By Steve Brown
Two new office towers opening their doors just north of downtown Dallas won’t have a lot of competition.
With the start of the COVID-19 pandemic, some developers hit the pause button on starting office projects in the Uptown area.
While new high-rises are expected to start next year, there are fewer options than usual for businesses looking for the newest office digs.
Kaizen Development’s Link at Uptown tower on Akard Street and Hillwood Urban’s Victory Commons One office building a few blocks away in Victory Park may have found a sweet spot in Dallas’ competitive office market.
“The Link and Victory Commons will likely lease up faster given the lack of competing supply over the next two years,” said Andrew Matheny, research manager at commercial property firm Transwestern. “We understand the developers may soon announce leases taking four floors or more.
town continues to lead the recovery,” Matheny said. “Last quarter, Uptown vacancy ranked among the lowest in Dallas at just 14.2%.”
Hillwood Urban’s 15-story, 365,000-square-foot Victory Commons One just opened next to American Airlines Center in Victory Park.
USAA Real Estate teamed up with Hillwood to build the office project, which has large, open floors that appeal to office tenants.
“Over the last few years, D-FW has seen many corporate relocations, especially from the east and west coasts, and we predict that trend will continue into next year,” Hillwood’s Bill Brokaw said.
“With a dynamic urban atmosphere, which is still affordable in comparison to other gateway cities, the Uptown market will remain one of Dallas’ premier locations for the recruitment of leading companies and the highly educated young professionals they bring with them.”
The 25-story Link at Uptown office tower is just finishing construction at Olive and Akard streets, next to the Union Dallas development. The glass-clad high-rise has about 292,000 square feet of office space.
“We’re working on leases for about half the building,” said Sarah Kennington with Thirty Four Commercial, which leases the property. “COVID kind of ended up working in our favor.
“Uptown is such a competitive market, and the delays COVID caused means less competition for a few years,” she said. “We are in the captain’s seat for a little while.”
Kennington said recent relocations by businesses to the downtown area and widely discussed plans by Goldman Sachs for a major new employment center near Victory Park have brought new attention to the neighborhood.
“This is the first time in my career we have seen relocations focused on Uptown and downtown,” she said. “We are not competing with the suburbs as much with space for financial firms.”
Both of the new office projects were designed by Dallas architect BOKA Powell.
“These two Class AA office towers are the first to deliver in a post-COVID world,” said Don Powell, partner at BOKA Powell Architects. “From touchless entry sequences and access to fresh air to world-class amenities, both afford tenants the best of what we have learned about occupant safety and comfort.”
When COVID hit and office workers sheltered at home, there were lots of off-the-cuff predictions that businesses would shun dense urban areas for less-dense office locations in the ‘burbs.
The high-quality office space coming on the market in the Uptown area and proximity to amenities will help businesses entice their employees back to the workplace, said Matt Heidelbaugh, executive managing director for Cushman & Wakefield.
“I predict we will have a supply problem in 2022 due to all the corporate delay and pent-up demand,” Heidelbaugh said. “Developers have paused a bit, and that’s going to be a problem in the near future as things take time — 24 to 36 months — to deliver new product.
“All the high-quality space in D-FW is being leased up.”
Several more office towers are on the way north of downtown but won’t be ready until after 2022.
Developer Harwood International is building a 27-story office tower on Harry Hines Boulevard that will open in 2023. Law firm Haynes and Boone will lease 125,000 square feet in the building.
On McKinney Avenue at Pearl Street, Trammell Crow Co. plans to begin work early next year on a 27-story office and retail high-rise across the street from the landmark Crescent. Commercial property firm CBRE Group is slated to move its headquarters into the tower.
Other office projects are being promoted in the Uptown area by developers Granite Properties and KDC.
Granite Properties’ tower would be at Cedar Springs and Maple Avenue.
“We are in the market for prelease now,” said Will Hendrickson, senior managing director at Granite Properties. “There is nothing we’d like better than to get that project started.”
With rents for new buildings topping $50 per square foot, the Uptown area is still at the top of companies’ office shopping lists.
“Uptown has not lost its luster at all,” said Jeff Ellerman, vice chairman at CBRE. “Vacancy is low with new projects on the way.”