Dallas-Fort Worth Real Estate Review — Spring 2016

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ANATOMY OF A DEAL:

OLD PARKLAND INSIDE DFW’s MOST EXCLUSIVE OFFICE CAMPUS

SPRING 2016

ALSO INSIDE:

DALLAS-FORT WORTH’S REAL ESTATE JOB MARKET ROUNDTABLE DISCUSSION:

DATA CENTERS

now

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D A V I D

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M A N A G I N G

KPMG PLAZA AT HALL ARTS

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2323 ROSS AVENUE

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DALLAS, TEXAS 75201

After 128 years in Dallas, our priorities are the same – to provide the best service with the finest talent, take care of our people and support our communities. The design of our brand new space has inspired us to take a more efficient approach to the practice of law. At KPMG Plaza at HALL Arts, we’re surrounded by impactful displays of sculpture and art and just steps away from countless restaurant and entertainment options. Who wouldn’t want to work here?

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HALLARTS.COM

The Advantage is Real www.AllenTX.com

Allen clearly has a lot to offer. It not only boasts a thriving, diversified business base and Class-A office developments but also offers quality housing and an active, family-centric environment with nationally recognized parks, recreation facilities, and an exemplary school district.

ON THE COVER: OLD PARKLAND CAMPUS; PHOTO COURTESY OF CROW HOLDINGS

SPRING 2016

CONTENTS

21 THE CRANE REPORT

Welcome Letter . . . . . . . . . . . . . . . . . . . . . . . . . .8 Publisher’s Note . . . . . . . . . . . . . . . . . . . . . . . 10

FOUNDATIONS DFW Market Statistics, Economic Indicators, and Commercial Real Estate News. . . . . . . . . 12

BUILDING THE FUTURE TOGETHER When it comes to relocation recruiting, the DRC gets creative . . . . . 17

34 ROUNDTABLE

THE CRANE REPORT Who’s Building What, Where . . . . . . . . . 21

SCORECARD DFW’s Top Office, Industrial, and Retail Leases . . . . . . . . . . . . . . . . . . . . . . 29

ROUNDTABLE A Critical Connection: Dallas-Fort Worth has emerged as one of the top data center markets in the country. . . . . . . . . . . . . . . . . . . . . . . . . . 34

SPRING 2016

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5

E XC L USI V E LY P UB L ISHE D B Y D MAGAZINE PARTNERS

50 FEATURE

DFWREALESTATEREVIEW.COM

Transportation: A driving force in Dallas-Fort Worth’s booming commercial real estate market.. . . . . . . . . . . . . . . . . . . . . . . 42

56 ANATOMY OF A DEAL

D MAGAZINE PARTNERS BUSINESS GROUP PUBLISHER Josh Schimmels

PUBLISHER Quincy Curé Preston 214-523-5215 quincy.preston@dmagazine.com

EDITOR-IN-CHIEF Christine Perez

MANAGING EDITOR Sarah Bennett

CREATIVE DIRECTOR Michael Samples

CONTRIBUTING WRITERS Jeff Bounds Hilary Lau

Anatomy of a Deal: Old Parkland With its phenomenal attention to detail and huge historical significance, Harlan Crow’s Old Parkland development is on course to set a new style standard—and become his legacy project. . . . . . . . . 56

COPY EDITOR Keri Samples

DIRECTOR OF SALES Kyle Moss 214-523-5247 kyle.moss@dmagazine.com

TOOLBOX

MEDIA DEVELOPMENT MANAGER

The Millennial Movement

Courtney Garza

How the workforce’s youngest generation will shape the world of commercial real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

INTERNS Kyla Davidson Harrison Long Michael Gordon

COMMUNITY

Gabrielle Rodriguez

The Real Estate Council, Impact Investors . . . . . . . . . . . . . . . . 67

The Real Estate Council, Associate Leadership Council . . . . 73

Dallas Regional Chamber, Top-Level Members . . . . . . . . . . . . . 68

Calendar of Events . . . . . . . . . . . . . . 74

The Real Estate Council’s Young Guns 2016 Casino Night . . 72

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Dallas Regional Chamber, Leadership Dallas . . . . . . . . . . . . . . . 74 View From the Top: Jay Adair . . . . 76

Dallas-Fort Worth Real Estate Review® is published for The Dallas Regional Chamber and The Real Estate Council by D Magazine Partners, 750 N. St. Paul St., Ste. 2100, Dallas, TX 75201; www. dallaschamberpublications.com, 214.523.0300. ©2016 All rights reserved. No part of ths publication may be reproduced or reprinted without written permission. Neither the Dallas Regional Chamber nor The Real Estate Council nor D Magazine Partners is a sponsor of, or committed to, the views expressed in these articles. The publisher is not responsible for unsolicited contributions.

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WELCOME

A letter from the Dallas Regional Chamber and The Real Estate Council

WHY GRADUATES KEEP CHOOSING DALLAS-FORT WORTH

DALE PETROSKEY President and Chief Executive Officer Dallas Regional Chamber

LINDA McMAHON President and Chief Executive Officer The Real Estate Council

Corporations relocating to the Dallas region are, in great measure, drawn by the quality and quantity of our existing workforce. A key element is the vitality of our region’s talent pipeline and its capacity to deliver highly skilled graduates from premier colleges and universities.

However, a subtle change has occurred in what companies and site selectors are asking related to local talent characteristics. More often, they are inquiring about “graduate retention” rates within the Dallas region as a proxy assessment of the long-term attractiveness of the region.

In the past, it would have been impressive enough to report that North Central Texas produced nearly 45,000 graduates with bachelor’s, master’s, and PhDs in 2014—or that Dallas exerts a gravity that attracts graduates from colleges and universities throughout Texas and from adjacent states. Nearly 260,000 exiting students per year are primed to fill job vacancies in the Dallas region.

However, the Dallas region’s ability to hold on to the students who graduate from local schools was an elusive calculation until

researchers at the Brookings Institution and Martin Prosperity Institute combined census and social media data to determine which urban locations have the most alumni still living in the area.

Richard Florida, noted urban economist and writer of the seminal book “Rise of the Creative Class,” recently published a new analysis in CityLab, showing the Dallas region is a top 10 metro area in retaining college grads from local two- and four-year institutions: 71.8 percent of alumni from schools in North Central Texas continue to make the Dallas region their home.

The economic impact of this retention rate should not be underestimated. The Brookings research notes that as the education of a household increases, so too increases the household’s contribution to the local economy. Over the course of a lifetime, a person with a bachelor’s degree will contribute on average $278,000 more in direct spending alone to the local economy than someone who only holds a high school diploma.

Consequently, property, sales, and income tax flows to state and local governments also rise dramatically as household education increases.

That’s why the Dallas Regional Chamber and The Real Estate Council have made the attraction and retention of talent a top priority. The Dallas region is continuing to boom.

One just has to look at the changes in the Dallas skyline to see the positive growth our region is experiencing. Retaining a strong local workforce—and attracting the best and brightest workers from around the world to join us here—are the key to sustaining and expanding our region’s exceptional growth in the years ahead.

2016 CHAIRMAN OF THE BOARD Thomas W. Codd Vice Chairman, US Human Capital Leader PwC PRESIDENT & CEO Dale Petroskey CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER Pat Priest COMMUNICATIONS & MARKETING, SENIOR VICE PRESIDENT Darren Grubb RESEARCH AND INNOVATION, SENIOR VICE PRESIDENT Duane Dankesreiter RESEARCH AND INNOVATION, DIRECTOR Eric Griffin

2016 CHAIRMAN Diane Butler BBG VICE CHAIR Greg Kraus Invesco PRESIDENT & CEO Linda McMahon VICE PRESIDENT MARKETING & EVENTS Debby Hanson VICE PRESIDENT FOUNDATION Robin Minick CFO Carla Brandt

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SPRING 2016

THESPIREDALLAS.COM

JOIN THE NEIGHBORHOOD Campbell Henry 214.740.2322 campbellh@spirerealty.com Tyler Marshall

214.740.2308 tylerm@spirerealty.com

A Project Of:

UPFRONT QUINCY CURÉ PRESTON Publisher Dallas-Fort Worth Real Estate Review

A letter from the Publisher

One trend we’re already seeing as 2016 takes off is that in the landscape of commercial real estate, we must continue thinking “outside the box” — exploring new territories and innovative ways of serving the market. Our cover story in this issue of the Dallas-Fort Worth Real Estate Review takes a look at Harlan Crow’s redevelopment of Old Parkland into a majestic, Ivy-Leagueinspired campus that many real estate professionals call home.

He makes good on the phrase “everything old is new again” with his nod to Enlightenment-era thinkers whose sculptures can be found all over the grounds and inspire the professionals who pass by them. Find that feature on page 57.

Continuing the thought of reexamining the traditional, we speak with industry giants about the development of data centers in DFW in our Roundtable feature. They have some great insight as to why data centers could be the next big thing in DFW real estate. Read their thoughts on page 34.

Speaking of reexamining, our Toolbox feature delves into the millennial generation’s impact on commercial real estate—here’s a hint: it’s going to be big. That’s on page 64.

Our partner, the Dallas Regional Chamber, is pretty inventive in their operations, as well. Mike Rosa discusses how the DRC assigns “code names” for companies considering a relocation to the DFW area—very creative stuff. Peek into that on page 17.

As always, we bring you the biggest deals in new office, industrial, and retail projects in our Crane Report (page 21) and the Scorecard (page 29).

To tide you over until our next issue, you can find extended content on our website, www.dfwrealestatereview.com, and our Facebook feed. And don’t forget to drop us a line—we’d love to hear from you.

Quincy Curé Preston Publisher

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SPRING 2016

ARLINGTON THE AMERICAN DREAM CITY

Arlington is in the spotlight and perfectly situated at the epicenter of North Texas.

Beyond our world-class entertainment is the backbone of our city: Economic vitality, a diverse, skilled workforce and a culture of global opportunities.

ARLINGTON: WHERE DREAMS GET DONE. Office of Economic Development ArlingtonTX.gov/ecodev | ecodev@arlingtontx.gov | 817-459-6155

FOUNDATIONS 1 DOT = 20

SOURCE: JLL

DISPELLING THE MYTHS— MILLENNIALS IN SUBURBAN DALLAS “I believe there are two drivers here,” Bialas says. “First, people often choose to live close to work. So, it does not surprise me that Legacy has a high concentration of millennials—after all, jobs here are plentiful and growing and represent some of the strongest companies in DFW. Add to that, the northern suburbs are a local hot spot for tech workers, and you have the key ingredients driving these numbers.”

All told, there are nearly 1 million millennials in Dallas-Fort Worth. And they have money to spend. Younger adults living in the Legacy region have an average household income of $86,000, which is 28 percent higher than the DFW average, JLL reports. The average household income for millennials in Las Colinas is $60,600 and $79,300 in Uptown.

BREAKING DOWN DFW MILLENNIAL DEMOGRAPHICS TOTAL POPULATION TOTAL HOUSEHOLDS MEDIAN AGE AVERAGE HOUSEHOLD INCOME MILLENNIAL POPULATION (25-34) MILLENNIAL HOUSEHOLD INCOME GEN X POPULATION (35-44) GEN X HOUSEHOLD INCOME

LAS COLINAS

UPTOWN

LEGACY

DFW

264,100 97,400 31.2

131,400 63,300 33.5

173,600 71,500 36.6

6,888,000 2,479,000 34.4

$65,700

$96,500

$133,200

$84,700

50,400

36,100

25,500

999,000

$60,600

$79,300

$86,000

$67,400

40,700

21,300

27,600

978,000

$69,100

$106,300

$130,300

$92,300

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The cranes are out in full force across North Texas, with development buoyed by both population and jobs growth.

Although Dallas proper has always been a strong office and retail market, at this point in the cycle, the multifamily sector is driving the city’s development boom.

New statistics from JLL show that multifamily construction has set a blazing pace in the core of Dallas, with more than 10,000 units currently underway.

Developers in other sectors are busy, too. Office construction in Dallas is humming along, JLL reports, with 1.6 million square feet currently underway. Including soon-tobreak-ground projects, this will add another 15,000 employees to the local job base and help create demand for the 500,000 square feet of retail development that’s in the pipeline.

RETAIL

OFFICE

MULTIFAMILY

SOURCE: JLL

Much has been written about the influential role millennials play in business and real estate decisions, along with shopping and housing trends. One comment that often crops up is the generation’s preference for living in urban locations that are close to restaurants and entertainment venues. And that’s very true, says Walt Bialas, vice president and market research director at JLL. Uptown alone is home to 36,100 millennials (ages 25-34 years), or 27.5 percent of the submarket’s population base.

But don’t discount the impact of millennials on suburban markets. Las Colinas, for example, is home to 50,400 millennials, or 19.1 percent of the population base. And the red-hot Legacy region is home to 25,500 millennials, or 14.7 percent of all residents.

STATISTIC

BY CHRISTINE PEREZ

MULTIFAMILY DRIVING DEVELOPMENT IN DALLAS

DALLAS-FORT WORTH MILLENNIAL POPULATION •

A baseline for the region’s future

FORBES NAMES DFW A “BUILDING BOOM TOWN” Greater Houston suffered a 49 percent drop in construction starts last year, a victim of the downturn in the oil industry.

But North Texas, which has a much more diverse economy, continues to thrive. Dallas-Fort Worth ranked No. 2 on Forbes’ annual “Building Boom Towns” list, which counts down U.S. metro areas that are seeing the most new construction.

DFW finished 2015 with $17.8 billion in new project starts. This is $1.2 billion more than Houston, which ranked No. 3, and represents a 19 percent improvement (in dollar values) over 2014. DFW was second only to the much-larger New York City market.

As the state’s financial center and regional logistics hub, Dallas is more closely tied to national and regional economic factors than the price of crude, Forbes reported. The magazine’s study, which was performed

by Dodge Data, tallied the dollar value of construction starts (breaking ground and actually beginning work) for single- and multifamily residences; office, retail, industrial, and healthcare facilities; and educational and research facilities, among others. It did not include money spent on public works projects such as bridges, streets, and parks.

The value is defined as the cost to build a project when construction begins, and does not include the land value or the cost of acquisition.

SPRING 2016

F FOUNDATIONS REAL ESTATE INVESTORS FAVOR DFW FOR 2015 BUYS Last year was a big year for commercial property trades in North Texas, and the market should see plenty of action in 2016, too. That’s the word from CBRE, whose Americas Investor Intentions Survey names Dallas-Fort Worth the country’s No. 3 target market this year, behind Los Angeles (No. 1) and New York City (No. 2).

According to CBRE’s study, the majority of real estate investors in the Americas intend to ramp up their buys in 2016, despite economic and capital markets uncertainties. Sixty-fi ve percent of investors intend to be net buyers, up from 60 percent in 2015, with the vast majority (81 percent) intending to maintain or increase buying activity this year.

Chris Hipps, managing director of investor services for CBRE, says North Texas’ diverse economic strength adds to its appeal. “DFW is attracting a broader pool of talent and experiencing a surge in both infill and suburban urbanization,” he says. “Plus, we’re still viewed as a market where comparatively good returns can be achieved. All of this combines to attract a deeper class of private equity and institutional investors.”

The CBRE study also found: > Among the five different investment types— core, secondary, value-add, opportunistic, and distressed—value-add remains the preferred strategy (40 percent). The preference for value-add declined in the 2016 survey, while the preference for core (second highest) rose, indicating some reversion to a more conservative strategy. Similarly, investors’ risk for secondary (non-core) assets edged down. > Multifamily (28 percent) is the most attractive property type to investors in 2016, replacing the industrial sector, which was last year’s favorite. Office (24 percent) and industrial (23 percent) came in almost tied for second. Retail (17 percent) still lags behind the other sectors, but this percentage reflects a slight strengthening in preference from 2015.

