Thursday, August 18, 2005

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News
Oak Lawn area suits developer
Third project there is set to break ground
Christine Perez
Staff Writer
Andy Carnahan was in his mid-20s when he began developing townhomes in the Oak Lawn area in 1998. Now 32, he has shifted his focus to boutique condominiums -- think "Melrose Place" -- and has grown his business, Foresite Development Ltd., into a $35 million operation.

Carnahan's third condo project, Vallera, a Tuscan villa-style complex on Holland at Oak Lawn Avenue, will break ground in 30 days. Nine of the 27 units, which range in size from 1,300 square feet to more than 1,800 square feet and in price from $199,000 to $355,000, have already been sold.

All are two-bedroom flats, some with an extra study. Standard features include bamboo and hardwood floors, stainless steel appliances, granite countertops and travertine floors.

Construction will wrap up in early September on The Sullivan, a 30-unit development at 4343 Gilbert Ave., where all but five units have been sold. They start at $185,000 and go up to $320,000 and range in size from 1,100 square feet to 1,600 square feet.

First success
Foresite's first condo development was a 19-unit complex called The 19, also on Gilbert Avenue.

"It was a first-generation product, and no one had ever done anything like it in the area," Carnahan said. "Eighty percent of the units were sold at completion of construction, and the others sold within a few months thereafter."

Al Coker with Dallas-based Al Coker & Associates is overseeing sales of Carnahan's projects. He said they're successful because the price point is hitting the market dead-on.

"It's like people are getting a Mercedes 450 SL but only having to pay for a 300," he said. "They're still getting the quality design and the engineering and the location but, because the developments are smaller, construction time is shorter and pricing is better."

Underground parking helps Foresite increase density. It also helps attract single women and other safety-conscious buyers. The fact that each of Carnahan's projects have a different look helps protects investments, Coker said.

"One might be Mediterranean and another might be inspired by Frank Lloyd Wright, so someone can't just walk down the street and find another development just like it," he said.

Fewer building sites
With land near Oak Lawn becoming scarce -- and pricey -- Carnahan is eyeing East Dallas for future developments.

"Oak Lawn is almost built out," he said. "Everything is boxed in by the highways; it has just been a matter of filling in the middle.

"We really like the neighborhood and are going to try to stay as long as we can. They just don't grow 150-year-old trees anymore. But we're also starting to look to the east; it's where everything is going next, geographically."

The challenges of building in Uptown, known for its rigorous approvals process, have helped keep competitors at bay, Carnahan said.

"Many lessons have been learned by new guys coming into Oak Lawn," he said. "Once you learn how to do it, it's a nice barrier to entry. The size of our projects also helps. The big guys don't have any interest in building 30 or 40 units, but it works for me."

cperez@bizjournals.com
DEVELOPER BUYS MCKINNEY AVENUE BLOCK

DALLAS (dallasnews.com) — SNK Realty Group of Phoenix, Ariz., is purchasing a block of McKinney Avenue. The site bounded by McKinney, Routh, State and Fairmount Streets has been owned by the Kasnetz family of Dallas for over 30 years.

According to real estate broker Michael Turner of J. Elmer Turner Realtors, who was an adviser to the Kasnetz family on the sale, SNK Realty is studying plans for hotel, retail and high-rise residential construction for the block. Some of the businesses on the block may be relocated to other commercial buildings the Kasnetz family owns along McKinney Avenue.

Terms of the sale were not disclosed, but area properties have traded for more than $70 per square foot. The purchase is pending but is expected to be completed this week.

Monday, August 08, 2005

Downtown Dallas & Uptown Real Estate News

Negotiations Cross Off Four More Renewals in Fountain Place

DALLAS (GlobeSt.com) - Four more renewals, totaling 21,696 sf, have been erased from the 2005 slate for the leasing team at the 1.2-million-sf Fountain Place. With this year's renewals put to bed, the class A high rise is resting at 94% occupancy.

"In addition to these four, it's really been a good year. We've leased over 51,000 sf so far in renewals and expansions," says Kirby White, leasing director for Fort Worth-based Crescent Real Estate Equities Co., a joint venture owner with the New York City powerhouse, JPMorgan Asset Management. White tells GlobeSt.com that all leases for the 60-story building at 1445 Ross Ave. in the CBD have been carrying five year terms, on average.

