Tuesday, September 08, 2015
Office Market Is 'Very Good' in Dallas
DALLAS--DFW added 131,000 people last year, and the area is proving to be an attractive environment for corporate relocations.
In the second RealShare Dallas panel, “Office: The Changing Landscape,” moderator Corbett Nichter, senior vice president, Adolfson & Peterson Construction, led an insightful discussion on the evolution of the sector.
“It’s a very good market,” said Greg Fuller, chief operating officer, Granite Properties. “Everybody wants to compare it to the ‘80s, and if you’re from New York, you’re afraid we’ll repeat that. But the dynamics in play in the '80s are very different than what’s at play today.”
Key submarkets involved in the action include Uptown, Preston Center, Las Colinas, Richardson and Legacy.
As for the upswing in the market, Fletcher Cordell, CCIM, and principal at Transwestern, questioned: “Are we seeing a new baseline?”
It's true: The success and scope of new projects is reaching new heights. Look no further than KDC, who is responsible for many of them in the area. Walt Mountford, executive vice president, said--to laughter in the crowd--“Essentially, we are a custom corporate homebuilder.”
From the Liberty Mutual development to CityLine, the 2.5-million square foot project with State Farm and Raytheon in Richardson, Mountford’s view is decidedly optimistic. State Farm was a previous client, and asked KDC to build them a campus, with a caveat.
“They asked us to integrate in their buildings privatized [entities],” he said of what he called a “place-creation asset.” “That’s why the apartment community is so important, to maintain the restaurant and retail that is already there. They were one of the first folks to see the labor bubble and they wanted to be that employer of choice.”
In additional, the project’s access to light-rail “extends the walkability of CityLine, which is a real attribute,” he added.
One area of concern remains the escalation of construction costs. With a lot of product on the market in a condensed time frame, it is a challenge.
Coming full circle, the conversation routed back to labor.
“On the office side, it’s all about work force,” said King White, CEO of Site Selection Group, one of the only participants, he said, with non-landlord insight. “One dollar in labor cost savings is the equivalent of $10 in rent. It’s not just a real estate cash-flow analysis. When you look at cost benefits, lots of factors come into play. You’ve got to see from the national scene, can DFW continue to the same labor rates? Economic incentives are the icing on the cake. With Gov. Abbott coming on board, things are now more streamlined.”
The outstanding current state of the sector was not to be overstated.
“This is likely to be the most phenomenal market that we’re likely to ever see and we’re not going to screw it up this time,” Mountford said.