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IRVING, TX-Northrop Grumman Corp. has taken a 20,000-sf block off the hands of Charlotte, NC-based FairPoint Communications Inc. at the class A 8710 Freeport Parkway in Las Colinas. The five-year sublease contract is the first one to close for a 75,000-sf office that came to market a year ago when FairPoint exited Texas.

Northrop Grumman plans to relocate in mid-November from the Colonnade Plaza in Las Colinas’ Urban Center. It’s widely rumored in brokerage circles that Northrop will be putting its Colonnade space of about 90,000 sf on the market in a realignment announced by its El Segundo, CA-based corporate chiefs.

The Las Colinas submarket, now shouldering one of the highest vacancies in the Dallas-Fort Worth metroplex, is in a state of flux with lateral moves, most often downsizing plays or as the industry prefers to term it, “rightsizing.” Las Colinas’ 21.2-million-sf inventory has 1.4 million sf of vacant sublease space and 4.4 million sf of empty direct space, according to third quarter statistics from Cushman & Wakefield of Texas Inc. Another 531,916 sf of sublease space is occupied. That kind of stiff competition translates into a real coup for the brokers structuring Northrop-FairPoint’s five-year agreement.

Tenants often will steer clear of sublease space out of fear about the sublessor’s creditworthiness. “FairPoint has good credit. Northrop realized that and received a good deal,” Kevin S. McGovern, managing director for Insignia/ESG in Dallas, tells GlobeSt.com. FairPoint is a rural local exchange company with operations in 123 communities in 18 states.

McGovern confided that the deal has been at the bargaining table since July. The close was made with a discounted rate, built-in TI dollars and the availability of first-generation shell condition, a rare find for the sublease market. FairPoint finished out 40,000 sf of its 75,000 sf, leaving the balance in shell state, of which Northrop got a portion. “It was a knock-out deal,” McGovern said although he’s not disclosing the bottom line of the transaction. Adam Faulk of Jackson & Cooksey in Dallas handled negotiations for Northrop Grumman.

The abundant supply of class A product in the Las Colinas submarket carries an average rate of $20.49 per sf, according to Julien J. Studley’s Q3 numbers. With market conditions as such, it is a given that Northrop shaved a few dollars per sf off the market average. Building owner Crow Holdings of Dallas was getting $21 per sf plus electric in 2000 when the 160,000-sf 8710 Freeport Parkway delivered.

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