09/21/2011

Big Office Park Hits Market North of Dallas

A developer is shopping a premier office campus in suburban Dallas to core investors, with bids expected to top $480 million.

Hall Office Park, in Frisco, Texas, has more than 1.9 million square feet spread over 15 buildings. At the estimated value of $250/sf, a buyer could expect an initial annual yield of roughly 7%.

Eastdil Secured is advising the seller, Hall Financial of Frisco, which developed the property between 1998 and 2008. Hall is interested in retaining a minority interest but would consider an outright sale. It hopes to continue managing the Class-A property.

The master-planned, 162-acre campus is at the Dallas North Tollway and Gaylord Parkway, about 20 miles north of downtown Dallas. It will be 94% occupied in January, when several tenants will move in. Its buildings have consistently maintained occupancy rates above 90% upon stabilization. No single tenant leases more than 15% of the park, minimizing rollover risk. The buildings, which have 2-8 stories, range in size from 87,000 sf to 197,000 sf.

The tenant roster boasts many international and national companies, including: Amerisource Bergen (262,000 sf until 2019), Aastra (116,000 sf until October 2014), Tenet Healthcare (75,000 sf until January 2014), Genband (52,000 sf until 2018) and ThyssenKrupp (46,000 sf until 2016).

The grounds feature walking and jogging trails, lakes, fountains and a sculpture garden. There is a conference center on the campus, as well as restaurants and stores on adjacent sites. The property is near the Sam Rayburn Tollway and President George Bush Turnpike, and has easy access to affluent residential neighborhoods. Frisco, which has 117,000 residents, is one of the fastest-growing cities in the nation.

Hall Office Park is in the Far North Dallas submarket, which has 37 million sf of office space that is 82.4% occupied, above the 80.1% average for all of Dallas/Fort Worth. The submarket’s occupancy has been consistently trending upward since 2009, and rents have increased 7% in the past year, according to Eastdil. The average asking rent on a triple-net basis in Far North Dallas is now $20.25/sf, compared to $17.55 for Dallas/Fort Worth. CBRE-Econometric Advisors projects rents in the submarket will grow by an average of 8% annually over the next five years.

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