Dallas Construction Moves Forward Despite High Vacancies

By Georgiana Mihaila, Associate Editor

The Dallas commercial property market seems to be taking a turn as eager developers continue to unveil designs for new office towers. This might come as a surprise, given the existing vacancy rate of nearly 29 percent in downtown Dallas. But developers are seeking this window of opportunity due to pent-up demand that is anticipated to lead to more leasing later this year, according to Grubb & Ellis Co. reports.

Downtown tenants will be facing the decision of either remaining in their existing space—mainly large office buildings that were mostly built in the 1980s—or relocating to one of the new planned buildings in the downtown Arts District or the nearby Uptown area.

One of the new Uptown projects to be developed is Spyglass Equities Co.’s Hardwood Court, a 100,000-square foot-building that will be located at Cedar Springs Road and Hardwood Street. The office space and three additional levels of parking are to be built on top of the existing three-story parking garage owned by the developer. The smaller size of Hardwood Court is seen as an advantage, meeting the developer’s goal of attracting mid-sized businesses that are looking for a prime Uptown location.

The challenging task of finding an anchor tenant falls on the shoulders of Altschuler & Co., the real estate advisory firm hired by Spyglass, while Dallas architect Good Fulton & Farrell designed the office development. The design itself represented a challenge, as the proposed development intends to hide the existing parking garage within the new exterior. Spyglass estimates that it would take no longer than 14 months to see the project through.

Another major project in the works is Lucy Billingsley’s Two Arts Plaza, a new office tower that will be part of a mixed-use development. Billingsley, daughter of famous developer Trammell Crow, successfully developed the very first office tower in the Arts District, One Arts Plaza, within the past four years.

In an attempt to replicate this success, Billingsley is planning Two Arts Plaza, a large development set on the 10-acre campus, with funding coming from the sale of the first building, which was listed sale earlier this year. With easy access to highways and just blocks away from both Uptown and Downtown Dallas, the 22-story Two Arts Plaza will be a mixed-use high-rise, consisting of parking, office and residential space, with a nice view of the Downtown skyline and excellent amenities. The technological infrastructure will ensure exceptional connectivity and performance for VoIP, Wi-Fi and other emerging technologies, while the building and mechanical systems design will meet all the requirements for LEED Commercial Interiors certification.

Many Dallas real estate observers are still skeptical when it comes to whether new office buildings are the best idea, taking into account the currently high vacancy rate, and it remains to be seen if there are enough professional services firms in the market that would actually benefit from relocating to more modern spaces.