The latest flurry delivers two office and two retail leases, with lipstick-type tenant improvement packages like paint and carpeting. The financial firm of Gerald L. Ray & Associates Ltd. re-upped 10,646 sf and Primera Cos. held fast to 3,086 sf in straight-up renewals for their offices. Avanti Restaurant and Gateway Newstands renewed 6,764 sf and 1,200 sf of retail space, respectively. Bruce Hecht with Swearingen Realty in Dallas negotiated on the financial firm's behalf while Jeff Schweitzer with locally based Stream Realty Partners LP handled talks for the real estate firm, Primera.

White says there are three new deals and one expansion under negotiation for Fountain Place.

"We have some good solid prospects that we are actively working," he says, "and hopefully will make in the third quarter." The opening quote for talks is $23.50 per sf to $26.50 per sf although he previously said recent deals have been averaging $25 per sf.

Image inset: Downtown Dallas - Fountain Place; Globest.com

Friday, August 05, 2005

Downtown Dallas & Uptown Real Estate News

Uptown Dallas Real Estate
This fast-changing neighborhood is experiencing a boom in residential high-rises, raising the stakes for luxury living.
(DallasNews.com)

1. W Dallas Victory Hotel & Residences
Where: 2424 N. Houston St.
How big: 70 condos, 250 hotel rooms
How much: $500,000 to $2.5 million
When: Under construction, opening spring 2006

2. South Tower
Where: 2424 N. Houston St.
How big: 15 stories, 83 condos
How much: $375,000 to $1 million plus
When: Under construction, opening spring 2006

3. The House
Where: 2225 N. Houston St.
How big: 26 stories, 150 condos
How much: $375,000 to$2.5 million
When: In design, opening 2008

4. Residences at the Ritz Carlton
Where: McKinney Avenue and Pearl Street
How big: 21 stories, 71 condos, 217 hotel rooms
How much: $650,000 to $6.5 million
When: Under construction, opening summer 2007

5. Azure
Where: McKinnon and Wolf streets
How big: 27 stories, 202 condos
How much: $400,000 to $4 million
When: Under construction, opening spring 2007

6. The Ashton
Where: 2215 Cedar Springs Road
How big: 21 stories, 267 apartments
How much: $1,700 to $11,800 per month
When: Open

7. One Arts Plaza
Where: Flora and Routh streets in the Arts District
How big: 24 stories, 70 condos
How much: $500,000 to $2.5 million
When: Under construction, opening spring 2006

8. Stoneleigh Residences
Where: Maple and Wolf streets
How big: 21 stories, 97 condos
How much: $380,000 to $2.5 million
When: In design, opening spring 2008

9. The Mondrian
Where: 3000 Blackburn St. at McKinney Avenue
How big: 20 stories, 218 apartments
How much: $1,225 to $10,500 per month
When: Open

10. Hotel ZaZa
Where: 2332 Leonard St.
How big: 5 stories, 29 condos
How much: $270,000 to $570,000
When: Open

Image Inset: Uptown marker; Dallasnews.com

Downtown & Uptown Real Estate News

GlobeSt.com EXCLUSIVE: SoCo Developer Clears Final Hurdle

DALLAS (GlobeSt.com) - Within a week, the developer of SoCo Urban Loft Condominiums will be sitting at a title company table to begin a whirlwind closing on 70 reservation contracts for a 203-unit project--a feat made possible by a financing restructuring that replaced a rental-required HUD mortgage with a conventional conversion package for $18.45 million.

"All the restrictions and impediments are going away," says Stephen Kanoff, executive vice president for Dallas-based Westmount Realty Capital LLC. The SoCo Urban Lofts at 1122 Jackson St. got its seed money from a HUD first-lien mortgage and city-backed second-lien package earmarked to provide rental units in the downtown. He says it was always "hoped" that the converted warehouse could be transitioned into "for sale" units, but it's taken eight years for the condo market to mature and mortgage restrictions to burn off.

Kanoff tells GlobeSt.com that the HUD loan's lockout period ended late last year as did a five-year hold for federal historic tax credits. The next hurdle was to find a lender willing to back a Downtown Dallas project, he says. James Richards with Live Oak Capital Ltd. in Houston arranged condo financing with a floating interest rate that required 30% presales through Capital Source Inc. in Chevy Chase, MD. Six months ago, the rental name--Santa Fe Pacific Terminal Lofts--was dropped and replaced with SoCo to reflect the identity change and reference the south of Commerce Street location.

