Coming soon? New downtown Dallas towers in the works

Posted by Emily Ray-Porter Group on Friday, January 28th, 2011 at 2:06pm.

Real Estate Editor
Published 27 January 2011 10:40 PM

Don’t put away those construction cranes just yet.

Downtown area developers are already vying for the chance to build the next office tower. And if one of them lands a big tenant, a groundbreaking won’t be far away.

Billingsley Co., Hall Financial Group, Spire Realty Group and Harwood International all have high-rises on the drawing boards and are trying to round up office tenants.

“We are responding to inquiries from potential tenants and do have some favorable discussion under way,” said developer Craig Hall, who owns the vacant block across from the Meyerson Symphony Center facing Ross Avenue and Routh Street.

“We are excited about our current plans for the first phase of the project, which would be just under 500,000 square feet of office and restaurant-retail space.

“We are hopeful for a late this year or early 2012 start,” Hall said.

Since Hall’s building would be built on top of an existing underground parking garage, construction time would be shorter than usual.

Of course, Hall says, several things still have to happen to make the project a reality.

“I don’t want to jump the gun and say we are moving forward when plans are not yet firm,” he said.

Just two blocks away from Hall’s site, Billingsley is hustling to get started on its Two Arts Plaza building at Flora and Routh streets.

The developer just put its successful One Arts Plaza office and retail tower up for sale. And the plan is to use the proceeds from that transaction to finance further development.

“We are focusing our energies on the office market,” developer Lucy Billingsley said. “There will be big movement in the downtown Dallas office market.

“If you want to be a corporation that is going to attain and retain great talent, you need to be in a new office building and connected to the Arts District and the excitement with everything going on.”

Billingsley said the high-rise she’s planning at Routh and Woodall Rodgers Freeway won’t include residential space but will have lower-level retail.

Feeling ‘gutsy’

The developer recently hired Michael O’Hanlon, formerly president and CEO of Inland Western Retail Real Estate Trust Inc., as its president and chief operating officer. O’Hanlon has been charged with expanding Billingsley Co.’s development portfolio.

“After the last two years with very little going on in this business, I’m gutsy about where things are now,” Billingsley said.

Along with Hall’s and Billingsley’s projects, investor and developer Spire Realty Group is pitching plans for a 21-story office tower in its 12-acre project at Ross and Routh.

Spire’s planned Block D building would have 360,000 square feet of office space plus retail and residential.

Spire senior vice president Jon Ruff said his firm has “presented this building to all of the large office tenants recently and currently interested in new construction in the downtown-Uptown market.

“All of the preliminary entitlement steps have been taken, and I believe we are on equal footing with the other projects in the area,” Ruff said.

Several big office tenants are looking for space, including law firms Akin Gump Strauss Hauer & Feld LLP and Baron & Budd PC.

Jockeying for position

Brokers and real estate agents say they aren’t surprised that developers are scrambling to get deals going downtown.

“There is a coming wave of downtown office leases that will be expiring soon,” said Joel Pustmueller, a partner with Peloton Commercial Real Estate. “Everyone is trying to get ahead of the curve and get in position with new buildings.

“It will take 24 months to build any of these projects.” Pustmueller said that even if more than one of the proposed projects makes it out of the ground, he isn’t worried about an excess of new office space.

“In the last construction cycle, there were six buildings announced and we felt the market could handle two or three at most,” he said. “But they were all successful.”

Granite Properties completed the last of those buildings in 2010 — its 21-story 17Seventeen McKinney tower north of Woodall Rodgers.

The 361,500-square-foot high-rise is about 30 percent leased, said Granite chief operating officer Greg Fuller.

Fuller said he isn’t surprised that other developers are teeing up projects.

“There have been some encouraging signs in the market,” he said. “You wouldn’t want to deliver a new building today. But it takes 18 months to plan one and two years to build.”



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