Tuesday, June 17, 2008

More offices, residences going up in Uptown

There's no need for road signs to tell visitors they're in Dallas' Uptown district – just look for the construction cranes.

Almost a dozen high rises are going up in the neighborhood just north of downtown. That's a higher concentration of construction than anywhere else in North Texas.

Almost 2 million square feet of office space and more than 1,200 high-rise residential units are being built in the area between Turtle Creek and Woodall Rodgers Freeway.

Despite all the construction activity, tenants have spoken for more than half the space in the five office towers creating Uptown's new skyline.

"When we looked at whether we should go forward with our building, that was a big part of our analysis," said Greg Fuller, chief operating officer of Granite Properties.

Granite is breaking ground on a 361,000-square-foot, 19-story office tower at McKinney Avenue and Akard Street.

It's the only building under way in Uptown that isn't more than half leased. But if recent trends continue, that won't be the case for long.

"Right now, we are the only opportunity for a lead tenant along Woodall Rodgers that wants great signage," Mr. Fuller said. "The other buildings that are under construction already have lease prospects that will take them above 80 percent."

Later this month, the 19-story Rosewood Court office tower opens on Cedar Springs Road and is 70 percent leased. It's the largest office project to open in Uptown in a decade.

Like the rest of the new buildings in the area, office space at Rosewood Court is renting for more than $30 per square foot – more than a third higher than in nearby downtown.

"It's a good time to be an Uptown building owner," said Tim Terrell, executive vice president of Stream Realty Partners, which is leasing Rosewood Court. "Without a doubt, it's the tightest market in the city."

At the end of March, office vacancy in the combined Uptown and Turtle Creek markets was about 9 percent. That compares to about 20 percent areawide, according to statistics from Cushman & Wakefield of Texas Inc.

"There's a lot of momentum in that market," said Mike Wyatt, executive director with Cushman & Wakefield. "Law firms are a big driver of the Uptown market."

In April, downtown law firm Patton Boggs LLP said it would move its offices from the Trammell Crow Center tower on Ross Avenue to the Texas Capital Bank Building, under construction at 2000 McKinney Ave. The new building is 70 percent leased and opens in September.

And Haynes & Boone LLP will move its operations to the One Victory Park office building when it opens later this year at Lamar Street and Victory Avenue.

Real estate brokers say another big tenant, accounting firm Deloitte, is looking at potential locations in Uptown for a major office.

Victory is the odds-on favorite for that deal.

Several weeks ago, Victory developer Ross Perot Jr. said his Hillwood Development Co. is putting "a couple more office buildings on the fast track to keep up with these tenants."

But don't expect a flurry of more tower groundbreakings this year.

With the current credit crunch, developers are having a tough time lining up financing for new projects.

"I couldn't imagine anyone starting an office building unless they had a bird in the hand," Mr. Terrell said.

And a 24 percent drop in condo sales in North Texas through May has put the brakes on more high-rise development.

There are more than 360 luxury condos being built in Uptown towers. More than 200 of the units have yet to sell.

And 900 luxury rental apartments are going up in three more Uptown buildings. The first of these – 1900 McKinney Avenue – opens later this year.

Atlanta developer Wood Partners plans to complete its 22-story Glass House apartment tower early next year near the Crescent.

C. Todd McCulloch, Wood Partners' Dallas development associate, said the number of high-rise rental units being built in Uptown "is still manageable."

"There is definitely a robust market for high-rise rentals right now," he said.

And Uptown developers are hoping demand increases.

"We didn't know that gasoline would be over $4 when we started our building," Mr. McCulloch said. "The energy concerns will continue to drive people back into these close-in employment centers."


Friday, June 13, 2008
By STEVE BROWN / The Dallas Morning News
SOURCE: Dallas Morning News research