The new year is bringing big changes for downtown Dallas, with several high-profile properties changing hands and three skyscrapers getting a redo.
Developments in the works will add hundreds of downtown housing units while repositioning properties to attract new business tenants.
The uptick in activity in Dallas’ central business district is in contrast to the dire predictions early in the COVID-19 pandemic that downtown would suffer. Several companies have announced office moves to downtown in the past year.
“Things may have paused some at first, but we’ve kept the momentum and are picking up speed,” said Amy Tharp, interim CEO of the economic development group Downtown Dallas Inc. “Other downtowns may not have been poised to fare as well as Dallas.
“We had a lot of momentum going into the pandemic,” Tharp said. “We’ve been working a long time to diversify the building uses and industries downtown and add entertainment.”
Three planned projects would bring major changes to landmark Dallas skyscrapers.
A new venture created by Jonas Woods of Dallas-based Woods Capital plans to remodel two downtown office towers into a combination of residences and business space.
“We have consolidated $1 billion of downtown office space into a new entity: Pacific Elm Properties,” Woods said. “It will be the holding company for about four and a half million square feet of downtown office space.
“Our plan for 2022 is to convert about 800,000 square feet of that portfolio into luxury apartments.”
Focus on residential
Dallas is suffering from a shortage of rental homes. Less than 3% of area apartments 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 landmark buildings his firm controls will be redeveloped as residences.
Woods’ firm is buying the 40-story Bryan Tower, which is only about a third occupied by office tenants.
“Our plans at Bryan Tower include converting roughly half the building to luxury apartments,” Woods said. “We are going to spend between the common area improvements and the conversion of the upper floors well over $150 million upgrading that building.
“It’s a beautiful piece of classic modern architecture.”
Built in 1973, the high-rise at 2001 Bryan was one of the first modern reflective glass high-rises constructed in Dallas. Lenders foreclosed on the tower last year.
Woods’ firm has already bought the adjoining parking lots and is acquiring the garage. Those areas will be developed for additional parking and tenant amenities, including restaurant space.
The developers are also planning a redo of the 50-story former Thanksgiving Tower — now Santander Tower — at 1601 Elm St. The owners also plan to convert multiple floors of that 1.4 million-square-foot skyscraper into housing.
“We took the top two floors of Santander Tower and converted it to a hotel,” Woods said. “It proved those floors can be converted in ways that will work.”
Work on the two skyscrapers is set to begin later this year to create 550 rental units.
North side construction
Also this year, Woods and his partners including Kaizen Development hope to start work on the first phase of their $1 billion Field Street District mixed-use project 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 be two large towers and a big food and beverage component,” Woods said. “The office tower will have a half million to 700,000 square feet, and the residential tower will be 300 units,” Woods said. “The first two buildings would be along the northern side of the property.”
Pacific Elm Properties, which also controls office space in the AT&T Tower, 2100 Ross and in the One Dallas Centre high-rise on Bryan Street, is also looking just north of downtown for more construction.
Woods said the developer is working on both office and apartment high-rise projects in the Knox Street district on McKinney Avenue.
“We are going to move as aggressively as possible to begin these buildings,” he said. “Obviously, Dallas has benefited greatly from the net migration to Texas from other markets, and I don’t see that slowing down any time soon.
“Nobody is more connected to what is happening downtown than we are.”
Downtown renaissance
Other major players are also in the market with new deals.
Atlanta-based developer Portman Holdings just acquired a large building site on Ross Avenue across from the Arts District, where it’s planning a combination of residential and office towers.
And a California real estate firm, Regent Properties, is negotiating to acquire downtown’s landmark Trammell Crow Center. The 50-story Ross Avenue skyscraper just completed a $135 million redevelopment program that has boosted occupancy to more than 90%.
Another downtown skyscraper — the 49-story Energy Plaza on Bryan Street — is being eyed for a redo that would convert part of the tower into apartments.
Dallas developer Todd Interests would spend $130 million to redevelop Energy Plaza, which opened in 1983 and faces Thanks-Giving Square, according to filings with the state. So far, the developers have not commented on their plans for the building, which was designed by architect I.M. Pei and Partners.
Todd Interests is the same firm building the East Quarter apartment and office tower on downtown’s east side.
“Downtown Dallas has seen a renaissance in terms of apartment redevelopment and office conversions,” said CBRE Group’s Phil Puckett. “Converting those buildings is good. Hopefully it will take office space off the market.”
Puckett said the old financial district downtown south of San Jacinto Street continues to suffer from high office vacancies while the area to the north near Uptown is filling up.
“The north side of downtown and Uptown are still very vibrant and active,” he said.
