Plano, Dallas welcome uptick in commercial office leasing as a return to office continues

As an increasing number of companies direct employees back to in-person work, employers are weighing location, size and attractive amenities in a post-pandemic workforce.

Leaders in Plano and Dallas are reporting an uptick in interest in filling vacant office spaces. In Plano, for the first time in the past five years.

Commercial real estate can have far-reaching impacts on communities like Plano, where 50% of taxes collected come from the commercial sector.

“When buildings are vacant, they collect less taxes,” said Doug McDonald, Director Of Economic Development for the city of Plano.  “We're collecting less taxes on an empty building than we would be if a company's in there. There's also business personal property that's taxed.

And so, from a revenue standpoint, it's important for us to get these buildings filled because it does bring additional tax revenue to the city, which provides one relief to Plano residents on their tax base.”

McDonald tells NBC 5, the City of Excellence is filling commercial office vacancies bouncing back from a vacancy rate of about 20%.

“We're starting to see kind of the rebound from the pandemic and kind of work from home,” he said. “As companies start making decisions of either return to office or looking at the real estate options to consolidate multiple operations into one single operation, Plano is now becoming really a hotbed of activity for corporate leasing, office leasing here in the Metroplex.”

Inventory is beginning to fill up, said McDonald.

Over the past two months, the city and developers have secured at least 9 new deals bringing major companies and headquarters to Granite Park, Liberty Mutual and the Ryan Tower including:

• Granite Park is now home to: Tech Mahindra Americas HQ (27,000 SF); Midea America (25,000 SF; Atlantic Aviation (25,000 SF); Lockton (53,000 SF).
• Plano’s Liberty Mutual building is now home to Sally Beauty Holdings (140,000 SF) and Comcast Business (50,000 SF).
• The Ryan Tower is welcoming Koch, Inc. (29,000 SF).

Other projects will soon be announced, according to the city’s spokesman Steve Stoler.

Sally Beauty Holdings, for example, is relocating its global headquarters from Denton to the Liberty Mutual building in Legacy West, bringing 600 employees with it.

Plano’s population has grown to approximately 300,000 residents and has a workforce of 300,000, according to McDonald.

The city has also taken steps to reimagine massive campuses like the former J.C. campus and the EDS campus that have until recently impacted the city’s vacancy rate.

“If you look at the former EDS campus, the HP campus, which is now converting into the Life Sciences campus, that's about a million and a half square feet,” said McDonald. “They've now been repositioned for mixed use for residential and retail and restaurants. Really, the amenities and walkability that now corporations are seeking.”

To the south, Downtown Dallas Inc. is also reporting a slight uptick in office space leasing after uncertainty related to the pandemic and its long-term impact on the workforce.

“Most companies, while there was a period of uncertainty trying to understand how much space they needed, there was hesitancy to sign new leases without knowing exactly what you needed,” said Evan Sheets, vice president of planning and policy for DDI. “Now what we've seen is a lot more certainty in the market, we've seen leasing tick upward.”

With this resurgence comes opportunities, both men say for cities with existing infrastructure over cities with large office buildings being built.

“New construction projects, they've slowed. They've slowed nationally.  For the first time, we've seen really no new office starts,” said Sheets.  “What that is is an opportunity for existing property, so existing property can continue to absorb those new leases, and we can fill up existing vacancy throughout DFW and certainly in downtown.”

Plano has new inventory ‘delivering’ this summer, including in Granite Park 6.

Both say cities have also taken steps to allow developers to transform vacant office space into residential and mixed-use projects.

“We have office space that's on the ground today, and we have Legacy West that's on the ground today, and the Shops at Legacy, and the Boardwalk,” said McDonald. “We have spent several decades planning and building the mixed-use that residents once wanted, and corporations are now vying for."