Signature Properties bought the building almost 20 years ago and converted it into an office building.
Last year, Tannehill Lodge sold the Dallas Masonic Temple, the organization’s former meeting space on South Harwood Street. The group currently is leasing the Green Room at the Scottish Rite Temple across the street until they find a new home downtown.
Later this year, Tannehill Lodge plans to place a new capsule in a leather or copper box 4 feet above ground in the cornerstone.
On Saturday, the Masons collected memorabilia in a plastic bag from other members and the public, such as coins, dollar bills, stamps, a history book on Freemasonry in Dallas, photos, a membership directory and business cards.
“We don’t want [future Masons] to lose the treasures we’ve left,” Shaw said. “But I don’t think my business card is going to last 100 years.”
… “On Tuesday I met with CEO Ken Good of Good Signature Management to review his project at the former Mattress Giant location at 14665 Midway Road. Ken and his team have done an amazing job of taking over the 60,000 square feet of space and reusing, rebuilding, restoring and repurposing the space that is now home to 10 new Addison businesses, creating over 200 jobs! While we were sorry to see Mattress Giant merge and subsequently leave us, Ken and his team now have filled all but 1,500 feet of the space with tenants that include high tech, credit card processing, accounting, insurance, architects, advertising and even a film studio run by former Dallas Cowboy Greg Ellis. Like with Bottle Rocket and Credera, these are exactly the kind of businesses we are working hard to attract to Addison. Congratulations Ken on a great job! Welcome to Addison.”
The proposed Pacific Plaza is now a parking lot. Some want parking to be part of its future. Others don’t want to sacrifice a lot of parkland.
In 2004, the city of Dallas put together the Downtown Parks Master Plan. It envisioned a downtown ringed, not just with freeways, but an emerald necklace of green spaces. Three new parks would be shining broaches in the parks masterwork: Belo Garden, Main Street Garden and Pacific Plaza Park.
That vision moved forward with such purpose that, less than 10 years later, the master plan needed updating after the Main Street and Belo parks opened. The update, however, reminded us of the unfulfilled promise that was Pacific Plaza Park.
The land for Pacific Plaza was bought with $2.5 million from a 2006 bond. But the remaining bond money was used up before Pacific Plaza Park could be built. It would have to wait until the next bond election. Or so it seemed.
Now, an opportunity to complete the third jewel in the necklace has materialized thanks to a confluence of events. Last year, developer John Kirtland bought two nearby buildings, the Petroleum Building and Corrigan Tower, with the intention of building condos. He needs 300 parking spaces. The 2004 Master Plan called for Pacific Plaza Park to have 840 parking spaces on three underground levels. Hand, meet glove. Parking could provide all or most of the money needed to finish the park.
Only problem is, underground parking costs about double what above-ground parking costs. But if the parking garage were placed above-ground (with retail shops attached to the parking garage to help subsidize the project), a third of the park could be compromised.
This week, the city’s economic development office brought together a task force of about a dozen downtown stakeholders, architects and planners to try to find a solution: underground parking, above-ground parking or a combination of the two?
The group decided it needed more information. They set up a committee to discuss construction options and another to look at financing. They will meet again in about three weeks for further discussion.
This newspaper has long advocated more green space downtown. As the 2013 Master Plan update pointed out, Dallas trails most comparable cities in downtown park space. It can ill afford to lose an acre of that precious land.
We urge the task force to find a parking solution without diminishing Pacific Plaza’s recreational space, whether it’s by building an underground garage or developing some other out-of-the-box approach, such as placing the park on the roof of the garage. How much fun, for example, would it be to have a staircased park in the middle of Dallas with two or three levels rising up to the top park tier atop a garage?
The key is to treat this as an opportunity, stoke creative solutions without compromising park land, and end up with another iconic green jewel.
Published: 12 December 2013 10:16 PM
Back in the late 1990s when one of Dallas’ biggest oil companies was looking for a new office location, downtown boosters hoped to land it.
Fina’s top officers were big supporters of Dallas civic and cultural organizations. And an office site near the downtown Arts District seemed like a natural choice for the energy firm, which was then near NorthPark Center in North Dallas.
When Fina turned down the generous financial incentives offered by Dallas and decamped to West Plano, Dallas officials were crushed.
Fina was just following a parade of other high-profile Dallas businesses — including Dr Pepper, Frito-Lay and Electronic Data Systems — that were headed to the burbs.
This was before the downtown renaissance began. Big business tenants were eager to head north on the tollway to new digs in Collin County.
