Thursday, May 30, 2024 May 30, 2024
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How the West End Was Won

There's 1 million square feet of office space in Dallas' historic district. Owen Hannay has snapped up about a quarter of it.
Shane Kislack

Owen Hannay was born and raised in Dallas. But he spent third through fifth grades overseas, when his banking executive father’s work took the family to Japan. The experience left an indelible impression.

On the weekends, Hannay and his younger brother would use their subway and bus passes and explore Tokyo. They’d take off at 8 or 9 in the morning, and their parents wouldn’t expect them home until 5 or 6 at night.

“Tokyo was totally safe,” he says. “It was the first time I experienced honest-to-god, big-city mass transit, and it was wonderful. But when we moved back to Dallas, I had to constantly ask, “Mom, can you drive me?’”

An appreciation for public transportation played a big part in Hannay’s decision to acquire The Awalt Building along the DART rail line back in 2000. Since then, he has made a number of other West End buys—including a three-building portfolio at Elm and North Record streets that he picked up last December. Of the 1 million square feet of office space available in the historic district, Hannay now owns about a quarter of it.

And real estate isn’t even his day job. Hannay is the founder and CEO of Slingshot LLC, a Dallas-based ad agency. He got into that business by happenstance.

Hannay’s mother hails from Virginia and, after he graduated from Cistercian, her family offered to pay Hannay’s tuition at the University of Virginia. “I left a flaming trail from Dallas,” he says. Hannay studied architecture, but determined that he didn’t have the design skills to make it, so he came back to Dallas and got a master’s degree at Southern Methodist University.

His goal was to get into real estate development. This was toward the end of the 1980s, though, and the market was entering a down cycle.
“I only half-jokingly say that I got laughed out of every tall building in downtown Dallas, trying to get hired,” Hannay says.

With limited options, he went to work as a media planner for the Bloom Agency in Dallas. The plan was to stick it out for six months while he looked for a real job. Instead, he became hooked on the ad business.

“I fell in love with the notion of finding customers, gaining an understanding of where they are, what they’re thinking, and crafting messages that made them do things—thousands and hundreds of thousands of people at a time,” he says. “I found it to be incredibly compelling. It’s not the most profitable business on the planet, but it’s a lot of fun.”

After Bloom, Hannay worked at a smaller agency for a while, to get exposed to the creative side of the business. He then joined The Richards Group, managing accounts like Tom Thumb, Wyndham Hotels, and Pergo Flooring. In 1995, he left to launch his own firm, Slingshot LLC, named for the weapon used by the Biblical David to fell the giant Goliath.

“I wanted to create a very good, small agency that took advantage of things that were beginning to happen,” he says. “We grabbed onto the internet very early. We did the first HTML banner ad that was ever put online, and a bunch of seminal work in that advertising space.”
Hannay managed the media planning and account side of things and freelanced out creative and programming services. But the agency’s work with the internet soon attracted clients like GTE and Jack Daniels—and things really began to take off.

In short order, Slingshot moved from small space in the State Thomas area, to Jack Ruby’s old office off Harry Hines, to the Adolphus Tower. It was there that Hannay met Reed Berry, who oversaw leasing of the property. Berry had cut his teeth at Woodbine Development Corp., redeveloping Founders Square on Jackson Street, among other projects.

By this time, the ad agency was experiencing explosive growth, going from a dozen to 75 employees in the span of about 18 months. Hannay tapped Berry to help him find new space. Together, they stumbled on The Awalt Building, a 62,000-square-foot building in the West End. Built in 1905, the property had sat vacant for about 30 years.

Owning rather than leasing made more sense to Hannay. He figured it would give the agency more flexibility to grow or shrink—both possibilities in the advertising business. It would also create a sense of stability for the young company, both among employees and clients. And immediate adjacency to the DART rail line was a big selling point.

“My mind went back to Tokyo and what mass transit can really do for a city,” Hannay says. “The fact that the building was classified for demolition due to neglect was staggering to me. The chance to save something like that was a great opportunity.”

At first, his employees didn’t share the vision. After closing on the deal, Hannay brought in a couple of kegs of beer and had a staff party at the site.

“Everyone thought I had lost my mind,” he recalls. “The fax machine was burning up with résumés going out.”

Others could see the possibilities, though. Ken Reimer with Venture Commercial, a high school buddy of Hannay’s, brought in Chipotle, which was looking for space in the area. A couple of other tenants signed on. Soon, the building was fully renovated and occupied.

The success of the project, and a desire to spark continued redevelopment in the West End district, led Hannay to form a real estate affiliate, Five Smooth Stones, named for the ammunition used by David. Berry became a development partner, tasked with finding the next endeavor.
It turned out to be Landmark Center, a 137,000- square-foot building on Ross Avenue, acquired by Five Smooth Stones in 2004. Its partner on the deal was CDK Realty Advisors, which helps manage investments for the Dallas Police & Fire Pension System.

Landmark Center had served as a longtime regional center for the Federal Bureau of Investigation, which moved out in 2003. Hannay and company completely gutted, redeveloped, and leased up the building within the span of about two years. In 2006, it was sold to Argus Realty Investors LP for $20.3 million.

Not long after, the commercial real estate market began to flounder. Berry reactivated his firm, Reed Berry Commercial Real Estate, and Hannay focused on Slingshot.

“We were grateful then that we were in the real estate business only part-time, and that we didn’t have to do any deals to put food on the table,” Hannay says. “A number of our investors were eager to do another project, because we had been so successful, but there was just nothing to buy.”

A five-year lull ended in 2011, when Berry brought Hannay the S.G. Davis Hat Building, a 40,000-square-foot building at 800 Jackson St. A year later, the renovated building is 90 percent leased to tenants such as 5G Studio.

Today, Five Smooth Stones is focused on the portfolio at Elm and Record streets, acquired in an off-market deal a few months back. The buildings were constructed in 1901-1903, but previously renovated, so the upgrades required are mainly cosmetic. Along with office space, the complex houses The Holocaust Museum and some condo units.

With several leases already inked, Berry says activity is brisk and expected to remain so, especially with a new regional U.S. Patent Office opening up this summer in the nearby Terminal Annex Federal Building.

“We will see more attorney offices coming to the West End, both from other areas of the state and from out of state,” Berry says.

With a bit of a track record, Hannay says sellers are starting to bring opportunities to Five Smooth Stones. He and his partners are ready to bite if the right opportunity presents itself. But at the same time, they don’t want to get ahead of their skis, Hannay says.

Looking back, he says the decision to begin redeveloping in the West End was sparked by “pure, unadulterated naiveté—and a strong force of will.” But helping to save the city’s heritage, and create spaces people like, makes him feel good.

“Too many of these fantastic buildings have burned down or been torn down over the years,” Hannay says. “Fortunately, we’ve had a great team of people and have been able to find a model that works. It’s as simple as that.”