No. 11: Iconic Office Properties Change Hands
The volume of property sales across all four major food groups (office, industrial, retail, and multifamily) will top $16 billion in 2015, breaking all previous records. Several high-profile office assets changed hands, especially toward the end of the year.
In November, Williams Square in Las Colinas was acquired by Apollo Global Real Estate and Vanderbilt Partners for a record $330 million, according to reports. And in September, CBRE Global Investors purchased the 1.4 million-square-foot Galleria Office Towers at LBJ Freeway and the Dallas North Tollway in Dallas. Terms of the transaction weren’t disclosed, but the asset was expected to fetch more than $300 million. The two sales are the largest office trades of 2015, says Gary Carr, who led the CBRE team that sold the Galleria properties.
A couple of downtown Dallas office towers also changed hands. TriGate Capital purchased a 90 percent stake in the 60-story Comerica Bank Tower on Main Street in October, and Cousins Properties sold the 843,728-square-foot 2100 Ross building for $131 million in August. (It acquired the property in August 2012 for $59.2 million.)
DFW’s blistering sales activity in 2015 “validates how strong the occupier fundamentals have been,” Carr says. “It also demonstrates the tremendous amount of liquidity there has been from both a debt and equity perspective.”
No. 12: Dallas Design District 3.0
It was a head-scratcher when a partnership led by Bill Hutchinson bought a big chunk of the Dallas Design District in late 2014. The company Hutchinson leads, Dunhill Partners, is known for buying, improving, and selling shopping centers, typically with a three- to five-year hold. One of the most attractive things about the Design District portfolio was development plays within the fast-growing neighborhood—not Hutchinson’s niche. “I’ve always said it’s easier to buy than build,” he says. “I don’t like dealing with city officials, and I’m more into instant gratification—buy it, you get the keys, and it’s yours.”
The Design District has led him to change that way of thinking. He’s viewing the 33-acre opportunity as a legacy project—and a chance to create impact in Dallas. His acquisition represents the third major iteration of the district. Initially developed as a collection of single-story warehouses by Trammell Crow, the district was reinvented by investors Mike Ablon and Lionstone Group, along with developers like Jim Lake Cos. and PM Realty, which brought in restaurants and apartments.
Hutchinson plans to take things to the next level. Already, he has secured deals for a 22-story, 209-room Virgin Hotel with about 45 condos on top, and a 123-room Joie de Vivre Hotel, topped by 225 ilume apartments from developer Luke Crosland. Two new restaurants from Tim Headington (one of Hutchinson’s investors in the project) are in the works; and restaurateurs Nick Palladino and Richard Ellman are doing an upscale lounge called Quill. A 22-story office building, called Design District Tower, is planned along Stemmons. “Unlike other properties, this one’s a keeper,” Hutchinson says. “I’ve fallen in love.”
No. 13: Hotels in the Urban Core
Travelers to downtown Dallas will soon have a multitude of options when looking for a place to stay for the night. More than a dozen projects planned or underway in the urban core will add about 2,500 rooms to the inventory. Because many are redevelopments, there’s an added bonus of repurposing long-vacant space and making it productive again.
Among the largest is a 323-room property from Starwood Hotels and Resorts and KFK Group. It’s going into One Main Place, a 1 million-square-foot building that occupies a full city block at Main, Elm, Field, and Griffin streets. At 1700 and 1712 Commerce, NewcrestImage is bringing in three hotels—two Marriott brands and a Hampton Inn. Combined, they’ll add about 400 rooms. The highest-profile endeavor may be the redevelopment of the Statler Hilton at 1914 Commerce St. The $175 million effort will create 161 hotel rooms on five floors and 219 residences on top. Centurion American bought the historic hotel in 2014 and was awarded $46.5 million in TIF money from the city of Dallas to help fund renovations. New projects include a 25-story hotel-condo tower from developer Craig Hall in his HALL Arts District project at Ross Avenue and Flora Street.
No. 14: New Office Tower for Fort Worth CBD
In what will be the first office tower built in downtown Fort Worth since the Great Recession, Anthracite Realty Partners announced plans in September for a 313,000-square-foot building at Taylor and West 5th streets. Called 640 Taylor, it will sit just northwest of the Fort Worth Club building. Along with 274,000 square feet of Class AA office space, it will feature 32,000 square feet of amenity space, about 6,000 square feet of retail space, and more than 900 parking spaces.
The 25-story glass-and-steel tower will serve as a new headquarters for Jetta Operating Co. Inc. Founded in 1991, the oil and gas concern operates more than 1,000 wells in the Texas Gulf Coast, the Delaware Basin of West Texas, the Southern Mid-Continent region of Oklahoma and Texas, and the Appalachian Basin in Eastern Kentucky.
Anthracite Realty is an affiliate of Jetta, which has leased 70,000 square feet in the new tower. Seth Koschak, Ramsey March, and Tyler Maner of Stream Realty Partners will oversee the leasing of the remaining available space, and Jerry Mays of Stream will provide pre-development consulting services for the project. It’s expected to open in 2017.
No. 15: Grocery Comes to Uptown
In grocery-starved Uptown, where some of the region’s snazziest office and residential towers are being built, news that a Tom Thumb was moving in was one of the more notable announcements in 2015. The 60,000-square-foot store will anchor The Union, a vertical mixed-use complex being developed by RED Development at the corner of Field Street and Cedar Springs Road near American Airlines Center. Comprised of a 22-story office tower, a 300-unit residential tower, and 145,000 square feet of retail space, the complex is expected to open in late 2017. Paul Rowsey, who heads things locally for Phoenix-based RED Development, says the grocery amenity is proving to be one of the project’s biggest selling points. “I don’t know that there’s another grocery store in the footprint of an office building in Dallas,” he says.
Over on McKinney Avenue, a 38,000-square-foot Whole Foods store that opened in August has been an immediate hit. The store sits at the base of an eight-story, 222-unit residential tower from Gables Residential and is the first project of its kind in North Texas. “It has required a lot of effort, but we couldn’t have asked for a better outcome,” says Sue Ansel, Gables’ president and CEO.
This story originally appeared in D CEO’s 2016 Real Estate Annual.