Another key redevelopment at a separate site transformed the 1926-vintage Davis Building at 1309 Main St. into 180 loft apartments by developer, Hamilton Properties.

Within walking or biking distance of the central business district, residential construction has been going gangbusters on the edge of downtown, such as Uptown, the Cedars, Deep Ellum and Victory Park. The 75-acre Victory Park, a mixed-use development started by Hillwood Urban on a reclaimed brownfield site more than a decade ago, is adding 1,800 new residential units to the downtown mix. Victory Park now has four new high-rise towers and a mid-rise apartment project under construction by multifamily developers that include Camden Property Trust, Novare Group, Greystar, Lennar Multifamily and Genesis Real Estate, GlobeSt.com learns.

Turning to leasing, activity remains extremely active across the region, with the fiercest competition in Uptown and the Far North Dallas Corridor. Despite a quarterly decline and fewer blockbuster deals than earlier on this cycle, leasing for the region still closed 2016 up approximately 2.2% year-over-year for a total of 14.1 million square feet leased, according to Savills Studley's fourth quarter 2016 Dallas/Fort Worth office market report.

Moreover, investors continue to buy up Dallas assets and increasingly view the metroplex as a core US city. As of November, year-to-date office sales totaled $4.9 billion, a 47.1% increase from the $3.3 billion sold in 2015. While market considerations remain positive, development is likely to moderate in 2017 as more owners focus on filling up existing assets or those that are currently being built. Dallas/Fort Worth ended 2016 with 5.3 million square feet underway—only 1.1 million square feet of that is pre-leased, Savills Studley says.

Overall asking rent of $24.19 to close last year was an increase of 0.8% from the third quarter and 5.4% from the same point last year, the report indicates. Tenants can anticipate additional rental rate growth in most submarkets, with sharper increases in Uptown, West Plano and Frisco where steady corporate relocations keep demand brisk.

Savills Studley observes that companies relocating from California, New York or Chicago are not at all fazed by the $45.00 to $50.00 per square foot rent for the newest product in the metroplex's most sought-after submarkets. These averages are still significantly less than class-A product in larger markets. Tenants with tighter budgets still have a wide range of product from which to select, such as downtown, Central Expressway and Stemmons, where a fair amount of space is still priced below $30.00 per square foot.

Dallas' sustained economic rally seems to have at least another year to run, says Savills Studley. In addition to positive local market factors, any substantial increase in federal expenditures for infrastructure, defense spending or other pro-growth plans discussed by the new administration could, if executed, advance growth for North Texas tenants.

KPMG

DALLAS—Companies left downtown in droves in the 1980s and it went on to have the emptiest office market in the nation in the early 1990s. But that was then and this is now. Dallas' core has been transformed, and while no single strategy or project is credited for the turnaround, there are many projects to highlight.

Hall Group's new 18-story Hall Arts office tower is the first office project built in the central business district in years. In downtown's Arts District, new performance halls and museums have been built. The new Klyde Warren Park is a transformative downtown recreational hot spot built over a below-grade freeway.

And perhaps most importantly, according to Downtown Dallas Inc., the key element was bringing in residential developments to house tens of thousands of new residents. Many older, obsolete office buildings have been converted to residential use, promoting a more active street life and acting as a spark for the area. Those thousands of residential units have been made into primarily rental apartments for young professionals who thrive in urban environments, says ULI.

One breakthrough was the redevelopment that transformed the landmark 31-story Mercantile National Bank building on Main Street, which was redeveloped as apartments in 2008. Forest City Texas, with the assistance of tax increment financing obtained through the city, created a 213-unit residential rental community out of the Mercantile tower. It and three other buildings that were subsequently developed by Forest City now make up Mercantile Place, which has a total of 704 apartment units.

Another key redevelopment at a separate site transformed the 1926-vintage Davis Building at 1309 Main St. into 180 loft apartments by developer, Hamilton Properties.

Within walking or biking distance of the central business district, residential construction has been going gangbusters on the edge of downtown, such as Uptown, the Cedars, Deep Ellum and Victory Park. The 75-acre Victory Park, a mixed-use development started by Hillwood Urban on a reclaimed brownfield site more than a decade ago, is adding 1,800 new residential units to the downtown mix. Victory Park now has four new high-rise towers and a mid-rise apartment project under construction by multifamily developers that include Camden Property Trust, Novare Group, Greystar, Lennar Multifamily and Genesis Real Estate, GlobeSt.com learns.

Turning to leasing, activity remains extremely active across the region, with the fiercest competition in Uptown and the Far North Dallas Corridor. Despite a quarterly decline and fewer blockbuster deals than earlier on this cycle, leasing for the region still closed 2016 up approximately 2.2% year-over-year for a total of 14.1 million square feet leased, according to Savills Studley's fourth quarter 2016 Dallas/Fort Worth office market report.

Moreover, investors continue to buy up Dallas assets and increasingly view the metroplex as a core US city. As of November, year-to-date office sales totaled $4.9 billion, a 47.1% increase from the $3.3 billion sold in 2015. While market considerations remain positive, development is likely to moderate in 2017 as more owners focus on filling up existing assets or those that are currently being built. Dallas/Fort Worth ended 2016 with 5.3 million square feet underway—only 1.1 million square feet of that is pre-leased, Savills Studley says.

Overall asking rent of $24.19 to close last year was an increase of 0.8% from the third quarter and 5.4% from the same point last year, the report indicates. Tenants can anticipate additional rental rate growth in most submarkets, with sharper increases in Uptown, West Plano and Frisco where steady corporate relocations keep demand brisk.

Savills Studley observes that companies relocating from California, New York or Chicago are not at all fazed by the $45.00 to $50.00 per square foot rent for the newest product in the metroplex's most sought-after submarkets. These averages are still significantly less than class-A product in larger markets. Tenants with tighter budgets still have a wide range of product from which to select, such as downtown, Central Expressway and Stemmons, where a fair amount of space is still priced below $30.00 per square foot.

Dallas' sustained economic rally seems to have at least another year to run, says Savills Studley. In addition to positive local market factors, any substantial increase in federal expenditures for infrastructure, defense spending or other pro-growth plans discussed by the new administration could, if executed, advance growth for North Texas tenants.