Dallas Office Broker

LBJ Office Corridor

February 6, 2015 By Kevin Finch Leave a Comment

Yesterday I attended a broker function where we discussed some of the new trends and what is occurring in the LBJ office market. This market is waiting upon the completion of the Texas Department of Transportation’s LBJ project to be completed in December 2015. From highway seventy five to Hillcrest the project is already completed.

Driving on LBJ and looking at the construction you may assume that there isn’t any possible way to have the project completed in December. However, the difficult work of excavation and relocation of utilities has been completed and they are close to pouring concrete. This step is the easiest and take the least amount of time.

So what was reported in the meeting that you may find of interest as an LBJ office tenant? There have been several LBJ office buildings that have sold in the past few months. When a building sells the new landlord typically will do some renovations and position the building to increase rental rates and property value. This is what is presently happening along LBJ Corridor.

Recent LBJ Office Building Sales

Toll Hill Office Park Cawley Bought 2 buildings approximately 240,000 square feet. They are completing roughly two million dollars in renovations and rental rates have been raised significantly to $18.00 – $19.00 + Electric. Renovations about 80% complete.

Mid Town Office Center at Montford and LBJ Owned by Sunwest they sold one building and it is rumored they are about to sell another one. Sunset will continue to own the multi tenant office building in the back 5720 LBJ.

LBJ Financial Center just signed a 37,000 square foot lease. Rumored to be at the $16.00 range with no tenant improvement allowance.

Commerce Plaza Hillcrest is under contract for sale and is rumored to go firm February 15. The buyer is going to rezone and tear down the buildings. They are planning on replacing the office use with grocery store anchored retail. The project is about 250,000 square feet of office space that will be removed from the LBJ office market if the transaction is completed and the new ownership follows through with the rumored plans.

Two Hillcrest and Three Hillcrest just sold a few months ago.

Galleria Plaza is out for sale. Lakeside is out for sale.

What hasn’t happened is the far west end but Meridian and Tri-West has a new owner within the past eighteen months. Heritage Square has a new owner.

The million dollar question is if tenants are going to be willing to move back into the market. The LBJ office corridor is posed to take advantage of the higher rental rates in Uptown, Preston Center, and far north Dallas. Once the LBJ construction is completed many of these tenants will find the LBJ office market to be more attractive.

Dallas Office Market 2015

January 29, 2015 By Kevin Finch Leave a Comment

As everybody knows 2104 was a fantastic year for the Dallas office market. However what does the Dallas office market 2015 have in store? The positive trend established in 2014 is going to continue into 2015.

I am more bullish today about the Dallas Fort Worth office market than I have ever been. The fundimentals for this marketplace for big corporations is outstanding. It is easy to say it is because of the tax rates but when it comes down to it there are a number of factors.

If you spend time in other marketplaces across the country particularly the northeast it astounding how costly it is for large corporations to do business in those marketplaces. It can be as much as a two or a three times multiplier. So the math is simple, if you continue to place pressure on corporations to reduce costs and increase profitability they will continue to look at ways to reallign themselves. Thats what is driving this positive office absorption trend in Dallas. Real estate costs are a component of it. The big costs come in the wage components and the quality of life. Corporations are looking at more than just real estate costs they are also considering taxes, workforce, quality housing, good public schools

Far north Dallas and Dallas Uptown markets are seeing speculative development. Big build to suits and large projects in Richardson and North Dallas. A lot of it is driven by the labor force and were people are wanting to live.

When you look at Atlanta it is a lot like Dallas in a number of ways. There is a new emerging millennial workforce which wants to be in a more urban type of environment. They like the sense of community they like to be together in big groups and that is what is driving the Uptown marketplace.

If a company wants to hire a millennial workforce you need to be in the uptown area. Conversly, once you hit a certain point you start having kids you cannot live in the Uptown environment. So the far north Dallas office market appeals to these people.

