The popularity of trophy offices in Dallas’ suburbs is buoying the market against the economic uncertainty that’s gripped commercial real estate.
The North Texas office market hit the year’s halfway point with a positive net absorption, according to a second quarter market report from JLL. Absorption was highest this quarter in suburbs along U.S. 75 North, like Plano and McKinney, as well as Las Colinas.
Trophy assets are raking in more than $100 per square foot gross, the report said.
The success of new office space with high-end amenities belies the struggle to make older office buildings relevant, as the flight-to-quality trend bifurcates the market. Vacancy is stuck at 27.7 percent, the report said, and that high rate is attributable to the region’s office properties built in the ’80s and ’90s.
Meanwhile, all eyes are on Y’all Street.
23Springs, the office building that will be the new home of Deloitte, was delivered this year, clearing out a large chunk of the pipeline.
Built-to-suit offices for financial giants still make up most of the pipeline. Specifically, buildings for Wells Fargo and Goldman Sachs account for 60 percent of the 2.6 million-square-foot construction pipeline. Of that number, 89.2 percent is pre-leased.
Dallas-based developer KDC is working on a new home for Wells Fargo in Las Colinas, a Metroplex suburb about 14 miles northwest of Dallas. The two-tower, 850,000-square-foot campus is expected to cost $455 million. CoStar called it the state’s largest office project underway. It’s supposed to be delivered this year.
Hunt Realty, also based in Dallas, is developing Goldman Sachs’ Dallas campus as part of its North End development in Uptown and Victory Park. The 800,000-square-foot building is projected to be completed in 2028. The estimated cost is $500 million. In addition to Goldman’s office, North End will include three other buildings on 11 acres.
Read more
Office leasing perks up everywhere but downtown
Suburban lease-up gives office market a pulse
What’s going on with major Uptown office landlord Harwood?
