CoStar Article Features Younger Partners Research, Leadership
CoStar article by Candace Carlisle
New Office Buildings Delivering Low Vacancy Rates in Dallas-Fort Worth: The Areas With the Lowest Vacancies Also have the Newest Office Options
Developers putting new office buildings on the ground in Dallas-Fort Worth are also helping boost occupancy rates in key neighborhoods as tenants flock to the younger generation properties.
It’s no accident some of North Texas’ submarkets with the lowest vacancy rates, including Far North Dallas, Uptown, Richardson and Las Colinas, have all delivered buildings in this real estate cycle, said Steve Triolet, research director for Dallas-based Younger Partners. “Tenants really prefer new product over old product,” Triolet told Costar News. “If you look at the 1980s vintage of buildings from the heyday of construction in Dallas, most of those skyscrapers are 35 years old and, to stay competitive, they have to renovate.”
Those skyscrapers in downtown Dallas, including Trammell Crow Center, Bank of America Plaza, Fountain Place, Ross Tower and Chase Tower, have all recently undergone or are undergoing massive multimillion-dollar upgrades. The facelifts help those buildings compete with new buildings coming to the market, including PwC Tower and The Union.
That is exactly what happened in the case of downtown law firm Vinson & Elkins, which had originally planned to relocate its Dallas office to The Union. But construction delays led to the law firm staying put at Trammell Crow Center after the downtown skyscraper unveiled a massive renovation and adjacent development to compliment the high-rise office building.
And the suburbs around Dallas are also following suit, with Far North Dallas in Plano’s Legacy Business Park and northward on the Dallas North Tollway to Frisco boasting one of the region’s submarkets with the most construction — and one of the lowest vacancy rates of 15 percent, said Triolet, who has been studying the tenant movement in North Texas for the last decade.
“We are seeing the vacancy rates get chronically larger when it comes to older buildings,” he added.
Older, build-to-suit are often the most difficult to fill, Triolet said, with few companies seeking to lease or buy the aging office stock designed specifically for an early 1980s business.
This is a trend longtime Dallas leader Moody Younger has seen for some time.
“The new office buildings are not for everyone, but Dallas does like bright, shiny new stuff more so than older buildings,” Younger told CoStar News. “In Dallas, we are also still able to provide new buildings at a reasonable cost.”
For tenants seeking new digs, Younger said they want a combination of amenities in a new building coupled with the walkable location coming with new buildings being delivered today in North Texas.
“Well-located properties with amenities are leasing up and I don’t see that trend stopping,” he said. “This is what is hot right now and it’s here to stay for the foreseeable future.”