Monday, April 14, 2014

Downtown Dallas scorecard: 6 skyscrapers sold, more deals in works

Kye R. Lee/Staff Photographer
Downtown Dallas property values are more than $1 billion higher than in 2004, according to appraisal district data.
Six and counting — that’s how many landmark downtown Dallas office towers have changed hands in the last couple of years.
It’s the biggest transfer of ownership of Dallas’ skyline since the late 1980s.
Like the ’80s sell-off, most of the skyscrapers changing hands downtown these days are being peddled as problem properties.
The buyers are investors hoping to cash in on downtown’s comeback.
The property value numbers for downtown show the strength of the rebound.
During the last decade, real estate appraisal values in Dallas’ central business district have grown by about 30 percent, even in the face of the worst recession in generations.
Total property values downtown are now more than $1 billion higher than in 2004, according to data from the Dallas County Central Appraisal District.
Last week’s sale of the 32-story One Main Place tower to a New Orleans buyer is the latest in a string of central business district office purchases.
More downtown deals are in the works.
Investors who are buying the properties plan to refurbish and fill up the buildings with new business tenants.
They are already seeing success.
Cousins Properties, which bought the 33-story 2100 Ross tower out of foreclosure in 2012, has increased occupancy in the high-rise to more than 80 percent.
New owners of the Thanksgiving Tower on Elm Street and buyers of the KPMG Centre on Harwood have landed major new tenants to fill empty office space, too.
Of course, downtown Dallas still has a long way to go to be on par with other big U.S. cities.
It’s one of the four major U.S. markets with more than 20 percent vacancy in its office skyline, according to a new report by commercial real estate firm JLL.
Looking at downtown’s landmark skyscrapers, mostly built in the 1980s, the average occupancy is now about 71 percent, according to the JLL report.
Occupancy rates range from almost 85 percent in the Chase Tower on Ross Avenue to as low as about 56 percent in Thanksgiving Tower.
Overall downtown office vacancy is just under 25 percent. That’s high by U.S. standards but a big improvement from 10 years ago, when almost 35 percent of downtown’s office building space was sitting empty.
JLL’s analysts conclude that “significant activity has shifted back to the core.”
“There is a surge in demand for the best-in-class, urban office buildings,” said JLL managing director Evan Stone in the report.
“This is taking place in Uptown and Preston Center, but also spilling over to the Dallas central business district as investors see the opportunity to capitalize upon the strong demand and quickly dropping supply in select locations.”