TARGET MARKETS Which metro in the Americas do you believe to be the most attractive for property investment purchase?

2016 RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 * Not in top 15

SPRING 2016

MARKET

2015 RANK

LOS ANGELES

4

NEW YORK DALLAS-FORT WORTH SAN FRANCISCO TORONTO ATLANTA SEATTLE WASHINGTON, D.C. DENVER BOSTON CHICAGO AUSTIN SAO PAULO MIAMI CALGARY

2 (T) 2 (T) 1 * 9 (T) 5 8 * * 9 (T) 6 * 9 (T) *

SOURCE: CBRE Research, 2016

AUTO INDUSTRY GROWTH DRIVING DEMAND FOR CRANE-SERVED BUILDINGS With national vacancy for crane-served buildings at a scarce 10 percent and auto sales hitting record highs, automakers and their suppliers are driving absorption of crane-served facilities. These specialized buildings feature massive overhead bridge cranes to maneuver heavy materials or large, unwieldy products.

Texas is among those seeing absorption of these type of facilities, along with Michigan, Missouri, South Carolina, Georgia,

Tennessee, Alabama, Mississippi, and Kentucky, according to Steve Kozarits of Transwestern. The Lone Star State’s inventory of crane-served facilities falls into the 11 percent to 20 percent range.

A record-breaking 17.39 million automobiles were sold in the United States during 2015, surpassing the 17.35 million mark set in 2000.

CURRENT CRANE-SERVED BUILDING VACANCY Q1 2016

■ ■ ■

VACANCY OVER 20% VACANCY BETWEEN 11-20% VACANCY BELOW 10% SOURCE: Transwestern

CO-WORKING SPACES: NOT JUST FOR STARTUPS ANYMORE The demand for co-working space is expected to continue to rise in 2016 as more companies are moving in to these types of facilities. That’s the word from CBRE, which recently released a research report on the topic.

In an occupier survey, 40 percent of respondents said they are using or are considering using shared space, including co-working space. Although these types of spaces have typically appealed more to startups and freelance workers, large enterprises are beginning to move in as well.

Co-working spaces—typically updated versions of executive suites in which tenants share workstations and amenities—can present opportunities, especially as companies venture into new markets. Demand is driven in part by the flexibility of the model—and lower costs, as average office asking rents have been on the rise.

The trend also is sparking an interest among landlords seeking to reposition older office facilities. Locally, this is occurring in the West End, where Goff Partners and Granite Properties are reinventing historic properties, and in the downtown core, with landlords like Woods Capital are leveraging opportunities in downtown towers like Thanksgiving Tower and One Dallas Center.

According to CBRE’s report, the increasingly diverse demand from occupiers and landlords suggests the co-working sector is better equipped to withstand a downturn than it was during the dot-com bust and the subsequent recession.

“Innovations and growth in the segment are tied to a number of enduring megatrends that are shaping workplaces and the business environment more broadly,” says Julie Whelan, Americas head of occupier research, CBRE.

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F FOUNDATIONS

WHERE THE OPPORTUNITIES LIE

Private investors share their strategies for 2016 at the High Net Worth and Family Office Summit.

BY CHRISTINE PEREZ

In the first of a five-part “Industry Insights” event series, The Real Estate Council and Real Estate Deal Sheet gathered top executives in the private investment realm to find out where they plan to focus their time and capital this year. Held March 2 at the Dallas Country Club, the morning event began with a keynote presentation from Albert Rabil III of Kayne Anderson Capital Advisors. It was followed by three rapid-fire panels moderated by Eric Beichler, managing principal of Mohr Partners.

Here are excerpts from the presentations.

ALBERT RABIL III, KAYNE ANDERSON CAPITAL ADVISORS: The way we approach investing is to do everything we can to get outside of real estate cycles and general economic cycles. What we’re trying to do is not be smart for seven years and dumb for three years, but really be smart whether we are in an up market or a down market. We initially started with student housing, and it has morphed into other niche real estate asset classes. Those asset classes share these dynamics: highly fragmented, recession-resistant, strong demographic trends, inefficient information and capital flows, and operationally intensive. My view is that the two primary predicators for return in any operationally intensive asset class are, No. 1, cost basis, and No. 2, your operational capabilities. We see opportunities in the student housing, senior housing, and medical office sectors. Our entire thesis is, in order to be successful over a long period of time in real estate, you really need to move away from boom-bust and away from beta- or macro-driven dynamics and get into alpha.

BRIAN BISCHOFF, CHIEF PARTNERS LP: Finding value. That’s getting tougher to do, as a lot more capital has entered the market. It has really come down to fundamentals game, understanding supply and demand, understanding the rent roll, when terms are expiring, and who those tenants are. At the end of the day, we’re all core value investors; it’s all driven by value.

RICK WAGGONER, MC SMITH REALTY: We made a shift in our strategy beginning the fourth quarter of 2014. Up until that time we had been 100 percent ground-up development, and we began to look for more opportunistic assets. It’s hard. With prices escalating—the cost of construction, the cost of land—it’s difficult to make the numbers work. And with the amount of cash chasing opportunistic assets, it’s hard to get in. Good opportunities are going to disappear quickly, so you have to react.

JERRY WHEELER, MOUNT VERNON INVESTMENTS: Our opinion is, if you have a stabilized asset that can be attractive in marketplace right now, it’s good time to sell. That doesn’t mean there aren’t opportunities to put out additional capital, but it’s going to be value-add from our perspective. We have a fair amount of concern about the job growth in Texas. We are really seeing a deceleration across the board, although Dallas still had a pretty good year last year.

VANCE DETWILER, PRESCOTT REALTY GROUP: Over the last year or two, we’ve been more of a net seller than a net buyer. On the debt side, we’re focused primarily on buying underperforming opportunities. That has been nice little niche market for us; it’s heavily regulated and tough to get in, with high barriers to entry. ... I would probably look at the next 12-18 months as a time to be a little more cautious, although there still certainly are opportunities.

MATT MILDREN, TUG HILL REAL ESTATE PARTNERS:

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UPCOMING INDUSTRY INSIGHT EVENTS APRIL 27: MULTIFAMILY SUMMIT JUNE 22: HEALTHCARE AND SENIOR HOUSING SUMMIT AUG. 17: CAPITAL MARKETS SUMMIT NOV. 16: RETAIL SUMMIT VISIT WWW.RECOUNCIL.COM We invest mainly in Texas and we’re contrarian advisers. We buy pretty much all product types except hotels. We like to be spread out—industrial, retail, medical office, and multifamily. The DallasFort Worth market has been working out well.

LES MELCHER, WOODBINE DEVELOPMENT CORP.: For the last 10 years, we’ve focused on the hospitality market. We’ve historically done large resorts; over the last five or six years we’ve migrated to select service side. Our run hasn’t been near as good as multifamily, but we’re seeing good growth in hospitality, both developments and acquisitions. We focus on domestic markets, mostly, lately, in the Sun Belt and the West Coast.

CLINT HAGGARD, BURGHER HAGGARD: I’m speaking as one of nine owners, so you’re getting an owner-beneficiary perspective. My time is spent in Fort Worth with Burgher Haggard. We do a lot of work with families. About one-third of our investments are in real estate. We have more than $1.6 billion under construction with our clients right now, mostly in Texas. I’m seeing a lot of activity in multifamily, and some in self-storage.

MATT MCMORD, CORONA CAPITAL: We’re trying to build up our real estate portfolio, and we’re looking to do that through partnerships. We like to find partners that are the best at what they do. We favor markets with high barriers to entry, where it’s harder to build, from a development perspective, where it might take several years to get entitlements in place, where the competition is going to be years behind us.

That tends to be on the East and West coasts, the Mid-Atlantic. We like Texas, too.

SPRING 2016

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B BUILDING TOMORROW TOGETHER

CODE TALKERS

WHEN IT COMES TO RELOCATION RECRUITING, THE DRC GETS CREATIVE

BY MIKE ROSA

What do a dragonfly, a kangaroo, or a jaguar have to do with the Dallas Regional Chamber? Why and how is the DRC economic development team communicating with Beethoven, Columbus, Roosevelt, and Geronimo? Why would the DRC be looking through a lens at Saturn, the Moon, or a Martian? Why are we trying to bring both heat and a blizzard to Dallas at the same time?

All are code names attached to companies that the DRC is engaged with and that are considering the Dallas region for new or expanding corporate locations. Most of the projects the Chamber has been involved in recruiting in recent years had code names, including the headquarters for Toyota (One), Kubota (Ranger), Hilti (2020), and Active Network (Blue Amber). With rare exceptions, companies or those advising companies such as site location consultants or tenant representation brokers, will use code names to preserve the confidentiality of the company considering a move. Code names allow a company to keep its intentions quiet so as not to alarm employees, inform competitors, or invite the hundreds or possibly thousands of soliciting calls and emails it might get from

SPRING 2016

communities, states, brokers, and others with an interest in the company’s search. Normally, projects don’t come with or get a code name until the level of activity or seriousness of intent warrants one. The DRC is working a very strong list of projects that we would love to recruit here. At the moment, we have 22 projects we consider active and that are code-named.

It’s also not unusual for a project to have multiple code names during the process. Often this is done to better disguise the identity of the company or because of the multiple groups that may be involved in the project. Of the 22 projects on our most active list, six have multiple names. Sometimes the DRC team generates the name, and we have internal competitions to see how clever we can be. Normally there is some aspect of the code name that relates to the CONTINUED 6

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B BUILDING TOMORROW TOGETHER actual company to help us with recall, without making it obvious, of course.

It’s fun and just part of corporate recruiting to generate and to use code names, but it’s all serious business when working with these companies to encourage and win a move for our region.

Our overall list of corporate targets and those that have made inquiries or that we have pitched on marketing trips is much larger than 22—it’s in the hundreds. Our goal is to carry as many as we can along the continuum of being receptive to our outreach, to tire kicking, to some level of formal investigation, all the way to visiting and making a decision. Those in the latter stages are the ones I’ll draw from to provide a snapshot of the types of projects we’re working with right now.

Headquarters projects remain a staple of our activity. Our region’s assets match very well with the requirements of a corporate headquarters location search. It’s a strategic goal of ours to leverage this region’s assets and bring more corporate headquarters here—a goal that we carry forward from our 2010 to 2015 “Blueprint For Prosperity” strategic plan to our 2016-2020 “Building Tomorrow Together” strategic plan.

Headquarters bring high-paying jobs, often result in major capital investments, and elevate a city’s status while also contributing in a big way to things like air service development, local corporate giving, and local spending.

Going forward, the DRC will add the emphasis of recruiting the U.S. and North American headquarters of international companies, in addition to attracting the headquarters of U.S. companies.

Of our 22 most active projects, seven are headquarters. Five of those are Fortune-ranked headquarters. Fortune-ranked corporate headquarters do not move very often; having five

OF OUR 22 MOST ACTIVE PROJECTS, FIVE OF THOSE ARE FORTUNE-RANKED HEADQUARTERS. FORTUNE-RANKED CORPORATE HEADQUARTERS DO NOT MOVE VERY OFTEN. that are considering a move and including the Dallas region as an option is a strong number. Reinforcing that in our marketing to Fortune corporations coupled with the strong draw of the Dallas region is a powerful combination.

Among our seven headquarters projects and including the five that are Fortune listed, three would best be described as service-providing corporations and three others as technology corporations. One of those technology corporate projects also happens to be for the U.S. headquarters of an international corporation. The seventh project is a major nonprofit organization. Three of the projects would create a thousand or more new jobs.

Headquarters are not the only projects engaged by the DRC. There are 15 active projects that represent an array of facility and job types, including a few non-headquarters corporate office projects, an innovation center, a corporate training center, a food and beverage manufacturing project, and multiple information and technology centers.

Over time, our active projects will migrate to conclusion and we’ll elevate others from our target and inquiry lists to active project status. We always want a full pipeline and look forward to more great names—the real names—calling the Dallas region home.

WANT TO LEARN MORE ABOUT HOW TO GET INVOLVED IN BUILDING TOMORROW TOGETHER?

Contact Mike Rosa, Senior Vice President, Economic Development, Dallas Regional Chamber 214-746-6735 | mrosa@dallaschamber.org

BUILDING TOMORROW TOGETHER The Dallas Regional Chamber’s economic development program, Building Tomorrow Together, provides organizations in Dallas-Fort Worth with an accelerated investment opportunity that helps advance our region’s success. This additional investment made by more than 130 organizations in addition to annual chamber membership dues allows organizations to increase their support of our efforts to further economic prosperity throughout the region. This initiative funds efforts related to direct contact with corporations and location consultants examining the DFW region.

1 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

SPRING 2016

C

M

Y

CM

MY

CY

CMY

K

Industry Insights: Multifamily Summit

Details: Date: Wednesday, April 27 Ticket Cost: $100 Location: Dallas Country Club Time: 7 – 9:15 a.m.

Visit recouncil.com for tickets

Performing at historically high levels, the multifamily sector is among the most attractive property types. But will it last or are we overselling?

The Real Estate Council and Real Estate Deal Sheet have partnered to bring you unparalleled access to industry experts and networking opportunities.

Upcoming Dates: Healthcare & Senior Housing Summit Wednesday, June 22 Capital Markets Summit Wednesday, August 17 Retail Summit

PRESENTED BY

Wednesday, November 16

Imagine.

Empower.

Impact.

FOR MORE INFORMATION R ECOU NCIL .COM

214 692 3600 PHONE

Xceligent Knows Dallas Real Estate Xceligent has partnered with NTCAR to offer comprehensive real estate data on the North Texas marketplace to ensure you have the right numbers when they matter. Our team has partnered with the research and brokerage communities to compile fresh data on the city’s major and lesser known assets and tenants giving you more data, more insight and more power to execute on your clients’ needs.

Search for property listings in North Texas and throughout the U.S. at CommercialSearch.com Property Listing Data Comps xceligent.com

Tenant Data Mapping Vacancy & Absorption

PHOTO: MICHAEL SAMPLES

CONSTRUCTION CONTINUES IN UPTOWN DALLAS AT A BRISK PACE.

THE CRANE REPORT

Spring 2016

North Texas continues to see robust development activity across all commercial real estate sectors. In each issue of the Dallas-Fort Worth Real Estate Review, we detail projects that are planned and underway in the region in The Crane Report. Data for the office and industrial markets is provided by Xceligent Inc. Data for the multifamily market is provided by Axiometrics Inc.

BY CHRISTINE PEREZ

ON-THE-GRO U N D I N S I G H TS

OFFICE

RANDY COOPER

Vice Chairman, Cushman & Wakefield

“Attracting and retaining employees, especially millennials, is job No. 1 in today’s site selection.

Price, while always a factor, has been tempered by the employee experience sentiment.”

SPRING 2016

INDUSTRIAL

MULTIFAMILY

SARAH HINKLEY

CANNON GREEN

Managing Director, Stream Realty Partners

RYAN REID

Principal, Peloton Commercial Real Estate

“People are fearful that we are near the end of the cycle, but tenant demand and job growth are still strong.

Relocations are getting headlines, but we’ve seen expansions and moves for upgraded space across all submarkets.”

“I believe that 20 million square feet of absorption is achievable this year. The discipline the development community adhered to during the front end of this cycle is paying off.”

