The new year brings big changes to downtown Dallas, with several high-profile properties changing hands and three skyscrapers being redone.
Ongoing developments will add hundreds of residential units downtown while repositioning properties to attract new commercial tenants.
The surge in activity in Dallas’ central business district contrasts with gloomy forecasts of the onset of the COVID-19 pandemic plaguing downtown. Several companies have announced office moves downtown over the past year.
“Things may have paused at first, but we’ve kept the momentum going and we’re picking up steam,” said Amy Tharp, interim CEO of economic development group Downtown Dallas Inc. as Dallas.
“We had a lot of momentum at the start of the pandemic,” Tharp said. “We have been working for a long time to diversify the uses of buildings and downtown industries and add entertainment.
Three planned projects would bring major changes to Dallas’ iconic skyscrapers.
A new venture created by Jonas Woods of Dallas-based Woods Capital plans to transform two downtown office towers into a combination of residences and retail space.
“We’ve consolidated $1 billion of downtown office space into a new entity: Pacific Elm Properties,” Woods said. “It will be the holding company for approximately four and a half million square feet of downtown office space.
“Our plan for 2022 is to convert approximately 800,000 square feet of this portfolio into luxury apartments.”
Focus on residential
Dallas suffers from a shortage of rental housing. Less than 3% of apartments in the sector were available at the end of 2021.
To meet the growing need caused by migration to the area, Woods said, some of the space in the iconic buildings his company controls will be redeveloped as residences.
Woods’ company buys the 40-story Bryan Tower, which is only about one-third occupied by office tenants.
“Our plans at Bryan Tower include converting approximately half of the building into luxury apartments,” Woods said. “Between the improvements to the common areas and the conversion of the upper floors, we will spend more than $150 million to modernize this building.
“It’s a beautiful piece of classic modern architecture.”
Built in 1973, the 2001 Bryan Skyscraper was one of the first modern reflective glass skyscrapers built in Dallas. Lenders seized the tower last year.
Woods’ company has already purchased the adjoining parking lots and is acquiring the garage. These areas will be developed for additional parking and tenant amenities, including food court space.
The developers also plan to redo the former 50-story Thanksgiving Tower — now the Santander Tower — at 1601 Elm St. The owners also plan to convert several floors of this 1.4 million square foot skyscraper into housing.
“We took the top two floors of the Santander Tower and converted it into a hotel,” Woods said. “It proved that these soils can be converted in a way that works.”
Work on the two skyscrapers is expected to begin later this year to create 550 rental units.
North side site
Also this year, Woods and its partners, including Kaizen Development, hope to begin work on the first phase of their $1 billion mixed-use project in the Field Street district on the north side of downtown.
The group purchased the 6-acre property at Woodall Rodgers Freeway and Field Street in 2019. The site is zoned for up to 5 million square feet of construction.
“The first phase will consist of two large towers and a major restoration component,” Woods said. “The office tower will be half a million to 700,000 square feet, and the residential tower will be 300 units,” Woods said. “The first two buildings would be along the north side of the property.”
Pacific Elm Properties, which also controls office space in the AT&T Tower, 2100 Ross and in the One Dallas Center skyscraper on Bryan Street, is also looking just north of downtown for more construction.
Woods said the developer was working on both office and apartment projects in the Knox Street area of McKinney Avenue.
“We are going to move as aggressively as possible to start these buildings,” he said. “Clearly, Dallas has benefited greatly from the net migration to Texas from other markets, and I don’t see that slowing down anytime soon.
“No one is more connected to what’s happening downtown than we are.”
Other major players are also on the market with new offers.
Atlanta-based developer Portman Holdings has just acquired a large construction site on Ross Avenue across from the Arts District, where it plans a mix of residential and office towers.
And a California real estate company, Regent Properties, is negotiating to acquire the famed downtown Trammell Crow Center. The 50-story Ross Avenue skyscraper just completed a $135 million redevelopment program that brought occupancy to over 90%.
Another downtown skyscraper – the 49-story Energy Plaza on Bryan Street – is on the prowl for a renovation that would convert part of the tower into apartments.
Dallas developer Todd Interests is reportedly spending $130 million to redevelop Energy Plaza, which opened in 1983 and faces Thanks-Giving Square, according to state filings. So far, developers have not commented on their plans for the building, which was designed by architect IM Pei and Partners.
Todd Interests is the same company building the East Quarter apartment and office tower on the east side of downtown.
“Downtown Dallas has seen a renaissance in terms of apartment redevelopment and office conversions,” said Phil Puckett of CBRE Group. “The conversion of these buildings is good. Hopefully this will take some office space off the market.
Puckett said the old downtown financial district south of San Jacinto Street continues to suffer from high vacancies while the area to the north near Uptown fills up.
“The North Side of Downtown and Uptown is still very vibrant and active,” he said.