Benefiting greatly from the coastal city exodus, Dallas’ commercial real estate closed 2021 on a high note. The city’s diverse economy and highly-skilled workforce attracted many tech and finance companies, which in turn fueled strong demand for industrial space.
These were the biggest stories in Dallas in 2021:
Major developments kick off
The Metroplex saw several massive projects begin construction or progress into new phases. After a global search, Dallas-based Texas Instruments selected the North Texas town of Sherman for a 300-millimeter semiconductor wafer fabrication facility. The company plans to invest up to $30 billion in the development of the 4.7 million-square-foot project, which will be constructed in four phases.
At the end of September, KDC announced plans to develop three additional office buildings totaling 1.4 million square feet at CityLine, the 204-acre transit-oriented, mixed-use development in Richardson.
HALL Group began construction on the next phase of HALL Park in Frisco. Over the next two decades, the company plans to invest $7 billion into a mixed-use development of roughly 9.5 million square feet of office, hotel, residential, retail and green space.
Crescent Real Estate broke ground on Museum Place, a $250 million mixed-use development in Fort Worth. Located within the city’s Cultural District, it will feature a 168,000-square-foot Class A office component, a 200-key boutique hotel and 170 luxury apartments.
A partnership between Hines, Mitsui Fudosan America and McNair Interests started construction of a roughly 3.4-acre mixed-use development in Dallas. Maple Terrace will feature 157,000 square feet of office space, up to 12,000 square feet of street-facing restaurant space and a 22-story residential tower.
A resilient office market
While the office sector has been one of the hardest hit sectors by the pandemic, the corporate migration to the Metroplex was strong enough for investors to maintain confidence in the market. According to CommercialEdge data, some 1.6 million square feet across 14 properties traded in September alone, with transaction volume year-to-date amounting to an estimated $2 billion.
Among the biggest sales in the past 12 months was the recent sale of The Terraces in Dallas at $773 per square foot. City Office REIT spent $133.5 million for the 12-story building. At the end of August, Westdale Real Estate Investment and Management sold 10000 NCX, a Class A office tower in Dallas. The 300,000-square-foot building underwent its most recent comprehensive renovation in 2012.
The growing presence of tech and finance companies was a big factor in the metro’s office development pipeline. The Dallas-Fort Worth area had some 5.4 million square feet of office space under construction as of September, according to CommercialEdge data.
Recently, Granite Properties broke ground on Granite Park Six, a 19-story, 420,000-square-foot Class AA office building in Granite Park, a 90-acre mixed-use development in Plano. In mid-August, Blue Star Land and Lincoln Property Co. prepared to begin construction on the 313,000-square-foot Phase IV of The Star in Frisco.
New leases and relocations
The prevalence of remote work over the past year and delayed return-to-office plans have made many companies rethink their office footprints. However, few have decided to abandon having a physical space in an office building altogether. According to September CommercialEdge data, Dallas-Fort Worth’s vacancy rate dropped to 18.2 percent, a 70-basis-point progress month-over-month and year-over-year.
Among the biggest leases signed in 2021, one of the largest involved JPMorgan Chase parting from its namesake skyscraper. The banking giant signed a nearly 132,000-square-foot lease at 1900 N. Akard St. with Hunt Realty Investments.
Worldwide Express relocated its Dallas headquarters from One Victory Park to another Dallas office development, the newly completed, 214,936-square-foot The Stack Deep Ellum. In mid-May, Incora opened its new global headquarters at 2601 Meacham Blvd.
Industrial demand intensifies
The industrial sector has thrived since the onset of the pandemic, as the growing popularity of e-commerce has fueled demand for space. Even though the industry has faced several issues as of late, from severe supply-chain bottlenecks to skyrocketing construction costs, demand for industrial real estate has only grown, CommercialEdge data shows.
The Metroplex had the largest share of industrial development underway nationwide as of the end of August, with 34.1 million square feet under construction. This construction activity has attracted newcomers to the industry like Velocis, which kicked off its entry into the industrial sector with the purchase of two developments in the Dallas area. The company plans to develop 850,000 square feet of Class A industrial space.