Uptown and downtown Dallas’ office market may be ready for some new construction.
The office tower in Uptown’s $350 million Union development is more than 90 percent leased. And the nearby Park District’s PwC Tower just hit 85 percent leased to office tenants.
The only big block of totally new office space downtown is at the Luminary Building, where about 80,000 square feet is still up for grabs.
Researchers at commercial property firm JLL estimate that during the current development cycle, 3.2 million square feet of office buildings have been delivered in Uptown and the central business district. About 2.5 million square feet of that space has been leased.
With no new office projects starting up in the last 12 months, it’s likely that all of Uptown and downtown’s new buildings will be full before another property can be built and put on the market.
“Demand is still very strong in the Uptown market,” said JLL managing director Greg Biggs. “Developers continue to look for development opportunities.
“Owners are optimistic yet cautious about speculative development,” he said. “They realize there is demand but want to make sure their investors goals will be met.”
JLL estimates that eight more Uptown and downtown area office buildings totaling more than 3 million square feet are on the drawing boards, waiting for the builders to pull the trigger and break ground.
“The question now is whether the next office project to break ground will choose to go spec to potentially take advantage of market timing or delay breaking ground until a lead tenant is identified,” JLL said in the new report.
One of the next projects likely to start is developer Hillwood Urban’s 12-story office building planned at Victory Park. The high-rise will include about 350,000 square feet of space.
And north of Uptown — in the Knox Street district — developers are planning to start soon on a 12-story tower with 250,000 square feet of offices.
One thing all the developers and lenders have to be thinking is that this late in the economic cycle, it’s easier for project timing to be off.