"With the new mortgage closed that will allow the actual closings to begin," Kanoff says. He says all net gain initially will go to the lender and the city until the break-even point is reached.

"After the first 70, the mortgage gets paid down dramatically," he says. "There a good margin between the total debt and total sellout."

Kanoff says reservations were getting signed at 10 per month, but picked up in recent months to 15. If the momentum holds, he predicts the adaptive reuse project can easily be sold out by late 2006. Units range from 831 sf to 1,400 sf; prices go from $150,000 to $300,000 plus. The 12-story converted warehouse, positioned within two blocks of the first in-town grocery, has Italian-style kitchens in a true loft design and amenities like a rooftop pool and yoga studio.
Kanoff says he and partner Cliff Booth are eyeing their in-town stock for other likely conversion candidates with downtown and Uptown condos in such high demand. "We're in the early planning stages on another project," he admits, careful not to pinpoint any one building at this stage of the game.

Image inset: 1122 Jackson St.

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Excess office space? No prob. This is Dallas
With interest rates low, developers build now and worry later

DALLAS (DallasNews.com) - About a quarter of North Texas' office space is sitting empty. Yet Dallas-Fort Worth ranks third in the country in office construction.

If you think that sounds wonky, you haven't been around here long.

Dallas developers are like car dealers – "We're stacking 'em deep and selling 'em cheap!"
Well, maybe not cheap.

But it looks like there will be plenty of new buildings to choose from.
At midyear, 2.8 million square feet of office space was under construction in the D-FW area.

A year ago, less than 250,000 square feet was going up.

Nationwide, Dallas-Fort Worth ranks behind only New York and Washington, D.C., in office building, according to statistics from McGraw Hill Construction Information Group.
Much of what's being built here is earmarked for big companies such as Citigroup Inc. and 7-Eleven Inc.

But in almost every case, those firms are leaving older buildings behind that must be refilled.
That may not be easy.

Still, don't look for a downturn in office building starts. With interest rates low, developers are likely to build today and worry tomorrow about filling the space.

That's the Dallas way.

Shiels apartments?

CWS Apartment Homes LLC, an Austin builder and investor that's already a player in Uptown, is negotiating to buy the Mary Shiels Hospital complex at Howell Street and Lemmon Avenue just west of North Central Expressway.

The developer would put a residential complex on the property.

Oak Lawn redo

The city of Dallas is considering selling a three-quarter-acre tract next to the site of the old Woodlawn Hospital in Oak Lawn.

If it decides to sell, the city's site and the historic hospital land would be combined to create an 8.25-acre redevelopment site at Maple and Oak Lawn avenues.

CB Richard Ellis has been hired by Dallas County Hospital District to advise on the sale of the Wood-lawn property.

"To date, we've heard from about 65 different people" who are interested in the property, said CB Richard Ellis' Jay Lorch.

Addison center sold

The Retail Connection has bought a shopping center in Addison from an affiliate of Dunhill Partners.

The Quorum Plaza II is on the southeast corner of Belt Line Road and Quorum Drive west of the Dallas North Tollway.

It's 90 percent leased and will be remodeled by the new owners.

The Retail Connection bought the shopping center in a partnership with Granite Properties.

T-Mobile near deal

Sometimes having a new, empty office building is the best way to land a deal.

That's certainly worked in Frisco, where developers have lured employers with affordable office space and city economic incentives.

Real estate brokers say another such transaction is in the works. T-Mobile is looking at Duke Realty's building under construction at Warren Parkway and the Dallas North Tollway.

Brokers say the pending lease – being negotiated by Staubach Co. – is for T-Mobile to occupy most of the three-story building with offices and a call center.

Pulte saves home

Pulte Homes builds almost 40,000 houses a year. So why is the big Michigan-based builder worrying about a 100-year-old home in Frisco?

The two-story, 3,000-square-foot, Prairie-style house was in the way of Pulte's new Del Webb Frisco Lakes residential development on the east shore of Lewisville Lake.

The nationwide builder donated the house to the Frisco Historical Association, which moved it to the city's Heritage Village to restore it.

