The towers in downtown and Uptown Dallas are just blocks apart.
But when it comes to office occupancy, there is a much greater gulf.
While Uptown’s major office projects average more than 94 percent leased, downtown’s big towers — most of them built in the 1980s — are just over 70 percent rented, according to a new report by commercial property firm JLL.
Several downtown skyscrapers have seen increases in occupancy in the last year, but there are still big vacancies in many of the high-rises, according to JLL’s annual Skyline report.
The study looks at office space in some of the tallest buildings in 57 markets across North America. JLL included more than two dozen downtown Dallas and Uptown buildings in the annual survey.
With rents in Uptown topping $50 per square foot, JLL analysts say more creative and startup companies are heading downtown.
“Professional services, financial institutions, and law firms are the main drivers of leasing activity within Skyline buildings,” Walter Bialas, JLL Dallas research director, said in the report. “To compete with new offerings, owners are reinvesting in downtown assets to attract the new and future generations of employees.”
Tenants also don’t have a lot to choose from in Uptown. Most of the vacant space is in a handful of buildings still under construction. Those four major projects average about 30 percent leased, according to JLL’s study.
Prices for Uptown office buildings are at the highest levels ever seen in North Texas, and downtown offers some of the few bargains for investors, property brokers say.
“Investments within downtown Dallas are a tale of two cities,” said Jack Crews, managing director of JLL Capital Markets. “Assets along Ross Avenue in the CBD [Central Business District] and to the north in nearby Uptown, have taken on a higher profile with strong development and redevelopment of buildings and parking lots, with new street level retail, along with hotel and residential uses.
“This may … be the most dynamic development area over the next five years.”
JLL estimates that $1.1 billion in Uptown and downtown major office properties traded in 2016. That compares with 42 such sales nationwide — including five in Dallas — that totaled $7.2 billion.
Currently, 1.4 million square feet of office space is being built in the Uptown and downtown markets. Most of the buildings are scheduled to open between late this year and early 2019.