Dallas-Fort Worth defies national office development slump

There has been a notable decline in the United States of new commercial project construction, but one would never know it seeing what is happening in Texas, particularly in Dallas-Fort Worth (DFW).

While U.S. commercial construction spending has declined 13.5 per cent year-over-year as of June 2024, more than six million square feet in new office space was underway at the start of the year in DFW. That represents nearly 10 per cent of all commercial space under construction across the entire country.

Two individual projects, both spearheaded by major investment banks, claim a large chunk of this. These symbolize the DFW area’s standing as the financial hub of the southwest United States.

Goldman Sachs, in partnership with building owner Hunt Realty Investments and developer Hillwood Urban, broke ground in October last year on its new $500 million campus in north central Dallas. The project reflects the growth of the company which has operated in the city since 1968. In fact, Dallas is home to Goldman Sachs’ second-largest office in the country.

The Goldman Sachs project anchors Hunt Realty’s 11-acre mixed-use development called NorthEnd. The location is near cultural and community attractions such as the Perot Museum, the Katy Trail and American Airlines Center, and includes a 1.5-acre park. It is also strategic for business, being only 15 minutes away from the DFW airport.

Designed by the New York office of international architects Henning Larsen, the 800,000-square-foot building has been conceived as, “a modern working environment and purpose-built workspaces to enable collaboration and productivity,” Goldman Sachs said in its media release.

That means social spaces in the form of on-floor formal and informal collaboration opportunities, and hospitality offerings that include an onsite café, a fitness center, back-up child care, and access to outdoor gardens and terraces. Upon completion in 2027, the project has the potential for Goldman Sachs to grow its local workforce to 5,000 people.

In addition to its ambitions to achieve both LEED and WELL certifications, the project’s two towers will be powered entirely by electric energy.

Meanwhile, Wells Fargo’s 850,000-square-foot campus in the northwest Dallas suburb of Irving was topped out in early March.

Designed by Dallas-based architects Corgan for developer KDC, with Austin Commercial as contractor, the project has been designed to achieve LEED Platinum certification. It will also generate more energy than it consumes, making it energy net-positive. Features include rooftop solar panels, electric vehicle charging stations and native plantings to minimize watering requirements.

The project location near the Las Colinas Urban Center in Irving is a hub of business activity, home to the largest concentration of office space in the DFW region, with 7,500 businesses and more than 150,000 employees.

Boasting similar amenities to the Goldman Sachs campus, the two-tower Wells Fargo project will include a food hall with cooking stations, a dining hall overlooking Lake Carolyn, a barista-style coffee area and a library with a high-tech workshop space. Also included are an employee lounge, well-being rooms and gyms with remotely led classes. Nearby are walking and bicycle trails, stand-up paddleboard rentals, a cycling studio and four golf courses.

State and local tax incentives have played a part in attracting Wells Fargo to increase its DFW footprint.

Wells Fargo could reportedly receive up to $36 million in state and local incentives for this latest project, including over $30 million from the City of Irving and $5 million from the state’s Texas Enterprise Fund.

These two high profile commercial campuses represent nearly $1 billion of construction, yet are swimming against a current of high office vacancies in DFW, reported by Avison Young to be as high as 30 per cent. Overall leasing activity in DFW is down by 65 per cent.

Nevertheless, other leading financial services firms are increasing their area presence.

The Bank of America has recently signed a large multi-tenant office lease and JP Morgan has moved into a new downtown Dallas office to accommodate part of its 30,000-strong Texas workforce. Charles Schwab relocated its headquarters from San Francisco to the northwest DFW suburb of Westlake in 2021.

Dallas Mayor Eric Johnson believes the future of DFW remains robust and promising, particularly in the financial services sector.

Speaking specifically to the Goldman Sachs development, Johnson stated in a release, “Luring the biggest names in business is becoming business as usual in Dallas — but this is a major moment for our city. This new development also shows that there are still greater things to come for a city that is already a unique and mighty engine of economic growth for our entire nation.”