Traditional tenants keep downtown looking up
The central business district has fared better than other Metroplex submarkets
in recent times and demand for space is starting to rise
Christine Perez
Senior writer
Three or four years ago, it was tough for commercial real estate brokers with
downtown Dallas properties to create much excitement about their submarkets.
All of the action was up north, in the white-hot Telecom Corridor, where tenants
were engaged in bidding wars for the chance to lease space in the lush corporate
campuses of Far North Dallas, or along the gleaming Platinum Corridor -- also
known as the Dallas North Tollway.
Tenant-rep brokers were chasing clients with sexy names, usually all lower-cased and with a .com at the end, and landlords were trading stock options in high-tech startups for free rent.
But today, after the tech-wreck rocked the economy, property owners have a new credo when it comes to tenants: the stodgier the better.
As home to law firms, accounting firms and other old-line industries, downtown Dallas has weathered the real estate downturn better than most submarkets, with little sublease space and only a few consolidations. And even in a soft market, the central business district has seen its share of leasing deals.
"Downtown has plodded along these last couple of years," said Matt Craft, principal with Trammell Crow Co. "The majority of the downsizing is done. We're now seeing some incremental gains from old-economy firms that have pent-up demand."
Downtown Dallas has seen a flurry of law-firm renewals and expansions in recent months, including Baker Botts L.L.P., which leased 176,300 square feet in the Trammell Crow Center; Jackson Walker L.L.P., which leased 141,000 square feet in Bank of America Tower; and Locke Liddell & Sapp L.L.P. and Fulbright & Jaworski, which took 225,000 square feet and 105,000 square feet, respectively, in the JPMorgan Chase Tower.
One law firm, Thompson, Coe, Cousins & Iron L.L.P., moved to the central business district from Uptown, leasing 70,000 square feet at Plaza of the Americas in late 2002. Another, Epstein Becker & Green P.C., just announced plans to relocate from Park Central, taking 25,500 square feet in Lincoln Plaza.
"Expirations are forcing a lot of deals right now," Craft said. "Tenants with 2004, 2005 and 2006 (expiration dates) are getting deals done early to take advantage of favorable terms."
The downtown Dallas submarket is expected to show negative absorption for the second quarter of 2003, but it should still perform better than other areas, said Lawrence Gardener with Cushman & Wakefield of Texas Inc.
"Given everything that is going on with the economy, the CBD is really holding its own," he said. "I don't think you could find a better economic alternative than what you can find downtown."
The Dallas CBD has been plagued by negative perceptions ever since the real estate crash of the late 1980s. But champions -- like Raymond Nasher, whose much-anticipated Nasher Sculpture Garden will open in the Arts District in mid-October, as well as initiatives launched by the Inside the Loop Committee and Main Street Partnership -- have boosted downtown's appeal, Gardner said.
"You're not going to see a complete transformation overnight, but there is a lot of progress and a lot of positive momentum," he said.
Contact DBJ writer Christine Perez at cperez@bizjournals.com or (214) 406-7120.