Top 10 Most Transacted Submarkets by Sales Volume in Dallas
- Apr 17, 2018
Dallas’ robust economy has continued its growth and diversification during the past 12 months, a momentum which is expected to go on for the next two years. The DFW metro’s real estate market has been rapidly maturing, as the number of large built-to-suit projects coming online is climbing, which, in turn, is attracting major corporations. The majority of new office deliveries are snapped up the moment they hit the market.
Assets located in the suburban primary and secondary submarkets were the most sought-after due to their accessible locations and relatively affordable prices. Demand for highly amenitized buildings is increasing and investors have been willing to pay top-dollar for Class A office properties. Nevertheless, a lot of interest is also placed on Class B assets, as value-add opportunities remain highly attractive.
The total number of office transactions is not extremely high as the bulk of large sales already closed during the previous years. However, the total sales volume surpassed $1.5 billion as several submarkets continue to record nine-figure deals. The list below consists of the top 10 most transacted submarkets by sales volume in the Dallas Fort-Worth metro between February 2017 and February 2018 based on Yardi Matrix data.
10. Platinum Corridor South ($71.2 million)
Twenty years after the first office developments started to appear in this submarket, Platinum Corridor has established itself as one of the busiest business areas in the DFW. Companies have been flocking in, particularly in the northern end, attracted by the submarket’s accessibility via air, light rail and road. The southern end, Platinum Corridor South, features less expensive average prices per square foot than the northern quadrant; nevertheless, it has attracted only $71.2 million in total investment. Among the five properties that changed hands in this submarket during the last 12 months, the highest-priced was Parkway Office Center at 14180 Dallas Parkway. Orbis Real Estate bought the 229,466-square-foot building for $31.3 million from KBS Realty Advisors in June.
9. Telecom Corridor ($72 million)
The Telecom Corridor in Richardson added almost 4 million square feet of new office development over the past decade, while its average price per square foot has stayed around an affordable $115. The availability of large office buildings has attracted several technical and telecommunication companies including AT&T, Ericsson, Verizon and Samsung. During the past 12 months, the area has seen six properties changing hands and generating $72 million in total sales volume. The top transaction—at $28.6 million—was Intercontinental Real Estate’s purchase of 2280 Greenville, a 192,710-square-foot property at 2280 N. Greenville Ave.
8. Plano ($86.8 million)
In January, Plano was one of the submarkets with the most office space underway. More than 1 million square feet are ready to be added to the existing 7.5 million-square-foot stock, as a result of increasing demand. Averagely priced and located near the popular Platinum Corridor North submarket, Plano’s office buildings have attracted several waves of investment. During the past four quarters five office properties sold for a combined $88.8 million or an average of approximately $126 per square foot. The largest transaction was represented by One Allen Center, which Accesso Partners bought for $32.4 million. The mid-rise building is located at 700 Central Expressway S. and encompasses 150, 492 square feet.
7. West Dallas ($111.2 million)
Despite its proximity to the market’s core, West Dallas has a high vacancy rate of about 30 percent. Over the past decade the submarket only added 115,000 square feet in new stock, while most of the inventory consists of outdated office assets. However, investors were interested in purchasing properties in West Dallas following a larger trend of repositioning older buildings located in primary urban areas. As a result, the total sales volume crossed the $100 million mark. Of the four office properties that traded during the past 12 months, the most expensive was Trinity Towers. Stanton Road Capital purchased the 634,381-square-foot tower at 2777 N. Stemmons Freeway from Sooner Management for $68.6 million.
6. North Dallas ($122.1 million)
North Dallas is also lacking in new development, just like West Dallas, as less than 60,000 square feet of office space were added to the submarket during the last decade. Its office inventory of roughly 10 million square feet consists of a significant supply of Class B properties, which, paired up with an affordable price of around $120 per-square-foot, attracted $122.1 million in total investments. Tanglewood Property Group closed the largest deal in this submarket after it had paid $39.6 million for Preston Plaza, a 294,133-square-foot office building at 17950 Preston Road.
5. Central Expressway ($140.9 million)
Only two properties traded in Central Expressway during the past four quarters, but the investment total was nearly $141 million. The first one, Meadow Central, a 175,184-square-foot building at 10300 N. Central Expressway sold for $20.9 million to Libitzky Property Cos. The second one, Northpark Central, was pirchased for $120 million. CBRE Global Investors bought the 491,803-square-foot tower located at 8750 N. Central Expressway from Barings in June after securing an $81 million loan from Metropolitan Life Insurance Co.
4. Uptown/Oak Lawn ($158.8 million)
During the last decade, Uptown/Oak Lawn added nearly 2 million square feet in new office development, which, together with its urban primary position, has attracted several companies and investors. The submarket enjoys strong fundamentals, as both leasing and sales activity are very dynamic. Its office vacancy rate was 14.7 percent as of January, below the market’s overall average. At the same time, the total sales volume was $158.8 million, with two properties changing hands during the last 12 months. Parkside Tower, a 376,710-square-foot high-rise at 3500 Maple Ave. was acquired for $122 million. Lincoln Property Co. purchased the asset from Champion Partners.
3. Platinum Corridor North ($287.3 million)
The submarket is one of the most dynamic areas for construction activity, with more than 2 million square feet of office space under construction as of January. Home of the Legacy Business Park, Platinum Corridor North has been attracting a growing number of corporations due to its easily accessible location and top-of-the-line office amenities. Toyota, JP Morgan Chase, Boeing and Liberty Mutual are just a few companies that have relocated their headquarters to Legacy West. Four properties changed hands in the submarket, generating a total of $287.5 million in sales volume. The largest deal was the purchase of Legacy District One, which cost TIER REIT $123.3 million.
2. East Dallas ($290 million)
Although having a more limited inventory compared to other submarkets on this list and only 550,000 square feet in new office deliveries, East Dallas is home to the largest office sale closed in the metro during the last four quarters. In July, Baylor Cancer Center at Dallas sold for $290 million to Physicians Realty Trust. The 458,396-square-foot office building is located at 3410 Worth St. and is LEED Gold-certified.
1. Las Colinas ($603.7 million)
While Platinum North Corridor and its Legacy Business Park have received a lot of attention recently, real estate analysts are expecting that Las Colinas—the recipient of more than 1 million square feet of new office space in 2017—is going to stay a competitive office market. During the last four quarters, the submarket was the most dynamic in terms of sales activity, with 13 properties finding new owners. It was also home to the second-largest office sale in the DFW. The 556,381-square-foot building at 600 Hidden Ridge Drive in Irving sold for $231.2 million to AVR Realty.
Images courtesy of Yardi Matrix