| TEXAS SNAPSHOT, AUGUST 2006
Dallas Office Market
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John Shaunfield,
Mohr Partners
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Office development is currently taking place in the northern suburbs (Plano and Frisco) as well as the uptown area just north of downtown, according to John Shaunfield Jr., managing director of Mohr Partners in Addison, Texas. “One such project is Granite Properties’ Granite Park Three in Plano,” he says. “This is a 369,313-square-foot, 14-story building that is estimated to be completed this month. This building will help by providing large contiguous blocks of space (50,000 rentable square feet and larger). There are very few options like this along the Dallas North Tollway, and, as the organic growth trend continues, this will be critical for larger users of space.”
There are several reasons that the majority of office development is occurring in this area. “Growth in Dallas has always traditionally been to the north, so it is natural from a historical perspective,” Shaunfield says. “Also, the area has not had the negative effects of the recently completed High 5 construction, which left large blocks of vacancy along the northern portions of Central Expressway and the LBJ Corridor. This area has also done well because it largely consists of newer buildings that are more efficient, provide better parking and are more suitable functionally and aesthetically. All these items help to keep the occupancy levels higher, keeping supply limited and helping justify new development.”
There are many tenants absorbing space across a wide variety of industries in the Dallas office market. For example, Countrywide Mortgage recently closed a lease for 150,000 square feet at Lakeside Center in Richardson.
The quoted prices for Class A spaces range greatly by submarket, according to Shaunfield. “In Downtown Dallas, they may be in the $18 to $19 range and higher, but along the tollway we are seeing prices in the $20 to $24.50 range,” he says.
Vacancy rates also vary by submarket. For Class A space, in general, they are between 10 percent to 20 percent. “There has been a flight to quality as the market begins to recover,” Shaunfield says.
In the near future, Richardson is the submarket to watch. “The Richardson submarket has been very active since the first of the year,” Shaunfield says. “With Countrywide Mortgage’s lease and currently seven to eight tenants looking for 25,000 to 100,000 square feet in the marketplace, I would not be too surprised to see new development discussed for this area in the near future.”
As things continue to improve in Dallas’ office sector, activity is showing no signs of a slowdown. “Leasing agents and tenant representation brokers are busier than they have been in years,” Shaunfield says. “The momentum in the economy is definitely driving things.”
— John Shaunfield Jr. is managing director of Mohr Partners in Addison, Texas.
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