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."