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.