Toyota came to the Legacy at the intersection of the North Dallas Tollway and the Sam Rayburn Tollway and there are five different cities that a person can choose to live in all within ten miles from work. Those cities have their own police and fire. They have their own school systems. So Toyota could give their employees choice. Each city has different philosophy on how they do things and it creates a dynamic environment.

There are a wide range of housing opportunities. In the northern suburban Dallas market people have a wide range of choice because of the smaller cities being close to each other. As the millennials begin to have family they will gravitate toward these markets.

The net of it is that we have different types of marketplaces in Dallas. The core markets of Dallas have reached their equilibrium . As you move out the newer markets are more speculative. The cost factors that larger corporations are looking for are not in those markets yet. That is not to say that they will not be in the future but they are not at this time. The Dallas office market 2015 looks strange with healthy positive absorption of the new space coming on to the market.

Wade Park and The Gate Frisco Texas

January 12, 2015 By Kevin Finch Leave a Comment

Frisco Texas real estate development is extremely active. In fact there is over five billion dollars worth of planned development that has been announced along the North Dallas Tollway. These projects include the Dallas Cowboys World Headquarters, Wade Park, Frisco Station and The Gate.

Each one of these projects is impressive and a sign of the future strength of the far North Dallas office market. The recent attention by international companies like Toyota and Federal Express in this area speaks to the quality of the opportunity for business relocation to the area. This market is surrounded by five high quality smaller cities that offer the business employees the ability to choose the types of schools they want for their children and the quality of lifestyle that is important to their families. Not to mention the quality of the educated work force.

The Gate was announced on August 20, 2014 in Dubai at the Grand Scape Real Estate Show at the World Trade Center in Dubi. This group invests overseas referred to as IGO. The scoured the United States and eventually settle in upon Texas. They then selected the Dallas market and focused in on Frisco and choose Frisco for this development over any other place in the United States.

They came in and bought two tracts in Frisco. At the northwest corner of the Dallas Tollway and John Hickman Parkway. They are planning four eight story 200,000 square foot Class A office buildings fronting on the Dallas North Tollway. There is also a planned hotel that overlooks a water feature surrounded by restaurants and retail.

Behind the office buildings there will be two apartment buildings with structured parking. These buildings will be by Lebanon Road and John Hickman Parkway. There should be somewhere between 980 – 1,000 units. Additionally there are tow ten story condominium towers planned as part of the project. These condos are planned to face a drive that goes directly into the Dallas Cowboy’s camp.

In total The Gate is expected to be around a 700 million dollar investment.

Another large project in Frisco is called Wade Park. This is a project by Stan Thomas with Thomas Land Development based out of Atlanta. This property was owned by the Wade family. It is on the South East corner of Dallas Parkway and Lebanon Road. The ground breaking was on August 6, 2014.

There will be retail including a theater, Pin Strikes and a Whole Foods. There will be possible four hotels in the development. These should be about 600,000 square feet of retail at this location comparable to the shops at legacy. They could also develop six million square feet of office space. Additionally 1,300 residential units are expected to be build within Wade Park.

It is interesting to note that Wade Park is expected to have 2 office buildings totaling 400,000 square feet of office space build in its first phase. The buildings will have two levels of underground parking and four levels of above ground parking.

Since the project started Stan added an additional 60 acres to the project which is south of John Hickman Parkway which should include some additional office buildings and possible another hotel. The project is going to have water features and a nice mixture of uses.

Wade Park and The Gate Frisco Texas are both large well funded developments in Frisco Texas. As this market matures we will see many new office buildings constructed. This area is truly becoming a major commercial real estate market in the Dallas Fort worth area.

New Frisco Real Estate Developments

January 10, 2015 By Kevin Finch Leave a Comment

Many of us are familiar with the major Frisco Real Estate Developments. This is one of the hottest development markets in the Dallas Fort Worth market. With the development of The Dallas Cowboys World Headquarters, Wade Park, The Gate and Frisco Station it is possible to focus most of your attention on these important projects.