“The new trend appears to be larger average unit sizes on new developments that target the empty-nester. Earlier in the cycle, the focus was on smaller floor plans catering more to millennials.”

Executive Vice President, CBRE

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 1

For North Texas office developments at least 10,000 sq. ft. in size, Xceligent reports that 75 projects totaling 14 million sq. ft. are under construction. Another 179 projects totaling 22.2 million sq. ft. are planned or proposed. All are represented on this map; a sampling are labeled.

THE CRANE REPORT:

OFFICE ANNOUNCED + UNDER CONSTRUCTION

THE VILLAGE AT CROSS ROADS CARROLL PARK PLACE PHASE II

OLD TOWN BLVD NORTH HARVEST COMMUNITY MEDICAL OFFICES

BARTONVILLE TOWN CENTER 4431 LONG PRAIRIE RD MEADOWLANDS ADDITION MONTEREY OFFICE PARK PRAIRIE COMMONS

THE VILLAGE CENTRE PHASE II

NE OF MORNINGSIDE ST AND S OAK ST

HIDDEN RIDGE

610 STONEGLEN DR GOLDEN TRIANGLE MEDICAL CENTER BEAR CREEK OFFICE PARK

HERITAGE TRACE PKWY

NW OF HERITAGE GLEN DRIVE AND NORTH BEACH STREET 7105 GOLF CLUB DR PAD SITE

UNICORN LAKE OAKMONT OFFICE CONDOS

AVONDALE HASLET CENTER

1

CYPRESS OFFICE

35 MEDICAL CENTRE

ANNOUNCED DEVELOPMENTS

SIZE: 3 million sq. ft.

DEVELOPER: KDC DETAILS: Approvals are still being worked out for this 160-acre, $1.5 billion transitoriented development planned in Irving on Hidden Ridge Drive. The site, owned

by Verizon, is planned to contain up to 3 million sq. ft. of office space, 85,000 sq. ft. of retail space, and a 150-room hotel, as well as apartments.

8500 E HIGHWAY 380 THE PRESIDIO BLDG 2

3665 WESTERN CENTER BLVD

SOUTHLAKE EXECUTIVE MEDICAL CENTER CARILLON OFFICE

2785 ROCKBROOK DR CARROLLTON TOWN CENTER PHASE II 801 ENTERPRISE DR RED HAWK OFFICE VILLAGE 2 PARK WEST MAIN STREET PLAZA CONNECTION COPPELL PARK 9001 CYPRESS WATERS BLVD GRAPEVINE STATION FREEPORT COMMONS

MIRON GROVE OFFICE PARK 8821 DAVIS BLVD HERITAGE OFFICE PARK

6148 PRECINCT LINE RD

3

THE APEX AT LAS COLINAS CROSSING PINNACLE TOWER II TEXAS MUSIC FACTORY DECKER AIRPORT 161 COMMONS HQ CENTER

1501 HUGHES RD 1105 GLADE RD COLLEYVILLE MEDICAL CENTER

PEDERSEN OFFICE PARK

EXPEDITION PLAZA 7TH & UNIVERSITY 2910 WINGATE ST

1

SEC OF OAKDALE RD AND MACARTHUR BLVD

D. R. HORTON HEADQUARTERS

OVERTON TOWER III

UT SOUTHWESTERN VICTORY MEDICAL PLAZA MEDICAL CENTER 1200 6TH AVE 2701 MATLOCK RD

CLEARFORK PHASE

TEXAS SHALE TOWER WATERSIDE

4015 IH 20 W CHISHOLM TRAIL

2

HULEN VILLAGE OFFICE

FOURTEEN555

SIZE: 400,000 sq. ft.

DEVELOPER: Cawley Partners LEASING AGENTS: Jeremy Duggins and Addie Ludwig of Cawley Partners DETAILS: Developer Bill Cawley is making another bet on the lower Dallas North Tollway market with this new complex north of Interstate 635. Amenities include a courtyard, restaurants, lounge, health club, and indoor-outdoor gathering spaces.

2 2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

NW OF W PLEASANT RD AND S BOWEN RD

MATLOCK PROFESSIONAL OFFICE PARK

BRYANT IRVIN PLAZA

THE ATRIUM BEAR MEDICAL PLAZA

CANNON PROFESSIONAL PLAZA

BROAD STREET PLAZA GRAND REGENCY PROFESSIONAL DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR BUILDING HIGHPOINT COMMONS

3

5

1212 N LOOP 12 THE OFFICES @ HAMPDEN WOODS

FROST TOWER FORT WORTH

4101 HIGHWAY 121 BYPASS BLVD

THE PLAZA OFFICE CONDOMINIUMS

TROPHY CLUB TOWN CENTER

8825 N TARRANT PKWY THE PONDS

7114 MID CITIES BLVD

CROWN CENTRE

CYPRESS WATERS

SIZE: 225,000 sq. ft.

DEVELOPER: Billingsley Co. DETAILS: The four-story office building, designed

by GFF, is the latest addition to the bustling Cypress Waters mixeduse development north of LBJ Freeway at Belt Line Road near North Lake. The speculative project can accommodate a single tenant or several users.

SPRING 2016

WHISPERING FARMS COMMERCIAL CENTER BLDGS 1-6 THE FORUM AT PROSPER 181 WEST 1840 S MAIN ST LAKE BAYLOR FOREST MCKINNEY II CONLEY CRESCENT BLVD COMMONS PROSPER PARC VIRGINIA CROSSINGS PARKWAY PLAZA NE OF METHODIST CHESTNUT COMMONS ELDORADO MCKINNEY PKWY AND MCKINNEY OFFICE CONDO TEEL PKWY PLAZA SUMMIT PARK II CUSTER CREEK MEDICAL

A CLOSER LOOK AT COLLIN COUNTY 4645 WYNDHAM LN

SE OF SMOTHERMAN RD AND FM 423 BLDG 1

SE OF TECHNOLOGY DR & DALLAS N TOLLWAY FRISCO SQUARE

MCKINNEY MEDICAL OFFICE PARK

STEWART CREEK OFFICE CENTER I 332 W LEBANON RD WESTSIDE MARKET PHASE II

STONEBROOK PARK STARWOOD PROFESSIONAL BUILDING II THE GATE VICTORY AT STONEBRIAR LEGACY MEDICAL PARK PHASE III

6

STONEBRIAR COMMONS ON LEGACY BLDG 9

NW OF W FM 544 & N MURPHY RD

DEXTER PROFESSIONAL PARK ALCATELLUCENT CITYLINE STATE FARM PALISADES CENTRAL NORTH DALLAS BLDG 4 MEDICAL CENTER II

2

TOLLWAY CENTER

PARK TOWER AT DALLAS MIDTOWN

399 MELROSE DR BLDG 2

QUEST RESOURCES

MURPHY MEDICAL OFFICES

CAMPBELL CROSSING OFFICE PARK

VICTORY AT RIVERSIDE

6351 PRESTON RD PHASE II PRESTON @ WADE CROSSING BLDG 12 THE FORUM AT WADE PARK FRISCO HIGHLANDS OFFICE PARK FRISCO STATION THE STAR FRISCO BRIDGES CAPITAL ONE

4401 W LOVERS LN 2505 TURTLE CREEK BLVD

FOUR ENERGY SQUARE

TWO ARTS PLAZA ROLEX MCKINNEY & OLIVE THE UNION TWO VICTORY PARK

4

VICTORY PLAZA AT CUSTER UNIT 6

CORPORATE CENTER FOUR

TWIN CREEKS OFFICE ANGEL FIELD CENTER

ONE FOUNTAIN COURT VILLAGES OF EXCHANGE PARKWAY WATTERS JUNCTION ALLEN PLACE

WATTERS CREEK OFFICE

WATTERS CREEK AT MONTGOMERY FARM

PRESTON LEGACY CENTER

PLATINUM VILLAGE OF TOWER LAKES ON TENNYSON CENTRE AT COMMUNICATIONS THE COLONY THE BRIDGES AT SANYO CASTLE HILLS LEGACY ENERGY SPRING CREEK BUSINESS HEADQUARTERS WINDHAVEN COMMONS PARK PLACE ONE PARKWAY PROFESSIONAL PLAZA

● ANNOUNCED ● UNDER CONSTRUCTION

UNDER CONSTRUCTION

MEADOW GREEN MEDICAL CENTER

FORMER CHASE BANK BUILDING

PRESTON BEND ONE PRESTON PARC II

LEGACY WEST

1015 SAM RAYBURN TOLLWAY

THE SHOPS OF INDEPENDENCE

6901 ROWLETT RD

MIDTOWN MEDICAL CENTER

PARK CITIES PLAZA

MCKINNEY MEDICAL OFFICE PARK

SHOAL CREEK BLDG 1

200 N 5TH ST FOUR GALLERIA TOWER

5001 COLLIN MCKINNEY PKWY

7638 STONEBROOK PKWY

TOYOTA HEADQUARTERS

PRESTON PARKER PROFESSIONAL BUILDING

ALMA OFFICE CONDOS IN CRAIG RANCH

SHALEM PARK GALLOWAY MEDICAL ARTS 910 N BELT LINE RD SUNNYVALE PROFESSIONAL PLAZA

SOLA ON LAMAR

5

THE MUSIC FACTORY

6

JPMORGAN CHASE

SIZE: 100,000 sq. ft. (office component) DEVELOPER: ARK Group DETAILS: Scheduled to open in 2017, this mixed-use complex will include an office building that will be fully occupied by Ethos Group. The entertainment-focused district will be anchored by an Alamo Drafthouse and Live Nation concert venue, and 250,000 sq. ft. of restaurant and entertainment space.

DAVIS STREET MARKET

DUNCANVILLE MEDICAL COMPLEX

530 E PLEASANT RUN RD

ONLINE EXTRA

THE CRANE REPORT: INTERACTIVE VERSION

online at dfwrealestatereview.com

4

TRINITY GROVES OFFICE

SIZE: To be determined LAND OWNER: West Dallas Investments LP DETAILS: The partnership behind Trinity Groves, led by restaurateur Phil Romano, has tapped HFF to help it find a developer or investment partner to add an office component on 3.1 acres within its booming development along the Trinity River. It will join 16 restaurants, 1,000 multifamily units, and 140,000 sq. ft. of retail space.

SPRING 2016

SIZE: 1.4 million sq. ft.

DEVELOPER: KDC

DETAILS: Designed by HKS Inc., the new campus for the banking giant will consist of six buildings on about 50 acres within Legacy West, joining other big tenants Toyota North America, Liberty Mutual, and FedEx Office. It’s scheduled to open in 2018.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 3

THE CRANE REPORT:

DENTON CREEK BUSINESS PARK

US 380 BUSINESS PARK

WESTGATE BUSINESS PARK

MARKET STREET INDUSTRIAL PARK

INDUSTRIAL ANNOUNCED + UNDER CONSTRUCTION

LEWISVILLE CORPORATE CENTER

GATEWAY BUSINESS PARK LOTS 6, 7 & 8 SPEEDWAY DISTRIBUTION CENTER BLDG C

ANNOUNCED PROJECTS 1

THE PARK 20/360

● ANNOUNCED ● UNDER CONSTRUCTION

SIZE: 1.6 million sq. ft.

DEVELOPER: Ridge Development and Invesco Real Estate DETAILS: The industrial development arm of Transwestern, Ridge Development, plans to break ground in the second quarter on this large industrial park at the northwest corner of Interstate 20 and State Highway 360 in Arlington.

The first phase will consist of four buildings totaling nearly 1.3 million sq. ft., scheduled for completion in early 2017.

2 ALLIANCE WESTPORT 18

NORTHPORT 35 BUSINESS CENTER BLDGS B&C FARMER BROTHERS COMPANY ALLIANCE CENTER NORTH 15

4

LEGO

ZANDER PLACE DCT WATERS RIDGE PARKVIEW COMMERCE CENTER LAKESIDE RANCH KUBOTA TRACTOR CORP

WAL-MART

PROLOGIS PARK 121

LOGISTICS CENTER II

12500 WILLOW SPRINGS RD 1005 CHISOLM TRL

MAJESTIC AIRPORT CENTER DFW

DFW NORTH II

MAIN STREET COPPELL S3 ROYAL TECH 18

LOGISTICS CENTER III & IV

1363 BRUMLOW AVE BLDG 3

PARC 114 BLDG 9 DFW EAST LOGISTICS CENTER

NORTH RIDGE FORT WORTH RAILHEAD LAND RAILHEAD INDUSTRIAL PARK

1815 RELIANCE PKWY

RAILHEAD PARC INDUSTRIAL NORTH PARK BLDGS 1-4

DFW/161 DISTRIBUTION CENTER

CENTREPORT GSW GATEWAY PHASE II 1460 AVENUE S

COUNTY LINE RD LIBERTY PARK GSW NORTH TRINITY CROSSING TRINITY 161 TRADE CENTER 2909 W OAKDALE RD

5

WILDLIFE COMMERCE PARK

360 GLOBAL LOGISTICS PARK

LOGISTICS CROSSING 2

SOUTH CENTRAL DISTRIBUTION CENTER II

4900 SUN VALLEY DR

1

FIRST ARLINGTON COMMERCE CENTER II

COOPER IH 20

ARLINGTON COMMERCE CENTER

MOUNTAIN CREEK CORPORATE CENTER 120/161 CROSSING

KENNEDALE PKWY F

2

ALLIANCE WESTPORT 18 AND 19

SIZE: 1,160,000 sq. ft.

DEVELOPER: Hillwood LEASING AGENT: Tony Creme with Hillwood DETAILS: These two new speculative buildings will be built at the entrance to the BNSF Railway Alliance Intermodal Facility at FM 156 and Intermodal Parkway. Westport 18 will total 800,000 sq. ft., expandable up to 1.3 million sq. ft., and Westport 19 will total 360,000 sq. ft.

2 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

ONLINE EXTRA

THE CRANE REPORT: INTERACTIVE VERSION

online at dfwrealestatereview.com

1102 ENTERPRISE PL

619 S WISTERIA ST HERITAGE COMMERCE CENTER

UNDER CONSTRUCTION 3

MOUNTAIN CREEK

SIZE: 630,000 sq. ft.

DEVELOPER: Crow Holdings Capital Partners LEASING AGENTS: Kacy Jones, Steve Koldyke, and Wilson Brown with CBRE DETAILS: The developer is underway on the second phase of its industrial project in Mountain Creek, off Interstate 20 in southern Dallas. It’s adding a second 630,000 sq. ft., cross-dock facility, scheduled to be ready for occupancy later this year.

SPRING 2016

3

PROSPER BUSINESS PARK

For North Texas industrial developments at least 10,000 sq. ft. in size, Xceligent reports that 80 projects totaling 20 million sq. ft. are under construction. Another 162 projects totaling 45.9 million sq. ft. are planned or proposed. All are represented on this map; a sampling are labeled.

