Wednesday, September 17, 2008
Southwest Financial Hub Stays on Solid Ground
After years of being marketed as the financial center of the Southwest, the lifeblood of the 1.1-million-sf Crescent is pumping strong despite the turmoil on Wall Street and its reverberations around the world. The landmark office trophy holds regional offices or valued divisions for nearly all players of the capital markets' debacle.
"The name on the door might be in trouble, but that doesn't mean the unit inside is. Will there be some consolidations? Very possibly," Michael Lewis, managing director for Crescent Real Estate Equities LP, says about the powerhouse tenant mix at 100, 200 and 300 Crescent Court in Uptown. "The units here are still maintaining a good vibrant presence."
The trophy asset's tenant roster includes Merrill Lynch & Co. Inc., Lehman Brothers Holdings Inc., Goldman Sachs Group Inc., Bear Stearns Cos. and naturally its owner, Morgan Stanley Real Estate Funds. Bank of America's stake in the Crescent is a retail location.
To put the roster into perspective, New York Gov. David Paterson, in tossing a lifesaver, to American International Group, pointed out two days ago Goldman Sachs and Morgan Stanley were the only two left standing out of Wall Street's top five independent investment banks. In Dallas, AIG leases 175,000 sf in the Plaza of the Americas at 600 N. Pearl St. in the CBD and the Centre at 4100 Alpha Rd. in North Dallas.
The Crescent today is 99% leased, of which roughly 70% of the tenants are financial institutions, hedge funds and high net-worth investors, Lewis tells GlobeSt.com. Of the reeling Wall Street names, Lehman occupies the most space--15,000 sf. None of the financial giants' leases are set to expire in the near term, but the complex will be getting a 50,000-sf vacancy at year's end when Rosewood Property Co. moves to its new Uptown building at 2101 Cedar Springs Rd. Rosewood had a larger block, but one-third of its total already has been re-leased.
Lewis says Rosewood's space plays out as more of an opportunity than a loss. "We still have people trying to get in who can't," he says. The Crescent's quoted rate hovers $40 per sf.
Just like Lewis sees promise in the upcoming vacancy, he says Crescent's financial tenants also are seizing opportunities to court their neighbors' seasoned talent. He cited a Bear Stearns team that moved to a competitor's camp without any down time and without leaving the building. "They just changed floors and offices," he says. In addition, he says there's been "very little talk" about sublease space or give-backs by the tenants in place.
Lewis believes the Dallas/Fort Worth economy, and Texas in general, is hardy enough that troubled financial institutions most likely won't cut local teams free. "They're the units that are producing and anybody would love to have the producers in the Dallas buildings," he says. "This is Dallas, TX and we are doing well."
Lewis admits there is concern in the ranks, but most tenants have said they are keeping eyes peeled for opportunities that might arise from the debacle. "Some people's failures create other people's opportunities. The good news is we're in Dallas and Texas," he says. "Are we affected? Yes. But not to the massive extent that other parts of the country are. We're concerned about the economy, but we're still conducting business and making money."