However there are many other important developments occurring in Friso that will positively impact the City of Frisco for years to come.

Heady Investments is building a class a six story office building of 170,000 square feet just off the South East corner of Dallas Parkway and Lebanon Road. Directly across the street from the Hall office park. It is expected to be ready for occupancy in June 2015. Strausberger and Price have already pre-leased 40,000 square feet of this building.

At the northwest corner of Gaylord Parkway and Parkwood. The is a Hyatt House hotel that is presently under construction. It is a six story structure with roughly 170 rooms. Broke ground October 3, 2014. It is directly across the street from the Frisco Conference Center and the Embasy Suites Hotel.

Off Lebanon Road and the Tollway at the North east Corner there is a forty acre development purchased by the Rudman Partnership. Scottish Rite Hospital is planning a facility at this location. Rumor is that Phase I will include 180,000 square feet for an ambulatory medical and office use. They are not going to use the entire property initially and they are planning to build some outdoor sports facilities to make available for the Frisco residents to use.

Stonework Business Park is approximately 32 acres just north of Stone Brook Parkway. Is being developed by a commercial real estate development company from California that selected Frisco. There are proposing 600,000 square feet of office space with some restaurants and retail for walkable amenities. They also have a proposed hotel site along the Toll Road. They are also planning a conference center. It is speculated that they will be developing a 100,000 square foot office building in the very near future.

Grant Park is a 350 acre development that is going to be a major gathering point for the citizens of Frisco. It is going to have large green fields and a lake of 15 – 20 acres with a depth of 12 feet. It could host events that could be attended by 20,000 – 30,000 people. There are 140 acres within the park that are planned for commercial development and mixed use with a hotel , office retail, apartments.

The City of Frisco has set aside $33,000,000 for the phase one development of Grant Park and the lake. Hopefully it will get started in 2015.

On Main street, on the South East Corner is Frisco Square roughly 150 acre development with office zoning construction. There are presently an office building under construction four floors of office. Two floor have been leased by Near Box Software.

On Main Street and Colman there is a four story 40,000 square foot building presently under construction with retail on the ground floor.

As you can see there are many projects that are under way in the Frisco Texas office market. As a company that represents Tenants that have seen rates increase due to lack of supply we are extremely encouraged to see all of this development underway.

If you are looking for Frisco Real Estate Developments you should contact us to learn about the most recent developments in the market and to see if there are better office options for you that could reduce your office space expenses.

Electricity Office Building

October 2, 2014 By Kevin Finch Leave a Comment

Your Office Building’s Electricity Charge

I belong to the DFW Independent Brokers and every month we have the opportunity to have a presentation given by high quality firms that service the Dallas commercial property owners. Our meeting today was an interesting even. The discussion was about the management of electricity for office and industrial buildings and how much efficient management can reduce the cost of electricity and reduce operating expenses.

You may be wondering why I would focus upon electricity for office space. The reason is that there are usually two ways a tenant will pay for their electricity in a multi tenant office building. They either pay their prorated share of the building’s entire electricity bill or they have a “full service lease” and the electricity will be included in the operation expense and passed though to the tenant. In either case if the landlord can reduce the office building’s electricity expense the tenant will benefit.

So today’s meeting was with Rapid Power Management and a most informative presentation was made by Jared Patterson Senior Energy Manager. A few areas of interest for the electricity consumer to consider. The majority of America’s electricity is being produced by either natural gas or coal. The cost of natural gas in America is cheap compared to the rest of the world because we are the Saudi Arabia of natural gas. Our energy companies have been given approval by the federal government to start exporting gas to other countries that are willing to pay ninety percent or more for the gas that Americans will pay. Obviously this will increase the price of America’s gas and since electricity is produced by generators powered by natural gas the price of electricity will increase in two years.

Commercial Electricity Increasing in 2016 for Office Buildings

Coal is the other source of energy to produce electricity in America. In 2016 many coal powered electricity generating systems are going to come off line because of US Federal Government regulations. These two events are expected to have a dramatic impact on the price of electricity in your office building.

