If you've lived in Dallas for a couple of decades, you'll remember the nightmare that was North Central Expressway before it was reconstructed and widened in 1999 for about $600M. Now the lower Central submarket has strong leasing activity and rents beyond anything Avison Young principal Chuck Sellers ever predicted.
Office rents and occupancy rates in the submarket have seen cyclical growth, largely due to situational factors. Occupancy dipped when reconstruction started in the '90s and again when LBJ Expressway began construction in 2002.
But as Uptown and Preston Center run out of capacity and bargain rents, tenants migrate east towards Central, Chuck tells us.
In the last cycle, dozens of buildings from Downtown to I-635 changed hands, getting capital upgrades and lots of tenant amenities with each new owner. A strong amenity base is important more now than ever, Chuck says, and rental rates increased according to upgrades. As long as strong, well-capped ownership sticks around, buildings will be well maintained and tenants will take notice.
That's driven major rent growth—Chuck has been repping office landlords in the area for about 30 years and he says he never would have thought we'd see rents where they are today.
Chuck's crystal ball can't predict when leasing velocity will slow, but he says tenants are running out of options if they're looking for value. He predicts Park Central is the next market where rents will spike.
Hear more predictions from Chuck and other Central Expressway experts at our North Central Expressway Development Forum event on Nov. 30. Get tickets here.
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