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FRISCO, TX-After wrestling with the decision for several months, developer Craig Hall has decided to forge ahead on 300,000 sf of spec office space for the 1.6-million-sf Hall Office Park. The pair of buildings will cost $54 million to bring out of the ground.

“It was a very difficult decision,” Hall tells GlobeSt.com. “If we get the rents we’re projecting, the returns are going to be very small compared to the other buildings we’ve done.” The dilemma is construction costs are 20% higher than a year ago–considerably more than the submarket’s modest rent growth.

Hall was forced to weigh the expansion plan with this year’s dealmaking hitting 500,000 sf to rack up a banner leasing year for the nine-year-old park. Occupancy is now 97%, with just 50,000 sf of vacancy. “We wanted to make sure that we had enough space available for the expansion of our existing tenants,” he says. “That gives us the motivation that others do not have. Right now, we need both of them.”

Hall’s “motivation” will drive a groundbreaking by the end of this month. The plan is to build a six-story, 150,000-sf, traditional class A building at 3000 Internet Blvd. and a three-story, 150,000-sf structure at 3010 Gaylord Parkway. The low-rise design is value office with higher-end architectural elements and a key location at the park’s entrance–a formula to drive rent. “I call it value plus,” Hall says. “It’s not a normal value office so we’re able to charge slightly higher rent for the location and upgrades.”

Hall says rents might change as the new buildings lease. But, the play is starting at $25 per sf for the six-story structure and $21 per sf for the low-rise. Both buildings will deliver in 2007′s third quarter, possibly the fourth.

A Dallas team for HKS Architects Inc. designed both buildings. Austin Commercial Inc., headquartered in the state capital, is the general contractor. Austin-based TBG Partners Inc. is the landscape architect.

Hall has built 13 buildings in the 162-acre park since 1997, but he’s previously said that he’s saved his premium dirt for last. The three-story building will be his first project for the premium land although he did sell 3.34 acres at the tollway-Warren Parkway junction to Dallas-based Greenway Investments, which is under construction on a 26,100-sf, convenience-retail center.

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