The future still remains bright because the state, and particularly this region, is a strong telecom market, Jeff Deweese, vice president and managing director for Grubb & Ellis in Dallas, emphasizes to GlobeSt.com. "We've obviously had a little slowdown," he says. "But, Dallas is going to outpace the national economy. It's just such a good business environment here."

The current market is such that there is "an overcapacity," Deweese concurs with the corporate researchers. He's confident that the space coming to market will lease up. Just how long that will take depends on the economy, he says. Quoted new and converted-property rates fall in the $18 per sf to $22 per sf triple net range.

The report states that about 1.15 million sf is contained in four older properties, with lower ceiling heights. The researchers say the owners have made minimal infrastructure improvements and are trying to jumpstart their projects by courting major tenants. "These projects may not actually go forward," according to the report.

That's definitely not the case for the Archon Group's Genisus Dallas North, a 1.3-million-sf redevelopment of the former Prestonwood Mall. Rusty Perry, Archon vice president and acquisitions director, tells GlobeSt.com that 300,000 sf is completed and another 300,000 sf will deliver in May. True, there haven't been any tenants signed, but there are a lot of talks going on right now and it most likely won't be long before a pact is sealed.

What's important to leasing is the quality of the space. Archon has sunk a lot of capital into the project so that it's not just being offered as a telecom hotel because it's positioned near fiber-optic lines, as some developers have done.

"Clearly there is a slowdown in demand now given the capital market. Our timing could have been better," he says. "We think ultimately we've got the right project that has superior attributes to our competition."

The current available space and what will deliver in the near future might constitute a "slight glut," Perry acquiesces, "but we think the Internet and the demand is not going to go away over time.

Instant Insights /

DFW Telecom Space Developers Hit Speed Bump

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