Cresa Connection: Tollway Corridor - December 2020

Please find December's edition of my monthly update on the North Dallas/Plano/Frisco office market detailing lease transactions recently signed, tenants searching for office space in the market and the latest office building news. 

As we turn the page on 2020, if you have an office decision to make next year please contact me for help with your real estate needs.

Lease Transaction Comps

1. Tenant: CrossFirst Bank
Building: 3000 Internet Boulevard / Hall Park
Type: New Lease
Size: 7,068 SF
Term: 86 months
Free Rent: 2 months
Start Rate: $25.00/NNN
Bumps: $0.75
TI: $30.00/SF

2. Tenant: Aimbridge Hospitality
Building: 5501 Headquarters Drive
Type: New Lease
Size: 66,484 SF
Term: 14 months
Free Rent: 0 months
Start Rate: $25.00/NNN
Bumps: $0.00
TI: $0.00/SF

3. Tenant: MetaBank National Association
Building: 5080 Spectrum Drive / Spectrum Center
Type: New Lease
Size: 11,493 SF
Term: 90 months
Free Rent: 6 months
Start Rate: $31.65 + E
Bumps: $0.50
TI: Turnkey

4. Tenant: Center for Autism and Related Disorders
Building: 5850 Granite Parkway / Granite Park Four
Type: New Lease, Size: 26,417 SF
Term: 56 months
Free Rent: 7 months
Start Rate: $32.00/NNN
Bumps: $0.50
TI: Turnkey

5. Tenant: NRG Energy
Building: 2745 Dallas Parkway / Parkway Centre III
Type: Renewal
Size: 24,555 SF
Term: 62 months
Free Rent: 2 months
Start Rate: $27.00 + E
Bumps: $0.75
TI: $10.00/SF

Market News

For the first time in a decade, the DFW office market has experienced three consecutive quarters of negative net absorption, totaling negative 3.4 million square feet. The 4th quarter’s net absorption is on pace for negative 1.4 million square feet. Many companies have placed moves on hold or are re-evaluating their space needs. As a result, available office sublease space in the DFW area has swelled to 9.2 million square feet or 11% of the total office space available.

While the COVID-19 pandemic has slowed or postponed some building projects, the Dallas area leads the nation in construction jobs gained over the past year. Only 30% of the nation’s metro areas have witnessed an increase in construction employment during the past 12 months due to the impact of the pandemic. The Dallas area has added 7,100 construction jobs since October 2019 – more than any other metro area. By comparison, Houston saw the worst construction sector employment declines in the nation with a 19,800-job decline. While DFW commercial construction starts have fallen 11% so far this year compared to the first 10 months of 2019, residential building activity has boomed with a 10% increase in starts. Homebuilding starts in North Texas rose by more than a third in the most recent 3rd quarter.    

To attract and retain office tenants, landlords are scrambling to put wellness features in place to fight the pandemic and allow tenants to safely return to their office environments. Plano-based Granite Properties is spending more than $10 million to make changes to its office buildings to reduce infection spread by adding touchless fixtures, UV lighting and air purification/filtration systems.

A California-based tech company is relocating its headquarters from Oakland to Plano. DZS, which manufactures telecom industry technology products, has signed a new lease for 14,000 square feet at Legacy Place East (5700 Tennyson Parkway), which is owned by Equus Capital Partners. DZS has over 700 employees and plans to keep some operations in California. A portion of the Plano office will include an engineering innovation lab. DZS expects to complete the new office build out by early 2021.

Hewlett Packard Enterprise (HPE) is marketing a portion of its 106,325 square foot space for sublease in Legacy. HPE is offering the entire 3rd floor (35,648 square feet) at Platinum Park for sublease. HPE’s space is less than two years old and presents a “plug and play” opportunity near the Dallas North Tollway and Tennyson Parkway intersection. The lease term expires in November 2029. Available sublease space in DFW has reached 9 million square feet and is expected to eventually top 10 million square feet, with more than 65% of subleases being greater than 20,000 square feet.

