Quenching tenant demand

With office vacancies dropping and lease rates on the rise, developers kick off new projects in Uptown and The Arts District.



For an office submarket that has only been around for about three decades, Uptown certainly has grown up fast. It’s now a bustling part of urban Dallas, with 10.4 million square feet of office space (compared to downtown Dallas’ 28 million), according to calculations by Dallas-based CBRE. Add in the two Arts District towers developed by Lucy Billingsley and Craig Hall, and the number climbs to 11.3 million square feet.

Downtown and Uptown/The Arts District used to be a “musical chairs” market, with tenants moving from one building to another, says Phil Puckett, executive vice president at CBRE. “What we’re seeing now are tenants outside the market coming in—not only into Dallas-Fort Worth, but into Uptown.” 

Initially, Uptown office properties—namely The Crescent, developed in the mid-1980s—attracted finance tenants, like stock brokerages and investment management firms. Then, law firms started moving in, leaving older space in downtown Dallas. After the 2012 opening of Klyde Warren Park—the 5.2-acre park constructed on top of Woodall Rodgers Freeway—a literal gap was bridged, connecting Uptown’s residents and office tenants to The Arts District and downtown Dallas. Soon, a mile-long extension of the M-Line Trolley will enhance that connectivity, and commuters will be able to more easily access the area via DART trains. 

“Uptown, make no mistake, is the hottest, fastest-growing in rents [submarket], Puckett says. “It has really become the live-work-and-play area of Dallas. In 2005, the Uptown market was about 5 million square feet. Fast forward to today, about nine years later, it has roughly doubled.”

As tenants continue to flock to the area, developers are stepping in to quench demand with new office projects. Here are some notable developments underway: 

 

McKinney & Olive

Crescent Real Estate has big dreams for its mixed-use McKinney & Olive project, a Cesar Pelli-designed tower that will stand across the street from The Ritz-Carlton Dallas and house 480,000 square feet of office space and another 50,000 square feet of retail space. Gardere Wynn Sewell LLP has signed on to be the 109,000-square-foot lead tenant. Sidley Austin LLP has claimed 75,000 square feet in the building, which will open in 2016.  

The developer is cutting no corners, setting records for lease rates and raising the bar for luxury, much as The Crescent did in the late 1980s. John Zogg is overseeing the project for Crescent and notes that, besides The Crescent itself, McKinney & Olive will be the most expensive building constructed in Dallas. He calls Pelli’s design “phenomenal,” citing its incorporation of natural light and 10-foot ceilings alongside an outdoor landscaped garden on the fifth floor as evidence. The building will have a fitness center—designed and outfitted by Canyon Ranch, a health spa company partly owned by Crescent Real Estate—for use by tenants. Del Frisco’s will anchor restaurant and retail space, and Zogg says additional “significant” retail tenant announcements will be made soon. All in all, McKinney & Olive is poised to change a big part of the Uptown landscape. 

“Cesar’s building is really with its arms completely open to the market,” Zogg says. “If you’re walking down McKinney, you’re going to feel like you’re inside the building already. If you’re inside the building, you’re going to feel like you’re outside.”

KEY PLAYERS

Developer: Crescent Real Estate Holdings LLC
Architect: Pelli Architects, Kendall/Heaton Associates
Interior Design: Pelli Architects
Landscape Architect: The Office of James Burnett
General Contractor: Beck Group
Engineers: Brockette-Davis-Drake Inc., I.A. Naman

 

Frost Tower

For Harwood International founder and CEO Gabriel Barbier-Mueller, part of the goal for many of his Uptown projects has been to incorporate certain elements that he missed from European cities, like Rome—think patios, terraces, landscaped gardens, and picturesque places to both work and enjoy a glass of wine. His latest development, the 22-story, 167,251-square-foot Frost Tower, is the seventh building in Barbier-Mueller’s Harwood District, situated on 17 city blocks nearly encased on the north and west sides by the Katy Trail in between Victory Park and The Crescent. 

Frost Bank, a longtime client of Harwood’s, will occupy 57,558 square feet of office space in the building. Kansas City-based law firm Polsinelli has signed for six floors (77,000 square feet), and will move its office from Saint Ann Court—another Harwood International property—when Frost Tower is complete. At press time, the building was 92 percent leased. 