EMPLOYEE SOLUTIONS INC THE TECH CENTER ON GREENVILLE

CREEKVIEW 121 BLDGS 1-4

DOZIER PLACE

PLANO TECH CENTER 8 PLANO TECH CENTER 12

PLANO COMMERCE PARK SITE A

RAGING WIRE PROLOGIS VALWOOD CORPORATE CENTER BLDGS 1-4

CHANNELL COMMERCIAL

DIPLOMAT I

SW OF MARQUIS AND NICHOLSON BLDG 2

MERCER BUSINESS PARK

NORTHGATE DIST CENTER

11070-11090 N STEMMONS FWY

3600 LEON RD

9749 CLIFFORD DR

PROLOGIS/ BUCKNER LAND

I-30 BUSINESS CENTER BLDG 3

SOUTHWEST DISTRIBUTION CENTER MOUNTAIN CREEK BLDG 2

PLANNED POINTSOUTH LOGISTICS & COMMERCE CENTRE INTERMODAL BUSINESS DALPARC CENTER IH 20

PROLOGIS PARK 20/35 LAND

SOUTHFIELD PARK 35

INTERSTATE COMMERCE CENTER

CROSSROADS TRADE MIDPOINT EAGLE PARK CENTER BLDG III LOGISTICS 20/35 PARK CENTER TWENTY

SOUTHPORT LOGISTICS PARK

SUNRIDGE BUSINESS PARK

DUKE INTERMODAL III SE OF PLEASANT RUN RD & SUNRIDGE BLVD

SOUTHPORT TRADE CENTER

I 35 INTERCHANGE I

DALPORT TRADE CENTER 6

DALPORT TRADE CENTER 3

DFW INLAND PORT

DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR

4

ALLIANCE CENTER NORTH

SIZE: 588,000 sq. ft.

DEVELOPER: Hillwood LEASING AGENT: Tony Creme with Hillwood DETAILS: This speculative project will sit at Interstate 35W and Eagle Parkway and be ready for occupancy sometime this summer.

5

LIBERTY PARK GSW

SIZE: 537,000 sq. ft.

DEVELOPER: Liberty Property Trust DETAILS: Designed by GSR Andrade and built

by Jordan Foster Construction LLC, the two speculative buildings will sit at 951 Valley View Lane and 5430 FAA Boulevard in Irving. At buildout, the project will total 720,500 sq. ft.

HILLWOOD BELIEVES IN THE FUNDAMENTALS OF THE NORTH TEXAS INDUSTRIAL MARKET. — TONY CREME, HILLWOOD

SPRING 2016

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 5

WOODLANDS APARTMENTS I

THE CRANE REPORT:

MULTIFAMILY ANNOUNCED + UNDER CONSTRUCTION

DISTRICT OF HIGHLAND VILLAGE

ANNOUNCED DEVELOPMENTS 1

RIVER WA VILLAG

ALEXAN KATY TRAIL

● ANNOUNCED ● UNDER CONSTRUCTION

UNITS: 159 DEVELOPER: Trammell Crow Residential DETAILS: Larger units are on tap for TCR’s newest multifamily project, which will be built on Carlisle Street near the Katy Trail. The project was designed by GDA Architects.

ENCLAVE AT WESTPORT

ONLINE EXTRA

THE CRANE REPORT: INTERACTIVE VERSION

DOLCE LIVING HOME TOWN PH 2

online at dfwrealestatereview.com

AVENUE9

ARLINGTON COMMONS PH I

HUNTER PLAZA PINNACLE BANK PLACE THE KELTON AT CLEARFORK

HIGHPOINT ON SOUTH MAIN

101 CENTER 404 BORDER

THE BERKELEY II THE GROVE AT WATERSIDE

VILLAGGIO

PARC AT MANSFIELD

MANSFIELD ON THE GREE

2

CITYPLACE

UNITS: 389 DEVELOPERS: Forest City Enterprises and Cityplace Co. DETAILS: The new addition to the Cityplace development in Dallas features a 23-story apartment highrise and a 150-room boutique hotel, which will fly the Hilton flag. The new tower, designed

by WDG and GFF, will include street-level retail.

2 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

UNDER CONSTRUCTION 3

ALTA STRAND

UNITS: 400 DEVELOPER: Wood Partners DETAILS: Designed by Good Fulton & Farrell, this five story complex is under construction at 1931 Market Center Boulevard in the Design District and is scheduled to open in 2017. Amenities include two clubhouses, a conference center, and a twolevel fitness center with a room for yoga.

SPRING 2016

THE MANSIONS OF LITTLE ELM

THE ABLON AT FRISCO SQUARE

STREETLIGHTS AT THE CANALS AT GRAND PARK

ORIGIN AT FRISCO BRIDGES THE GRAND AT LEGACY WEST

ROSE HILL APARTMENTS

MCKINNEY RBAN VILLAGE

TWIN CREEKS CROSSING II

JEFFERSON STONEBRIAR

F D

DOLCE LIVING TWIN CREEKS PH I LOFTS AT WATTERS CREEK II

HUNTINGTON APARTMENTS

5

Just north of Dallas.

Far from ordinary.

DISCOVERY CASTLE HILLS BROADSTONE PARK PLACE

ALK GE

HERITAGE CREEKSIDE

THE ELLIS

HEBRON 121 STATION III

LAKEVIEW POINTE

PALISADES VILLAGE I

BROADSTONE 51/51 AURA 5515

IMT PRESTONWOOD

PARSON`S GREEN

GABLES WATER STREET

LINCOLN WATERS EDGE II JEFFERSON RIVERSIDE

CREST AT LAS COLINAS STATION APARTMENTS

JEFFERSON GALATYN PARKWAY

EASTSIDE II HARMONY HILL I OAKS 5TH STREET CROSSING AT CITY CENTER TERRA LAGO

THE CALLIE

MERCER CROSSING AT LUNA II AMLI ON RIVERSIDE ALEXAN LAS COLINAS

AURA ONE90 ALEXAN CITYLINE I

BUCKINGHAM FLATS

MODERA GALLERIA

900

D

STRATFORD LAND MCKINNEY RANCH DEV POST OAK APARMTENTS PARKSIDE AT CRAIG RANCH II

PALLADIUM MIXED USE PARKVIEW APARTMENTS

MARK AT MIDTOWN PARK PRESTON HOLLOW VILLAGE BANDERA APARTMENTS

LOVERS AND PRESTON CREST AT AURA ON OAK PARK MCKINNEY

4

HARRY HINES BOULEVARD MIXED

3 BRADY TRINITY MIRO

1

2

GREEN

CANYON IN OAK CLIFF MIXED USE

OAK FARMS DAIRY

VILLAGE OF ROWLETT

PARC AT WHITE ROCK FRMR SALTILLO APARTMENTS ALEXAN HENDERSON THE CASE BUILDINGS BUTLER BROTHERS BUILDING

VILLAS AT VANSTON PARK

BROADSTONE FARMERS MARKET

ALTA YORKTOWN

VILLAS CENTRAL PARK

THE ENCLAVE AT MIRA LAGOS I

D EN

DATA SOURCE: AXIOMETRICS INC.

4

THE MCKINZIE

UNITS: 183 DEVELOPER: Street Lights Residential and Tricon Capital Group Inc. DETAILS: This 22-story project, underway at Harvard Avenue and Tracy Street in the Knox-Henderson area, is designed to be reminiscent of a historic luxury hotel. It will target empty-nesters, with units that range from 990 to 2,700 square feet and one to three bedrooms, as well as limited penthouses.

SPRING 2016

5

DISCOVERY AT THE REALM

UNITS: 423 DEVELOPER: Bright Realty DETAILS: Located south of Windhaven Parkway at Castle Hills Drive in Lewisville, the project’s first three-building phase is being developed on a 20acre site. At completion, Discovery at The Realm will include more than 4,000 units, with another 800 units in the project’s mixed-use component.

McKINNEY ECONOMIC DEVELOPMENT CORPORATION

McKinneyEDC.com D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 7

S SCORECARD

SUNOCO LP SIGNED A 121,000 SQ. FT. LEASE AT 8020 PARK LANE.

SCORECARD

Spring 2016

It’s not just relocations that are boosting absorption numbers; existing tenants are expanding and taking up more space, too. That’s why vacancies are tightening, even with new construction that’s underway. Here we look at the top five office, industrial, and retail leases across North Texas during the past three months. As always, data is provided by Xceligent Inc.

BY CHRISTINE PEREZ

ON-THE-GRO U N D I N S I G H TS

OFFICE

RANDY GARRETT

DALE RAY

“The North Dallas/Plano/ Frisco office submarkets should continue to see unprecedented growth in 2016. All of the growth factors that have been in existence over the last 24 to 36 months are still firmly in place.”

“The HR directors now have a huge say when it comes to leasing space and making sure it maximizes the experience for employees.

You used to never see them.

Now they’re on the tours, day one.”

Principal, Transwestern

SPRING 2016

Principal, Avison Young

INDUSTRIAL

RETAIL

GARY LINDSEY

MICHAEL WALTERS

“It is safe to say that the major Dallas-Fort Worth metrics will remain positive, with lower vacancy rates, above-average absorption, and rental rates on the rise until new construction is complete.”

“The retail market in North Texas is the strongest I have seen it since I have been in the business. Land prices and, as a result, retail lease prices, have skyrocketed in the past two to three years.”

Managing Director, Newmark Grubb Knight Frank

Division President, Falcon Realty Advisors

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 9

S SCORECARD

OFFICE LEASES

1

5

3

4

5,34417,003 SF

2

17,00345,337 SF 45,337101,319 SF 101,319232,000 SF 232,000489,000 SF

LARGEST OFFICE LEASES

1

FANNIE MAE

SIZE: 330,000 sq. ft. at Granite Park TENANT REPS: Randy Cooper and Craig Wilson with Cushman & Wakefield LANDLORD: Granite Properties DETAILS: The mortgage giant will consolidate three different facilities into one location in Plano, where it will occupy all of Granite Park VII, a new building in the park at the southeast corner of the Dallas North Tollway and State Highway 121.

2

PWC

SIZE: 200,000 sq. ft. at Park District TENANT REP: Phil Puckett, CBRE LANDLORD: Trammell Crow and Met Life, represented by Dennis Barnes, Celeste Fowden, and Clay Gilbert with CBRE DETAILS: The accounting and professional services firm will occupy floors 12-19 of PWC Tower at Park District, leaving about 300,000 sq. ft. available in the 20-story office building, part of a mixed-use project being developed off Klyde Waren Park between Pearl and Olive streets in Uptown.

3 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

3

SUNOCO LP

SIZE: 121,000 sq. ft. at 8020 Park Lane TENANT REPS: Dan Harris, Randy Cooper, and Craig Wilson of Cushman & Wakefield LANDLORD: Northwood Investors, represented by Trey Smith, Ward Eastman, and Johnny Johnson of Cushman & Wakefield DETAILS: This subsidiary of Energy Transfer Partners moved its headquarters from Philadelphia, taking full occupancy of the new Park Lane office building along North Central Expressway.

4

ETHOS GROUP

SIZE: 100,000 sq. ft. at The Irving Music Factory TENANT REPS: Andy Leatherman and Brad Selner, JLL LANDLORD: The ARK Group DETAILS: Opening in 2017, The Irving Music Factory at Las Colinas is a walkable mixed-use development anchored by an Alamo Drafthouse Cinema and Live Nation concert hall and many other retail venues. The privately held training and consulting company will fully occupy the project’s office tower.

5

MAXIM INTEGRATED INC.

SIZE: 81,500 sq. ft.

TENANT REPS: Sharon Morrison, Jim Hazard, and Saadia Sheikh with E. Smith Realty Partners LANDLORD: Cawley Partners, represented by Jeremy Duggins and Addie Ludwig DETAILS: The tenant will occupy part of the first floor and all of the third and fourth floors of a six-story, 200,000-sq.-ft. building under construction along the Dallas North Tollway in Addison.

SHARON MORRISON

SPRING 2016

S SCORECARD

INDUSTRIAL LEASES

1

5

< 15,697 SF

4

15,69748,950 SF 48,950111,805 SF

2 3

111,805200,000 SF 200,000417,600 SF 417,6001,002,620 SF

DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR

1

BED BATH & BEYOND

SIZE: 800,000 sq. ft. at 2900 Valley Parkway TENANT REPS: David Knee, Tom McCarthy, and Kurt Griffin of JLL LANDLORD: Majestic Realty Co., represented by Al Sorrels DETAILS: As many as 1,000 people will fill orders for Bed Bath & Beyond at this new e-commerce facility along State Highway 121 in Lewisville.

LARGEST INDUSTRIAL LEASES

3

NIAGARA BOTTLING

SIZE: 630,000 sq. ft. at Mountain Creek TENANT REPS: Trey Fricke and Reid Bassinger of Lee & Associates LANDLORD: Crow Holdings Capital Partners, represented by Kacy Jones, Steve Koldyke, and Wilson Brown with CBRE DETAILS: With this lease, Niagara Bottling is establishing its third large-scale industrial facility in South Dallas. The property sits along Interstate 20 at Mountain Creek Parkway.

4

WE PACK LOGISTICS LP

SIZE: 300,283 sq. ft. in Skyline Business Park TENANT REP: Holmes Davis of Binswanger LANDLORD: LIT Industrial, represented by John Hendricks with CBRE

2

MISSION FOODS

SIZE: 767,587 sq. ft. at Logistics Crossing Industrial Park TENANT REPS: Corporate Realty Advisors’ James Rigelsky and Brian Kelly LANDLORD: Weeks Robinson, represented by Bob Rice and Forrest Robinson

SPRING 2016

DETAILS: One of the world’s largest producers of tortillas, flatbread, and corn flour products, Mission Foods is consolidating its regional manufacturing and distribution operations into this new industrial park in Grand Prairie.

5

TREY FRICKE

DETAILS: The growing national supply chain management firm is expanding into a larger warehouse and distribution facility along Town East Boulevard in Mesquite, adjacent to a Union Pacific Railroad intermodal yard.

HELLOFRESH

SIZE: 138,500 sq. ft. at 1025 Post & Paddock TENANT REPS: Rick Medinis and Michael Walters with NAI Robert Lynn LANDLORD: Crow Holdings, represented by Michael Spain of Bradford Commercial Real Estate Services DETAILS: This fast-growing meal-kit delivery service backed by British celebrity chef Jamie Oliver is opening up a North Texas distribution hub in Grand Prairie.

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S SCORECARD

2

1

RETAIL LEASES 43

< 2890 SF

5

2,8906,916 SF 6,91617,150 SF 17,15045,362 SF 45,362106,207 SF

DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR

LARGEST RETAIL LEASES

1

2

GANDER MOUNTAIN

SIZE: 60,031 sq. ft.

LOCATION: Eldorado Marketplace in Frisco TENANT REP: Daniel Taylor with CBRE LANDLORD: Fidelis Realty Partners, represented by Melanie Dickenson DETAILS: The new location in Frisco will be the fifth North Texas location for the sporting goods chain.

3

ALTITUDE TRAMPOLINE PARK

SIZE: 33,530 sq. ft.

LOCATION: 2434 S. Interstate 35E in Denton TENANT REP: Joseph Williams, The Woodmont Co. DETAILS: The seven-year lease was part of a four-venue package that totals 140,000 sq. ft. The other locations are in Cedar Hill, Grapevine, and Austin.

BUYBUYBABY

SIZE: 23,428 sq. ft.

LOCATION: Gateway Plaza in Southlake TENANT REP: Steve Lieberman, The Retail Connection LANDLORD: RPAI, represented by David Fazio with The Retail Connection DETAILS: This lease was part of what became a seven-store package of deals between the tenant and the landlord.

4

COST PLUS WORLD MARKET

SIZE: 18,300 sq. ft.

LOCATION: Gateway Plaza in Southlake TENANT REP: Steve Lieberman, The Retail Connection LANDLORD: RPAI, represented by David Fazio with The Retail Connection DETAILS: This store helped backfill 40,000 sq. ft. at a shopping center along State Highway 114 in one of the most active retail markets in North Texas.

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TYLER’S

SIZE: 17,274 sq. ft.

