Written by Lauren Napper, Vice President, Agency Leasing
Uptown has seen significant office development this cycle. And to top it off, many of these new entries are coming from the CBD. While this may look like a cause for concern to the CBD right now, long term, the effects won’t last. There is certainly a light at the end of the tunnel.
Uptown’s supply, while managing to still be available today, may be much more limited in the near future due to lack of available land sites for offices. In addition, the majority of the prime office sites in Uptown have, or are currently being developed for multi-family use instead.
With land being snatched up left and right with new developments, there has been a dramatic shift in the cost for office land in this market, as land itself has become infinitely more expensive. Raised land costs lead to increased rental rates that need to be met in order for investors to hit their returns. Office rental rates have shifted upward of $10 per RSF since the recession hit.
Dallas is still a relatively young city compared to the other major metros in the US (New York, San Francisco, Chicago, Boston, Washington DC, etc). When examining the dynamic that exists between Uptown and Downtown Dallas, Uptown has many alluring traits that causes Downtown to fall short in comparison. To name a few; walk-ability, restaurants, office amenities, parking ratios and building efficiencies.
In the next five to seven years, Uptown will experience an office supply issue that will create a spill over back into the CBD. While we cannot fix the efficiency issue Downtown, the CBD is solving the lack of amenity problem with the addition of multi-family projects, and new retail developments, which is even poised to benefit from the expansion and recent growth in Uptown.
As this city continues to densify, it will urbanize as well, public transportation will continue to grow and become more readily accessible, and parking will become less of a concern for the CBD. In addition, the cost for parking ($225 per reserved space and $125 unreserved) comes with a hefty price tag and parking ration in 2016.
Patience is something we’ll all be working on strengthening as we wait for the CBD to grow. While it may always lag behind Uptown, the success of Uptown will have a positive spillover effect into the CBD with time. Dallas is a maturing city that we have the exciting opportunity to witness and navigate as it grows and becomes competitive with its aged elders.
Lauren Napper is a Vice President within the Cushman & Wakefield’s agency leasing team, where she focuses on the leasing and marketing of commercial office buildings. With 11 years of commercial real estate experience. Lauren currently handles the leasing of over 2.5 million square feet of properties in the Dallas/Fort Worth Metroplex.