Built in 1905 by Alfred Fletcher, the house was originally part of a 300-acre farm.
E-mail stevebrown@dallasnews.com

Thursday, August 04, 2005

Downtown & Uptown Real Estate News

Uptown center's lot sold
Quadrangle parking area destined to be apartments or condos

DALLAS (DallasNews.com) - A parking lot at the Quadrangle in Uptown is set to become apartments or condominiums.
Fairfield Residential, one of the companies building housing in the Victory project, has bought 2.5 acres of the Quadrangle complex.

Fairfield Residential bought the property at Vine and Howell streets from Champion Partners. The Dallas developer and investor has owned the Quadrangle since 2003. Terms were not disclosed.
With its location just a block off McKinney Avenue, the Quadrangle property is a likely candidate for mid-rise or high-rise apartments or condos.


"We are planning to do a residential development there," said Fairfield Residential's Barry Howard. "Right now, we are working to decide what is most appropriate for the neighborhood.

"We would not break ground before 2006," he said.

The developer will replace all of the parking now on the open lot.
Champion Partners founder Jeff Swope declined to discuss the sale but said his firm remains committed to the Quadrangle retail and office complex.

"We've put several million dollars into it, and we are continuing to try and improve the tenant base," he said.

Built in the 1960s, the Quadrangle was Dallas' first urban retail complex. It was redeveloped in 1986 with an office high-rise and remodeled retail buildings. That redevelopment also included a plan to turn the parking lot into a residential building.

Fairfield Residential is one of Uptown's busiest builders. The company built the 232-unit Bryson at City Place apartments near Lemmon and McKinney avenues.

At the Victory project just north of downtown, it's building the Terrace, a seven-story condominium building, and the 125-unit Vista apartments.

In the Addison Circle community on the Dallas North Tollway, Fairfield has gotten preliminary approval from Addison to build a seven-story, 140-condo building.

E-mail stevebrown@dallasnews.com
Image inset: BETSY BOCK/Staff Artist

Downtown & Uptown Real Estate News

Going up: Dallas developing the luxe life

DALLAS (Dallasnews.com) - It all starts with views. The downtown skyline, with its neon halos and pinstripes, and to the west the Trinity River, not much to look at now but if the lakes and Calatrava bridges get built, another Central Park. To the east is Turtle Creek, our little river walk, and beyond that Oak Lawn, settled yet trendy. A corner unit buys you two views, a penthouse the panorama. Then come the amenities. Doorman, concierge, valet and fitness center are all part of the package. But there's more: balcony fireplace, wine cooler, built-in espresso machine, European appliances that look like furniture, slate floors, flamed granite countertops.

Need somebody to walk your dog or water your plants? No problem. Bed turned down and a chocolate on your pillow? Can be arranged.

Welcome to the strutting, glittering world of Dallas luxury high-rise living, where people who have everything they need are free to focus on everything they want, where the distinction between needs and wants barely exists.

For the past 50 years, high-rise living in Dallas has generally meant a row of discreet towers along Turtle Creek, set off by fountains and manicured gardens and filled with empty nesters from the suburbs and old-money couples from the Park Cities. Many residences were essentially vertical versions of the houses the owners left behind, right down to the furniture and even the number of rooms.

No more. The old demographics and many of the old assumptions are dead. A dozen high-rise apartment and condo buildings are open or under construction in Uptown, the bubble of new wealth just north of downtown, with another dozen or so in the pipeline. That's more than 1,300 units, which are being snapped up by doctors and stockbrokers in their 20s and early 30s, young marrieds, gay couples, itinerant CEOs in need of a pied-à-terre and retirees who've had it with mowers and mulch. Some are their only homes, others are weekend pads or part of a boxed set of residences spread across several continents.

"It all turns on lifestyle rather than traditional real estate," says Marty Collins, president of Gatehouse Capital, co-developer of the W Dallas. "It's not so much about location. It's not priced by the pound. People are buying brands that express themselves, and there are a lot of them out there who want to get their tortilla soup at 3 a.m. and are willing to pay for it."

Financial means

The main constant is money, lots of it, together with a lofty sense of entitlement. Luxury high-rise condos start around $500 a square foot – extravagant by Dallas standards but only a quarter or third of those in New York and San Francisco – with some penthouses going for $7 million or more. Rents range from $1,225 to $11,800 per month – on a par with Manhattan. The corner store is Stanley Korshak, the neighborhood restaurants Nobu and Dragonfly. Even the toy cars on the leasing center models are Porsches and Lamborghinis.

