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<\/p>\nTrophy office space still dominates Dallas-Fort Worth, but a crop of 1980s and 1990s towers is holding its own, winning tenants with high-end renovations.<\/p>\n
The upgrades go beyond cosmetics. In a market where trophy buildings have cut vacancy to 14.5% while nonprime space tops 19%, revamped vintage properties are closing the gap with hospitality-style amenities, fitness centers, upgraded lobbies and spec suites.<\/p>\n
For investors, such projects \u2014 sometimes costing tens of millions \u2014 are often the only way to keep aging assets competitive in a Metroplex that\u2019s attracting a bigger, more educated workforce and is on track to become the nation\u2019s No. 3 metro by 2030.<\/p>\n
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\n Bisnow\/created with assistance from ChatGPT\n <\/p>\n
Piedmont Realty Trust<\/a>\u00a0paid nearly $400M for the Galleria Office Towers in 2020 after\u00a0CBRE Global Investors<\/a> spent about $27M upgrading the trio of Reagan-Bush-era buildings. Coming out of the pandemic, Piedmont poured in another $9M<\/a>, pushing the complex further into trophy territory.<\/p>\n Modernized facilities and a hospitality-style tenant experience, from sleek meeting rooms to a lobby coffee shop, have fueled demand.<\/p>\n \u201cThey rival any of the new Class-A stuff being built,\u201d Colliers Executive Vice President Chris Wright said.<\/p>\n Nationally, the divide between trophy offices and the rest is widening. Trophy vacancy fell 30 basis points to 14.5% in Q2, while nonprime vacancy rose 10 bps to above 19%, CBRE data shows<\/a>. With more occupiers\u00a0planning to expand in the coming years<\/a>, demand for top-tier space could climb further.<\/p>\n The Metroplex is on pace to overtake Chicago as the nation\u2019s third-largest metro by 2030<\/a>, a shift expected to spur job growth and office demand. That growth will draw a more educated workforce<\/a>, and \u201cthose people are looking for quality and they\u2019re going to find it,\u201d said Jeff Holzmann, chief operating officer at RREAF Holdings.<\/p>\n \n The Galleria Office Towers were purchased by Piedmont Realty Trust in 2020 for nearly $400M.\n <\/p>\n To compete, older and Class-B offices need a hospitality-style overhaul, Wright said \u2014 renovations that can range from $1M to tens of millions of dollars. At a minimum, that means food service, a modern fitness center with locker rooms and an upgraded conference facility for tenants.<\/p>\n \u201cThose are the three check boxes that you really have to put into place to even be considered as you’re chasing these tenants that are coming to the market to live,\u201d Wright said. \u201cBecause your competitor next door is going to build those at a bare minimum.\u201d<\/p>\n With more companies pushing return-to-office, older buildings are competing with the comforts of home. Cozy common areas with WiFi and outdoor courtyard workspaces have become popular upgrades, Wright said.<\/p>\n \u201cAny of those creature comforts that you can add are very beneficial,\u201d he said.\u00a0<\/p>\n Spec suites are another tool for reviving older offices, giving landlords an edge in the race for tenants.<\/p>\n Across Texas, renovations have historically boosted occupancy and rents, a 2024 Partners study found<\/a>. Before the pandemic, occupancy climbed an average of 500 basis points and asking rents rose $2.46 per SF within two years of upgrades.<\/p>\n But those kinds of increases are no longer guaranteed.\u00a0<\/p>\n DFW office renovations in 2020 and 2021 lifted occupancy 360 bps over two years. Asking rents rose $1.71 per SF in that period to more than $31.<\/p>\n \n The 42-year-old Burnett Plaza in Fort Worth underwent extensive upgrades in 2021.\n <\/p>\n Piedmont\u2019s postpandemic renovation turned Three Galleria Tower, the largest of the three high-rises along the Dallas North Tollway, into a leasing leader, said Steve Triolet, senior vice president of research and market forecasting at Partners.<\/p>\n Nearly 140K SF of new leases were signed there in Q2, he said, including high-profile firms drawn by its prime location and modern upgrades.<\/p>\n Marsh McLennan<\/a> signed a nearly 93K SF lease in April to occupy three floors at the tower, followed by Burns & McDonnell’s 46K SF lease in May.<\/p>\n Some Class-B buildings in DFW have a flaw renovations can\u2019t fix: \u201clocation, location, location,\u201d\u00a0said\u00a0Richmond\u00a0Collinsworth<\/a>, senior vice president and managing partner at Bradford Commercial Real Estate Services<\/a>.<\/p>\n \u201cThere are certain buildings where you could sink $20M into it and you wouldn’t get $1 of it back,\u201d Collinsworth said.\u00a0<\/p>\n He said Mid-Cities buildings are drawing little interest and are more likely to be scraped for industrial or multifamily use. Class-C offices rarely thrive, and Wright doesn\u2019t expect strong demand in the Metroplex.<\/p>\n Holzmann sees an opening with older buildings that can\u2019t afford multimillion-dollar renovations, targeting tenants without front-facing operations.<\/p>\n \u201cIf you\u2019re offered enough money and the company is interesting enough, are you really going to care about the exterior or if the building is old?\u201d Holzmann said. \u201cYou really care about your work environment.\u201d<\/p>\n Successful Class-B investors follow a value-add playbook: invest capital, upgrade amenities and drive leasing. Many properties bought since 2022 are moving through that process. Colliers data shows average Class-B rents have climbed nearly $3 in five years to $24.25 per SF as of June.<\/p>\n \u201cI’m incredibly bullish on DFW and Class-B,\u201d Wright said. \u201cYou’re going to see a run of three to five years that’s going to be incredibly healthy for the Class-B market.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Trophy office space still dominates Dallas-Fort Worth, but a crop of 1980s and 1990s towers is holding its…\n","protected":false},"author":3,"featured_media":155391,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5138],"tags":[5229,90680,15833,90678,53973,7371,7372,90681,90685,14496,90683,90682,90684,90679,358,3187,67,586,132,5230,68,2969],"class_list":{"0":"post-155390","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-fort-worth","8":"tag-america","9":"tag-bradford-commercial-real-estate","10":"tag-cbre","11":"tag-chris-wright","12":"tag-colliers","13":"tag-fort-worth","14":"tag-fortworth","15":"tag-galleria-office-towers","16":"tag-jeff-holzmann","17":"tag-partners","18":"tag-piedmont-realty-trust","19":"tag-richmond-collinsworth","20":"tag-rreaf-holdings","21":"tag-steve-triolet","22":"tag-texas","23":"tag-tx","24":"tag-united-states","25":"tag-united-states-of-america","26":"tag-unitedstates","27":"tag-unitedstatesofamerica","28":"tag-us","29":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115049103649588912","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/155390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=155390"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/155390\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/155391"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=155390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=155390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=155390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n<\/p>\n