We’ve been talking about Uptown for a long time. A lot of positive trends, like “live-work-play” environment, amenity rich, walkability. Everybody wants to be a part of it. As this cycle starts to peak, it seems safe to say the submarket has truly arrived.
In fact, JLL recently published a study that noted McKinney Avenue as the 14th most expensive street in the United States, so the area has obviously seen an increase in national attention. What’s interesting about the emergence of neighboring mico-markets is that they are really offering a compliment to all the progress of Uptown. Another really positive story for Dallas.
The Main Street District has taken off with the opening of the Statler Hilton, Tim Headington’s 4510 and other developments, including Main Street Gardens. Trinity Groves has a lot of momentum from a nightlife and residential standpoint, and the Design District has experienced a rebirth from a showroom district to a unique mixed use district with a personality all its own. These areas offer a great compliment to Uptown in that they are more affordable from a residential standpoint and offer something a little more unique and personal compared to Uptown’s glitz and gleam. It’s almost as if Dallas has had its own Park Avenue and Upper East Side, and now we’re seeing the emergence of our own Tribeca, Soho and Meatpacking Districts. These areas are not in competition but complimentary.
I do think Uptown will stay at its position as one of the most highly-regarded employment centers thanks to the quality of development that’s taken place there, and, subsequently, the quality of ownership in terms of the office product that has continued to be significant in the market. Certainly, as with all real estate cycles, things can soften, but Uptown’s very recent arrival on the national landscape of most desirable places to be, not only from an office standpoint, but a residential standpoint, I can’t see that changing.
During the last economic crash, what we experienced locally, which was obviously driven by the national economy, also had a lot to do with the type of owners and investors in Dallas. This cycle, we have a lot more institutional, a lot more international money in our assets. What that tells us is that if an economic softening does occur, or when it occurs, it will be much less dramatic. We have patient, stable money in our market and even though they may have bought it at the top of the market, these investors are in it for the long haul. We don’t anticipate a big crash or softening in rental rates. We see it being a lot more subtle than the last cycle.
As for the future of development, office occupier demand leads the way. Trinity Groves, Deep Ellum, Design District are certainly the next frontiers, and though many of these areas have seen positive residential demand, the office demand isn’t there yet. Eventually, I think it will be, but not just yet.
The distinct difference between Uptown and neighboring CBD has always been the age of the properties and lack of parking. That’s changed for the past couple of years as new buildings developed in the Arts District, like KPMG Plaza and 1900 Pearl, and the main assets in the area, like Chase Tower, Trammell Crow Center and Fountain Place, do everything they can to modernize, providing additional parking, ground-floor retail, opening up their plazas to the street level to create more connection with pedestrian traffic.
Throughout Dallas’ CBD and Uptown, these different micro-markets are finding ways to increase their connectivity and investor interest, while strengthening the foundation for potential future development.