Dallas' Historic West End Is Ready To Compete On Price And Its Coolness Factor
If buildings could talk, the historic brick-and-timber buildings in Dallas' West End Historic District would have much to say.
In the 20th century, the West End's brick-adorned real estate served as a backdrop to the famed Bonnie and Clyde saga and the assassination of President John F. Kennedy.
The neighborhood's low-rise buildings and cobblestoned streets spent the latter part of the last century offering Downtown Dallas a healthy mix of pedestrian-friendly retail and dining options until the West End faded in the 2000s.
The time for the West End's renaissance has arrived, and a thoughtful mix of high-quality office product interspersed with unique restaurants and stores is driving a renewed vibrance in the area.
"In the last three years, there has been more money spent in the West End than in the last 30 years combined," Crescent Real Estate Managing Director of Asset Management John Zogg said.
The revitalization of Downtown will be discussed at Bisnow's Future of Downtown Dallas event Feb. 20.
With cash from institutional investors and developers like Granite Properties, Crescent Real Estate, Spear Street Capital and Wildcat Management flowing through the West End these past five years, the area is rising to rival Uptown Dallas in its design aesthetics but at a much more appealing price point for tenants.
The average office rent hovers at $25.10 per SF across the 25 properties, roughly 2M SF, in the West End area, compared to average rents of $40 per SF and higher in Uptown Dallas, according to CoStar data.
Investors in the West End have kept these rents low by refurbishing the area's older assets, while maintaining strict construction price controls and rental projections to ensure the community stayed competitive when renovated historic products rolled back onto the market.
Here is just a brief list of the historic office renovations transforming the West End.
The Landmark Center On Lamar Street
Several years ago, Spear Street Capital predicted the West End renaissance, prompting the firm to acquire the 134K SF Landmark Center on North Lamar Street.
The company pumped cash into the building to create modern office space, and the historic asset is now 70% occupied, Spear Street Capital's Nicholas Marine told Bisnow.
And with Spear Street seeing increased interest in ready-made corporate destinations, the company recently built out speculative office space on the building's ground floor.
"The idea is we've seen a lot of tenants in the market who are looking for space, but they don't want to spend too much time building it out," Marine said. "They just want it now, and they want it ready to go, and we see a lot of opportunity to capitalize on that."
The West End is adjacent to Downtown Dallas' Central Business District and across the highway from Uptown, and has a major DART Rail station. This location and its set of amenities meet what corporate users are searching for in Uptown Dallas, but at a reduced price, he said.
Office rents in the West End come with discounts as steep as 50% compared to similar products in Uptown, Marine added. This dynamic alone makes the West End stand out as Uptown prices drive former corporate clients to cheaper alternatives near Downtown Dallas.
But Marine said the main point of differentiation between the West End and other Dallas submarkets is the amount of money investors have spent to preserve the historic bones of the revamped office buildings.
When walking around the West End, pedestrians are surrounded by buildings that are at least 100 years old and a community interlaced with historic red-brick streets.
"You really get the sense of wow ... when I go outside I feel like I am walking into a bit of Dallas history," Marine said. "I don't think people want to go in and create the next Uptown. People want to keep it this cool, funky, interesting and high-quality area."
Factory Six03 And The Luminary
For decades, the now revamped Factory Six03 building served as the iconic West End Marketplace. It sat empty for a decade until Granite Properties acquired the asset and transformed it into a high-quality office building.
With tenants like Common Desk, C1 Innovation Lab by Blue Cross and Blue Shield of Texas and Sam's Club Innovation Center, the 215K SF building is now 50% leased and has another large deal Granite hopes to announce soon, Granite Properties Senior Managing Director Will Hendrickson said.
"When we did our renovation for Factory Six03, our thought process was we are going to deliver a completely modernized space, and we recognized we would need to be at a discount to new construction rents in Uptown," Hendrickson said.
Even with prices on these higher-quality West End assets coming in $10 to $15 cheaper than comparable products in Uptown Dallas, Factory Six03 and nearby The Luminary building by Crescent Real Estate still have average rents around $41.37 per SF, somewhat on par with Uptown/Turtle Creek prices, CoStar Director of Market Analytics Paul Hendershot said. Similarly high-quality assets are going for $50 to $60 per SF in Uptown, which means overall the West End maintains a price-point advantage, he said.
The Luminary is a seven-story historic redevelopment project brought to the office market by Crescent Real Estate and Long Wharf Capital.
"The great thing about the West End is it currently has all of the ingredients for corporations to recruit and retain employees in a great place," Crescent's Zogg said. "You see millions and millions of dollars going into the district."
Many of those millions were injected into The Luminary, where for only 30K to 40K SF of office space, a tenant can have one of the best Downtown signage locations in all of Dallas, Zogg said.
The Luminary, which is now the tallest building in the West End, launched with the purchase of the old Corgan architectural firm building. The site is now designated as "a creative space designed for creatives" in the heart of the West End.
The Historic Purse Building
The Purse Building sits just blocks from where Kennedy was assassinated in 1963. Being 114 years old definitely has its advantages, with the building becoming one of a few in Downtown Dallas listed on the National Register of Historic Places.
After Wildcat Management pumped roughly $15M into the building's redevelopment, CEO Tanya Ragan expects to bring the retail-office asset to market within the next 18 to 24 months.
Even in the midst of its reconstruction, Ragan is already getting bites from prospective tenants, with interest coming from both potential office tenants for floors two through six and prospective retail tenants for the ground floor, she said.
Ragan, who is in the process of finding a leasing partner, anticipates 20K to 40K SF will go to a single user, with any such anchor tenant receiving office signage on one of Dallas' busiest thoroughfares running through the West End.
For Ragan, this historic building offers future tenants rents that are virtually incomprehensible anywhere else.
"When we initially bought the building and we started evaluating, rents over here were $12 to $15, and maybe they included electric," Ragan said. "But they certainly weren't triple net."
"I don't think people realize what a good buy the West End is," she added. "Sometimes when I tell people where we are at today, their mouth drops, they cannot believe what rent is still going for here. If you look at space in the West End, average rents are somewhere around $18 to $24 [per SF] and that includes triple net."
Ragan and her team gutted the building down to its original hardwood floors and brick walls, giving potential end users the option of creating a funky urban vibe that uses the historic footprint of the original building as its design template.