Dallas Office Building’s Seller Claims Rents 30% Below Market

An aging office building in Park Central Dallas is hitting the market.

American National Insurance Company has listed Churchill Tower, a 277,000-square-foot office building. The property, at 12400 Coit Road, was built in 1999, making it 25 years old, but it is still the newest tower in Park Central by 12 years. American National has owned the building since 2003, according to property records.

A JLL team of Todd Savage, Ben Esterer, Andrew Levy and Jonathan Napper have the listing.

The property sits on 2.7 acres near Medical City, at the intersection of US Highway 75 and Interstate 635. The building is 79 percent leased, leaving it slightly better off than the average in Dallas. The city’s office vacancy rate hit 26.6 percent last quarter, with 60 percent of the vacancy tracing to just 10 percent of the buildings, according to JLL.

While offices not built in the last five years are generally struggling, the sellers claim Churchill Tower’s rents are as much as 30 percent below market value. The average rent in the city sits at $35.25 per square foot, though high-end, newly built towers are scoring rates as high as $100 per square foot. The sellers cite 42,000 square feet of new leases signed and 29,000 square feet in renewals or expansions in the past year.

In the past 12 months, nearly 1.4 million square feet more space has come on the market than has been taken off in Dallas. Another 5.2 million square feet is under development, some 70 percent of it pre-leased, which is likely to push vacancy rates higher. So far, the largest lease of the year has been Santander’s renewal of 211,000 square feet at 1601 Elm Street.

While deal flow has slowed significantly in Dallas commercial real estate, some offices are still selling. Associa bought two buildings in Richardson, with plans to turn them into a headquarters after some $15 million in renovations.