Tenants and office building owners need to start looking for experts in the energy management business now to place their businesses in the best position to reduce the electricity expenses now and in the future. You need to ask yourself some important questions:

Are you managing your energy expenses or are they managing you?
Do you have an energy purchasing strategy?
Are you aware of energy price reductions and prepared to take advantage of them when they occur?

These and many more tasks are handled when you have a quality energy management company helping you navigate the expense of electricity for your building. You can avoid the electricity gotchas that many companies are paying but you can avoid:

Meter Fees
Payment Terms
Band Width Charges
Nodal Charges
Meter Adds and Delete Charges
An avoid termination notice charges

Quality Energy Efficient Solutions Can Reduce Operating Expenses

If you are a tenant and you are billed by your landlord for your electricity you can help yourself by helping your landlord and share information with them that will help the landlord reduce their expenses which ultimately are passed on to you. If you are looking at a new building for to lease you should investigate to see what type of energy management is in place on the building because you will benefit if they are monitoring the energy market.

Triple Net Lease Charges

June 28, 2014 By Kevin Finch Leave a Comment

A few weeks ago I was helping an industrial tenant locate their first Dallas industrial space for operation in the United States. They have several businesses in the middle east but they have never negotiated a lease in America. Obviously the market is different in Dallas, Texas than in Jordan. However the major source of confusion during our negotiations were understanding the triple net lease charges.

Since the Dallas office market is also migrating toward triple net leases this confusion is now effecting some Dallas office tenants as well so I thought that a review of what triple net charges are would be helpful. This should clear up some the confusion for those that are new to this concept.

An industrial commercial lease and some office have several expenses to a tenant they are, base rent, triple net charges, insurance, utilities, HVAC repairs and maintenance (not normally charged to office tenants). All of these expenses should be considered when a tenant is considering a lease renewal, relocation, expansion or a new location. The triple net lease charge creates the most confusion,

Simply stated the triple net charge consists of there nets. They are the tenant’s prorated share of the building’s property taxes, the tenant’s prorated share of the building’s property insurance and the tenant’s prorated share of the building’s operating expenses. This charge is exclusive from the lease’s base rent charge, insurance, utilities, HVAC repairs and maintenance.

The first net, property taxes are clear. Whatever the annual property tax bill is that the building must pay to the city and county where the building resides plus the cost of reducing the tax bill is included in this charge. Unfortunately this expense is unavoidable and the landlord will pass the cost along to the tenant.

The next net is insurance. This usually is a reimbursement to to landlord of their cost to insure the building for damage, vandalism and natural disasters. The confusion occurs when a tenant thinks that since their reimbursing the landlord for their insurance expense that they are covered and they don’t need insurance. The landlord’s insurance covers the base building it doesn’t cover your leasehold.

So if you have a flood that is caused by the water heater in your premises the landlord’s insurance will not cover this damage. You will need to look to your insurance provider. The same goes for vandalism, fire caused by the tenant, injuries within the premises and any other mayhem that could occur in your space.

The last net is operating expenses. These are the expenses that the landlord pays for the repairs and maintenance of the property. These expenses are generally not for the repairs and maintenance of your space. Many of these expenses include but are not limited to parking lot repairs, exterior building painting, landscaping, exterior lighting, water and sewer.

Some confusion occurs when a tenant sees that the landlord is including the water utility expense in the operating expenses and they think that the operating expenses also include electricity and natural gas. To an uninformed person this appears to be logical. The reason that the water and sewer charges are usually prorated is because most buildings have a single water and sewer meter to the building. So the only way the expense can be reimbursed is by prorating the bill. Each tenant’s space usually has its own electricity and gas meter so the tenant can contract directly with the local utility providers for service.

I hope that this provides a better understanding of triple net charges and clears up some of the confusion that I have seen with some of my clients. The concept is easy to understand but there are a few items that can make triple net charges confusing to new tenants.