The Legacy West development in the Legacy/Frisco area is projected to see an increase in employment of almost 30,000 by the end of 2017 when several major developments are completed.

Like its southern counterpart, the Uptown submarket, the Legacy area has been on fire for the last few years, drawing in major new developments with the promise of a master-planned live-work-play environment. Brands like JPMorgan, Toyota, Liberty Mutual, FedEx and Boeing have all made a home at Legacy, and Uptown has drawn names like Gardere, PricewaterhouseCoopers, Rolex, Sidley Austin, and WeWork. With all that activity has come a surge in prices, says Grant Pruitt, co-founder, president and managing director for Whitebox Real Estate.

“We are seeing rates up about 30 percent in Legacy/Frisco and Uptown over the last four years because there is so much demand,” Pruitt said. “We were doing $20 plus E-deals in some Class A buildings in Legacy in 2009 and 2010. Now you’re over $30 on a net basis. That’s crazy exponential growth from almost 10 years ago.”

There’s no doubt that Legacy and Uptown check off all the boxes of desirable office real estate in Dallas, but Pruitt says he has his eye on two other underrated markets that are poised to explode: Las Colinas and Downtown Dallas.

Las Colinas has been known as a hub for corporate headquarters, but until recently it has lacked the amenities that many office users are searching for, Pruitt said.

“There was this idea that Las Colinas didn’t have the amenities of live-work-play and would be hard to recruit young talent,” Pruitt said. “It got passed over for Legacy and Uptown. I’m starting to feel that this market is doing things to solve that mystique.”

A few new mixed-use developments are bringing restaurants and entertainment venues to Las Colinas that will put the submarket’s appeal nearly on par with Uptown and Legacy. Cypress Waters, Water Street, and the Music Factory are all developments set to open soon that will add vibrancy to the area.

Las Colinas has always offered excellent accessibility — it’s right next to DFW Airport and centrally located to the greater Dallas-Fort Worth metroplex — and in the next few years, that could prove to be a game changer. Las Colinas sits on the Orange Line of Dallas’s light rail system, with direct access to the airport in one direction, and downtown in the other. That access distinguishes Las Colinas from booming areas to the north of the city like Legacy, which have no light rail connection.

Pruitt said he expects to see budding technologies like self-driving cars make an impact on real estate development. With Dallas’s traffic situation only getting worse, as 200 people move to the area each day, dependence on public transit will grow, leaving places like Legacy out in the cold. Already, the commute times in the region have more than doubled compared to a few years ago.

“I used to be able to get from downtown to Frisco in 20 minutes, that’s 32 miles,” Pruitt said. “Now, if I try to go 10 miles, it takes about 45 minutes.” With the employee population of Legacy about to quadruple, Pruitt said he expects traffic to become even worse in that area.

Pruitt said he is also optimistic about the future of the downtown office market, where his office is currently.

“I’m more bullish on downtown than maybe anywhere else in the long term,” Pruitt said. “I love being downtown. There’s an energy to being downtown. We’re fortunate to have owners who have been taking a significant stake in pockets of downtown to renovate it.”

Even though downtown still has a vacancy rate of 22 percent, Pruitt said he expects to see office users seeking good value return to downtown. Several large building owners have responded to the traditional objection to downtown — not enough parking — by building or renovating more parking garages. Now downtown has gotten closer to the same parking ratio office users experience in the suburbs.

“A lot of people have said I don’t feel safe downtown, and I don’t like the parking, or it’s not enough value,” Pruitt said. “But now, you get them down here and they say, ‘This is amazing. It’s an unbelievable value.’”

 

Presented by Dallas Business Journal, August 14, 2017

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