LOCATION: West Bend in Fort Worth TENANT REP: Greg Pierce and Ryan May with CBRE LANDLORD: Trademark Property Co., represented by Steve Toppel and Kaitlin Travis DETAILS: This location will mark the athletic apparel retailer’s seventh store in Texas and its first in Fort Worth.

SPRING 2016

OFFICE/FLEX • INDUSTRIAL • RETAIL • RESIDENTIAL AWARD-WINNING COMMERCIAL DEVELOPMENTS A GROWING, EDUCATED POPULATION BUILDING FOR THE FUTURE UPSCALE LIVING & RECREATION IN THE HEART OF D/FW METROPLEX Top 20

Top 10

Best Places to Live in the U.S.

Most Affordable Homes in the U.S.

in Best Suburbs List

Top 25

Top 15

CNN/Money Magazine

CNN/Money Magazine

D Magazine

Safewise

of 50 Safest Texas Cities

Keri Samford, Economic Development Director 972.624.3127 • edc@thecolonytx.org • www.TheColonyEDC.org

R ROUNDTABLE

A CRITICAL CONNECTION

BRYAN MARSH

As vice president, Bryan Marsh serves as Digital Realty’s Central region portfolio manager. He has overall responsibility for strategic planning, acquisitions, development, operations, leasing, and financial performance of 43 buildings with 4.7 million rentable square feet.

BRYAN LOEWEN

Bryan Loewen leads Newmark Grubb Knight Frank’s global data center practice. He works closely with the company’s 300 worldwide offices to help companies develop business continuity plans and missioncritical strategies involving data centers, colocation sites, and hosting facilities.

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BILL BURTON

As executive vice president of Hillwood Properties and Hillwood Urban, Bill Burton has been a key player in the transformation of AllianceTexas from raw ranch land to an 18,000-acre, masterplanned development.

He also was instrumental in bringing a Facebook data center to Fort Worth.

CAROLINE BRELSFORD

Caroline Brelsford is central regional director for CyrusOne, which specializes in reliable enterprise data center colocation. A seasoned industry executive, she has helped the world’s leading brands reduce risks and costs associated with critical data center infrastructure.

SPRING 2016

R ROUNDTABLE

At a time when demand for data center space is skyrocketing, Dallas-Fort Worth has emerged as one of the top markets in the country.

BY CHRISTINE PEREZ

BO BOND

|

PHOTOGR APHY BY MICHAEL SAMPLES

Bo Bond is managing director and co-leader of JLL’s global data center solutions practice team. A recognized industry leader with more than 24 years of experience, he has successfully negotiated more than 20 million square feet of real estate transactions in multiple states.

SPRING 2016

BRANT BERNET

As senior vice president in CBRE’s brokerage services group, Brant Bernet leads the firm’s data center team.

He previously was a principal at Trammell Crow Co., where he helped pioneer high-tech tenant representation. He went on to launch Rackhouse Group, which focused on data center site selection.

ANDY ABBAS

When social media giant Facebook selected a Hillwood site in North Fort Worth for its newest data center, reverberations were felt throughout the market. Hillwood chairman Ross Perot Jr. spoke about its impact at a ground-breaking event last summer: “The fact that we were able to go through the Facebook process, which is very rigorous and very professional, and come out on top, shows the world that this is where you want big data centers to be.” Those involved in the sector have long known this to be true. In fact, Dallas-Fort Worth has quietly become the nation’s No. 2 data center market.

To get an update on activity in the region, we gathered some of the top minds in the business for a panel discussion. Here’s what they had to say.

Andy Abbas, co-founder and vice president of Data Agility Group, which specializes in data and data center migrations, data center relocations and consolidations, and related services. He has been in the industry for more than 30 years, holding IT executive posts at AT&T and Sears.

CHRISTINE PEREZ: Let’s start with a look back at 2015 and North Texas data center market activity and absorption. Did it fall short, meet, or exceed expectations?

BO BOND: JLL just released a report on what happened in major U.S. markets—a wrap-up

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R ROUNDTABLE of 2015 and highlights of 2016. Specifically to Dallas, we saw greater than 40 megawatts on the multitenant data center front absorb. That’s 250 kilowatts and up. Outside of that, you would have very large enterprise data centers that were built, which we wouldn’t put in the absorption model. If you look at Facebook, you look at State Farm delivering its data center, we wouldn’t put those into the numbers.

In 2015, we saw an increase over 2014 and 2013, and it was very strong for Dallas, in comparison to the rest of the country. Northern Virginia, which led it, was well into the 60s.

Dallas was the second-largest market in the U.S. from an absorption perspective. I think everybody in this room is pretty excited about that. And I think everybody had a hand in that.

As we look forward to 2016, we’re going to find a unique situation where there’s starting to be constraints on space, something that Dallas really has never run into.

BRYAN MARSH: Just a point of reference for those who may read this and don’t know, the metric for data centers is kilowatts or megawatts; that’s how we measure the increments we lease. It’s all based on IT load—what can service the computers in the data centers. For Digital Realty, we did 15 megawatts of IT loads in 2015. That was up from 7 megawatts in 2014.

We almost doubled it. We typically see about 10 or 11 megawatts per year of absorption in our portfolio in Dallas. So, it was a better-than-normal year.

BRANT BERNET: So your double was just in Dallas?

MARSH: Just in Dallas, right. When Bo was talking about 40 megawatts of absorption in Dallas, about 16 of that was from Digital Realty.

BERNET: The only thing I would add to that is, in 2015, we ran a couple of projects where really, truly, for the first time, we only had a couple of options. Thankfully, there’s a lot of potential construction going on that will bring that back into alignment.

BOND: Compare that to traditional real estate.

For the person looking for a warehouse or retail or office, to have just two or three options total— that’s unheard of.

BERNET: There were a couple of “sold-out” signs in 2015.

CAROLINE BRELSFORD: A few years ago, we started increasing our scale of the footprint of our data halls—we deliberately enlarged. We take what I’ll call a factory approach or an assembly-line modular approach to building. We

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BRYAN MARSH

structured that process through our construction arm so we could keep up with the type of demands that were coming. We could see it coming on the horizon. The scale has served us well … to have the larger data halls, to be able to scale up additional megawatts on a moment’s notice. That has been key to supporting some of the emerging growth we’ve seen coming into the market.

ANDY ABBAS: One of the things that we’ve seen, particularly in the scale end, is more organizations creating a lot denser racks, because that would help the real estate requirements. You minimize the requirements to a certain extent and you’re going to have a lot more compute within a rack. That provides scalability to the organization so they can scale better and faster than having to span across multiple data centers and multiple racks. On the flip side of it, that obviously puts a lot of load on the power and cooling for that same rack. Historically, if it has only been 5 kilowatts and now you’re up to 8 or 9 or 10 kilowatts, that increases the load on the entire data center. What we’re seeing is more organizations are wanting to put more functionality and compute in individual servers, versus spanning across multiple—particularly with the virtualization and cloud piece of it.

BRELSFORD: We call that vertical growth. Because that will also have a positive impact on the client over time. As their IT infrastructure changes, they refresh their servers, the servers process more efficiently, they also reject more heat. When the data center is designed to accommodate the vertical growth, the client does not have to necessarily add more space when they need to refresh their IT kit. It also has positive benefits long term.

BRYAN LOEWEN: To the original question, what you’re hearing here is, although it may have met some of the opinions here as far as expectations and what we would expect from the marketplace, if you look at it from Wall Street’s perspective and others, I think we exceeded expectations in the market. The inventory is at a low point here. We look at other markets across the U.S., and there are similar markets that had a lot of absorption. But the Dallas-Fort Worth market, when there’s very little inventory left, I think you have to look at it having exceeded expectations.

BOND: That’s a great point. You look at the public market this past year, everybody thought maybe we were in a bubble here in Dallas, a lot of cranes coming out, headquarters relocations. But if you look across the county, the stock market stayed fairly flat at the end of the year. We’ll use the term in this room, “Big Six.” There are six larger, publicly-traded real estate investment trusts on the data center side, that the market is really starting to track. They ended up 30-plus percent, if you average weight them, over the market. So, performance at the public level is extremely

SPRING 2016

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R ROUNDTABLE positive. You look at the traditional real estate category; they’re down five percent. So there are really strong metrics at the public markets level. That’s something we’ve seen over the last few years. The public markets are very instrumental to this industry, how these guys come in and build, and where they build.

BILL BURTON: With regard to the vertical growth inside the buildings: Where does it put stress on the buildings, and does it start to limit anything in this area, with respect to growth?

BERNET: I think the biggest stress is the power piece. We’ve got good, clean, and abundant power here. So my knee-jerk reaction would be, bring it on. I think it’s going to be fine. Some of the constraints of how you build, especially where you have restrictions on the equipment yard where you can’t bring in more generators, like in a downtown environment, it would be difficult to expand that. But most of what we’re seeing is big equipment yards, big setbacks, the opportunity to grow that equipment yard kind of as large as you want, and then all you’ve got to do is bring in more power.

What is driving all of the demand that we’re seeing, here in this market and nationally?

BRELSFORD: It’s the explosion of data, the amount of data that continues to compound every year. I read somewhere, to put it in perspective, that we’ll be at 44 data bytes by the year 2020. To give an idea what that means, it would be as if every human being on the planet were receiving 174 newspapers per day, just to get to 1.9 data bytes. A cell phone alone today, an iPhone 6, could support over 100 Apollo-type rockets. The technology in such a small chassis can yield so much processing. Clients today look at the data and they want the velocity of that data. Gone are the days where they want to hear they have restrictions on how they access that data. We’re even seeing clients begin to retool their applications with Herculean efforts to do so, such that they’re not bound by a particular geography. The cloud has helped drive that in many respects. That’s why Dallas is such a good location, even for enterprises that aren’t located here today, because of the clean power, the economy, the affordable living, good access to power, et cetera. It makes Dallas a viable option because they’re re-tooling their applications that data can be accessed.

MARSH: We call it “SMACC.” And that’s not trash talk. That’s social, mobile, analytic, cloud,

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CAROLINE BRELSFORD

and content. To us, those are the big drivers in the market. Social obviously being Facebook, LinkedIn, online gaming; mobile with smartphones, laptops, wearable devices transmitting data; analytics revolves around big data, analyzing information, and recognizing patterns and making predictions, algorithms, that sort of thing; the cloud, obviously, is where the Internet resides; and then content, with streaming like Netflix and Comcast.

BURTON: That stuff doesn’t go away. And that’s part of the issue. More users, more user engagement. And the product, it’s changed. It’s gone from pictures to streaming.

ABBAS: That’s in addition to the consumer-driven data, because it’s so easy for organizations to deploy systems—you can deploy a system within minutes, versus having to wait for two weeks. What happens with that is organizations are becoming more fluid in what they’re doing. So if they need to send up a VM (virtual machine) and say, “I’m going to test at one functionality,” they don’t really have to think about it other than, “OK, these are the steps I need to take. Within 20 minutes, I’m going to be done and up and running.” So they’re deploying more and more VMs. That, in turn, is growing the data center environment. As they grow, the back-end infrastructure needs to be able to accommodate that.

BOND: If you look at what happened in Dallas, we’re pretty fortunate here. Because the users that took space in this market in 2015 were extremely diversified. They mirror what happened in the larger office market. If you look at Northern California, it’s major technology companies, major social media companies. But in Dallas, we had major social media companies, a major transportation network company we’re all using to get places on our smartphones. We had huge healthcare land this year.

We had nice financial institutions that landed this year. The cloud companies took a ton of space this year. Our automobile manufacturers took space here. So, there was very diversified absorption. It came from every industry vertical. That’s good for all of us.

Caroline, you mentioned talent. How does Dallas stack up in terms of access to talent?

BRELSFORD: It’s absolutely phenomenal. You have major university systems here.

You have good trade schools. Dallas is a place where young, career-minded people want to be. You have transportation systems for those who want to live downtown and maybe commute outward to work. It’s a very diverse and very strong human capital market in my mind. It’s unusual, because we see other markets where you may have difficulty hiring or staffing someone for a period of time until you find the right one. Here, it’s not uncommon for us to have several qualified candidates come in. We’re having to interview more times to try and figure out which one is the right fit. But I believe the quality of living here attracts individuals to work for us and, of

SPRING 2016

BRANT BERNET

R ROUNDTABLE

course, just the education system here—even for ongoing, continuous education for employees is excellent.

BERNET: Having said that—and you and Bryan would know better than anybody, because I completely agree with that. But the engineers are in short supply, right? It’s hard to find good engineers to run good data centers, even in Dallas, especially because there’s just so much going on. Is that right?

MARSH: Yeah. We’re having to raid our competition a little bit for good engineers.

BERNET: Seems like the good ones bounce from place to place.

BURTON: Don’t you think it’s relative? We’ve got a very large pool relative to the rest of the country. If you’re looking for talent, that’s what we understand

in the companies that we’ve worked with. For Facebook most recently, talent was one of the big criteria for them. And then also access from the West Coast, having enough direct flights to and from the Valley. It’s very important getting those people here. Those were two critical components.

BRELSFORD: I certainly haven’t seen that challenge for our partners delivering what I’ll call higher-end solution technology engineering skill sets. Perhaps, maybe, on some of the mechanical facility side, that might be a challenge for some. One of the other things that attracts clients to this market is the fact you have large hubs for what I’ll call your major OEMs (original equipment manufacturers), your major managed service providers. And there’s always a good head count for those operators to come in and assist clients with their IT strategy or even the management of their infrastructure. It may be unique to certain skill sets around mechanical or cooling, or generator sets on the power side, but we haven’t seen that at this point.

ABBAS: There’s a lot of attrition going on right now and also layoffs. Obviously, it’s the big

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ROUNDTABLE

boys, like HP, for example. So I think that will help with having resources available for the data center market. One of the key things that probably needs mentioning is a lot of colleges and universities are focusing on this. At the University of North Texas, for example, there’s a brand-new technology lab they’ve developed.

And IBM has donated quite a bit of equipment there. I heard the same thing that the resource availability within DFW, because of the growth spurt, is becoming a challenge. The universities are working to circumvent that.

BOND: Again, I don’t want to contradict what you said, but to say there’s been a lot of layoffs, I’m going to raise my hand and say that may be at HP or something like that. But I wouldn’t say there are a lot of layoffs in this town. As a matter of fact, I think there’s a significant amount of growth, and there is a race for good talent.

Relatively speaking, we’re not talking about the West Coast here where they’re literally having to bus people in on company-owned buses, set up company-owned apartments, pay significant bonuses and deal with job hopping left and right. This is not the Bay Area, where it’s a talent war. I think we have great talent here.

Bill, you mentioned Facebook. What kind of an impact does winning a brand like Facebook have on the region?

BURTON: For us, it has been outstanding.

Facebook is a world-class company. They do a tremendous job. They have tremendous branding, tremendous reach. Their criteria is very, very strict and specific. They dive pretty deep, pretty hard. So when they’re looking at our site and they’re looking at our infrastructure, when they’re looking at our city, when they’re looking at the politics in the state—no stone is left unturned. They always told us they’d protect to the 1 percent of 1 percent, and that’s pretty deep.

And so having them go through the process with us and validating the infrastructure program that we have in place, the skills and the talents that are in this area, and then the politics on top of that, I think it says a lot.

LOEWEN: North Texas has been a tremendous data center marketplace, but the Fort Worth side has not seen the growth that the Dallas and Richardson side has seen. You see in data centers a lot of times the conglomeration of facilities. Facebook and their extreme due diligence process and everything else, is going to lead other companies to say that going west of DFW Airport, that there is a very strong

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infrastructure. There are land options. There’s a lot of uniqueness out there that I don’t think has been properly benefited to the community. So I think Facebook will probably be one of those pioneers to show the path for other corporations to say, “Look at facilities outside the traditional Richardson corridor.”

