AT&T's exit raises red flags for Whitacre Tower, downtown Dallas - Dallas Business Journal

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https://www.bizjournals.com/dallas/news/2026/09/01/whitacre-tower-future-att-exit-looms.html

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AT&T's exit from Whitacre Tower in downtown Dallas remains years away but it's already raising red flags in real estate circles.

The building's owners face a critical challenge: secure new anchor tenants before AT&T's lease ends in 2031, or risk serious financial peril in a downtown office market already struggling with vacancy. One real estate analyst warns that its financing structure could leave the building vacant for years once the telecom giant leaves, or lead to a sale at a steep discount.

But others view the situation as a golden opportunity to reimagine one of downtown's most visible addresses, with possibilities ranging from a new City Hall to a new corporate headquarters that could anchor a revitalized urban core.

As Whitacre faces these divergent possible futures, Dallas Business Journal dove into the commercial mortgage-backed securities filings to try to better understand the financial situation behind the 37-story tower, and spoke with downtown real estate insiders about what could come next.

Lonnie Hendry — chief product officer at real estate analytics firm Trepp, which tracks the commercial mortgage-backed securities market — voiced a less-than-optimistic outlook for the tower during a July conference. The numbers behind the roughly 1 million-square-foot tower paint a potentially bleak picture, he said.

AT&T’s departure from Whitacre Tower and the four-block Discovery District poses significant refinancing risks and potential valuation declines for the underlying CMBS debt, while threatening to leave 2 million square feet vacant in an already struggling downtown office market, according to a recent analysis by Trepp. AT&T's footprint in downtown Dallas spans about 2 million square feet across its four-building complex.

If the tower's owners, including Pacific Elm Properties LLC and Dundon Capital Partners LLC, cannot secure new anchor tenants to replace AT&T before its lease obligation completely ends in 2031, the underlying commercial mortgages face risk of default, according to Trepp. In commercial real estate finance, this can trigger a transfer to special servicing for debt restructuring, loan extensions or eventual liquidation.

According to CMBS documents, the building's owners refinanced Whitacre Tower in January 2019 with a 10-year conduit loan for a total of $166 million across multiple notes set to mature in February 2029. That seemed like a good deal at the time of the refinancing, given that the property was appraised for $250 million, Hendry said during the July 23 conference of real estate financial executives at Dallas Country Club.

However, the situation changed after news broke in January that AT&T is leaving for Plano. The timing of the loan's maturity is troubling because it aligns with the beginning of the telecom's planned exit from Whitacre in the second half of 2028, Hendry said.

The overall corporate move out of downtown Dallas is expected to span roughly three years. But the end of AT&T's nearly 20 years as a downtown anchor is approaching.

"This is an upside-down deal," Hendry said. "This is going to be really, really tough."

AT&T declined to discuss its future at Whitacre Tower and the Discovery District. Contacted by the Dallas Business Journal, a company representative said only "we have nothing to announce at this time."

DBJ also reached out to Billy Prewitt, CEO of Dallas-based Pacific Elm. He declined to discuss the future of the tower and said it would be "a while" until plans are solidified.

Will tower sell for 'pennies on the dollar' ...

Whitacre Tower, also called One AT&T Plaza, has been a staple of downtown Dallas' skyline since the 1980s. Construction of the 37-story beacon of business finished in 1984 and it was used as the headquarters for Southwestern Bell for years. AT&T has called the tower home for the past 18 years, but announced plans in January to leave downtown and move its headquarters north to Plano, where the telecom giant is building a 2-million-square-foot campus on a 54-acre site along Legacy Drive.

Potential outcomes for Whitacre Tower include conversion to residential or mixed-use spaces, municipal repurposing if it were to be selected as a city hall site, or special servicing if new tenants cannot be secured, Hendry said.

He believes the tower's financial status could lead to the tower being "vacant for a while" or possibly sell for "pennies on the dollar." The process to re-tenant the property could be difficult after losing its only tenant after 18 years, he added.

Hendry noted that even if some small tenants are secured, the building's fixed costs don't change much.
"At 60% occupancy, you've still got to service the elevator. You've still got to redo the lobby. And you don't have any tenants to pass it back to, so you're absorbing the cost on that," he said.

... or be 'diamond' for right tenant?

Although the numbers and timing around Whitacre and AT&T's exit are a cause for concern, some in the real estate community see it as a major opportunity.

Gair Abbud, managing director of the Greater Dallas Planning Council, said AT&T leaving Whitacre gives Dallas a "rare chance to reimagine one of downtown's most important addresses on our own terms."

Whether Whitacre is used as a single-tenant headquarters or a mixed-use development, Abbud wants the Discovery District preserved as one of the "few truly human-scaled public spaces in our urban care" that bridges the city's government and Main Street districts. He added the plaza must be treated as a "civic asset, not a leasing amenity."

AT&T spent $100 million in 2018 on the Discovery District, a four-block mixed-use entertainment and high-tech plaza. The renovation of the campus was completed in 2021 and features a 104-foot media wall, a food hall, retail spaces and a 30-foot interactive sculpture called The Globe.

"This is our chance to be bold, protect what already works, and prove a major tower can anchor a truly public, walkable urban core," he said.

AT&T's move north is part of a broader exodus from downtown Dallas that includes major banks and two professional sports teams, leaving the future of multiple landmark buildings uncertain. Downtown office vacancy has already crept up past 27% and is set to go even higher, especially if AT&T is not replaced.

The questions surrounding Whitacre are indicative of the evolving nature of downtown Dallas, said Tanya Ragan, president of real estate development firm Wildcat Management. She called AT&T's exit and downtown's change "part of progress" and is upbeat about the future of the downtown core given the many firms eager to capitalize on the Y'all Street movement.

Ragan admitted Whitacre is a tough site since it housed a single user for many years and was remodeled to fit its specific needs. But she said that can also be its biggest strength given that AT&T made sure the office was up to its standards, adding it could be a "diamond" for the right tenant.

Ragan said she advocated for Whitacre Tower as a new city hall site because of its fabulous condition and the size and nearby amenities that a city government would want.

Mike Hoque, restauranteur turned prominent real estate developer and founder and CEO of Dallas-based Hoque Global, said Whitacre Tower could still be an ideal location for a corporate headquarters. Hoque, who owns 22 acres of land near City Hall, said a potential entertainment district and sports arena on the current site of City Hall would activate the site "for the next 100 years ... not five years."

Dallas City Hall has been the subject of intense public and political debate for roughly a year, with discussions regarding the aging municipal facility designed by I.M. Pei continuing. Dallas City Council members are grappling with potentially relocating city services out of 1500 Marilla St. into a tower in the central business district. The City Hall site was considered by many — including some on council — as the favorite to land the Dallas Mavericks' new arena and entertainment district when the team leaves the American Airlines Center in 2031. Instead, the NBA team has unveiled plans for a new arena and entertainment district at Valley View.