Barbier-Mueller says about one-third of his Harwood district’s 22 phases have been completed. (They include Azure, a 31-story condo tower, and Bleu Ciel, a 33-story condo tower.) Frost Tower, which will open in 2015, has special meaning for the developer.

“The Frost Tower project was designed by our architectural firm HDF—Harwood Design Factory,” he says. “It’s the first building we designed 100 percent in-house.” 

KEY PLAYERS

Developer: Harwood International
Architect: HDF LLC
Interior Design: HDF LLC
General Contractor: HCMS, Manhattan Construction Co.
Engineers: L.A. Fuess Partners Inc., TTG

 

1920 McKinney

A parcel of land along McKinney Avenue at Harwood Street will soon be home to a 12-story, 150,000-square-foot office and retail tower. KDC and Invesco Real Estate broke ground on 1920 McKinney last September, planning for six floors of office space, a six-story parking garage, and 8,500 square feet of ground-level retail space.

Construction will wrap up in early 2016, with McCarthy serving as the general contractor. Mike McWay, Texas region president, says he’s seeing developers incorporate more amenities into their projects. “The Uptown market typically provides for retail, restaurants, fitness centers, outdoor spaces, and adjacencies to outdoor venues like Klyde Warren Park, which was another project McCarthy built.”

BOKA Powell is serving the project’s architect, JLL is leasing the building’s office space, and The Retail Connection is marketing ground-floor retail. Colin Fitzgibbons, vice president at KDC, has been involved with the project since its inception in early 2013. The lead office tenant has been secured but remains undisclosed.  Specific amenities are still being ironed out.

“This is great, great real estate,” he says. “It’s two minutes from Klyde Warren Park, it’s truly walkable to all the major amenities that make Uptown so great—The Crescent, The Ritz, other restaurants—it’s on the trolley, and it has great access. Especially with the Uptown office market being as hot as it is right now, it’s just really well-positioned to deliver something that doesn’t really exist today in the market, which is new construction for the midsize tenants out there—your 10,000- or 15,000-square-foot tenants.”  

KEY PLAYERS

Developer: KDC, Invesco
Architect: BOKA Powell
General Contractor: McCarthy
Engineers: Schmidt & Stacy

 

KPMG Plaza at Hall Arts

By April 2015, the Dallas skyline will have another tower in KPMG Plaza at Hall Arts, the newest development from Craig Hall and Hall Financial Group. The 19-story building will bring 500,000 square feet of office space to the Arts District at 2323 Ross Avenue, as well as ground-floor retail space. Nestled beside the AT&T Performing Arts Center and across the street from the Meyerson Symphony Center, KPMG Plaza will also include a half-acre public park, a plaza named for lead tenant KPMG, and an artful outdoor Texas Sculpture Walk populated with commissioned and acquired works by Texas artists. 

Along with in-house amenities, the project’s location near the country’s largest arts district will provide tenants with a variety of nearby dining, residential, and entertainment options. Joining lead tenant KPMG, which has leased more than 150,000 square feet, are Jackson Walker, UMB Bank, Hall Financial Group, and Stephan Pyles’ flagship restaurant. The building is now 70 percent pre-leased, with the seventh and top-two floors still available. Kim Butler, who heads up leasing for Hall Financial Group, says everyone on board is excited to see the long-term project—Craig Hall bought the property in 2005—finally come to fruition.

“The one thing that this building has that is unique and, I think, a deviation from how we did business 10, 20, and 30 years ago when we were just trying to put as much commercial space as possible on a site to maximize the income potential: This space is going to have an unusual amount of green space and livable space—what I call ‘enjoyment’ space for collaboration—to get out of the office with your laptop, and get some fresh air,” Butler says. 

Once the timing was right to move forward with construction—which Hall did on a speculative basis—the project quickly gained momentum.

“It’s the newest building but has some of the most tenured tenants … KPMG will be 100 next year when they move in; Jackson Walker celebrated its 125th two years ago,; UMB Bank, out of Missouri, this is their entre into Dallas ... and they’re a 100-year-old bank,” Butler says. “Here you have this new, bright, shiny, fabulous new building, and the people that are choosing it are the real stalwarts of business. Hall’s the young kid on the block.” 

