Thursday, July 21, 2005

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Class A Office Space Race Triggers 75,540-SF Shuffle

DALLAS (GlobeSt.com)-Seven tenants have triggered a 75,540-sf space shuffle in the Quadrangle in Uptown and Galleria Crossing in North Dallas with most of the class A deals crossing the finish line at the same time. Save for one, all are long-term leases.

The flurry of deals began in the 195,910-sf Quadrangle at 2800-2828 Routh St. and trickled over to 232,000-sf Galleria Crossing at 5429 LBJ Freeway. The gist of the play is an immediate backfill for 22,000 sf on the Quadrangle's second and third floors, vacated by the Lauck Group and its sublease tenant, Meinhart Texas Inc. to make way for hawkeye/FFWD Group, which is moving from 301 N. Market St. to the eight-story Uptown structure. Daniel T. Paterson, executive vice president and principal with Swearingen Realty Group LLC in Dallas, represented hawkeye/FFWD.

Joel Pustmueller, principal with Peloton Real Estate Partners in Dallas, tells GlobeSt.com that FFWD, a top-ranked marketing firm, signed an eight-year lease for a class A office connected by a stairwell and spread out on two floors. The agency is planning a September move-in, he says. The deal became reality when the Lauck Group made plans to downsize, ultimately taking 8,900 sf on the fourth floor where Berger IT practically cut its office in half as part of the shuffle. Lauck signed a three-year lease while Berger simply gave back the space, Pustmueller explains. Lauck moves in this weekend.

Meanwhile, Meinhart is making an early exit from a three-year subleased spot for an 8,815-sf office in Galleria Crossing. The engineering firm worked out a six-year lease for half of the third floor to house its US headquarters, says Lee Wagner, vice president in Dallas for Grubb & Ellis Co. who teamed with Sam Hocker, senior vice president, and Bill Coleman, associate, to find relocation space after Lauck triggered a domino effect with its downsizing. Meinhart also is moving this weekend, Wagner says.

Meinhart looked at 16 options, including staying in Uptown. "They were coming out of a sublease," Wagner says. "The sticker shock in Uptown was not going to work for them." Galleria Crossing's space is on the market at an effective rate of $15 per sf plus electric--a price that also snared an 8,600-sf tenant, MW Logistics LLC.

Galleria Crossing's broker, Art Kline with Thompson Realty Corp. of Richardson says MW Logistics, planning a mid-September occupancy, signed a 72-month lease for the fifth floor. Lawrence Gardner, a Dallas director with Cushman & Wakefield of Texas Inc., represented MW Logistics.

Kline says Galleria Crossing is 40% leased and more leases are close to signing for a building bought on a value-add basis in December 2004 by Thompson in partnership with Goddard Real Estate.

But the Quadrangle was the bigger winner: a 95.4% occupancy, new tenants and all 2005 lease rolls put to bed. Besides the related deals, Pustmueller says J Development Co. just moved into a 3,910-sf, third-floor office for five years and the Chicago-based Mesirow Financial Holdings Inc. will open doors on a 12,000-sf office this month, signing a seven-year lease for its space. To make way for Mesirow, the management office moved from the sixth floor to a second-floor retail spot.

"All these deals just sort of happened at the same time," Pustmueller says. "The asset's in good shape and locked up for awhile." And if his prediction is right, the building, quoted at $23 per sf plus electric, will be filled by year's end.