This week, we’re counting down the top 15 real estate stories of 2014. Below are stories 6-10. Click here to see the top five, here to see stories 11-15, and here to see our list of six things to watch in 2015.
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6. Big Lease Deals Downtown.
Downtown Dallas often gets blamed for pulling down the region’s real estate stats, with higher vacancies and lower lease rates than some of its submarket counterparts. But not this year. Landlords in downtown buildings scored big renewals and brought in even larger new deals, boosting absorption in the third quarter alone by nearly 750,000 square feet. Santander Consumer USA took occupancy of 372,000 square feet at Thanksgiving Tower, and two San Diego companies, Omnitracs and Active Network—both owned by Austin-based Vista Equity Partners—relocated their HQs from San Diego to Dallas. Omnitracs, a fleet management services company, leased about 100,000 square feet in KPMG Centre. Active Network took another 125,000 square feet in the same building. CEO Darko Dejanovic says the company wanted to consolidate several U.S. offices into one large headquarters to create operational efficiency. “We were looking for a location with a business-friendly climate, a strong pool of talent, and a city that offered a great quality of life for our employees,” he says. “Based on our search, Dallas proved to be our top choice, and it has exceeded our expectations.” Active Network, which plans to employ about 1,000 in Dallas, specifically targeted downtown, Dejanovic says. “Being in the city fits best with us and the talent we want to attract.”
7. Industrial Developers Flock to Southern Dallas.
For years, brokers have heralded Southern Dallas as the next great industrial frontier. It just made sense: If you want to transport goods north, south, east, or west, there’s not a more convenient hub. The favorable tax rates don’t hurt, either. Several pioneers began developing in Southern Dallas in the mid-2000s, but then the Great Recession hit, and projects stalled. Now, though, every developer and his brother are planting stakes and pouring concrete. At least 15 companies have projects underway, including Trammell Crow Co., Hillwood, Prologis, Holt Lunsford Commercial, Crow Holdings, Duke Realty, IDI Gazeley, and Majestic Realty. Two have already won big; Panattoni scored a 1.4 million-square-foot-lease from Procter & Gamble, and Hillwood snagged a 1.5 million-square-foot build-to-suit for Georgia-Pacific. Of the more than 6 million square feet that’s being built—a figure that doesn’t include the P&G or GP deals—most is spec space. And developers are waiting in the wings with projects that would double that. Industrial activity has grown “exponentially,” says Chris Teesdale of Colliers International. Brand-name tenants like L’Oreal, Quaker, BMW, and Home Depot have caused the market to take notice. “Every large industrial user in the marketplace is looking at South Dallas,” Teesdale says. “It’s on everyone’s radar.”
8. CityLine Gets Even Bigger.
If you haven’t seen KDC’s new State Farm-anchored campus in Richardson, hop in your car sometime and head toward the intersection of State Highway 190 and North Central Expressway. As you get closer, you’ll see the 186-acre development off to the east, sparkling in the distance like the Emerald City. Typically, massive projects like this evolve over time. But when CityLine opens in 2015, it will start with a daytime population of more than 16,000 people. Many will work for State Farm. The company initially signed on for about 1.5 million square feet; this year it took the total up to 2.1 million. Raytheon also leased 500,000 square feet. Other 2014 announcements include an Aloft hotel, a Whole Foods-anchored retail center, a 12-screen movie theater from LOOK Cinema, Jasper’s and Coal Vines restaurants, and two luxury apartment communities. Randy Cooper and Craig Wilson of Cassidy Turley represented State Farm in its search for space. “It went from a hay operation to a mixed-use development faster than any project in DFW,” Cooper says. As opposed to a “sealed-up, fortress-like” campus, the insurer wanted something that was open, inviting, and invigorating. “They made a bold decision to completely rethink what the future worker will be, and what they needed to do to attract the best and the brightest,” Cooper says. “It would have been much easier and certainly less expensive to fall into the typical corporate campus mindset. I think many companies will follow this type of development; it’s the wave of the future.”
9. Dallas Farmer’s Market Goes Private.
There had been rumblings about a private takeover of the Farmers Market for decades. Last year, the talk became reality when DF Market Holdings, led by Brian Bergersen of Spectrum Properties, acquired the complex from the City of Dallas—and kicked off a $65 million transformation (supported, in part, by an expanded Tax Increment Finance district). The Shed reopened Labor Day weekend and now operates seven days a week. The former administration building was acquired by the North Texas Food Bank, which will move its headquarters there this spring. But it’s the velocity of the leases for The Market (formerly Shed 2) that really stands out. “We are 90 percent leased before even starting construction,” says Jack Gosnell of UCR Urban, who’s overseeing marketing of the space, along with colleague Sasha Levine. “I think it has caught everyone’s imagination. People are hearing about it and wanting to be part of something new.” The Market will house about 30 restaurants and shops in all. The latest tenants to sign on include Rex’s Seafood and Market, Stocks & Bondy, Palmieri Cafe, a Firebird Restaurant Group eatery, and Mudhen, a concept from Shannon Wynne, the restaurateur behind Meddlesome Moth, Flying Fish, and Lark on the Park. Up next: More retail, parking, green space, and a 240-unit apartment complex. When the renovation is complete, the Dallas Farmers Market will become the “fourth leg on the table,” says Gosnell, joining the Arts District, West End/Victory Park, and the South Side/Cedars area. “It’s going to make another vibrant corner of downtown Dallas, all of which will be activated by the infill of residential in the middle,” he says.
10. AllianceTexas’ $5 Billion Impact.
Mike Berry was a bit skeptical when he was approached in the late 1980s by his former Vanderbilt University frat brother, Ross Perot Jr., about developing Alliance Airport in North Fort Worth. After all, that part of the North Texas region was still largely undeveloped, and no one had ever built an industrial airport before. But Perot was persuasive, and Berry eventually left his post at Ray Hunt’s Woodbine Development Corp. to join Perot at the fledgling Hillwood. Alliance Airport broke ground in December 1989. Twenty-five years later, it has evolved into AllianceTexas, an 18,000-acre development that sprawls from Fort Worth into Haslet, Roanoke, and Westlake. Through 2013, it has generated a local economic impact of $50.6 billion. “It’s far bigger than what we thought it would be, and far more complex,” Perot says. That’s an understatement. Under the leadership of Perot and Berry, who serves as president of Hillwood Properties, AllianceTexas has become one of the most successful developments in the world. Along with numerous residential communities, the project holds 37 million square feet of commercial space occupied by about 400 companies—including biggies like Amazon, Mercedes-Benz, FedEx, and Deloitte. And Perot and Berry aren’t done yet. Only about half of AllianceTexas has been developed so far, and expansions are underway on the office, industrial, retail, and residential fronts. “That’s what’s fun about being a developer,” Perot says. “You get to build cities.”.”