KEY PLAYERS

Developer: Hall Financial Group
Architect: HKS Inc.
General Contractor: Turner Construction
Leasing agent: Kim Butler of Hall Financial Group

 

Old Parkland, West Campus

Harlan Crow’s redevelopment of the historic hospital at Maple and Oak Lawn avenues has gained both prominence and notoriety as Dallas’ most expensive office campuses; it’s certainly one of the area’s most stunning. What began with Crow Holdings’ remake of the former hospital and nurses quarters has evolved into an eight-building, 490,000-square-foot complex.

Woodlawn Hall and Reagan Place were added in 2010; Maple Hall was completed in 2013. A three-building West Campus that’s now underway completes the project. Two smaller four-story buildings (Commonwealth Hall and Oaklawn Hall) flank Parkland Hall, a six-story, 87,000-square-foot building that’s topped by a gleaming dome that’s visible from both the Dallas North Tollway and Interstate 35E.

Crow Holdings was the first tenant to take occupancy of Old Parkland, moving into the 60,000-square-foot former hospital in 2008. The private campus, which sits behind iron gates, is favored by family offices, hedge funds, foundations, private equity investment groups, real estate investment groups, executive offices, and other smaller tenants. The lone exception is a 164,000-square-foot headquarters for Robert Rowling’s TRT Holdings which controls Omni Hotels and Gold’s Gym. In 2012, TRT bought a parcel of Old Parkland land from Crow to build its $40 million corporate office. The project was designed to be in keeping with the rest of the campus, which is inspired by Jeffersonian architecture and American Classicism.

“The motivation for Harlan was really to preserve this asset for the community,” says Cathy Golden, Crow Holdings’ general manager of Old Parkland. “He could build a nice corporate headquarters anywhere he wanted to, but he very much wanted to preserve this and keep it as true-to-form as he could. Additionally, he wanted to create a really different real estate model than we’ve seen anywhere else.” 

KEY PLAYERS

Developer: Crow Holdings
Architect: Beck, Dalgliesh Glipin Paxton Architects
Leasing agent: Crow Holdings

 

WAITING IN THE WINGS

Several developers are ready to pull the trigger on new projects in Uptown/The Arts District—as soon as they can secure a lead tenant. Here are some that are poised to kick off, as soon as that happens.

Akard Place. In early summer 2014, RED Development and several partners announced plans for a new, 800,000-square-foot mixed-use project on land RED had purchased at Field Street and Cedar Springs Road. Akard Place, slated to open in 2017, will include a 300-unit residential tower and a 17-story office tower above retail, restaurants, and a parking structure. Around 75,000 square feet of ground-level retail space will be up for grabs. Shannon Brown and Burson Holman with CBRE are marketing office space. The project is designed by HKS Inc. and Graphite Design Group. The Office of James Burnett is the landscape architect, and Kimley-Horn is the project engineer.

Trammell Crow Uptown. Longtime Dallas developer Trammell Crow Co. acquired the coveted JP Morgan Chase Bank site at the corner of Woodall Rodgers Freeway and Pearl Street in June 2014. Soon after, MetLife and Crow announced plans to build a 20-story office building and 30-story residential tower there. The mixed-use project will also include 20,900 square feet of restaurant space. Office space will total 513,000 square feet, and the residential tower will be comprised of 275 luxury units. The project is being designed by HKS Inc. 

Two Arts Plaza. Now that its One Arts Plaza is nearly full again (with EnLink Midstream stepping up to backfill space left by departing 7-Eleven Inc.), Billingsley Co. is ready to go with its neighboring Two Arts Plaza. The 12-story, 290,000-square-foot tower will take about 24 months to construct. Two Arts will be connected to neighboring One Arts by a 1-acre park, which will feature pavilions and other amenities.

 Victory Center. Hines and its development partner Cousins Properties plan to soon break ground on this 470,000-square-foot, 23-story office tower at 2371 Victory Avenue, a “sloped crystalline structure” that was designed by Duda/Paine Architects. TBG Partners is serving as landscape architect, and ME Engineers is the project engineer. Cushman & Wakefield is overseeing leasing for the project, with Bill Brokaw leading the team.

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