Almost 20 years later, the picture looks a lot different. And if Fina were still around to be shopping for new office digs, the oil company would probably be moving to downtown Dallas.
Just this week, one of the country’s largest institutional investors — Invesco Ltd. — announced that it was moving its regional office from Far North Dallas to downtown’s Trammell Crow Center office tower.
Invesco is one of the world’s largest financial and real estate investment companies and has been in the Galleria complex on Noel Road for years.
After shopping all over the region for a new office location, it picked downtown Dallas, even though many of its employees live up north in the suburbs.
About 130 Invesco workers will be moving next year to two floors of the Ross Avenue skyscraper.
“Personally, I can’t wait for the move,” said Invesco managing director Greg Kraus.
The decision, Kraus says, “was easy for us as leaders of the firm, as we believe this is where our peer group is headed.”
“There’s been push-back from those that live way up north, and we are still figuring out parking.”
The journey for Invesco began about two years ago, when the company became the lead investor to buy and remodel downtown’s Plaza of the Americas complex.
Before then, Invesco had been pretty cool on the central business district.
Billions in upgrades
But with the public and private sector spending billions of dollars to upgrade downtown, Invesco decided to team up with developer M-M Properties to spend more than $10 million upgrading the office and retail complex on Pearl Street.
“We saw what was going on in Uptown and the completion of the Arts District,” Kraus said in 2011 when Invesco did the Plaza of the Americas deal.
Now Invesco is upping its ante downtown, bringing its operations to the neighborhood.
Jeff Ellerman, the CBRE Group broker who did the office transaction, said Invesco looked at lots of options, including moving to a new location in the northern suburbs.
“Corporate perceptions have changed about downtown Dallas,” Ellerman said. “These businesses want to be closer to where all the change is now taking place.
“Invesco’s move is great news for downtown.”
During the last five years, most of the major commercial real estate companies have traded offices in the suburbs for locations in the central city.
Regions Bank, HFF LP and Bain & Co. all recently moved from the suburbs to Uptown. Jacobs Engineering and Breitling Oil and Gas Corp. moved downtown.
Ellerman said office skyscrapers near the Arts District and in Uptown are attracting most of the looks from suburban businesses.
Taking a look
But that may change as conditions continue to improve downtown and tenants take a look at other office buildings in the old financial district along Elm, Main and Commerce streets.
Another big office tenant, Santander Consumer USA, is negotiating an office lease in the 50-story Thanksgiving Tower on Elm Street. That could bring as many as 1,000 workers downtown.
“We are all watching to see how far south of Ross Avenue the demand for downtown office space spreads,” Ellerman said.
Follow Steve Brown on Twitter at @SteveBrownDMN.
By STEVE BROWN
Real Estate Editor
Published: 08 November 2013 03:30 PM
Construction will start in two weeks to convert the upper floors of the One Dallas Center tower in downtown Dallas into apartments.
The 276-unit project will occupy the top 16 floors of the office tower at Bryan and St. Paul streets.
Developer Todd Interests and Moriah Real Estate Co. have already converted the lower floors of the 1970s building into new office space for architect HKS and Greyhound Lines.
Now Dallas-based apartment developer StreetLights Residential is joining the mix to create rental residences in the top half of the tower.
“We will have the first units ready in eight months,” developer Shawn Todd said Friday. “The whole theme of this project is like a high-end luxury hotel.”
The ground floor will include a tenant lounge, dining area and professional kitchen. And there’s a swimming pool, deck area and cabanas outside.
On the top floor, developers will build a workout facility and spa.
Rents in the building will start at $1,100 a month, and each unit will average about 840 square feet.
Todd Interests has already completed the public areas on the ground floor of the 30-story high-rise.
“We’ve spent over a half-million dollars on art,” Todd said. “This feels like a private gallery.”
The developers have been working since late last year to remodel the 34-year-old metal and glass tower, which was designed by I.M.Pei & Partners.
Todd Interests acquired the building out of foreclosure in 2011.
The first step of the more than $100 million redo was finished earlier this year when HKS moved in — relocating its headquarters from Uptown.
Now, construction is underway on the apartments, which will have a separate entrance and elevator space from the office portion of the tower.
One Dallas Center is right next door to the site of Dallas’ next planned downtown park at Live Oak and St. Paul. DART’s commuter rail line is on the other side of the building.
“This building offers a sophisticated, contemporary, international feel that doesn’t exist in Dallas today,” Todd said.
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