By Christine Perez
For years, Las Colinas has been known as a “9-to-5” market. What began as a sprawling, 6,000-acre ranch within Irving has become one of the largest planned developments in the country. Its proximity to Dallas-Fort Worth International Airport and dead-center location within the region helped it attract an extensive array of major companies. Multifamily developers began moving in during the last decade or so. And now, finally, entertainment is catching up.
“There are two mixed-use development projects that are going to be finished by the end of the year: The Music Factory and Water Street,” says Matt Schendle, Managing Director. “This will create a true live-work-play environment, with the emphasis on play. It’s something the Urban Center in Las Colinas has never had.”
The 410,400-square-foot, $175 million Music Factory at U.S. Hwy. 114 and Las Colinas Boulevard will include an 8,000-seat Live Nation indoor/outdoor concert hall and 24 restaurants and clubs. Larger tenants signing on for space include Alamo Drafthouse and Yard House, with restaurants like Sambuca, Thirsty Lion, and Gloria’s Latin Cuisine. The project’s 100,000-square-foot office component has already been fully leased by Ethos Group.
The $100 million Water Street, off Lake Carolyn at Las Colinas and O’Connor boulevards, will include about 60,000 square feet of retail and restaurant space, surrounding 340 multifamily units developed by Gables Residential. Tenants signing on at Water Street include Twisted Root Burger Bar, Main Street Bistro and Bakery, Olivella’s, Planet Sub, and The Londoner Pub.
“The two developments are going to be a game-changer for the area,” says Schendle, who has specialized in the market for more than 18 years. “We’re already seeing it have an impact on office lease rates. And this is 10 months before the projects are done.”
Between 2013 and 2016, average office lease rates in the Las Colinas Urban Center increased 23 percent, according to Cushman & Wakefield research. The area also is seeing a multifamily boom, with more than 7,000 apartment units now under construction.
A third factor coming into play is mass transit. Dallas Area Rapid Transit’s light rail goes through the Urban Center, connecting it with downtown Dallas, DFW Airport, and a multitude of other destinations. The community’s “Area Personal Transit” system, or APT, offers free transit that connects to DART and various points throughout Las Colinas.
Schendle said mass transit gives the Urban Center a significant advantage when competing against other popular, highly amenitized office markets. “It’s the big differentiator between the lower Tollway and Legacy,” he said. “In recent years, there has been a lot of organic movement within Las Colinas, where companies have left one office building and gone to another. With the mixed-use coming in, you’re going to see tenants come in from other submarkets. They can save $10 to $15 per square foot, in some circumstances, have a Class A environment, mass transit, and now the rich amenities, too.
Average lease rates for office space in Las Colinas currently stand at $24.11 per square foot, full service ($27.18 for Class A space and $20.75 for Class B space). The market saw 880,524 square feet in net absorption last year and 681,219 square feet in new construction, bringing the total submarket inventory to 31.7 million square feet and the vacancy rate to 15 percent.
“Las Colinas is the center of the Dallas-Fort Worth region,” Schendle says. “It always has been and always will be. Now that the mixed-use is coming in, you’ll begin to see more tenants moving to the Urban Center, and more buy-in from investors, too.”