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News release

DALLAS, TX

Dallas’ Skyline Office Space Commands Top Dollar, Rent Growth Expected to Increase

JLL’s 2016 Skyline reveals that tenants demand more bang for their buck as trophy rental rates continue to command a premium


​DALLAS, June 22, 2016 – The booming Dallas economy has driven rents in its Skyline buildings, maintaining consistent growth over the last few years. Overall, Skyline properties have seen rent gains of almost 7.8 percent in the last two years, with Trophy assets, whose vacancy is just 17.3 percent, outpacing that by almost a full percentage point.

This translates into rental rate spread of fully $9 per square foot between the traditional Class A Skyline properties and top-tier trophies. The upward push on rates comes from both the well-located, highly desirable existing assets and new Skyline construction. JLL’s 2016 Skyline shows these properties are currently setting a rent watermark of as much as $48 to $50 per square foot on a full service basis. Over the next 12 to 18 months, rent growth is expected to continue to grow as new product is delivered and leased.

  • Skyline and trophy rents at record highs; owners retain leverage due to limited stock
  • Rent growth expected to increase
  • Landlords need to retain best-in-class standard of Skyline assets, mindful they don’t tarnish with complacency 

“Our downtown has again evolved into a desirable location for employment and living,” said Walter Bialas, JLL Research Director in Dallas. “To understand the real trends and opportunities, however, you really have to look at the properties individually. Many of our Skyline buildings, which represent our urban core’s top-tier assets, are in high demand by tenants as evidenced by rising rents and above average occupancy. What is critical to understand is that while the newest buildings are seeing good leasing activity, it is not just these properties attracting tenant attention. The last generation is seeing its share of activity as well.”

Current Skyline buildings are seeing interest as tenants move into downtown from other submarkets or even outside of Dallas entirely, including Invesco, Omnitracs/ Active Networks, and Santander Financial. Additionally, CBD/Uptown tenants remain steadfast, renewing their leases and possibly reconfiguring their space to meet their changing needs, such as law firms Hunton & Williams in Fountain Place and Strasburger in Bank of America Plaza.

New construction commands a premium

Owners, especially those with new and recently developed Skyline properties, still have the upper hand for now. Rents for those rising towers in Dallas are hitting $48 to $50 per square foot, a nearly 75 percent premium over average Skyline asking rents due to greater efficiencies inherent in such factors as layouts and operating costs. By comparison, in places like New York (Hudson Yards) and San Francisco (Salesforce Tower), landlords are asking near double at more than $100 per square foot.

Modest declines in investment volumes

Overall investment volumes into the Skyline fell slightly in 2015 nationally, due to strong demand and liquidity for Skyline assets earlier in the economic cycle as well as the generational nature of many acquisitions since the Global Financial Crisis. The scarcity of opportunities meant only 9.5 percent of the Skyline across North America traded in 2015, down from 10.7 percent in 2014.

“Dallas’ economy is prospering and real estate continues to become more and more valuable,” said Evan Stone, Managing Director with JLL’s Capital Markets. “Urban-walkable locations and high-end amenities are drawing the attention of tenants, fuelling interest of investors as several new buildings are preparing to go or have gone to market and rents and occupancy continue to rise.”

What have you done for me lately?

Despite the rise in popularity of creative buildings and fringe markets, assets within the Skyline are still the gold standard. However, owners need to stay mindful they don’t tarnish with complacency. In downtown Dallas, that means landlords have had to make significant lobby and plaza upgrades like Plaza of the Americas and Fountain Place.

“Properties are evaluating and renovating to stay competitive with new deliveries,” said Jeff Eckert, Managing Director with JLL’s Agency Leasing and Property Management in Dallas. “Tenants are looking for the most efficient space within the Skyline that provides employee-friendly spaces, like Wi-Fi accessible lounges and coffee bars, and on-site amenities, including restaurants, fitness centers, and parking, to attract top talent and retain employees.”

About the Skyline Review

Investors and tenants alike can access JLL’s Skyline via a digital platform. The fully interactive website will feature JLL’s proprietary market insights regarding office supply, demand, rents, leverage and investment into 52 markets across the United States and Canada, with the ability to compare and contrast individual markets or multiples of markets as well as individual properties or portfolios. In addition, the site will offer videos and infographics. All information will also be available via mobile access.

About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.