The largest brokerage in the world by revenue, CBRE, appears to have thrown up its hands on the development of their new Dallas headquarters. The company now intends to designate its HQ into a building which formerly hosted its now-defunct Hana flexible office concept. The decision is a prominent illustration of how ballooning interest rates and inflationary pressures are pushing construction costs so high that real estate developers are stepping back from projects that had previously been greenlit.
The news comes on the heels of CBRE’s fourth-quarter earnings call where CBRE officials informed investors that their development pipeline was contracting as a result of projects being postponed due in anticipation of a recession. However, projects that were leaving the pipeline weren’t anticipated to start construction in the upcoming 12 months. The abandonment of the proposed Dallas HQ was a shock as construction was supposed to break ground last year.
A CBRE spokeswoman stated that the firm would continue to carry out its obligations under an incentive contract it has with the state of Texas and the city of Dallas. According to the spokeswoman, these state and local incentives are not linked to a specific property, but rather to job development and associated measures of having a headquarters in Uptown Dallas.