Las Colinas Urban Center's Sales Listings Reach All-Time High

"Whatever you've got, there's money for it," says Russell Ingrum with CB Richard Ellis Inc.'s Dallas office. "At the end of the day, there's a buyer for it." He and partner Gary Carr are courting the capital circuit with the 835,044-sf Millennium Center, a TIAA-CREF-owned property at 222 W. Las Colinas Blvd. With the call for offers already made, the 70%-leased Millennium deed will be handed off in the fourth quarter, Ingrum says.

Never before has so much of Las Colinas' top-tier office space hit the market in the same year, says Charles Cotten, senior vice president for the Atlanta-based Cousins Properties Inc. and top exec for the Las Colinas Land LP, which has been the caretaker for the 12,000-acre, master-planned development since its inception in 1980. "To be honest, they're trading at good prices and that's what is driving it," he tells GlobeSt.com. "And they're paying good prices because they're accepting lower returns going in. They're all class A properties that have some upside to them."

In addition to the office space, the Las Colinas Land LP's 810-acre package of developable land includes 185 acres in the Urban Center, a setting of marble curbs, canals and glass-skinned high rises. Cotten says the offers are due in a couple weeks for the land sale, being steered by Holliday Fenoglio Fowler LP.

Mark Dickenson, Cousins' senior vice president, says the norm has been "maybe two or three" buildings per year. "Owners just feel like it's the best time to sell," says Dickenson, who's rode roughshod on the submarket's leasing scene since 1991.

As investors compete to acquire, brokers are battling their own front--finding tenants to fill the blocks of dark Urban Center space. "There is still a lot of hand-to-hand combat in the trenches to make a deal," Dickenson says. "It currently has the best value in Las Colinas due to competing rental rates, TI allowances and the amenities of a dense urban center." Excluding the crown jewel, Cousins' Williams Square, the Urban Center's effective rental rate is $17 per sf to $18 per sf.

Cotten says the number of buildings for sale isn't a red flag. And all, he forewarns, might not trade due to the seller's expectations. "I suspect they're pretty high considering what's going on," he says, "and I suspect some may not sell."

The latest to come to market is the six-building Waterside Commons, 458,906 sf of class A and B space at 1420 E. Rochelle. Owned by Fort Worth-based Crescent Real Estate Equities Co., the complex is roughly 50% leased.

Another newcomer is VHA Place, a 326,000-sf asset with a 75% occupancy at 220 E. Las Colinas Blvd. Andrea Peskind with Cushman & Wakefield of Texas Inc. is marketing the property for UBS Realty Investors of Hartford.

Supposedly, the 238,320-sf Canal Plaza at 400 Las Colinas Blvd. remains up for grabs while its kid sister, the 220,471-sf Waterway Tower at 433 E. Las Colinas Blvd. has been pulled until some tenants can be found. In January 2004, Bandera Ventures of Dallas, with equity from the New York City-headquartered Lehman Bros. Inc., bought the nearly empty buildings from Fidelity Investors LP.

Though Calgary's TGS North American REIT and Chicago's Equity Office Properties Trust have sold their Urban Center stakes, the lingerers this year have been the first two high rises to be built in the pocket--Las Colinas Towers I and II, early 1980 product totaling 486,757 sf at 201 and 225 E. John Carpenter Freeway. The assets are part of a four-building portfolio sale by Colonnade Properties LLC of New York City, which has Evan Stone with Jones Lang LaSalle Inc.'s Dallas office running the show.

To date this year, EOP's second-quarter sales included a 360,815-sf building at 909 Lake Carolyn Parkway and a 369,134-sf structure at 545 E. John Carpenter Freeway. In recent weeks, Prime Income Asset Management spent $56 million for the 509,707-sf 600 Las Colinas.

"These assets stand on their own. Each of these assets have different risk profiles and return profiles," Ingrum says. "But, they ought to all sell."