Mixed-Use Projects Lead Dallas Office Strength
It’s not enough to just build a class A office building anymore. In today’s commercial real estate setting, mixed-use offices with retail components and other uses, such as residential and hotels, are garnering the most attention.
Dallas developers and investors are embracing this trend. Its growing population and diversified workforce make the area a top destination for asset owners and managers. This spurred, at the start of the year, the Urban Land Institute to name Dallas the country's second-strongest city for commercial real estate investment. It is considered somewhat of a gateway U.S. city where investors can still garner favorable returns.
There are a number of major projects on the horizon in the Dallas-Fort Worth region, which are examples of the importance mixed-use development is playing against the backdrop of strong overall office fundamentals.
Despite new construction, vacancy rates drop
It’s evidence of a strong market when new product is introduced, yet vacancy rates fall. There were 700,000 new jobs added to the Dallas area since 2010, driving a healthy office market, according to JLL. Over that time, 19 million square feet of office was absorbed in the metro area. Vacancy rates also dropped from about 25 percent in 2010, to 17.7 percent during this year’s first quarter. Rent growth is currently increasing at a 7.5-percent pace and rose 28 percent in the last four years.
JLL expects these positive trends to continue, and they are setting the table for some significant mixed-use developments, either physically underway or far along in the planning stages.
Verizon’s $1B Irving plan
In the Las Colinas area of suburban Irving, Verizon and local developer KDC are starting the $1 billion Hidden Ridge mixed-use project, which will reportedly include more than two million square feet of offices, along with shops and restaurants, as well as apartments.
Though Verizon owns the 100 acres on which Hidden Ridge is being built, the anchor tenant will be energy firm Pioneer Natural Resources, which has inked a 750,000-square-foot anchor deal that will house 1,100 employees.
Dallas midtown rises from former mall
In a sign of the times, the super-regional Valley View Mall is making way for Dallas Midtown, a $4 billion multi-use project that has its $500-million first phase currently underway. Beck Ventures is helming the endeavor.
The initial portion of the project is set for completion in 2019, and anchor tenants so far announced are a 183,000-square-foot Life Time Fitness and a 10-screen Cinépolis theater. In total, the first portion of Dallas Midtown is planned for 500,000 square feet of office, 400,000 square feet of retail, as well as apartments and a hotel. A 20-acre park, to be operated by the city, is also on the horizon.
Deep Ellum gets ‘epic’
Closer to Dallas’s city center, in the Deep Ellum entertainment area, KDC, along with developer Westdale, have started The Epic. Laid out over eight acres, it will include a 10-story office tower totaling 250,000 square feet, as well as ground-floor retail. Apartments and a hotel will be housed in adjacent towers. The site also sits next to a Dallas Area Rapid Transit (DART) rail station.
This development also has a 2019 target for completion on tap.
Revisiting North Dallas
Galleria Dallas, in North Dallas, was considered one of the country’s groundbreaking mixed-use facilities when it opened in 1982. Now the neighborhood it calls home is having an office revitalization.
North Dallas is seeing older properties first built during the late 70s and early 80s get bought up and renovated with contemporary tenant requirements, says JLL.
A big part of the area’s revitalization is the creation of the aforementioned Dallas Midtown development, along with other projects.