Office Development Amid Coronavirus: Case Study

Hines incorporates new design features to address heightened concerns about wellness.

In November 2019, Houston-based Hines, along with partners Westdale Real Estate Investment & Management and Ivanhoé Cambridge, broke ground on The Stack, a 16-story mixed-use building with 200,000 square feet of office space and 15,000 square feet of ground-floor retail.

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The project is located in the Deep Ellum neighborhood of Dallas, a hip and highly walkable area with over 60 restaurants and bars, plus numerous retail shops and live music venues. For the Class AA building designed by 5G Studio Collaborative, the development team envisioned a cutting-edge stacked design and distinguished appearance, along with sustainability features, to attract creative tenants in the technology, advertising, media and IT industries.

Tenant amenities at The Stack will include electric vehicle and scooter charging stations, an expansive 10th floor amenity terrace, a state-of-the-art fitness center and concierge package delivery. Rendering courtesy of 5G Studio Collaborative

The Stack will be transformational to Deep Ellum and the Dallas market,” said Ben Brewer, a Hines managing director. “Its cutting-edge design will offer a first-class office experience, allowing our tenants to recruit and retain top talent.”

The project, slated for completion in May 2021, has not experienced any major delays or disruptions due to COVID-19. Proper protocols were implemented at the job site—including face masks and social distancing—but the transition was smooth, and construction is ongoing, according to Corbin Eckel, a director in Hines’ Dallas office.

Leasing, however, may be slower than expected. The project is currently being marketed, but no preleases have been signed to date. “Historically, a lot of the new Class A buildings that have been successful have gone speculative, and we’re in that bucket,” he said. “COVID-19 has impacted the decision-making for a lot of office tenants. But there are no other Class A office buildings with vacancy in Deep Ellum at present, so we anticipate things will pick up again.”

Located just east of the city’s central business district, The Stack will offer tenants 75-plus options for breakfast, lunch, happy hour and dinner. Rendering courtesy of 5G Studio Collaborative

Eckel said COVID-19 has accelerated trends that were already present in the office sector. “We are seeing an increase in remote working, but, at the same time, we’re seeing a de-densification of office space,” he said. “We think office space will become more of a want than a need, and that high-quality office assets may start to behave more like a luxury product.”

Still, to meet the evolving needs of potential office tenants, Eckel said Hines is studying new design features to implement, in addition to the WELL Building Standard they are already targeting. He said it’s likely that elevators, doors and restrooms will be modified to become touch-free, antimicrobial finishes will be added in high-touch locations, and ultraviolet lights—already planned for outdoor air handlers to decontaminate coils—will be incorporated to disinfect indoor air, as well.

Although the new features will increase construction costs, Eckel believes they will make the building more marketable to future tenants. “We think they will bring the building into the future in a unique way,” he said. “We’ll ultimately have to make decisions on which items make the most sense.”

You’ll find more on this topic in the CPE-MHN 2020 Midyear Update.