Sharon Quist, a Dallas real estate broker in her mid-50s, has opted for the traditional elegance of the Residences at Ritz Carlton, with their crown moldings and rich mahogany paneling.
"It's got a prestigious name, and Dallas people are always impressed by prestige," she explains. "If the world collapsed tomorrow I know I could still get my money out."

Michael Rimlawi, a 34-year-old back surgeon, is less interested in prestige than buzz, so he's selling his downtown condo for a one-bedroom pad at the W Dallas, where he'll be surrounded by fashionable restaurants and clubs wrapped in metal and glass and super-sized electronic jewelry.


"I work hard, and when I'm not working, I want to have fun," Dr. Rimlawi says. "It will be a weekend place in the middle of the scene. And if I get bored with it in a few years, I can always sell it."

Amenities are luring Dan Levine, 48, an investment counselor, to Azure, the hip baby boomer alternative to the aggressively urban W and the sedate Ritz.

Push-button palace

"Press a button and your drapes disappear," he says, "Press another button and your car is waiting for you at the front door. I can sit on my balcony with two fireplaces and look out at the skyline and all the other projects."

It is tempting to dismiss the luxury high-rise boom as just another fad of the overprivileged, an architectural version of the Hummer craze, except that it is happening all over the country and for reasons other than irrational exuberance.

Interest rates have been historically low for five years, making even pricey condos seem like solid investments. And among skittish investors, real estate has resurfaced as an attractive alternative to the volatile stock market.


"If you've been burned in the market two or three times in the last decade," says Dallas financial consultant Mike Puls, "seen all your gains disappear in a few months, then you start looking for other places to put your money."

In part, the luxury high-rise boom reveals the astonishing amount of disposable income in America now, the result of a generation of tax cutting and stock market advances. Not only is there a widening gap between rich and poor, but between rich and super-rich. Several recent economic studies have shown that the top 0.1 percent of wage earners account for nearly 8 percent of the nation's income. And some of that bounty is going into ever-more-opulent accommodations.

Back to the city

At another level, this trend represents the gradual rediscovery of the American city, not everywhere or powerfully enough to reverse six decades of suburban flight, but sufficient to entice members of the potent investor class to take another look. Downtown housing is surging in Boston, Chicago, Los Angeles and many other cities, and many of the buyers who are snapping up condos in Dallas are emigrating from these places. Eighty percent of the residents at the Mondrian, an apartment building, are from outside Texas. At the Azure and the Ritz Carlton, the figure is 20 percent to 25 percent.

"The people who are moving into Azure are very sophisticated about urban living," says its developer, Gabriel Barbier-Mueller. "They've looked at high-rise condos in Chicago and Vancouver. They've researched the architects. They're willing to pay the price, but they also know what they're buying."

Pros and cons

Mr. Puls likewise sees many pluses in the Uptown boom, along with some big risks.
"Dallas is still at the bottom of the curve, and buying at the bottom is an intriguing proposition for investors. But you could also be buying a ticket on the Titanic. Things always change. Interest rates could spike, consumer confidence could tank, there could be another terrorist attack. Then all bets are off."

Among the possible Titanics is Las Vegas, a delirious speculator's market with some 80 condo towers in the works, where owners can make a quick $200,000 just by flipping their pads. For people who sometimes drop that much at the tables over a weekend, buying a condo is just another big bet instead of an investment in a community.

Dallas is not that kind of place. Speculators are here, developers agree, but not the way they are in Vegas, Miami or Honolulu.

"Things will change here, but not in that way," insists Mr. Collins. "For people who've been going to New York and L.A., those 'A' customers, it's a large, branded, off-the-grid venue. For folks from Arkansas and Louisiana, it's a new local destination."

But a destination is not the same thing as a neighborhood. On this score, Uptown still has a ways to go. It is crisscrossed with broad, high-speed roads that are a boon at rush hour and a nightmare at other times. It has limited services (gas stations, dry cleaners, grocery stores) and almost no parks or green space. Sidewalks seem more like novelties than basic infrastructure.

Although all the new projects are promoting the "walking life," anyone who might want to stroll from the Azure to the Arts District or from the W to the McKinney Avenue Contemporary should bring along an organ donor card. These public amenities distinguish neighborhoods from mere developments; without them, the result is a cluster of vertical gated communities.
So Uptown is still something of a frontier boomtown, a settlement more than a neighborhood, promising but immature – a virtual place for the really, really privileged.

