Why Downtown Dallas is Sexy Again
The Dallas urban core posted the second-highest direct net absorption in 2014, which tells a story of a region poised for further growth. Downtown tower deals are bringing in new ownership; and Downtown is seeing its first office tower construction since 2007. That’s why we’re excited to bring you Bisnow’s Evolution of Downtown Dallas event on March 31 at the Hyatt Regency Dallas starting at 7:30am.
2014 saw 1.5M SF of renewals and expansions in the urban core, which means in addition to attracting new jobs, the area is also seeing tenant retention, says Downtown Dallas Inc. president and CEO John Crawford (far right with Oncor’s Jim Greer, City of Dallas’ A.C. Gonzales, Matthews Southwest’s Jack Matthews—at the presentation of DDI’s Chairman’s Award–and Grant Thornton’s Randy Robason). John says there’s also a new area of growth: the startup sector. The entrepreneurs aren’t afraid of taking chances and they’re experimenting with common use spaces, for one, he says. It's worth noting, too, that 60k to 70k SF of Downtown office space was absorbed by co-working space, he tells us.
A catalyst for growth is the redevelopment of the Trinity River, which will connect more neighborhoods to Downtown, adding upon what’s already been started in Oak Cliff and West Dallas, John tells us. The Corps of Engineers should have a status update in the next three months about what’s next in the Trinity River development efforts. The lifting of the Wright Amendment has seen Love Field upgrades and improvements as well as many additional flights added. John tells us it is a gateway to Downtown and should contribute to more corporate relocations because executives can now fly in and out of Love Field with a new ease.
By 2017, Dallas’ urban core should have more than 50,000 residents. That’s a critical mass needed to draw big retailers, which Big D is already beginning to see. Some retailers have some things on the drawing board from larger and diversified retailers to the smaller ones, he says. “They’re calling us now,” he tells us. “Our competition is not among North Texas cities; it’s in Atlanta, Chicago and Denver.” Across the Metroplex, there’s a rush of activity with something to fit every company’s needs. DDI’s two goals are to create that critical mass Downtown and to give people a reason to be there. “We don’t want to be a drive-through city; we want to be a destination,” John says.
Another office tower is going on the market: the 74% occupied 1.2M SF Class-A Plaza of the Americas at the corner of Pearl and San Jacinto streets. M-M Properties and Invesco Real Estate have tapped CBRE’s John Alvarado, Russell Ingrum, Gary Carr, Bernard Branca, Eric Mackey, Jared Chua and Robert Hill to rep the owners of the asset, which includes two 25-story office towers connected by a 13-story atrium, two levels of retail, and a 12-story parking garage. John tells us the appetite for quality urban investments is growing daily. “Having another trophy tower on the market will draw more attention to the Downtown market, bring more investment dollars and ultimately positively impact the sale of Plaza of the Americas,” John tells us. M-M Properties has enhanced the rent roll as well as updated the project since its acquisition a few years ago.
Hall Financial Group is gearing up to open the first new construction Downtown since the Billingsley Co opened One Arts Plaza in 2007, says Hall director of leasing Kim Butler. Kim says the 500k SF first phase of KPMG Plaza at Hall Arts (at 2323 Ross Ave) will open in the Q2 and is already 72% pre-leased to KPMG, Jackson Walker, Hall Financial Group, UMB Bank and Spencer Stuart, among others.
It’s been exciting to give tenant rep brokers hard hat tours, Kim tells us. It’s been a long time since the tenured brokers have been on a hard hat tour Downtown and being the first out of the ground locally during this cycle has been a differentiator. For some of the more junior brokers and even those with mid-level experience, this is their first hard hat tour in the CBD, Kim says. The opening of Hall Arts should be a positive for One Arts Plaza and its restaurants by bringing some critical mass to the district with even more office users there during the day and into the evening, meaning more customers for all the restaurants, Kim says. She's excited about one restaurant in particular; Stephan Pyles (a lifelong friend of building developer Craig Hall—Stephan even catered his wedding) is moving his flagship restaurant from its current Ross Avenue location to Hall Arts facing Flora. There’s room for one other destination restaurant next door.
The building’s seven levels of underground parking were built in the 1980s for two monster-sized towers that never materialized, Kim tells us. Now, they will serve KPMG Plaza at Hall Arts and provide an even better parking ratio than Uptown or any other Class-A office environment, she says. The timing was right to come out of the ground as many companies in the areas are looking to rebrand to assist in the recruiting and retention of their workforce. Now, more so than ever before, their office space is viewed as a tool in helping them secure the best and brightest workers; tenants are coming out of older buildings and able to take less and better space for the same number of people, Kim says. Today’s momentum is unlike any she’s seen before in the CBD through her 30-plus-year tenure of working the submarket. “Dallas is growing up as a city,” Kim says. Please join us for Bisnow’s Evolution of Downtown Dallas event on March 31 at the Hyatt Regency Dallas starting at 7:30am. (Sign up here.)