Saturday, August 23, 2008
Downtown Dallas Lures Firms with Transit, Residences, Vibrancy
During the first half of 2008, downtown Dallas had more office leasing than all of the suburban areas combined.
The jump in net office leasing - almost 400,000 square feet so far – represents quite a turnaround for a market that for years suffered losses of business to the suburbs.
But after billions of dollars in private- and public-sector investment, central business district proponents are ready to proclaim that downtown Dallas has turned the corner.
"I can't remember a time since the early 1980s that we had a bigger year for downtown Dallas," said John Crawford, president and chief executive of DowntownDallas, the central business district economic development organization. "And back then, it was purely a commercial district – very one-dimensional.
"Today, we have new commercial, residential, retail, entertainment and big cultural components."
Indeed, it is that diversity that is driving downtown's renewal.
From loft apartments on Main Street to the new opera hall in the Arts District, the center city is enjoying the biggest boom in two decades.
At the same time, a renewed interest in urbanism and greater emphasis on public transit are feeding into the downtown area's resurgence.
"Downtown is the one part of town everyone can get to on public transit," said Jon Altschuler, Stream Realty Partners president and partner. "It's amazing to look at the momentum that's being created downtown and the relocations."
During the last year, relocating companies have added almost 6,000 workers downtown and gobbled up more than 1 million square feet of empty office space.
The recent downtown moves include two of the largest companies ever to move to the Dallas area – AT&T's 700-employee corporate headquarters, moving from San Antonio, and last year's move by Comerica from Detroit with more than 200 workers.
Along with those moves from outside the area, local firms have recently transferred offices from the suburbs to Dallas' city center. Among them: Tenet Healthcare, 7-Eleven, American International Group and TM Advertising.
"There is definitely a pendulum swing here," said Phil Puckett, the CB Richard Ellis executive vice president who represented Tenet in its search for office space.
Downtown's position as the hub of regional rail traffic is in big part driving the prosperity, Mr. Puckett said.
"Never before have we had gasoline prices so high, and that's having a big impact," he said. "With the central business district being rich in DART rail and the added line going to D/FW Airport, it is a major decision factor" by companies considering a move.
The growth of downtown's housing market also has been key to bringing corporate residents to the city's core.
"In 1996, we had just 200 people living in one building, the Manor House," Mr. Crawford said.
Since then, developers have boosted the central business district's residential base to more than 3,500 units.
More than 5,000 people now live inside the downtown freeway loop.
The boom in residential building has made it easier to attract workers who want to live nearby.
And more projects are in the works.
JPI, the Irving-based builder that is one of the country's largest apartment developers, is finishing up one project in downtown's West End and has started another in the Arts District.
Together the projects represent more than $80 million in investment, said JPI's senior vice president, Brad Taylor.
"We have made a pretty big investment in Dallas and have tried to pick specific neighborhoods that we thought were good long-term investments," Mr. Taylor said. "We are a believer in the urban core and think it's the place to be for the next several years."
Unlike some suburban locations where competing developers can set up shop on almost every corner, the high cost of land downtown and greater project densities reduce the number of projects.
"That means the urban market, we feel, is less likely to get overbuilt," Mr. Taylor said.
Cleveland-based developer Forest City Enterprise is finishing work on the first phase of its Mercantile Place apartment project on Main Street – a redevelopment more than four years in the making.
The landmark Mercantile National Bank tower has been converted into 225 apartments.
The 31-story historic skyscraper is 30 percent leased, according to project manager Jim Truitt.
Mr. Truitt said leasing has gone a little slower than expected.
"Due to the economy, we are still under construction and our amenity space does not open until the fall."
Next door, Forest City is working on a new 150-unit building that will open late this year.
Mr. Truitt is optimistic because of the recent jump in office leasing downtown, "a reversal of a long trend of companies moving to the suburbs."
Hamilton Properties, which is the largest loft apartment developer in Dallas, is pleased with the response to its latest project, the Mosaic building on Bryan Street.
"We're 72 percent leased, and most of our inexpensive units are all taken," said Ted Hamilton.
"We are hitting our projections."
More important, the completion of several loft apartment buildings hasn't cut into occupancy at the older properties, Mr. Hamilton said.
Developer Lucy Billingsley has leased most of the office space in her mixed-use One Arts Plaza building on Flora Street.
"I have about 10,000 square feet of office space available," Ms. Billingsley said. "The rest is gone. The retail is all gone."
Billingsley Co. is ready to start work on a second office, retail and condo building.
"We've got to get a lead tenant and we are ready," she said. "It's so fulfilling to see people living in our project, working there and dining there."