E-mail ddillon@dallasnews.com

Image inset:
DANNY GAWLOWSKI/DMN Images of luxury and relaxation encircle the construction site of the W Dallas Victory Hotel and Residences.

Downtown & Uptown Real Estate News


In Dallas, more people are moving on Uptown
Luxury high-rises have become a status symbol

DALLAS (Dallasnews.com) - As a sportscaster for CBS and the USA Network, Bill Macatee spends a lot of time in big cities. He's an urban guy who loves the buzz. So when he came to town in May for the Byron Nelson golf tournament, he stopped by the marketing center for Azure, which opens next year. Within 20 minutes he had put down a deposit on a two-bedroom.

Luxury, convenience and cachet are the mantra of Uptown high-rise living, where prices start around $500,000 and soar well into seven figures. Mr. Macatee already owns houses in California and Utah, but jumped at the chance to "have something in Dallas," where he got his start at WFAA-TV (Channel 8) in the early 1980s.

A surprising number of Dallasites are doing the same thing. After decades of discreet upward mobility, Uptown has exploded with more than a dozen luxury high-rise projects, ranging from the unapologetically modern W and Azure to the sedate Residences at the Ritz Carlton and the edgy, freeway-hugging Mondrian.
"Frankly, I was surprised to find something that sophisticated here," Mr. Macatee says. "The city seems to be growing up."

Image inset: Courtesy; A private swimming pool with wall fountains and a lounge/wading area is a selling point of The Azure.

Tuesday, August 02, 2005

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Monuments to Dallas' boom times are becoming condos

DALLAS (HoustonChronicle.com) - The condo and apartment conversion craze has hit a wall here — a sleek corporate wall of smoked glass and cheap steel girding.

It was bound to happen. Across the country, buildings with character — old garment factories, warehouses, Art Deco skyscrapers and Beaux-Arts firehouses — are being revived as condominiums and loft apartments as cities try to draw residents back to their core. But with that historic stock depleting, developers are now turning to uglier candidates for condo makeovers: moribund office towers.

They are installing new windows, limestone facades, balconies and contemporary ornament, and in some cases stripping the buildings to curtain walls and I-beams to do it.

"You've got to take off some of the old ugly facades and let there be glass and light," said Laura Miller, the mayor of Dallas. "If you take the skin off and restore it, it's beautiful."

The glass-and-steel monoliths sprang up in droves from 1950 to 1980, when cities like Dallas experienced explosive and unchecked commercial development. In the 1950s, Dallas added 7.2 million square feet of office space, second only to New York City, according to an article in May 1960 in the Dallas Morning News.

But as the buildings aged and jobs fled Dallas during the dot-com recession, many of those buildings emptied, giving Dallas the highest office vacancy rate in the country. From 2000 to 2005, amid a glut of office space, office rents declined by 22 percent, according to Reis, a real estate research company.

Although the city's numbers have improved over the last year, 26.5 percent of its office space is still vacant. Downtown alone, 9 million square feet of office space sits vacant, according to the brokerage firm Cushman & Wakefield.

In other cities, the choice to tear down or redevelop a dilapidated old building can instantly ignite an emotional battle, pitching preservationists and historians against developers. Less so in cities like Dallas, said Art Lomenick, managing director for the Trammel Crow Co., a Dallas real estate brokerage firm.

"It's not that old of a city," Lomenick said. "You've got buildings that are functionally obsolete now that were built in the '50s and '60s. They're not architecturally significant. They're terrible."

Razing or refacing often boils down to a cost-benefit analysis, said Joseph Sapp, a San Diego developer who plans to reface three downtown Dallas office buildings and convert them to apartments.

If the building's footprint is not too big (sprawling office floors beget cavelike apartments) and its bones are solid, it is often cheaper and faster to reface than rebuild.

In Dallas, some of the before-and-after building renderings are as striking as photos in a weight-loss brochure.

At 1217 Main Street, British developers have sketched out plans to morph a dark and vacant five-story office into an Edenic mix of offices, stores and restaurants, where waterfalls flow down a crystal-clear facade and a giant red awning sweeps up to a roof garden planted with palms. New stone and metal panels would complete the picture.

The building known as 1200 Main St. is a classic black-and-brown office box being transformed into condos costing $120,000 to $600,000.

