Starting at the end of the year, one of the biggest office moves in Dallas-area history will begin.
Most of the thousands of workers are relocating less than 2 miles.
State Farm Insurance will eventually house almost 8,000 employees in its new regional campus on Plano Road in Richardson.
As the company moves into the new buildings in the CityLine project over the next couple of years, it will leave more than 1 million square feet of nearby empty office space.
Real estate brokers and Richardson officials say that filling up the empty spaces after State Farm leaves will be both a challenge and an opportunity for the booming Telecom Corridor.
“We plan to begin to occupy the first of our CityLine facilities later this year and then anticipate moving employees throughout 2015 into that building,” said State Farm spokesman Gary Stephenson. “We project moving employees into the next two buildings in 2015 and 2016.
“The fourth building is scheduled for completion around mid-2016,” Stephenson said. “The project is moving forward at a good pace at the present time.”
State Farm leases temporary office space in five Richardson buildings south of its new campus. The leases in some cases run as long as until 2018.
The long lease times and multiyear move of employees will mean that the entire block of office space won’t hit the Telecom Corridor market at the same time, property brokers say.
“It’s not like this just magically appears all at once,” said John Jacobs, executive vice president of the Richardson Economic Development Partnership. “We’re already working on it.
“We have some companies that are expressing an interest in the space. It’s an opportunity for us to have 1.5 million square feet of attractive office space to work with.”
Telecom bust
The last time Richardson had so much empty office space become available was in the telecom bust days of the early 2000s when companies, including Nortel, were dumping space. It took years to fill that void. State Farm is in some of the old Nortel property.
Overall economic conditions are totally different now.
“The whole area is on fire with growth,” Jacobs said. “You don’t have very many large blocks of office space in the entire D-FW market.”
State Farm will be vacating three office buildings in Richardson’s Galatyn Park development between Greenville Avenue and North Central Expressway. And the insurance company also has temporary space in two former Nortel buildings at Lakeside Boulevard and North Central.
Top Dallas office broker Jeff Ellerman of CBRE Group says demand for office space is good in that area.
“There continues to be shortage of large blocks of functional office space that has the infrastructure and parking that corporate America wants,” Ellerman said.
The buildings State Farm will vacate in Richardson check most of the boxes for what companies need for large office blocks, he said. Plus they are close to DART’s commuter rail line.
‘Period of digestion’
But Ellerman said “there will be a period of digestion” before the empty State Farm space has new tenants.
“It will take some time to backfill that space,” he said.
Some companies hiring large workforces may opt out of the Telecom Corridor market because they don’t want to bump up against State Farm, Ellerman said.
“There are some large employers that are concerned about being in State Farm land and competing with them for employees,” he said.
Cassidy Turley and Peloton Commercial Real Estate are already hunting potential tenants for some of the State Farm temporary space.
Peloton principal Joel Pustmueller said the firms are talking to potential tenants.
“There is a new focus on Richardson — it’s now being viewed in a similar light to Legacy in Plano,” Pustmueller said. “Because of that the big deal activity out there is astounding.”
Some of the offices can be subleased from State Farm before their leases expire, brokers say.
“They have plenty of time to lease all this up,” said Greg Biggs of commercial real estate firm JLL. “Those are terrific buildings in a good location.
“And we have so many companies looking at the Dallas area.”
Follow Steve Brown on Twitter at @SteveBrownDMN.
