Commercial Real Estate

CRE Opinion: Cookie-Cutter Space Won’t Do for DFW’s Most Innovative Tenants

Innovative tech, advertising, media, and information companies are attracted to smartly redeveloped, former industrial space.

McCaffertyFrank_SavillsStudley
Frank McCafferty of Savills Studley

You can’t fake cool, you can’t manufacture it. While my family will remind me I’m not necessarily an expert on the matter, that’s the common feedback I hear from innovative, growing tenants during site tours. Over the last six years, Dallas has been able to absorb new space, attract large-scale corporate relocations, and facilitate expanding homegrown companies better than any other office market in America. But can our office market win out in the competition for the companies most attractive to the next generation of top talent across the globe? Here are some observations I’ve heard from clients that match that description—on what kind of space in our market works for them and what doesn’t.

New space is not necessarily the best space. Thanks to few natural borders, a strong work force, and friendly regulatory environment for development, building new product has always come easy in Dallas compared to other markets. Unfortunately, this has, at times, come at the expense of preservation of unique older properties. From the Fulton Market District in Chicago to Chelsea in New York to Santa Monica and Venice in Los Angeles—the most sought-after office submarkets in the country right now for innovative tech, advertising, media, and information (TAMI) companies possess extensive inventory of smartly redeveloped, former industrial space. These properties usually offer a central location, extensive natural light, open floorplans, and unique designs most conducive to the latest workplace trends and millennial preferences. Some of the best built-to-suit projects in the country have been in Dallas-Fort Worth over the last decade, but often the siloed floorplan, glass, corporate trophy tower does not mesh with tenants seeking a gritty, flexible and collaborative workplace.

Downtown Dallas’s West End led by Factory Six03 is establishing itself as our region’s innovation district to meet this need. After sitting vacant for nearly a decade, the Factory Six03 property was redeveloped by Granite Properties in 2015 and 2016. The 603 Munger Avenue complex originally housed the Brown Cracker and Candy Co., which had up to 1,000 workers and was once the largest cracker factory in the country. The developer took advantage of the 215,000-square-foot building’s existing assets including outdoor urban space, historic windows, and masonry exterior, only cleaning and applying light reconstruction to these characteristics. Granite Properties is also adding new plaza landscaping and a primary building entry, an updated interior atrium and skylight, restaurants, and a coffee shop on the ground floor, as well as a rooftop amenity deck patio. Following the full redevelopment, the building features brand new systems offering utility costs in line with the newest office buildings.

Our team recently helped bring Blue Cross Blue Shield’s C1 Innovation Lab to Factory Six03 over buildings in multiple markets across the Southwest that were considered. The client was attracted to this space not only for our market’s great talent pool and corporate diversity, but the building’s ability to move the quick production of ideas like a start-up, while at the time support collaboration between the design team, co-located workforce, internal stakeholders, clients, and vendors.

Like Factory Six03, developers took a similar approach utilizing historic assets and applying modern renovations that entice collaboration at nearby buildings such as the Landmark Center, multiple tech-targeted developments underway by Crescent Real Estate as well as the Brewery Building’s adaptive residential project planned between Victory Park and West End.  These buildings are attracting buzz from both start-ups and inventive groups within larger corporations, which has led to the region’s entrepreneurial community dubbing the West End as Dallas’ innovation center.

If you build it, they will come. West End is not the only place budding tenants want to go, and while it has more 20th century brick-and-timber buildings ripe for redevelopment than anywhere else in Dallas, the number of these buildings positioned for office use is limited. The population and office landscape of our region is notoriously sprawling, and thoughtful developments can be found outside the downtown core. The Centrum in Oak Lawn is a great example of this. The upscale, yet minimalist-designed, multi-use complex built in the 1980s is not as old as the West End properties, but has attracted office tenants like Salesforce and Uber. In turn, flipping stereotypes about Uptown tenants. In response to workplace flexibility offered in popular co-working spaces, The Centrum offers 100 MB wifi connection throughout the complex, the largest rooftop in Uptown Dallas, and a 15,000-square-foot outdoor courtyard. Tenants are connected to building management through a mobile app that provides updates on events, dining discounts, and other announcements.

Saint Paul Place in the Arts District, also redeveloped by the team behind The Centrum, and Thanksgiving Tower in CBD have similar success stories. These 1980s office complexes have won over top TAMI tenants in recent years following massive renovations that balance a professional services environment while simultaneously supporting collaborative work spaces and highly desired lifestyle amenities.

Must get feedback from the C Suite, but also HR. When I first started in this business the feedback and insight from the CEO on office preferences and needs was far and away the primary driving force behind site selection. Today, hearing from the head of human resources is equally important. Tenants that go on to have the most success identify offices within a building design that are harmonious to internal and external surroundings. Bike racks and showers are not winning amenities in an isolated office park; if a company prefers the benefits of a campus environment, great dining options must be on site.

We make sure the prospective tenant’s team gets insight to the building stack before a potential relocation so they are aware of the different industry types and brands that cohabit the building that their employees may call home. It’s important to consider other companies stacked around and near the client that could build with their platform and facilitate a mutually beneficial exchange of ideas; while also watching out for competitors or companies whose values are in conflict with our client’s corporate culture. For the client, these may seem like small or trivial details to influence such an important decision such as selecting their office space. However, if within a building that does not match the company’s brand or existing workforce, these issues could manifest into a major problem for retaining and recruiting top talent.

We haven’t fully evolved from suites and corner offices to flannels and co-working, but we are venturing into unchartered workplace territory for many decision makers. There are not any complexes compatible for all industries, and what is cool now, may not necessarily remain cool by the time your entry-level employees become executives. What is certain is that the combination of assets that win the most innovative tenants is a fluid formula. As commercial real estate practitioners, we must constantly reexamine what the workforce wants, what it needs to be most productive, and the assets our market already has in place.

Frank McCafferty is the executive managing director and co-branch manager of Savills Studley’s Dallas office.

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