Trizec Wins Neiman's Space Race

The silence from the brokers doing the Neiman deal most likely is tied to a confidentiality clause. This morning, Steve Zimmerman, principal of Trammell Crow Co. and Neiman's broker, confirms that GlobeSt.com facts are correct, but there are a few outstanding issues. "It's not a done deal yet," he says.

Numerous real estate sources yesterday confirmed final signatures were garnered on a long-term contract for Neiman Marcus Group's block of high-end office space at 1201 Elm St., a 1.7-million-sf landmark tower owned by Trizec Properties of Chicago. Trizec did not respond to telephone calls for comment on the deal prior to publication time.

Sources describe the chase as "intense competition" that pared all but two from the final fracas. Ren Tower, scrapping to hold onto a top name on its roster, was up against 1700 Pacific, a 1.3-million-sf high-rise owned by First City Center Association of Dallas. Thanksgiving Tower at 1601 Elm St., the 1.1-million-sf joint venture holding of Dallas-based Macfarlan Real Estate Services, made the short list and then was withdrawn from the bidding war.

One source tells GlobeSt.com that Trizec, a hardball negotiator when it comes to besting the competition, is believed to have fared "better than most people think. Trizec fought long and hard and they made a good deal."

Renaissance Tower's quoted rate is $17 per sf to $18 per sf plus electric, but it's a well-known fact that building owners, across the board, are shaving rates 10% to 20% to score the win while tenant improvement packages oftentimes are exceeding $25 per sf. Long-term commitments are earning six months and up of free rent, according to office brokers around town.

Activity in the Dallas CBD started picking up midway through the second quarter as law firms and the like started re-upping while class A prices are right. The 21-building, class A inventory has occupancies ranging from 82% to the low 90% mark. In March, Renaissance Tower was sitting at 89%.

One tenant's rep confides that building owners have been setting hooks to renew by stair-stepping the rate, a commonplace practice that gives discounts up front and balloons over time; erasing the balance of the term, in some cases 18 to 24 months, in exchange for fresh signatures and a longer deal; and committing to fixed rental rates on future expansion options. As for the building owners' brokers, they claim they're just being creative to maintain occupancy until the good times return. But from the tenant's take, the good times are here, at least when it comes to negotiating leases.