PLANO, TX—As Dallas continues to gain more jobs at higher wages relative to its cost of living than most other metros in the country, employers across all industries are reshaping the office market to accompany the growth. And, the appetite for shiny new office product among the influx of new talent is resulting in major renovations or large concessions in older buildings to remain attractive to tenants coming up on the end of their leases, according to JLL's second quarter office report.
One example of using the proceeds of a loan to refinance existing debt and fully stabilize properties to compete is evident in a recent portfolio loan. A $110 million refinancing was obtained for a seven-building office portfolio totaling 801,153 square feet in Plano and Carrollton, TX.
Representing the Billingsley Company, Holliday Fenoglio Fowler LP secured a three-year, floating-rate, non-recourse loan with two one-year extension options through Ares Commercial Real Estate Corporation. The parties declined requests for comment.
The portfolio buildings are located at 4000, 4120, 4100, 6400, 6404, 6500 and 6504 International Parkway within the International Business Park, a 50-acre office park. The buildings are situated near the northwest intersection of two of the most heavily trafficked highways, the Dallas North Tollway and President George Bush Turnpike. Completed between 1997 and 2001, the two- and three-story buildings are 87% leased. The portfolio features 24-hour security, on-site management and maintenance, a health club, café, gas grills for corporate events, and green spaces.
The HFF debt placement team representing the borrower was led by senior managing director Trey Morsbach and senior director Jim Curtin.
With more than 2.5 million square feet absorbed this year across all DFW buildings, more than 4 million square feet has been absorbed in buildings delivered in 2016 and 2017. With more than half of the office space currently under construction already spoken for, the supply-demand dynamics are keeping average rental rates on a steady tick upwards, increasing 5.4% year-over-year, GlobeSt.com learns.
Eight speculative buildings have delivered in the first half of 2017 at an average 50% leased. As it stands now, there are eight more spec buildings totaling 1.7 million square feet set to deliver later this year, cumulatively sitting at 16% pre-leased. With more than 5 million square feet of spec space currently under construction or soon to break ground, the ongoing supply of new space will undoubtedly change the face of Dallas' office landscape during the next several years.
While the new product will drive average rental rates to new heights in coming quarters, Dallas' relative affordability to other markets will continue to draw both employers and employees. This, coupled with an increasing supply of office space in the pipeline, should result in stable office fundamentals in the next two to three years, says JLL.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
