One of downtown Dallas' most visible office towers went up for sale and came back with nothing. The Harwood Center, a 36-story high-rise at 1999 Bryan St., failed to land a buyer in a fall auction and now sits in a kind of real estate purgatory. The nearly 735,000-square-foot building still has corporate tenants, but is roughly half empty, leaving owners, lenders and city boosters with a complicated question: what now.
According to a special-servicer filing tied to the COMM 2014-UBS5 trust, cited by The Dallas Morning News, "The asset was marketed for sale on the RealINSIGHT Marketplace, the decision was made not to proceed with a trade." The same filing notes that a New York ownership partnership defaulted on the loan in 2021. The servicer did not spell out why a deal was pulled back after marketing.
Auction Push and the Listing
The tower was teed up for an online auction in October, with brokers taking it to market on RI Marketplace and opening bids reportedly set at $10 million. The Real Deal reported that the building was advertised at roughly 734,000 to 735,000 square feet and pitched as a prime candidate for a conversion or major repositioning rather than a simple lease-up play.
CoStar News noted that brokers leaned on the tower's location next to the St. Paul DART station and talked up the potential for redevelopment or a sizable renovation, a common theme these days for aging downtown office stock.
Headwinds in Downtown Dallas
Any would-be buyer would be swimming against some choppy market currents. While Dallas-Fort Worth has posted strong leasing numbers in the suburbs, downtown has been a different story, with older towers fighting to hang on to tenants.
The Dallas Morning News reported that the central business district carried a vacancy rate near 26.8 percent, even as the broader market logged about 13.4 million square feet of leasing activity. That kind of split makes any large-scale conversion or upgrade at Harwood Center a much riskier and more expensive bet.
Small Parcel, Big Complication
The capital stack is not the only wrinkle. Under the tower sits a tiny but important piece of dirt that has its own economics. Colliers is marketing a 0.16-acre ground lease beneath Harwood Center that runs through September 1, 2077, and currently generates roughly $65,232 a year in rent.
The listing shows that rent resets every 10 years. For developers and lenders trying to model a gut renovation or conversion, that kind of long-term ground lease, with periodic bumps, can make financing and pro forma forecasts a lot harder to pencil out. Ownership quirks like this tend to limit the pool of investors who are both interested in and capable of executing complex downtown redevelopments.
What Comes Next
CoStar News reported that Transwestern, which is involved with the property, did not immediately respond to requests for comment about how the auction played out, leaving the trust's decision to hold the asset as the clearest hint of strategy for now.
Public records and prior reporting show that the building reverted to lender control after a 2021 foreclosure, according to The Real Deal. Market watchers say the next moves could include sitting tight and waiting for conditions to improve, bringing in a new capital partner to recapitalize the property, or rolling out a phased repositioning plan that chips away at vacancies and upgrades the building over time.
Until someone blinks, Harwood Center stands as a high-profile test of whether big, half-empty downtown office towers can realistically be reborn at scale, or whether they will linger in limbo while the market figures itself out.
