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DALLAS-Developers and investors are scrambling to get a piece of two side-by-side close-in submarkets, where real deals and rumors are flying and furious. Cushman & Wakefield of Texas Inc. broke its local record with one listing drumming up 60 registered buyers in 24 hours.

The submarkets’ boundary lines are beginning to blur, thanks to five-star developers who got into the game early. M/PF YieldStar calls it in-town; others see it as Uptown. The close-in pocket is rounded out by Oak Lawn/Park Cities. And those in the know say the current wave could be the last big round-up of relatively-easy-to-land development opportunities.

To keep it simple, the ground rules follow M/PF’s submarket boundaries. “Intown Dallas” is bounded by Interstates 35E and 30, Haskell, Ross and Fitzhugh avenues and the Union Pacific Railroad tracks. Oak Lawn and Park Cities are bounded by US Highway 75, Fitzhugh Avenue, the UP tracks, Harry Hines Boulevard, Inwood Road, Lemmon Avenue, Mockingbird Lane and includes the cities of Highland Park and University Park. Inside those lines, dirt prices are rising dramatically, tear-down properties are cornering top dollar and the rumor mill is churning.

An executive for New York City-based Ashkenazy Acquisition Corp. previously told GlobeSt.com that it’s not buying the 1.2-million-sf Cityplace Center at 2711 N. Haskell Ave. and converting the top floors to condos. But, the street says otherwise about the Brandywine Realty Trust-owned asset. What is fact is the neighborhood is bustling with under-the-radar and listing activity because a “Cinderella” ending is inevitable for the sleeping beauty’s story when the Plymouth Meeting PA-based Brandywine sells.

Among those locals circling wagons with other deals are Criterion Development Partners, which has a site under contract for a big-ticket plan, and Square One, which has bought 25 single-family homes for tear-downs and redevelopment into 62 townhouses. And the fact is they’ll simply be joining a building frenzy with 2,822 units under way in the close-in pocket.

The development pressure has dirt prices at an all-time high, according to Don Ostroff, C&W’s senior director. In-town dirt is drawing $80 per sf to $100 per sf and its immediate neighbors are in the $50 per sf to $60 per sf ballpark. The end result is investors are buying, or trying to buy, properties like the 228-unit Park Gates at City Place, situated on 6.2 acres at 4211 Cabell Dr. or 96-unit Sycamore Tree, positioned on 4.5 acres at 4925 Lahoma St. Both assets are boasting high occupancies, but the plays are buy now, make minor to moderate upgrades to pick up higher rents and warehouse the land in a bet on the future.

The 19-year-old Park Gates is C&W’s record-breaker in a no-minimum ask; its call for offers is March 22. The 38-year-old Sycamore Tree, priced at $93,750 per unit, drew 100 requests for sales books, with 12 solid offers now on the table. The brokers say developers were leading the rush for both listings as they eyed the opportunity to warehouse large tracts of land.

“We are not a 30-year-old teardown that has no option but the land,” Ostroff says about Park Gates. Its units average 721 sf and rents are running $1.07 per sf or $773 per month.

On one side of Park Gates is the Square One Development site, which is ticketed for units averaging 2,400 sf and $185 per sf sale tags. It’s also just a stone’s throw from West Village, where rents are running $1.80 per sf. Jason Boyce, part of a C&W team that includes Lamont Rattler, says “they’re looking at this on land rate rather than cap rate.”

Will Balthrope, senior director of the Balthrope Group in Dallas for Marcus & Millichap Real Estate Investment Brokerage Co., estimates there are 400 complexes in the under 100-unit size on the market in the combined submarkets. And, he adds, there no more class A’s up for grabs. It’s been no secret that CB Richard Ellis is holding a contract for a prime block–the Cityville portfolio, which being sold by Des Moines-based Principal Financial Group and FirstWorthing Corp. of Dallas.

“The boundaries of this submarket will grow out,” Balthrope predicts. “It’s about done in terms of places to build.”

While land is scarce, desires to be close to offices and the multi-faceted entertainment venues are contributing just as much to the buy-in equation. “I believe there’s a supply crunch,” Balthrope says. “The development community will not be able to meet the demand in this submarket over the next five years.”

Greg Willett, vice president of research and analysis for the Carrollton, TX-based M/PF, says the in-town submarket is 95.3% leased in its 12,853-unit inventory and Oak Lawn/Park Cities is 94.3% filled in its 9,102-unit stock. The Dallas average is 92.8%. And, that doesn’t count any condos.

As Oak Lawn picks up the spillover from in-town, it’s starting to blur the demarcation lines. “It’s certainly, by far, the most active pocket in Dallas/Fort Worth,” Willett says.

The in-town pocket has had 78% of its inventory built since 1995, of which 5,191 units went up in the past six years and 4,776 rose since the mid- to late 1990s. Oak Lawn/Park Cities’ dynamics are somewhat different: 4,447 apartments are pre-1970 or close to half of its total.

With the demand for in-town living, both submarkets posted rent increases last year. In-town rose 2.5% to nudge its average to $1,167 per month and Oak Lawn/Park Cities climbed 3.7% for an average of $777 per month. The Dallas/Fort Worth average is $695 per month.

“This is the mecca of our city for apartment investments,” Balthrope says. “I don’t think there is any particular cap on rents. I think who’s going to be priced out is the developer not the tenant.”

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