With Uptown Dallas’ two newest office towers filling up, developers are already working on new projects in the area just north of downtown.
But rising construction costs and tightening finance requirements could make it harder to start more speculative office projects Uptown.
The new 22-story Union office tower at Cedar Springs Road and Field Street is 90 percent leased. And the 20-story Park District office high-rise at Pearl and Woodall Rodgers Freeway is three-quarters full, too.
That’s motivation for eager-beaver builders who want to start more offices in Uptown.
“We keep hearing about a new project — every day it seems,” said Brooke Armstrong, executive vice president of commercial property firm JLL. “There are at least three I know of and a whole slew
of others right behind them.
“There is as much activity in the development world in Uptown as there ever has been.”
Some of the new office towers in the works for the area include:
- Granite Properties’ Cedar Maple Plaza, a 27-story office project on Cedar Springs Road across from the Crescent.
- The Link at Uptown, a 22-story office tower planned at Akard and Olive streets next to the new Union development.
- Hillwood Victory Park, a 15-story building with 374,000 square feet planned just west of American Airlines Center.
Developers including Hines, Ryan Cos. and Cityplace Co. are also considering Uptown office projects.
The only large Uptown area office project still under construction is developer Harwood International’s 22-story Harwood No. 10 project on McKinnon Street. The 220,548-square-foot building opens this summer and has signed leases with data center firm CyrusOne and other companies.
“At least three developers I have talked to say they are definitely going to build,” Armstrong said, even though rents in the project would top $40 per square foot. “We’ve all been asking how tenants can justify this and make sense of these rents, but somehow they do. ”
Granite Properties’ planned project across from the Crescent would include both retail and open space to make the project more attractive to both businesses and the neighborhood.
“We are limiting our lot coverage to 50 percent to provide for green space, and we are putting all of our parking underground to create a vibrant and active streetscape,” said Granite senior managing director Will Hendrickson. “The earliest we would be able to start is first quarter 2021.
Uptown already has Dallas’ highest office rents, and they are likely to keep soaring as construction and land costs continue to rise.
“I think you will find the next generation of office buildings to be really expensive,” said John Zogg, managing director of Crescent Real Estate. “Costs have gone up, and we are going to be at rent levels Dallas hasn’t seen before.”
Crescent is currently redeveloping the former GuideStone Building on Cedar Springs Road. The developer opened its $225 million McKinney & Olive office and retail project in Uptown in 2016.
“We are still bullish on Uptown long term,” Zogg said. “But Crescent will not be building a speculative building in Uptown today.”
Still, Zogg said big office leases signed recently at the Union and Park District are a good sign for the health of the Uptown market. “I was nervous six month ago,” he said. “But there has been a flurry of leasing that’s filled in a lot of holes.”
Uptown’s $350 million Union project just leased more than 100,000 square feet of space to customer service giant Salesforce.
The Salesforce lease shows how the appeal of Uptown office space has widened, said Mike Ebert, managing partner of RED Development, which built the Union.
“When we started preparing for this project, demand in the area was mostly downtown law firms,” Ebert said. “There is a growing tenant base for Uptown.”
Ebert said his firm is scouting the area for another construction site. “I don’t think these buildings planned for Uptown are going to have a hard time leasing,” he said.