BURTON: Facebook was a huge announcement. But in addition, we have AIG, Citigroup, and Blue Cross Blue Shield, who have very significant data center operations. It goes back to the age of the infrastructure and the quality and the redundancy of the infrastructure. Texas being on its own grid, I don’t know that it alone is really that big a deal. But at Alliance, you actually have a location where the Brazos Co-op and Oncor come together at the same location. So you’ve got phenomenal redundancy from independent generating sources, and that’s a big deal. We also have locally- and regionally-looped water. We haven’t really talked about water, but water is a very big factor. Renewable energy is becoming more and more of a factor because of what companies want to operate as well.

We talked about vertical growth. What other trends are we seeing from a development perspective?

MARSH: Caroline mentioned CyrusOne going to the bigger-scale projects, and Digital has done that, too. So bigger footprints, multi-story buildings, larger data halls, and shared infrastructure, particularly on the mechanical side. We are also seeing customers that are asking for N and N+1 now on the UTF (unicode transformation format) side, the electrical side, where in the past they used to all be pretty much 2N. They’re willing to give up some redundancies in order to save money and reduce cost. The higher densities we talked about, you’re seeing a lot of new technologies there, in order to accommodate, like in-rack cooling, where you’ve actually got water inside the cabinets.

LOEWEN: I think one thing that’s universal is—and this has been over the last three or four years—you’re seeing less and less retrofitting. The guys who had to put their data center inside of an office building and grow it over time, the light bulb is going off and they’re saying, “We need to move this out, move it somewhere that doesn’t have sprinkler systems and floor load issues and power issues.” They’re finding it’s easier, it’s cheaper, and more efficient to build from scratch. From a user’s perspective, you’re seeing a lot more options—not just in the Dallas-Fort Worth area, but really across the whole sector. You see a lot more customer-driven solutions that are allowing for optionalities that go beyond just your box and power-cooling space.

BOND: I think what we see now from the providers is they see the benefit of larger, campus-type developments, being able to make that dollar go further. And then inside that box it is absolutely customization. I’m listening to exactly what the customer wants. I built a product that is flexible enough that I can absolutely handle the way you want to run your IT. The results have been great on the user side, which

SPRING 2016

R ROUNDTABLE there’s always a back-up for that. These guys, especially the brokers here—Bo, Brant, Bryan— you know, they can make a ton of money on commissions, much greater than any office deal or retail deal with the size of the transactions. I’m always amazed when it comes out with the list of the biggest real estate deals in Dallas that there aren’t more data center transactions on there.

Well, no one likes to talk about the data center deals. They like to keep them hush-hush.

BO BOND

then translates back to the provider side, to the public markets, et cetera. It’s always fun to sit in the room with some very smart people dissecting the requirements and coming back with customized solutions. As we go from provider to provider, there’s a lot of time that the solution looks different. You really start to see light bulbs going off on the user side saying, “I just never thought of that.” Right now we are at a new frontier of helping the client truly solve, versus having to fit into what’s available in the marketplace.

MARSH: Let’s not forget that data centers are the most sophisticated, most complex type of commercial real estate on the planet. So add a zero to everything. It’s because of the redundancies that are built into the system. So if something fails,

MARSH: We should, though. Because sometimes we laugh when we see the size of some of those transactions on the office side compared to the deals we’re doing on the data center side.

ABBAS: The online news source Data Center Knowledge recently published a report that said they’re seeing enterprises reducing their footprint by up to 50 percent. Now, that is huge, because their computing requirements are not going away. So what are they doing with that reduction? Well, they’re going into co-location facilities. There is a huge data center campus in

T

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ANDY ABBAS

Dallas owned by an organization, and they’re actually moving to a co-location facility.

More organizations are realizing that they don’t want to be in the data center business, and they’re consolidating their data centers. We had one organization we worked with that took 34 different sites and consolidated it into one. Now, some of those sites were closets, right? So they weren’t necessarily full data centers, but those types of moves are happening more and more.

BOND: Maybe volume of data centers are being shrunk, a number of them. But I think if you can compute the power behind it, the number of servers is growing astronomically.

ABBAS: We’re talking about organizations that own their own data centers.

BOND: Which, in my opinion, are very few and far between. They might have a cabinet closet here or there, and they’re seeing the benefit of consolidating. But when they’re doing that, the overall compute power is still growing at a rate that is a huge hockey stick.

BRELSFORD: In 2001, the average back-office density per server cabinet was around, maybe, 1 or 2 kilowatts per rack. It’s not uncommon to see a back-office compute rack now 13 kilowatts up to 20 kilowatts per rack. So if anyone has ever heard the term “Moore’s law” and the compounding effect of that, we have definitely seen that. Also, I think that CTOs and CIOs and CFOs, to some degree, want to transfer the risk of that asset to an operator like us. So it’s a risk transferral. It’s risk of either overspending capital or not spending enough if you didn’t get to market in time with your application. It’s the risk of downtime. It’s all these risks that if you can make it somewhat utilitarian and use a operator like one of us, that is sort of the trend we’re seeing. If you think about it, every refresh cycle since 2001 we’ve seen an up-kick in the kilowatts.

The footprint might not necessarily grow when the client refreshes, but the density certainly does. If you’re owning and operating your own data center in an office building, you begin to run out of what room to move the air to just cool the heat dissipation for those systems.

LOEWEN: We spend a lot of time translating from CFO to real estate, CFO to legal, CFO to IT. That involvement by the CFO in decisions is because it’s such enormous cost and is becoming a bigger percentage of overall operations. As such, they’re evaluating should it be [capital expense] or should it be [operating expense]. If it’s cap ex, they may do it on their own site. If it’s op ex, they may choose to go and push these things to a third-party operator. As this industry has evolved into a very competent industry, there’s more trust that the risk can be shifted to someone else. Ten years ago, a lot of trust wasn’t built in this industry. It wasn’t distrust, but the fear of the unknown.

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R ROUNDTABLE

DALLAS IS THE ON-RAMP TO THE INTERNET SUPER HIGHWAY ACROSS THE SOUTHERN UNITED STATES. AND THAT GOES BACK TO OUR HISTORY AS A LOGISTICS HUB, WITH THE RAILROADS AND THE INTERSTATE SYSTEM. THE FIBER FOLLOWS THOSE ROUTES. —BRYAN MARSH, DIGITAL REALTY

BOND: For years, the CFO was worried about the most expensive item on the ledger, which was labor. The technological infrastructure is equally important today, managing that data. Obviously, it’s very important to recruit and retain talent, but to maintain the data that’s sitting on the server and then determining what to do with it, i.e., the big data concept—it’s very, very important.

And that CFO is thinking about it all the time. That CTO, that CIO, they’re very, very integral into the direction of companies going forward.

Earlier, we talked about Dallas-Fort Worth being the No. 2 data center market in the country last year.

Our readers may not know all the reasons why. So what makes North Texas such a strong data center market?

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CITY OF

NORTH RICHLAND HILLS

ECONOMIC DEVELOPMENT DEPARTMENT 35W

35E

377 114 121

114 377 26

35W

121 183

183

FORT WORTH

35E

635

360

820 30

20

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BERNET: Dallas is in the center of the country, so it’s easy to get to. We talked about power. Fiber is abundant. And despite the tragic tornado just after Christmas last year, we’re down at the bottom of Tornado Alley. We don’t really have natural disasters here.

It’s a safe place to go. We have great diversity of working people. The total cost here for a colocation—if it’s not the bottom, it’s at the very bottom of the scale.

BOND: Definitely for a major metropolitan area. I think one of the critical factors outside of our airport, our labor force, our right-to-work state, permits, the abundance of developable land—just the backbone of Texas and ERCOT and our power supply is phenomenal. We can get inexpensive, very available power. That’s the backbone of what runs the data center. And to be fortunate enough to sit on our own grid where, basically, you have Texas and you have two sides of the country and that’s it. It drives so many of the larger user requirements that come here—they feel safe. And at the end of the day, those guys are sleep-at-night guys. Mitigation of risk is everything. And then you roll in the fact that 80 percent of the state of Texas is deregulated, so then the fact that you get to choose and negotiate a power price and model that works for you, is phenomenal.

LOEWEN: One of the macro effects—and probably complements what Bo is saying— that DFW is home to a lot of major corporations, whether it’s their headquarters or regional headquarters. Subjectivity comes into play in so many data center site selection searches. When I say subjectivity, people will look at various regions. DFW has a lot of metrics that make it a very attractive space.

MARSH: Dallas is the on-ramp to the Internet super highway across the southern United States. And that goes back to our history as a logistics hub, with the railroads and the interstate system. The fiber follows those routes. If you’re trying to get from coast to coast, Dallas is the place. Chicago is another hub, for the northern part of the hub. What data center users need is a diverse connectivity and a low latency—and they can get that in Dallas.

BURTON: Is that related—what you were saying, the on-ramp to the super highway is about latency, right?

BOND: It starts west and comes through Dallas, so it’s very beneficial. Take the online gaming community. A lot of that talent, a lot of development in the state is done out of Austin, but you’ll see a lot of the data centers here, and it’s because of latency. They have a [service level agreement] they have to deliver to the person who buys the game, and that they want all those images to not, as my kids say, glitch. They’ve got to deliver. It’s got to have low latency. It’s got to sit on that highway, and Dallas delivers that, whereas other parts of the state and country don’t. Big financial institutions, healthcare institutions, technology companies have to have an abundance in aggregation of fiber, and it’s a win to be here.

BRELSFORD: The conditions in this ecosystem that you heard everyone describe for the area are creating a magnet for the technology companies to come in, even some of the startup technology companies. You’ll see more of that, because we’re the foundation of

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R ROUNDTABLE

WHEN THE DATA CENTERS ARE IN PLAY, THEN YOU’LL START SEEING THE MARKET REALLY ATTRACT ITS OWN LITTLE TECH HUB, IF YOU WILL. SO IT’S A VERY EXCITING TIME. — CAROLINE BRELSFORD, CYRUSONE

that. When the data centers are in play, you’ll start seeing the market really attract its own little tech hub, if you will. It’s a very exciting time.

MARSH: It’s not just one thing. It’s everything. You have to have it all. And that’s what makes Dallas great, because it’s basically got it all.

BOND: We check so many of the boxes.

BURTON: And a pretty stable government, too, which is very important.

We talked a little bit about supply and demand, with supply becoming more constrained. How are developers responding to that? What do you expect to see in terms of new development this year?

BRELSFORD: Build, baby, build. You’ll see that with all of us, don’t you think?

BOND: Absolutely.

LOEWEN: We tracked at about 650,000 feet of either under construction or potential construction first-phase-type stuff for 2016 and 2017.

The market has listened to the fact that demand is high and supply is—like I said, there are some sold-out signs, and you never see that in the data center business.

BURTON: We’ve developed some data centers in the past. It’s really not our core. We build a lot of other product. For us, it’s really looking at the land, and then how do we access all of this infrastructure? How do we maintain the pathways? How do we make sure we can provide an environment that the users will want? And so as we do our land planning and develop around, for example, the Alliance area, we look closely at maintaining and protecting the purest environment we can to provide the flexibility, the speed to market. We also spend a lot of time with our local governments, because we’re in four different cities. When data center operations come in, time is money, and it’s very important to have those good relationships and have them understand what’s driving their business. And

Dallas | Boston

ARCHITECTURE | ENGINEERING | PLANNING

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SPRING 2016

Teams of Architects & Engineers Award-winning, Innovative Solutions Multi-tenant, Corporate, Institutional, Higher Ed, and Government Clients 4+ Million Square Feet Completed Multiple Uptime Institute Certified Tier III and IV Design & Construction

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 5

R ROUNDTABLE so we spend a lot of time with them trying to help educate them on that topic as well.

LOEWEN: Brant mentioned the supply that’s going on, and there’s been a lot of supply that’s been coming into the Dallas-Fort Worth market lately. Users have historically wanted to see it before they buy it. And that inventory is not sitting in place, for the most part, in Dallas-Fort Worth right now. It’s still a little bit to-be-determined as to what 2016 and 2017 are going to look like, because that inventory is not there, where it has been in the past. It’s been absorbed pretty quickly.

BOND: Of the Big Six publicly traded data center developers, four of them are here in Dallas, and all four are theoretically swinging hammers or have permits and sitting. So they’re building. But it takes a lot longer with the mechanical and electrical infrastructure that we’ve put into these buildings to be able to bring them to market versus your standard four slab walls. The folks who are in the room have streamlined and do things at lightning speed, but that’s because of the brilliance they have behind their construction teams, their supply chain and working with very smart people who have come up with great designs, and their suppliers being out in front of them.

MARSH: We have broken ground on a 300,000-square-foot building in Richardson that will be delivered in November. It will start off with 6 megawatts, but will easily grow up to as much as 36 megawatts. We’ve got the scalability and flexibility to meet the market, as the customer demands are there. A year or so ago, we moved to an adjusted time delivery where we wouldn’t have inventory just sitting finished and vacant.

Once we got the shell up, we could deliver it, really, in four or five months. We like going that route where we can have pre-leasing in place to eliminate some of that risk and that downtime. But in Dallas, you need to have a little bit of space sitting there ready where someone can move in, because a lot of times these requirements pop up and they need it tomorrow. It’s good to have a little bit available.

When a headquarters moves here or a company sets up a big regional operations center here, does the data center usually come along at some point?

LOEWEN: All across the board, I’d say, yes. State Farm did that, as an example, but it doesn’t always happen. A lot of times that data center piece is a very difficult thing to migrate, and it might lag. Ideally, I think it would be in the same market as that headquarters, but it doesn’t happen all the time.

BERNET: It just depends on the make-up of that particular company. Some will say, yes, we’ve got to have it right here because I want to go see the blinking lights and make sure that we’re able to touch it and change out the C Drive or whatever we need to do.

BOND: If you go look at the stack of the bigger [relocation] announcements, I would say more than half of those have moved some form of data center component here. We’re using more data centers, but we have production data centers,

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COMING SOON

Developers are responding to the demand for North Texas data center space. Here’s a look at four new projects that are underway.

KDC-PATRONUS

SKYBOX LEGACY ONE

SIZE: 500,000 sq. ft.

SIZE: 150,000 sq. ft.

DEVELOPERS: KDC and Patronus Data Centers

DEVELOPER: Skybox Datacenters

DETAILS: The two firms are pairing up to market build-to-suit data centers on a 35-acre site north of the new Dallas Cowboys headquarters in Frisco. It can accommodate up to 500,000 sq. ft. of data center space. The property is adjacent to a 200 megawatt Co-Serve substation and provides access to abundant fiber networks.

DETAILS: Designed by Corgan, this purpose-built project will be built to LEED Silver certification and will be ready for occupancy this fall. It will sit near the Legacy West development at State Highway 121 and the Dallas North Tollway.

The 21-acre site can support an expansion of up to 350,000 sq. ft.

899 STEMMONS

STREAM-LEGACY

SIZE: 100,000 sq. ft.

SIZE: 210,000 sq. ft.

DEVELOPERS: T5 Data Centers and Lincoln Rackhouse

DEVELOPER: Stream Data Centers

DETAILS: The former Cabana Motor Hotel is making way for a purpose-built data center along Stemmons Freeway near downtown Dallas. An electric power substation adjoins the property and offers multiple fiber pathways. There will be two buildings, between eight and 12 stories each, with 45,000 sq. ft. floorplates.

