Sep 3

Dallas’ Stemmons Freeway corridor getting new looks from real estate investor

One of Dallas’ oldest suburban office districts is getting another look thanks to rising real estate costs and nearby redevelopment.

Starting in the 1960s and 1970s, developers built dozens of office buildings in the Stemmons Freeway corridor, which runs northwest of downtown.

For decades, the area was one of North Texas’ most popular business districts.

But as companies migrated farther out and newer buildings went up downtown and in Oak Lawn, Stemmons lost its office luster.

Now the area has some of the cheapest office rents and building prices in town.

That’s why investors have zeroed in on the Stemmons market with a string of recent building buys.

“We think there are big opportunities there,” said Dustin Schilling with Dallas’ Caddo Holdings.

His firm just bought the two-building Mockingbird Towers office complex west of Love Field near Stemmons. “We like the location, and there is a lot of redevelopment in the area.

“We can offer an office rent that’s not achievable downtown or further out in Las Colinas.”

Office rents in the Stemmons corridor average just under $15 per square foot, according to Cushman & Wakefield.

Downtown office rents average close to $25, and out in Las Colinas they’re about $22.

New buildings in Uptown cost more than $40.

Caddo Holdings is spending $7 million to upgrade Mockingbird Towers, which went up in the 1970s. The glass buildings with about 450,000 square feet are only about half rented.

“We think our timing is good,” said Caddo’s Justin Engler. “You’ve had a lot of apartment development recently around the medical district.

“And there’s revitalization of the Design District,” he said. “The area is becoming more attractive.”

Also, recent expansion at Dallas Love Field has made the Stemmons market more appealing to businesses that need nationwide air connections.

“Stemmons for sure is the last place to find a deal,” said Andrew Segel, whose Boxer Property Co. began buying offices in the area more than two decades ago. “If you were not from Dallas and I told you there was the most central office market in the metroplex, almost walking distance to Love Field, 1 mile from the Park Cities and situated on a freeway that runs from Mexico to Canada, you would want to see it.”

One of the largest property purchases in more than a decade just wrapped up.

Exxon Mobil Corp. sold its 23-acre office campus on Stemmons near Mockingbird to Dallas’ J. Small Investments.

The purchase includes a 17-story office tower surrounded by smaller office and commercial buildings.

The new owner plans to renovate the buildings and market them to businesses that want to locate in the area.

And the 20-story Trinity Towers at Stemmons and Inwood Road just sold to JP Realty Partners.

The 630,000-square-foot office high-rise is more than 90 percent leased.

Companies that want centrally located office space at good prices will look at some of the redevelopments along Stemmons, real estate brokers say.

“The demographics over there are changing,” said Joel Pustmueller of Peloton Commercial Real Estate. “And now, DART’s light-rail line runs through the area.

“It’s a completely different Stemmons market than it used to be.”

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