Shorenstein Buys 388 KSF Dallas Office Asset

September 20, 2024

Investment Dallas News OfficeMoreSouthwest

International Plaza II is almost fully leased.

Exterior shot of International Plaza II, an office building in Dallas. — International Plaza II in Dallas underwent multimillion-dollar renovations before becoming almost fully leased at the moment of sale. *Image courtesy of CommercialEdge*

Shorenstein has acquired the 388,000-square-foot International Plaza II, a 15-story office tower in north Dallas, from Taconic Capital, which tapped JLL to market the building earlier this year.

Taconic acquired the property in 2018, largely as vacant space that had previously been occupied by JPMorgan Chase and Fannie Mae. The investor spent about $26 million to make renovations to the property, which were completed in 2020. Since the first quarter of 2020, about 360,000 square feet has been leased at International Plaza II.

The building’s upgrades included the addition of about 50,000 square feet of new amenity space, such as a full-floor food hall, a coffee and wine bar, indoor and outdoor tenant lounges, and fitness and conference centers. A newly built event center, Lake House, offers both indoor and outdoor settings for tenant events.

International Plaza II is 93 percent occupied, well above the average for the DFW office market, with its remaining space on offer for $45 per square foot. That is above the North Tollway area average of about $32 per square feet.

Tenants at the property include Interstate Batteries, event services firm Freeman and the accountancy Forvis. None of the seven leases currently in place at the building expire in the next 12 months, CommercialEdge shows. The leases—with an 11-year weighted lease term—provide a durable cash flow stream, according to prepared remarks from Colby Wick, managing director at Shorenstein.

The building, on one acre at 14221 Dallas Parkway, came online in 2000, and includes a multilevel parking structure with 1,624 spaces.

DFW office still smarting

During the second quarter of 2024, Dallas-Fort Worth office recorded 125,700 square feet of negative absorption, according to Colliers, an indication that demand is still suffering postpandemic. A year ago, demand was even weaker: In the second quarter of 2023, negative absorption came in at 313,300 square feet.

Colliers puts the market vacancy rate at 21.0 percent as of last quarter, up from 20.3 percent a year earlier, though Class A buildings continue to have the edge when it comes to attracting tenants. Rents on average are declining, down 0.32 percent quarter-over-quarter.

In response to weak metrics, DFW office development has slowed. Only 600,000 square feet was delivered during the second quarter of 2024, compared with 1.5 million during the same quarter a year earlier.