DETAILS: Stream will break ground in the second quarter of 2016 on a purpose-built data center on 16 acres within Legacy Business Park. It will be built to Silver LEED specifications and use the Miami-Dade County building code standards, providing the ability to withstand 185-mph winds.

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R ROUNDTABLE we have research and development, business continuity, disaster recovery. Some form of that truly, I believe, ends up in the city.

ABBAS: Organizations historically have wanted their data centers close by, but that’s becoming less and less of a concern. As Bo mentioned, they may like to have some component of their data centers local, but then because their connectivity is so much in abundance, they can have a lot of their [disaster recovery], as well as their— in particular the DR they wouldn’t want in the same location, anyway, but R&D involvement can be at other facilities. I agree with what Brant said, that it’s really been a good half-and-half approach, where a lot of organizations have decided to move, and others have said we’re going to keep them where they’re at.

LOEWEN: Subjectivity comes into play. Having proximity to the headquarters is definitely an advantage. In a market like Dallas where the rates are competitive, it weighs in our favor when there’s a larger regional headquarters presence there.

What about House Bill 1223, the data center sales and use tax break that passed in 2013? Has that helped?

MARSH: I think that’s why Facebook is here.

BOND: I call it elephant hunting, because it’s done a great job attracting some very large users here, but I think the state of Texas is missing out on the majority of the market—the smaller users. We’ve been trying for the last couple of sessions to tweak the bill a little bit so it can apply to more customers looking to come into Texas. It has gotten very competitive, and we’re competing with states all around the country.

BOND: In 2013, when HB-1223 was passed, I think, for us, that it started the conversation. In 2015, there was legislation passed, and it actually was larger than

1223. That’s what helped Facebook get here.

Stuff that didn’t get passed that a lot of people in the room spent a lot of time working on is where we need to be, where it allows the user to truly benefit coming in and reside still in the masterful hands of a colocation data center operator, whether that benefit starts and inures to the benefit of the two—the tenant, or it can just go directly to the tenant. I hope we as a community can band with other different communities and get down to the state during the next session and see that. We’ve seen projects that would have landed in the state of Texas, probably in the city of Dallas, that went to other markets just because there were absolutely more aggressive state programs in other major metropolitan areas.

What about opportunities for southern Dallas and infrastructure there? Are there things in place in southern Dallas County that could support data center operations?

BOND: You used the word “infrastructure.” If you were to look at the greater DFW area and,

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to Bill’s point earlier, and what Alliance brings in this area, it is the infrastructure. So the abundance of power, the abundance of fiber. Fiber is much more rich in the northern community than in the southern community, just based on what’s been put in the ground. You also have a higher potential or perceived risk potentially in the southern sector—little more flood, little more rail.

MARSH: What southern Dallas does have going for it is its proximity to the big carrier hotels in Dallas, which are 2323 Bryan Street and the Infomart. When you talk about low latency, the closer you can be to those hubs, the better off you’re going to be. There is an abundance of land sitting just across Interstate 30 that’s close to those facilities downtown. So, yeah, if you could get the infrastructure in place and some of the other things, there could be real opportunity connecting back to those gateways.

BURTON: When we say infrastructure, it’s not enough to have access to it, it’s the redundancy that goes along with that.

Let’s get everyone’s outlook for 2016, the challenges and opportunities. Andy?

ABBAS: The opportunities are great, because there is a lot of activity happening. A lot of companies are realizing they want to move into either a sale/lease-back or move to a colocation facility. There are still a lot of companies wanting to relocate here for all the reasons that we discussed. So there’s a lot of change. And for our business, that’s perfect.

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BERNET: The future is bright. It’s a great time to be in the data center business on all sides, be it land or colocation or real estate or brokerage side. For Dallas, 2016 will have some challenges, because of the lack of space that’s available. But 2017, 2018, we just look into the future—the requirements that started the need for data centers years ago have not changed, except that they have just continued to grow.

BOND: To echo a little of what Brant said, the interim challenge is maybe a lack of supply, but that will take care of itself just by folks that are on the ground today developing. The upside is here. That will be delivered. I think our economy is healthy.

As long as we don’t run into a significant global issue, then I think we’re still going to have a bright, bright future here for years to come.

BRELSFORD: It’s a very exciting time. I share the same outlook as these gentlemen here. We’ll also continue to see a number of enterprises that are out of state come visit this wonderful city and see what we all know to be true in terms of the economic conditions here. We’ll continue to play host, if you will, to visiting entities looking to, maybe, put roots down here. So it’s a very, very exciting time.

BURTON: As I look at the broader economy, I have some concerns because of the geopolitical situation, as well as things taking place domestically. But as Bo mentioned earlier, with the increased users and user engagement, I think the opportunity in this particular sector is outstanding. We have the cost structure, we’ve got the access, everything that we talked about. This business is going to continue to grow, and I think that looks very well for DFW. LOEWEN: I think in 2016 and 2017, we’ll see a lot more consolidation in M&A activity in this overall industry. There’ll be fewer companies, but they’ll be larger in size. With the M&A activity and company portfolios that are for sale, we’ll find that there will be consolidation in the overall industry. Dallas-Fort Worth will be one of the markets where you will see a handful of companies picked off.

MARSH: I think the challenge for Dallas is to develop in a smart manner. We have a history on the real estate side of sometimes overbuilding and getting overly excited, because we have a lot of great developers in the city and it’s a great real estate community. So I hope that the data center [developers] will learn from some of the mistakes that were made in the past in some of those other areas, and be prudent with development so we can keep the supply and demand in check, and keep our rents at levels where we can make money and generate good returns for our shareholders.

SPRING 2016

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F FEATURE

A CONTINENTAL

CROSSROADS .WHETHER BY PLANE, TRAIN, OR AUTOMOBILE,. .TRANSPORTATION IS A DRIVING FORCE IN DFW’S BOOMING. .COMMERCIAL REAL ESTATE MARKET. HERE ARE FIVE THINGS. .THAT COULD SPARK EVEN MORE GROWTH..

BY PE TER SIMEK AND CHRISTINE PEREZ

When John Neely Bryan built his log cabin and trading post on the banks of the Trinity River, it was remarkably welllocated at the nexus point of an ancient network of Native American trails. Throughout its history, Dallas has taken advantage of its position at the center of a continental crossroads. The railroad came in the 1880s, followed by the interstates in the 1950s. Transit helped Dallas become a financial center for the cotton and oil businesses. And today, the region’s robust roadways, railway infrastructure, and airports provide easy access to all points around the country—and the globe.

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These things have helped make Dallas-Fort Worth a top-tier logistics hub, says Tom Pearson and Chris Teesdale, executive vice presidents at Colliers International and leaders in the firm’s supply chain real estate advisors group. “Every company that has anything to do with distribution is trying to find ways to take costs out of their supply chain,” Teesdale says. “The DFW area is considered a safe harbor, providing the logistics for achieving this. Specifically, traffic congestion is generally nominal in getting product in or out of the region. Also DFW is not prone to severe weather conditions, as recently experienced in the North and Northeast.”

As manufacturing continues to expand in Mexico, the DFW area becomes even more strategic, as truckers can get product here within

SPRING 2016

F FEATURE

RICHARDSON’S CITYLINE DEVELOPMENT PHOTO: MICHAEL SAMPLES

their regulated service times, Teesdale adds.

“Since nearly 65 percent of the logistics cost of goods is in transportation, the more efficient a location is to get to helps in cutting costs from the supply chain,” he says.

“Again, Dallas-Fort Worth rates very high with corporate supply chain managers in this regard.”

DFW’s stature as a top logistics market is evidenced by the number of major distribution facilities that have located here— and continue to migrate from other states, Pearson says. “So much depends on the nature of the particular company’s supply chain—its customer base, the nature of the product, point of origin, the market area it will serve, etc.,” he says. “North Texas is

SPRING 2016

blessed to be located in the center of the country with an excellent freeway infrastructure, state-of-the-art intermodal rail facilities, and one of the largest airports in the country. These are just a few of the many benefits our region offers.”

Dallas-Fort Worth International Airport ranks third globally in terms of operations and ninth in terms of passengers, according to noted economist Ray Perryman, who recently studied the airport’s economic impact on the region. Nearly 30 passenger airlines operate out of the airport, providing service to more than 200 destinations.

“Many firms locate and expand throughout the region and the state because of the domestic and global accessibility provided by DFW Airport,” Perryman wrote in his report. “It is difficult to imagine just how different Texas would look without this vital and catalytic infrastructure.”

Just as important for North Texas companies is ensuring employees have an easy time of getting to the office. With 90 miles of track, the Dallas Area Rapid Transit Authority is the largest light-rail operator in the country. It also operates buses and the city’s high-occupancy vehicle lanes. The region is served by six interstates, seven other U.S. highways, and numerous state highways. Even with its spectacular population growth, DFW gets high marks for major improvement projects that help

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F FEATURE

RENDERING: CORGAN

RENDERING OF TOYOTA’S NEW HEADQUARTERS IN PLANO

keep traffic jams to a minimum. They include the $2.6 billion LBJ Express, which opened three months ahead of schedule last September. The largest public-private partnership in the state of Texas, it improved more than 13 miles of LBJ Freeway between U.S. 75 and Luna Road. Other major construction initiatives are underway on Interstates 30, 35E and 35W, and State Highways 114 and 183.

Transportation plays a major role in shaping how the region grows. For decades, the region’s ample supply of land allowed investors to take advantage of a ready supply of cheap dirt beyond the northern fringes of the city sprawl. In many ways, this continues to be the pattern of growth. Booming along new or expanded transportation corridors such as State Highway 121 in Collin County or the Alliance Intermodal Transit Center in Tarrant County demonstrate the economic power unleashed by the extension and expansion of roadway systems into undeveloped areas.

However, there is also a new demographic trend that is driving real estate investment back toward the center of the city. The last decade has seen explosive growth in the value of real estate in Dallas’ Uptown neighborhood as dense, urban living becomes more attractive to younger generations and new empty-nesters. Nonvehicular transit, like the Katy Trail and the McKinney Avenue streetcar, has played a big role in supporting Uptown’s success. And one of the major catalysts of recent growth downtown has not been the development of a road, but the covering up of one with Klyde Warren Park. An engineering marvel, the five-acre park was built atop Woodall Rodgers Freeway in downtown Dallas.

Understanding how the various modes of transportation affect DFW’s real estate economy is vital to anticipating the direction of growth in the region. Here’s a look at several initiatives and trends currently underway.

TRANSIT-ORIENTED DEVELOPMENTS From the beginning, the DART light rail system was imagined not merely as a way to move people, but as a catalyst for development. When it opened in 1997, Mockingbird Station was a national model for transit-oriented developments, or TODs. After that, came The Shops at Park Lane and a TOD in downtown Plano.

Lately, the idea of investing along a DART line has begun to percolate, with new projects in Victory, the Cedars, and the West Village. Among the region’s biggest

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new TOD is CityLine, a 186-acre development anchored by a 2 million-square-foot corporate campus for State Farm. The burst of new projects indicate that Dallas’ real estate market is ready to leverage the public transit infrastructure that laid the way for a more urban Dallas decades ago.

SOUTH DALLAS INDUSTRIAL BOOM The emergence of the Southern Sector of Dallas is huge for the region, as it offers thousands of acres of undeveloped land for future development, says Colliers’ Pearson. “With the convergence of three major interstates (I-20, I-45 and I-35 and the upcoming Loop 9) plus the Union Pacific Intermodal right in the heart of the sector, Southern Dallas is our future and our Inland Empire,” he says. “The Intermodal will increasingly become a magnet for new industrial development as more companies utilize intermodal rail.”

THE URBANIZATION OF THE ’BURBS In his annual state of the city address this past February, Plano Mayor Harry LaRosiliere told his constituents that to succeed in the future, the city will have to adapt. “In the ’80s, we were a bedroom community, and in the ’90s, we were known as a big suburb,” LaRosiliere said.

“Today we are our own city, and we compete on a global stage for businesses, and individuals or families looking for a home.”

SPRING 2016

“We’re empowering people to discover more.”

“DART provides mobility, stimulates economic development and improves quality of life. We’re proud to help people from all walks of life discover the places they want to go.”

Gary C. Thomas President/Executive Director, Dallas Area Rapid Transit

214.979.1111 DART.org

BIG THINGS HAPPEN IN DALLAS WHEN YOU PARTNER WITH US The Dallas Office of Economic Development is here to partner with you on your project, big or small. When youâ&#x20AC;&#x2122;re ready to discuss your business or development needs, contact us: (214) 670-1685 DallasEcoDev.org

BUSINESS. SKILLS. IDEAS. NETWORKS. LIVING. CULTURE. Photography: Large Dallas skyline, Dallas Love Field Airport - Urban Fabric Photography; Winspear Opera House - DCVB

F FEATURE A BULLET TRAIN IS PLANNED TO CONNECT DALLAS AN D HOUSTON

PHOTO: DART

PHOTO: TEXAS CENTRAL PARTNERS

MOCKINGBRID STATION

HISTORIC DOWNTOWN PLANO

Village, will soon be home to tens of thousands of residents and employees, A comprehensive plan approved by the city in 2015 lays out a roadmap for continuing the trend by opening new transit corridors and intersections for mixed-use developments and multifamily housing. And Plano is not alone. Addison Circle and Cypress Waters (north of DFW International Airport) also offer models for urbanization of suburban communities. In Frisco, a similar trend is emerging along the city’s touted “$5 billion mile,” with new urban-suburban projects like The Star, which is anchored by a new headquarters for the Dallas Cowboys. As population in the region swells, the next 30 years of real estate development may begin to generate a regional network of large and smaller urban clusters connected by highways and public transit, along with bike and pedestrian corridors.

EMERGENCE OF E-COMMERCE As e-commerce continues to proliferate, there will be an increased focus on getting products to customers within 24 hours—or same day delivery. As a result, expect to see more partnering on transportation and final-mile delivery methods, says Teesdale of Colliers. “Proximity to intermodal terminals and major FedEx and UPS facilities will be equally critical,” he says. “DFW has been blessed with two Tier 1 Class A Intermodal Terminals (Union Pacific in southern Dallas County and BNSF at Alliance on the northwest side of the region), as well as two of the largest FedEx Ground facilities west of the Mississippi—not to mention FedEx’s major air facility at Alliance.”

PHOTO: ANDREW SMITH

BULLET TRAIN

The mayor wasn’t just blustering. Plano, has become a regional leader in the rethinking of suburban communities. Legacy Town Center and the redevelopment of Plano’s historic downtown have created urban zones in suburbia. Legacy West, a 240-acre development anchored by a 2 million-square-foot headquarters for Toyota Motor North America and a massive mixed-use component called Legacy West

SPRING 2016

For years, Dallas struggled to turn major investments in its convention center and the site of the former Reunion Arena in southwestern downtown into a bustling urban area. That dream may finally be made possible with the development of the high-speed “bullet” train.

With construction set to start as soon as early 2017 (and an estimated completion date of 2021), the $10 to $12 billion bullet train project promises to whisk passengers between Houston in Dallas in 90 minutes. While developer Texas Central Partners has run into some opposition from properties owners all along the proposed route, in Dallas and Houston the discussion has focused mainly on where to locate the terminal stations. Houston plans to locate the station on the outskirts of town near the intersection of U.S. Highway 290 and Interstate 610. Dallas, on the other hand, hopes that a downtown terminal could link the high speed rail to the DART network and kick-start real estate development that bridges Interstate 30.