J.C. Penney has quietly vacated its headquarters at Legacy West after not making rent payment for several months and going through bankruptcy proceedings. The retailer has filed a notice with the bankruptcy court that it has rejected its lease and abandoned the building. Penney had been engaged in a 15-year lease term at $2,450,000 in base monthly rent payments prior to its bankruptcy. Company employees have been working remotely since March. The Penny headquarters is now owned by a unit of Beal Bank. When Penney moved into its Plano headquarters from Manhattan in 1988, the company had 195,000 employees worldwide and was among the first wave of Fortune 500 companies to move to Plano and helped turn Collin County into one of the fastest-growing communities in the nation. The company now has 60,000 employees, with roughly 3,000 employees working from the Legacy office until the remote-work status took effect in March. Penney’s first-lien lenders now own 160 stores and 6 distribution centers. The retailer will lease back the store properties at $150 million per year in rent on the buildings it previously owned. Penney is expected to exit bankruptcy operating more than 650 stores. The sale of Penney’s retail business, which still owns many of its stores, is pending. Penney’s two biggest store landlords, Simon and Brookfield, have agreed to purchase the 118-year old retail business. That sale is expected to close soon.

Dallas Cowboys owner Jerry Jones has added to his substantial Collin County real estate holdings with a land purchase for a new business park. Jones’ Blue Star Land acquired 40 acres in Prosper on First Street to construct a business park just north of Blue Star’s existing The Gates of Prosper mixed-use development. The 40-acre site is adjacent to two adjoining properties that Blue Star already owns and the company’s Star Trail residential community is just to the west of the newly-acquired site. Blue Star Land purchased the site from Prosper’s Mahard family.

Leading DFW residential real estate firm Ebby Halliday has relocated its headquarters from its longtime Dallas location to a smaller space in Plano’s Legacy market at 5560 Tennyson Parkway. The new, 17,000 square foot office, which is half the size of its previous headquarters, was deliberate and a response to today’s remote work environment. The new headquarters now has all its central operations under one roof, including brokerage, mortgage, insurance and title services. Ebby Halliday employs over 2,000 agents and employees across 31 North Texas offices and has been owned by billionaire Warren Buffett’s Omaha-based Berkshire Hathaway since 2018.

Plano-based Aimbridge Hospitality is making bold moves during a crippling pandemic for the hotel industry, laying out an ambitious plan to add 120 properties to its portfolio in the next 120 days. Aimbridge has had to function through the pandemic with at least 20,000 fewer staff due to layoffs and furloughs. As the industry’s largest third-party management company, Aimbridge handles $10 billion in annual revenue for its hotel owners. The pandemic has cut Aimbridge sales by 86% even as the company has added 128 properties to its portfolio this year. The private equity backed company has seen historic organic growth this year in new properties across all of its verticals, including extended stay, select service, and international segments.   

MTX Group
, currently in Frisco’s Hall Park and which attracted media attention earlier this year when it was awarded a $295 million state contract for coronavirus contact tracing, will be relocating and expanding into a 20,000 square foot office space just across Warren Parkway at Frisco Station’s newly-constructed The Offices Two building. MTX Group had relocated to Frisco from New York in 2019.

Plano-based car trading platform CarOffer is selling a majority stake in the company to a bigger online automotive player for $140 million. The cash and stock deal gives publicly-traded CarGurus a 51% stake in the firm founded in 2019 by auto industry entrepreneur Bruce Thompson. Under terms of the deal, CarGurus can buy the remaining 49% of the company over the next three years. By leveraging technology, data and analytics to build more transparent solutions, CarOffer is disrupting the traditional wholesale auction model in the same way that CarGurus gained its position as the leading online consumer automotive marketplace in the U.S. Unlike traditional vehicle auctions, which require manual bidding and inspection, CarOffer’s technology lets dealers create standing buy orders and provides instant offers to sellers. In the 3rd Quarter 2020, CarOffer processed over $350 million in transactions.



I specialize in representing office tenants in the North Dallas/Plano/Frisco market. Please let me know if I can be of service with your real estate needs (relocation search, expansion, lease renewal negotiations, building/condo purchase, sublease, portfolio management).

Learn why Cresa only represents tenants/occupiers exclusively.

Tor Erickson | Senior Vice President

5005 Lyndon B. Johnson Freeway, Suite 800
Dallas, TX 75244