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Commercial Real Estate

Why New Office Buildings Will Get Built—Soon

Two submarkets—the Dallas CBD/Uptown and the Legacy area of Plano—are very active and have limited options for large blocks of available Class A+ space. That's why developers have at least eight new office projects ready to go.

Is it really time for office development in North Texas? Yes, chances are very good that new office buildings will get built—and soon. Two submarkets, the Dallas CBD/Uptown and the Legacy area of Plano, are very active and have limited options for large blocks of available Class A+ space.

The Dallas CBD/Uptown submarket has more than 160 tenants with lease expirations between 2012 and 2016. Most will renew or relocate to existing buildings. However, there are a handful of tenants that can and will consider new construction.

They’ll have their choice of at least eight proposed projects, ranging in size from 390,000 square feet to 550,000 square feet that could be built. Due to stringent financing parameters, not all of them will be developed in the near future, and any new building in this submarket will need a lead tenant in order to kick things off.

The Legacy submarket in Plano has been extremely active and boasts one of the lowest vacancy rates in North Texas: 12.1 percent. With the completion of the 121 Toll Road providing direct access to D/FW International Airport and the labor pool of the northern suburbs, employers looking to grow their businesses often consider Legacy due to its robust base of amenities and existing corporate neighbors.

Developers have new projects ready to go. In fact, there have been rumors of speculative development. As unusual as that would be in today’s economic environment, it could be a reality in these two active submarkets.

Although typically more expensive, the benefits of opting for new construction include structured parking for all or a majority of employees, efficient floor plates, and sustainable construction.

What you won’t see is the return of the 1 million-square-foot office tower. That business model is gone—if not forever, then for any foreseeable future.

Greg Biggs is an executive director at Cushman & Wakefield. Contact him at [email protected].