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Commercial Real Estate

Greg Biggs—Why Preston Center is Dallas’ Little Gem

With just 5.5 million square feet in 137 buildings, Preston Center is the smallest submarket in Dallas. Its bragging rights come from its traditionally high occupancy rates. Strong leasing activity continues to drive up lease rates in Preston Center—and has developers scrambling to find new construction sites.
Greg Biggs

Although the Dallas commercial real estate market is faring better than almost every other market in the United States, collectively, it seems to be treading water. Other than in select areas like Uptown and Legacy, market activity has been slower in 2011 than most commercial real estate experts had hoped.

Of all the submarkets that make up North Texas, there is one area that seems to do consistently well. The Preston Center market has been a Dallas gem for years. According to CoStar, Preston Center consists of just 5.5 million square feet within 137 buildings, making it the smallest submarket in Dallas. However, Preston Center’s bragging rights come from its traditionally high occupancy rates.

During the last five years, vacancy rates in Preston Center have averaged between 7.3 percent and 12 percent; it currently stands at 10.5 percent. This compares to an overall Dallas market average of 16.8 percent.

The appeal of the submarket is its central location along the Dallas North Tollway between downtown Dallas and North Dallas, and the ability for tenants to walk to the numerous restaurants and retail amenities that occupy the area.

The office tenant base consists primarily of smaller firms whose executives live in the surrounding residential neighborhoods. In addition to prominent tenants such as former President George W. Bush and the Sammons family, the tenant mix ranges from family offices to virtually every single bank, money manager, and stock brokerage firms that have operations in the United States.

What does this all of this mean? It means exactly what is happening: Average quoted rental rates are being pushed higher, and developers are scrambling to find new sites on which to build. With very limited parcels available, building owners in Preston Center are feeling confident about the future returns on their investments.

Greg Biggs is an executive managing director and principal at Cassidy Turley, where he helps lead the firm’s tenant rep group in Texas. Contact him at [email protected].