Office Improvements Score Organic Growth
Comerica Bank Tower closed out the year with a total aggregate of 28,499 rentable square feet due in part to a capital improvements program that was undertaken by M-M Properties and TriGate Capital.
DALLAS—Comerica Bank Tower closed out the year with a total aggregate of 28,499 rentable square feet of office space. The leases were due in part to a capital improvements program that was undertaken by management.
“It is good to see some organic growth with the Dykema expansion and some outside of the submarket migration with HBC and Echelon,” says Mike Silliman, senior vice president of leasing with M-M Properties. “These pursuits were successful in part because of our capital improvement program. They all leased space on floors where we renovated common corridors and restrooms on the floors to new building standards and implemented our spec suite and spec-to-suit programs. We are continuing those initiatives with new spec suites coming out soon and exploring some more exciting ideas for the building. The building is currently 75% leased and we’ve got a good number of deals in the pipeline.”
Dykema expanded by 7,387 rentable square feet with a total of 40,000 square feet in the building. And, Echelon Analytics leased 2,874 rentable square feet. This forensics accounting firm moved from Preston Center. It was represented by Chris Callicutt with Younger Partners.
“The other factor that is happening is the desirability gap of the submarket has shrunk. There are so many more amenities downtown now,” Silliman tells GlobeSt.com. “All of the formerly vacant buildings have been put into production mostly as residences and hotels, which catalyzes the retail, restaurants, gyms and bars that office tenants look for, so looking downtown for office space is now becoming attractive. Add in the core-plus location of Comerica Bank Tower and it puts us in good position to win deals.”
Other leases at Comerica Bank Tower:
Access Physicians’ lease of 4,646 rentable square feet on the 58th floor. This is a headquarters location for a growing telemedicine company. The tenant was represented by Conor McCarthy with JLL.
Harper Bates & Champion’ lease of 8,722 rentable square feet on the 35th floor. This law firm was previously located at Premier Place on Central. It was represented by Billy Gannon with Cushman & Wakefield.
Williams Anderson Ryan & Carroll leased 4,870 rentable square feet after moving from its previous location at the Bank of America Center. The firm was represented by Charlie Morris and Graham Shelby with Avison Young.
“With the Dow down 3,000 points since December and the general macro-economy trending flat, I believe we may see tenants start to show some price sensitivity, which will be great news for good properties with reasonable pricing like Comerica Bank Tower,” Silliman says. “It just doesn’t seem like savvy market participants would be excited about locking in their fixed cost at the top of the market. And such is the case of some of the recent law firm deals which are committing to more space than they have people for.”
Comerica Bank Tower was designed by Philip Johnson. The building totals 1.5 million square feet and is 60 stories, making it one of the most recognizable buildings on the Dallas skyline. The building has a Walk Score of 93, providing tenants with access to the Uptown/Arts District/CBD submarkets.
Comerica Bank Tower is owned by a joint venture of M-M Properties Inc. and TriGate Capital LLC. The Comerica Bank Tower partnership allows for a combination of local ownership and a hands-on approach of providing the highest level of service, operations and efficient decision making.
The office market finished the year strong with more than 1 million square feet of net absorption in fourth quarter, surpassing the previous three quarters combined, according to the CBRE fourth quarter 2018 DFW Office MarketView. According to the Bureau of Labor Statistics, DFW maintained solid job growth by adding 107,500 non-farm jobs since October 2017, a 3% annualized gain.
Net absorption in the quarter surpassed the first three quarters of the year with slightly more than 1 million square feet, yielding 2 million square feet for the year. Vacancy remained flat during the quarter despite the positive absorption, due to 1.6 million square feet of competitive inventory introduced to the DFW market following an investment sale of a former owner/user campus, says CBRE.
The shared workspace concept has picked up even more traction in DFW, with a handful of operators taking occupancy in the fourth quarter and roughly 400,000 square feet of new locations already on deck to open in 2019.
Currently 16 leased projects totaling 3.9 million square feet are in the construction pipeline with a pre-leased rate of 45%.
Overall asking rents dipped slightly from $25.03 per square foot to $24.88 per square foot on a full-service gross basis. Class-A asking rates, however, increased from $30.72 per square foot to $30.93 per square foot, says the CBRE report.