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Everything Old Is New Again As DFW Office Inventory Tightens, Spurring Redevelopment Activity

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Demand for top-quality office space fueled a slew of costly building renovations in Downtown Dallas over the course of the past decade, a new report from CoStar says. 

Everything Old Is New Again As DFW Office Inventory Tightens, Spurring Redevelopment Activity
Fountain Place in Downtown Dallas

In the past nine years, 432 DFW buildings with a total of 40.2M SF of space underwent renovations, with the majority of the activity — approximately 9.4M SF, or 28% of the dated inventory — occurring in Downtown Dallas. 

"As the arms race for increased amenities and the flight to quality continues to escalate in Dallas-Fort Worth, creative owners and developers are reimagining once-forgotten and obsolete office spaces," CoStar Group Director of Market Analytics Paul Hendershot said in his latest research note. 

About 35% of the current DFW office stock was built in the 1980s, CoStar says. Office renovation activity hit a peak in 2015 when 5.2M SF was renovated throughout the year, Hendershot wrote. But as more office tenants demand high-quality spaces in today's landlocked environment, refurbishment activity is expected to continue to climb. 

Downtown Dallas office projects serve as a bellwether for the type of solutions architects and owners are using on their older inventory.

Hendershot points to the 60-story Fountain Place Downtown, built in 1986, as one example of a massive building overhaul. He notes Goddard Investments spent $70M redeveloping the property after buying it in 2014. Before it was finalized, the group added a 10-story parking garage and retail space, updated the lobby and restored the center's outside fountains. 

Cityplace Tower, a 42-story, Class-A office tower in Dallas.
Cityplace Tower, a 42-story, Class-A office tower in Dallas.

The Trammell Crow Center also received a facelift with JP Morgan Asset Management finalizing a $135M renovation on the Downtown skyscraper, complete with a parking garage and retail amenities. 

The redo paid off with ORIX USA signing a deal this year to lease 100K SF inside the renovated building. Common Desk also set up shop inside Trammell Crow Center, placing a 51K SF coworking facility on the premises, Hendershot said.

The 42-floor CityPlace Tower — owned by Highland Capital Management affiliate NexPoint Advisors — is the latest Downtown building to get a creative facelift. 

The building's owner announced plans to move an InterContinental Hotels & Resorts-branded hotel into the office tower's ground floors, anchoring it as a luxury amenity.