Downtown Dallas Dealmakers Combing Streets for Nearly 500,000 SF

On both sides of the deal-making fence, brokers credit the hardy requests for proposals to the simultaneous birthing of long-awaited, multimillion-dollar projects on residential, cultural, retail and office fronts. The year has begun with an RFP roster for 10 deals, totaling roughly 300,000 sf; the Thompson Knight law firm hiring a CB Richard Ellis Inc. team to hunt for 150,000 sf inside and outside its 1700 Pacific walls; and another CBD corporate tenant starting tours today for 200,000 sf with a 25,000-sf expansion embedded into its search. Meanwhile, rumor has it that AIG Insurance Inc. also is looking to reclaim CBD space for a regional claims services' office when its lease expires at 8144 Walnut Hill Lane in North Dallas. Other deals making their way to the streets are Chubb Insurance Co., now in the CBD's Bryan Tower, and Standard & Poor's, which offices in North Dallas' Lincoln Centre.

Unlike recent years, today's proposals reflect in-migration from neighbors like Las Colinas, LBJ Freeway and Central Expressway along with a full-blown roster of expansions. "Before we were trading deals amongst ourselves," says Don Dowell, Bank One Center's leasing manager for the joint venture-owned high rise of Chicago-based Trizec Properties Inc. and Crescent Real Estate Equities Co. "That's not good because there's no new blood."

But, it's clearly the expansions that are causing the buzz. Steve Zimmerman, principal for the locally based Trammell Crow Co., says nearly all his corporate clients are looking at expansions--and looking to stay in the CBD. "Downtown is a much more viable option because of all the things going on around it," he says. "They are more interested in staying than they would have been five or 10 years ago." In a couple cases, he says there's been "a sense of urgency" to get extra space to keep pace with hiring plans.

Zimmerman, like others, credits projects like Victory, One Arts Plaza, the Mercantile, Woodall Rodgers Park and the performing arts center with dishing up incentives to stay. "You're seeing commitments from public and private sectors to incorporate Downtown into the overall redevelopment of the city. Downtown has kind of been on its own," he says. "It's becoming more seamless."

Not only are there more deals floating around than in recent memory, but they are larger, according to Kirby White, leasing director for the Fort Worth-based Crescent. He says the optimism surrounding the activity is tied to commitments from core companies choosing to renew and expand; in-migration from a variety of office users in the legal, advertising, financial and insurance industries; and the expansion mindset underlying the stepped-up interest.

"We don't know if it will be an over-the-top year, but we think it will be a good year," White says. As for his pipeline, tenants have placed requests for 50,000 sf of extra space.

"We're getting more interest, requests and activity about the dynamics of Downtown and Uptown than we've had since the beginning of 1990," says Carl Ewert, executive vice president for Dallas-based Staubach Co.

The majority of new deals range from 10,000 sf to 50,000 sf. Brokers report signed deals of late have stair-stepped rates and longer terms, some extending to 2017 and even 2020. It's too early to tell if the activity will translate into an overall rent hike, but some are predicting class A and AA owners might be able to glean some gain from the increased deal flow. And though free rent remains part of the equation, it's steadily decreasing with the latest perk being four to six months on a minimum five-year stay.