The developers will carve balconies into the building, giving it notches and texture, but they said it would cost too much to replace the building's exterior. "This building has been here since 1972," said Audra Hall, the senior sales manager for the project, as she walked through the renovated apartments. "It is what it is."

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Dallas Office Market
Readies for Job Growth

DALLAS (RealEstateJournal.com) - While many companies in the Dallas-Fort Worth area are hiring again and the area's business-friendly environment and low cost of living continue to draw companies and new residents, the region's office market remains the worst in the country and it isn't clear that will change any time soon.

The office sector's first-quarter vacancy rate, which fell slightly from last year, was still the highest of the 54 metropolitan areas surveyed by Property & Portfolio Research Inc. Office rents are expected to fall again this year, according to the Boston real-estate research company.

The fortunes of the increasingly diversified city -- hit hard by the tech bust and job losses in the telecommunications corridor north of Dallas -- appear to be improving thanks in part to a cost of living that is 2% below the national average. Job growth for the 12 months ending in March rose 1.8%, edging the national rate of 1.7%, according to consulting company Economy.com.

Among the companies moving to the area is engineering company Fluor Corp., which is relocating its corporate headquarters to Dallas from Southern California. Fluor expects to complete construction of its building in the suburb of Irving by April 2006; it plans to employ 200 people at the site.

The good news about job growth could be offset by slew of construction that will put 2.7 million square feet of office space in place this year and next with more down the road, PPR says. "We have a tendency in this market to start overbuilding before demand catches up with supply," says Daryl Mullin, senior director at Cushman & Wakefield of Texas Inc. in Dallas.

Houston-based Hines and Ross Perot Jr.'s Hillwood real-estate company plan One Victory Park, an 18-story building with approximately 350,000 square feet of office space, for the Uptown neighborhood of Dallas.

Developers counter that healthy job growth and the booming oil industry will boost demand for high-end offices in the city and suburbs. They point out that some parts of the area are doing much better than others. The vacancy rate in downtown Forth Worth is 9.4%, while in the Denton-Lewisville area to the north, the rate is 38.4%.

The Dallas central business district's vacancy rate stood at 28.3%, but that hasn't stopped two major office projects. Two Texas developers, Hines and Ross Perot Jr.'s Hillwood real-estate company, are teaming up to build One Victory Park, an 18-story building in the Victory District. The first of a two-phase, 800,000-square-foot project would be located in a 75-acre mixed-use area being developed by Hillwood near both the downtown central business district and Uptown. Already home to the $420 million American Airlines Center sports and entertainment complex, the district is slated to contain as many as 4,000 residential units and a W Hotel, a Starwood Hotels & Resorts Worldwide Inc. brand.

Further along in the development process is the $100 million One Arts Plaza, a 24-story tower, which broke ground Monday in the downtown Dallas arts district. It is to contain 425,000 square feet of office space and will house the new headquarters of 7-Eleven Inc. The complex will include luxury condos, restaurants and galleries and would be downtown Dallas's first new office building in about 18 years.

Lucy Billingsley, a partner in the Billingsley Co. which is developing One Arts Plaza, said all of the construction will revitalize downtown and boost demand rather than create a glut of space. "If there were only one developer and one office building that's interesting but it's not as significant as having multiple opportunities, multiple office buildings," she said.

Email your comments to rjeditor@dowjones.com.

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Texas: Dallas Office Market Worst in U.S.?

DALLAS (Realtor.org) -- The Dallas-Fort Worth area's office property market continues to rank as the worst in the nation, according to a survey of 54 major U.S. metro areas by Property & Portfolio Research.

The market posted the highest first-quarter office vacancy rate, which is expected to lead to further drops in office rents. Among the companies taking advantage of these low rents is Fluor Corp., which recently announced plans to relocate its corporate headquarters from Southern California to the Dallas suburb of Irving. Completion of its building is slated for next April.

Area job growth, however, could be offset by a host of new construction that will add 2.7 million square feet of offices over the next two years.

"We have a tendency in this market to start overbuilding before demand catches up with supply," says Daryl Mullin, senior director of Cushman & Wakefield of Texas Inc.

Nevertheless, Dallas' central business district recorded a 28.3-percent vacancy rate and will soon welcome two new major office projects: the 18-story One Victory Park and the $100 million One Arts Plaza.

Source: Wall Street Journal (07/27/05); Sadovi, Maura Webber