Tenet, planning a late 2009 move-in, has become the fifth deal to be signed at the 1.2-million-sf high rise at 1445 Ross Ave. since Hunt Co. exited for a build-to-suit office building on the CBD's edge. "We feel very fortunate in six months time to be at stabilization," says Kirby White, leasing director for Crescent Real Estate Equities LP, who is vacationing and missed yesterday's festivities in Dallas heralding the Downtown's latest headquarters win.
White tells GlobeSt.com that the bulk of Tenet's space ropes off floors 14 through 18 in the 60-story building. But, Tenet also has laid claim to 5,000 sf on floors 57 and 58, a sky room with interior staircase that Tenet will use as a conference center just like Hunt did. He says space planning will be done by fall, allowing demolition on the lower floors to get under way so finish-out can begin in the spring. "There's not as much down time as you'd think," he says. All he can say about the finish-out is the negotiated shared expense is "a good market TI."
The stair-stepped lease pushes occupancy to 81% from 67%, with 200,000 sf of Hunt's empty space already backfilled. Adding to the leasing victory, Crescent also has landed a 3,726-sf tenant for the first of four sky suites on the 49th floor, outfitted as spec space and being marketed at $27 per sf. On the first day of their availability, Monarch Vision Funding Quad Wealth inked a five-year lease and moved in ASAP, according to White.
Fountain Place is now in the portfolio of New York City-based Morgan Stanley. Its quoted rate is $24 per sf to $27 per sf plus electric. "It was a comfortable deal for us and a fair deal for them," White says about Tenet's signed pact. "And, it is in line with other deals that we've completed."
Michael Lewis, Crescent's managing director, says Fountain Place's location as a bookend for the Arts District, gateway to Victory and DART rail station at its door put it at the top of the list when class AA tenants are looking for new office space. In Tenet's case, he says "we were the obvious choice" because the high rise had the largest block of class AA space in the Downtown and a lower price point than the under-construction high rises in Uptown, where $40 per sf or close to it is commonplace.
"Why pay more for less versus new construction," Lewis says. "It was too compelling. A corporate headquarters needs to be in a building with a class AA image and everyone is amazed at how compelling this location is."
Tenet will relocate from 13737 Noel Rd. in North Dallas, where it has spent the past four years since its move from Santa Barbara, CA. CB Richard Ellis executive vice president Phil Puckett and senior vice president Chris Hermann represented Tenet in its search for new space to house its 500-member headquarters team.
In a press release, Puckett says the search spanned all areas of Dallas/Fort Worth. "We found Downtown Dallas to be a very attractive option as have other recent tenants relocating to Downtown," he says, citing Comerica Inc., American International Group and AT&T Inc. Tenet is ranked 280 on the Fortune 500 list and is the 13th largest public company in the metroplex, boasting 2007 revenues of $9 billion.
"In the last year alone, we have seen a surge of corporate relocations to Downtown," says Dallas Mayor Tom Leppert, estimating the wins to have brought more than 6,000 new jobs to the city's business core. According DowntownDallas, 40 companies this year have leased more than one million sf in the inner core.
"We expect Tenet's decision to move Downtown will be helpful in convincing other forward-thinking companies to follow suit," John F. Crawford, president and CEO of the Downtown association, says in a press release.
With five months left in the year, city leaders and brokers alike are confident more powerhouse deals are going to be made before the calendar turns. "This is a continuation of a trend that you're going to continue to see," Lewis says. "There is a pipeline of other significant relocations to the city.
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