Cresa Connection: Tollway Corridor - September 2020

September's edition of Cresa Connection provides an 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.


Lease Transaction Comps

  1. Building: 14221 Dallas Parkway / International Plaza II
    Tenant: Trinity International Industries
    New Lease
    Size: 155,200 SF
    Term: 192 months
    Free Rent: 12 months
    Starting Rate: $28.50/NNN
    Bumps: $0.50
    TI: $75.00/SF

  2. Building: 6201 W. Plano Parkway / International Business Park
    Tenant: Scriptdash
    Type: New Lease
    Size: 43,578 SF
    Term: 95 months
    Free Rent: None
    Starting Rate: $29.12 +E
    Bumps: $0.50
    TI: $70.00/SF

  3. Building: 6100 Tennyson Parkway / Tennyson Office Center I
    Tenant: Imagine Communications
    Type: New Lease
    Size: 14,669 SF
    Term: 67 months
    Free Rent: None
    Starting Rate: $28.12 +E
    Bumps: $0.50
    TI: Turnkey

  4. Building: 7460 Warren Parkway / Duke Bridges III
    Tenant: ANPI
    Type: New Lease
    Size: 5,847 SF
    Term: 84 months
    Free Rent: None
    Starting Rate: $19.50/NNN
    Bumps: $0.50
    TI: $28.00/SF

  5. Building: 4975 Preston Park Boulevard / Preston Park Towers West
    Tenant: Keyence
    Type: Renewal
    Size: 6,230 SF
    Term: 16 months
    Free Rent: None
    Starting Rate: $31.00/NNN
    Bumps: $0.50
    TI: None

  6. Building: 5000 Quorum Drive / Five Thousand Quorum
    Tenant: Screen Actors Guild
    Type: New Lease
    Size: 8,344 SF
    Term: 65 months
    Free Rent: 5 months
    Starting Rate: $21.00/NNN
    Bumps: $0.50
    TI: $30.00/SF


Market News
Nationwide, 2nd Quarter commercial real estate investment volume decreased by 69.9% year-over-year to $40.2 billion as both limited property touring and market uncertainty from the pandemic hampered investment activity. The hotel sector had the largest percentage decrease year-over-year (-91.2%) while the industrial sector has the least percentage decrease year-over-year (-49.8%) and multi-family had the largest absolute decrease (-$34.1 billion). Leading indicators suggest that the global recovery will gain momentum in the second half of 2020 and deliver strong rates of growth in 2021. The expected pick-up in real estate demand will lag the improvement in economic growth by between six and nine months.

The latest employment data for June shows the DFW market is well on the path to recovery. DFW gained 104,000 jobs in June and the unemployment rate is down to 8.4%. Those one-month gains are typically what the local economy adds in one year and reflects early efforts to open the economy. Since shedding 408,600 jobs in February and March, the DFW market has gained 172,300 jobs and employment levels are now resting at levels last seen in late 2017. The unemployment rate spiked to 12.8% in March and has steadily improved by 4.4% over the past three months. In June, most gains came from the leisure and hospitality segment, adding 47,700 jobs, and retail trade, which added 14,800 jobs. These gains are an outcome from the initial stages of reopening the economy in May as many consumers have ventured out from lockdown to restaurants, shopping destinations and entertainment venues.

The Dallas area leads the nation in the share of employees returning to the office following COVID-19 shutdowns. Looking at the 10 largest U.S. metro areas, workplace occupancy is back to an average of only 23% re-openings. The Dallas area, at 36%, is more than three times as open as New York City (11.8%) after Dallas office occupancy by workers dropped to less than 12% in April at the start of the pandemic. One in five employees say they are working more hours at home than they did at the office.    

DFW commercial construction starts in June were up 10% from 2019 levels and for the first half of 2020, almost $11.4 billion in construction starts were recorded in DFW – behind only New York City for new construction nationwide. Developers say most projects that were close to starting before the pandemic hit have moved ahead. Almost 85% of the real estate executives surveyed by a top Dallas architectural firm said they are optimistic about a return to “normal” at some point.

For the first time ever, Dallas ranked as the number one U.S. commercial property market at the halfway mark of the year. Dallas had more than $9 billion in commercial property transactions in the first six months of 2020, compared with less than $8 billion in Manhattan and just over $7 billion in Los Angeles. Two of Dallas’ largest office deals included the $400 million sale of the Galleria Towers and the $370 million sale of Uptown’s The Union. Even so, total commercial property investment in the Dallas area dropped by about 10% in the first half of 2020.

The sales volume for office properties, in particular, in the DFW market has remained remarkably resilient. The market has experienced an increase of $94.5 million compared to the first half of 2019. From 2010-2019, the DFW market averaged $1.9 billion in office sales volume in the first half of the year. The first half of 2020 surpassed this average with $2.2 billion in office sales volume. The third quarter, however, is off to a slow start with $120.9 million in office sales quarter to date. The present environment makes it difficult to predict which tenants will put their office space up for sublease, shutter, renew or even continue paying rent. The longer the crisis persists, the more distress we could see from landlords.

Amazon is creating 600 new technology jobs at its Galleria Towers location and will expand by an additional 100,000 SF (giving the company a total of 270,000 SF) as part of the company’s national tech hub expansion. Dallas is one of six cities where Amazon announced that it will create a total of 3,500 new jobs, including Manhattan (2,000), Phoenix (500), San Diego (200), Denver (100) and Detroit (100). The jobs pay an average of $150,000 per year and the multiple-city expansion came after Amazon decided last year to drop its plan to put half of its second headquarters along the eastern seaboard in New York City due to mounting political opposition from the Queens borough. The 600 new jobs are in addition to Amazon’s 1,500 existing technology employees in Dallas as well as 130 tech and corporate roles currently open. Teams in the Dallas office support Amazon Web Services, Amazon’s retail operations and Amazon devices, including Fire, Kindle and Echo products. Projects include machine learning and ways to accelerate the benefits of 5G.

Wolverine Investments has completed a lobby renovation of its newest asset – 3905 Dallas Parkway (“Tollway Office Center 2”). The 160,000 SF, 2-story building comprises 80,000 SF floorplates and currently has 120,000 SF available for lease at $21.00/NNN. Globe Life Insurance currently occupies 40,000 SF on the 1st floor.

After five years of civic fighting and lengthy debates, Plano’s city council voted to abandon a development plan called “Plano Tomorrow.” The plan, which called for more high-density development to help grow the suburb in the coming decades, was seen through a politically charged lens. The council, which included members who support and oppose it, decided to compromise and begin drafting a new plan. In the meantime, the city replaced the Plano Tomorrow plan with the development plan that guided the city from 1985 until 2015. 

VanTrust Real Estate, developers of Frisco Station adjacent to The Star, plans to build a four-story, 115,000 square foot office building in McKinney’s Craig Ranch development on the north side of SH-121. McKinney Corporate Center II will be located next door to a similar building VanTrust built in the business park that is fully leased.

Kaizen Development Partners is teaming up with the McKinney Economic Development Corporation to build an 8-story, 200,000 SF speculative office building in Craig Ranch at the northeast corner of SH-121 and Alma Drive. Construction is scheduled to start in the 1st Quarter of 2021 and is one of only a few speculative office projects moving ahead in Collin County during the pandemic.

Addison’s 1.1 million SF The Colonnade office complex is undergoing a multi-million dollar renovation project this year that will include a 10,000 SF fitness center with group classes and country club style locker rooms and a 125-person conference center.

The 304-room Renaissance Hotel at Legacy West is cutting 66 jobs effective October 30. The occupancy rate for U.S. hotels was under 43% in June and delinquencies on hotel loans hit a record high in July, with 23% more than 30 days behind. The American Hotel and Lodging Association has been pushing Congress for financial help for months, warning that an historical wave of foreclosures could result. The Renaissance job cuts are expected to be permanent.


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