Tentative plans place the terminal on one of two sites in the Cedars, adjacent to Matthews Southwest’s new apartment and entertainment developments. That location could not only stimulate new development downtown, it also might provide a catalyst for pushing even more real estate investment to the south.

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PHOTO: CROW HOLDINGS SPRING 2016

A ANATOMY OF A DEAL

WHERE PAST

MEETS PRESENT Dallas is a familiar setting for many rags-to-riches stories of wildcatters forging their own fortunes. It’s also home to several business dynasties, led by people with last names like Perot, Hunt, and Bass—who traditionally have passed ownership of companies down from generation to generation.

An exemplary marriage of these two phenomena is Harlan Crow, the third son of Margaret Doggett Crow and commercial developer Trammell Crow. For this particular family, real estate is seemingly in their blood. Trammell’s father, Jefferson Crow, kept books for Collett Munger, who built Munger Place and was one of Dallas’ earliest commercial real estate tycoons.

Trammell worked with the Stemmons brothers to repurpose the Trinity River

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Go behind the gates of Old Parkland, where Harlan Crow transformed a historic hospital into one of the most stunning and exclusive office parks in Dallas.

BY HILARY LAU

floodplain by developing warehouses in what would become the Dallas Design District. He was named the largest American private real estate developer by Forbes in 1971. Of Trammell and Margaret’s six children, four were bitten by the real estate bug. Their only daughter, Lucy Crow Billingsley, and sons, Robert, Harlan, and Trammell S., each worked for various segments of their father’s business throughout the 1970s, ’80s, and ’90s.

Billingsley launched her own company in 1996 with her business partner and husband, Henry, to develop land north of Dallas into International Business Park. Trammell S. primarily focuses on Earth Day Dallas and oversees the Trammell & Margaret Crow Collection of Asian Art. Harlan worked as an industrial leasing agent for Trammell Crow’s Houston outfit in the ’70s, then managed Dallas office building development for the company until the mid-1980s. He worked for Wyndham Hotels, which his father founded in 1981, for two years before taking the helm of Trammell Crow Interests in 1988.

For the next two decades, Harlan Crow ushered his father’s company into its next iteration, Crow Holdings, and became its chairman and CEO. He was involved in the IPO for the Wyndham Hotel Co. in 1996 and the IPO for Trammell Crow Co. in 1997. Today, Crow Holdings Capital-Real Estate manages private equity real estate funds for institutional investors (domestic and foreign) and is investing in the $1.8 billion of capital raised for Fund VII. Crow Holdings Development businesses, Trammell Crow Residential and Crow Holdings Industrial develop apartments and warehouses in major markets around

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“I WANT OLD PARKLAND TO BE MORE THAN JUST ANOTHER OFFICE BUILDING FULL OF PEOPLE; I WANT IT TO BE A PLACE WHERE THERE ARE CONVERSATIONS, THERE’S SHARING OF IDEAS, AND THERE ARE THOUGHT LEADERS” — Harlan Crow,

the country. And Crow Holdings CapitalInvestment Partners invests in a variety of asset classes on behalf of the Crow family and partner families.

After all that action in the early 2000s, Harlan was ready for a different kind of project. Back in 1987, the city had designated the Old Parkland hospital at Maple and Oak Lawn Avenues a Dallas Historic Landmark. The county repurchased it in 1996 with plans for redevelopment, but the complex sat vacant for years. The historic hospital went back on the market in 2005.

Harlan, a history buff whose personal collection includes original documents

by American revolutionaries and famous neoclassical and impressionist paintings, partnered with Alliance Residential, which sought to develop a multifamily project on the 8.3-acre site. In 2006, they came in with a $16.5 million winning bid. Harlan thought Old Parkland would be perfect for a new Crow Holdings headquarters, so he quickly made an offer to buy out Alliance, thus sparking one of the most stunning redevelopments Dallas has ever seen.

UNEARTHING A BEAUTY When Crow Holdings began construction on Old Parkland, it was a dilapidated dump.

Crumbling walls and ceilings were covered

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PHOTO: CROW HOLDINGS

as recalled by Cathy Golden

with graffiti and signs of people who occupied the space while it was vacant, and the decades of inattention the property had experienced were obvious. None of this hampered Harlan’s vision, though; he wanted to create a corporate office park reminiscent of a college campus, where tenants could enjoy winding pathways flanked with sculptures and lined by majestic, shady trees, plus a slew of top-notch amenities.

He called on Dallas-based architecture firm Good Fulton & Farrell, a team that could pay mind to the project’s historical significance. The “new” Old Parkland was built in 1913, replacing a wooden structure that had been constructed in 1894. The classical, revival-style brick building with Georgian influences included a two-story porch that passers-by would come to remember. When Crow began restoring it in 2008, he maintained the entire front of the structure as it stood in the early 1900s.

(A modern wall of steel-and-glass windows was added to the back.)

Part of the second floor was removed to expand the first-floor lobby, whose centerpiece is a glass encasement of pictures and memorabilia from the hospital that

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A ANATOMY OF A DEAL

have been donated by people who played some part in Old Parkland’s robust history.

The bulk of the first floor houses real estate professionals in the same open-office style that Trammell Crow pioneered.

Cathy Golden, the general manager of Old Parkland, has worked for Crow Holdings since 2013. “When Harlan first came to me, he said, ‘I know I can build buildings, and I know I can fill them up with people. I want Old Parkland to be more than just another office building full of people; I want it to be a place where there are conversations, there’s sharing of ideas, and there are thought leaders,’” Golden recalls. “What really has made this unique is, with all of the programs that we have— speakers, authors—it does stimulate a conversation. We invite tenants to most of those things, and whether it’s an event or just around the bar or at lunch, we’re seeing tenants having lunch or a drink with another tenant they didn’t know before they came here. It’s creating that synergy.”

In 2009, Harlan unveiled the renovated Nurse’s Quarters, a 23,000-square-foot building originally constructed in 1922 to serve as permanent housing for nursing

SPRING 2016

trainees at Parkland Hospital. It’s aesthetically similar to Old Main and houses the majestic Pecan Room. Part elegant dining room and part stately conference hall, the Pecan Room has myriad historic artifacts. Behind its grandiose fireplace are planks signed by visiting luminaries.

There’s also The Tavern, which has a stained glass ceiling and outdoor terrace and was a favorite meeting place among tenants, prior to the opening of the Gren Door Restaurant and Bar. On the second floor, there’s a dining room and a conference facility; the third and fourth floors are office space.

Woodlawn Hall, the first new Class A

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EVEN MORE OF A GOOD THING Buoyed by the success of his redevelopment efforts, Harlan Crow was ready to head west. Two four-story “sister buildings,” the 34,000-square-foot Commonwealth Hall and the 40,000-square-foot Oak Lawn Hall, were built in 2015 to flank the landmark Parkland Hall, whose shiny copper dome you might have seen from the Dallas North Tollway or Interstate 35-E. Both of the sister buildings were designed by The Beck Group and Dalgliesh Gilpin Paxton Architects, and each features a historic statue at its entrance—Alexander Hamilton stands at the entry of Commonwealth, while Benjamin Franklin flanks the entrance of Oak Lawn Hall— plus underground conference rooms.

The copper-topped Parkland Hall is truly the statement piece of the property. Its Jeffersonian-inspired architecture is modeled

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THE OLD PARKLAND CAMPUS IN 1950

PHOTO: CROW HOLDINGS

construction on the campus, was also completed in 2009. You can’t really tell the 33,000-square-foot office building apart from the old-school buildings, though. Even sitting right next door to Old Main and the Nurse’s Quarters, Woodlawn Hall is a convincing reproduction.

The next campus addition, the 47,000-squarefoot Reagan Place, was completed in 2011. Its Jeffersonian architecture was a small step away from the Georgian Revival style for Good Fulton & Farrell and Dalgliesh Gilpin Paxton Architects.

It was the latter of two new buildings erected to “complement the original and historic landmark structures,” and it boasts a two-story balcony and a two-story rotunda with a stone portico.

Like Old Parkland’s front façade, it, too, might become a recognizable local landmark.

Completing the far east side of the campus is Maple Hall, which was opened in 2013 and serves as the headquarters for TRT Holdings, the parent company of Omni Hotels and Gold’s Gym that relocated to Old Parkland from Irving.

Designed by HKS and built by Brasfield & Gorrie, the six-story building offers 164,000 square feet of office space.

A 10-year tax abatement on 90 percent of the real property improvement value resulting from its construction, plus a $200,000 economic development incentive grant played an important role in the development of the property. When plans for Maple Hall were announced, the city of Dallas concluded the development would have a positive impact with property taxes and jobs.

after the Rotunda at the University of Virginia. The first-floor lobby has a marble fireplace, crystal chandeliers, and George Washington to greet entrants. Also designed by The Beck Group and Dalgliesh Gilpin Paxton Architects, it was finished in 2015. The six-story, 87,000-square-foot marvel offers views of downtown Dallas— and two rooftop terraces. Parkland Hall also offers two private restaurants, including The Green Dragon.

“There was a Green Dragon pub in Boston, and it was where the revolutionaries hung out,” explains Golden. “It’s from where Paul Revere rode and said, ‘The British are coming!’”

The last piece of the Old Parkland puzzle, The Pavilion, was also completed in 2015. It pays homage to Monticello, Thomas Jefferson’s famous home. The stately first-floor public space has an impressive art collection on display underneath the towering glass dome, and its spiral staircase ushers guests down to the Century Hall and Debate Chamber—a work of art in its own right. The underground, oval chamber can hold up to 150 and has already served as a venue to collegiate and high-school debates, internal meetings, discussion on politics and policy, and other speaking engagements.

Crow Holdings says the chamber was “designed to facilitate debate and dialogue,” and the busts and quotes of Classical Greek and Roman philosophers are there for inspiration. “It hearkens back to ancient Rome and Greece and the Classical era, and ties it all together,” Golden says.

THE GREAT ESCAPE When you stroll through the landscaped paths that meander between the

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THE PECAN ROOM, LOCATED IN THE NURSE’S QUARTERS BUILDING PHOTO: CROW HOLDINGS

“FOR THE MOST PART THERE’S BEEN MORE INTEREST THAN WE CAN ACCOMMODATE. IT’S A VERY FORTUNATE PLACE TO BE.” — Cathy Golden, Crow Holdings

monolithic buildings of Old Parkland, it’s easy to forget that you’re in the middle of one of the nation’s biggest cities, perched right next to bustling highways.

There are quotes and pieces of art embedded into the ground. In even the most unassuming of places, there’s a bust or a sculpture or an artifact to catch your eye.

“All of the bricks in all of the buildings are hand-molded, just as they would’ve been in 1776,” Golden says. “It was really an effort to inspire people, and a lot of people have asked if we have a walking guide, or an app, or a live guide. We’re considering that, just because I think there are a lot of people who would find it interesting. … But it was really intended for our tenants on our campus to kind of stumble upon stuff.”

And when your tenants are real estate investment groups, private equity firms, charitable foundations, and hedge funds, it’s not hard to get users of your property to pony up the extra rent money for additional amenities. But for some tenants, history has also played an important role in their decision to office on the campus.

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“Southwestern Medical is a tenant here, and Southwestern Medical School started on this campus, so they tell me, in that spot,” Golden says. “It’s really interesting because, for rental rates, we were by far at the top of the market when we first started, and we really didn’t have trouble filling it up. People really get the value of being here because it’s a different deal; it’s not just an office, and we have incredible retention, and there’s just not a lot of turnover.”

At Old Parkland, which cost more than $200 million to build, rents hover around $60 per square foot. That’s significantly more than the Dallas average, but it’s the going price for onsite amenities like 24-hour security that uses closed-circuit TV surveillance, a 3/4-mile walking trail, a full basketball court, squash court, a fitness center, and plenty of oak tree-shaded land.

And for all of those perks, the property has been hotter than hot. “For the most part there’s been more interest than we can accommodate,” Golden says. “It’s a very fortunate place to be.”

The development has also piqued the interest

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PHOTO: CROW HOLDINGS

of real estate investment groups from all over.

As it seems, Old Parkland could set an enviable new standard for developers in North Texas and beyond.

Despite its size and prestige, Old Parkland is a very comfortable place to be. Porches on all of the buildings offer welcoming rocking chairs.

There’s an old-fashioned barbershop where tenants can get a haircut.

Tenants have access to The Commons Café and The Green Dragon, an outdoor fireplace, and many venues for business and social gatherings. You can even get a massage in the fitness center, play squash, play basketball, get your shoes shined, or have your laundry washed and folded.

“I sat in on construction meetings each week and looked at this as it went along on paper and in planning, and you just can’t imagine it until it really goes vertical,” Golden says from the windy rooftop terrace of Parkland Hall. “To think about the scale of these buildings in such a tight space but still having the green space and the courtyard—it really has been a special project.”

It’s the art and artifacts that really set Old Parkland apart. There is so much to be seen, in fact, that Harlan conceptualized an essential highlight reel of the most noteworthy items,

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DESPITE ITS SIZE AND PRESTIGE, OLD PARKLAND IS A VERY COMFORTABLE PLACE TO BE. PORCHES ON ALL OF THE BUILDINGS OFFER WELCOMING ROCKING CHAIRS. called “The American Experiment.”

Named for a term used by other countries during the late 18th century after Thomas Jefferson wrote the Declaration of Independence in defiance of Great Britain, “The American Experiment” at Old Parkland is comprised of more than 30 architectural elements, sculptures, and quotes etched into walls and buildings. And although some components are historic or excavated, others were commissioned.

One such piece, Alexander Stoddart’s “Eos Column,” serves as the central structure in the courtyard of West Campus. The bronze structure stands 45 feet tall and is topped with Eos, the winged goddess of dawn, and at its midpoint includes 4-foot tall depictions of Thomas Jefferson and James Madison next to John Locke and Adam Smith, figures from the Enlightenment. Their quotations are carved into the sculpture’s granite base.

Thomas Jefferson once said to John Adams at Monticello that he liked the dreams of the future better than the history of the past. Harlan Crow has seemingly unified the two at Old Parkland, creating an office campus and living landmark where, just as he dreamed it, people can gather to comfortably discuss the issues of the age and ideas for the future.

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LAY OF THE LAND | OLD PARKLAND 6 NURSE’S QUARTERS

1 MAPLE HALL

1

> Headquarters for TRT Holdings

M

AP

LE

> Completed in 2013 > 164,000 square feet

AV E

> Amenities include the Pecan Room (elegant conference hall with historic artifacts), The Tavern (a bar with a stained-glass ceiling and outdoor terrace), and a second-floor conference facility.

NU E

> Completed in 2009

6

2 WOODLAWN HALL

> 23,000 square feet

7 OLD MAIN

2

> First Class A construction on the campus

> Headquarters for Crow Holdings > Completed in 2008

> Completed in 2009

> 70,000 square feet

3

> 33,000 square feet

7 DA L L

8 THE PAVILION

4 NU E

9

AV E

AY OLLW

> Georgian revival-style architecture

RTH T AS NO

3 REAGAN PLACE

8

LA W

N

> Completed in 2011

> Grand sprial staircase leads down to Century Hall and the Debate Chamber

5

OA

K

> 47,000 square feet

> Monticello-inspired Jeffersonian architecture by the Beck Group and Dalgliesh Gilpin Paxton Architects

> Completed in 2015

5 PARKLAND HALL 4 COMMONWEALTH HALL > Completed in 2015 > 34,000 square feet > Designed by The Beck Group and Dalgliesh Gilpin Paxton Architects

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> Jeffersonian architecture modeled after University of Virginia’s Rotunda > Designed by The Beck Group and Dalgliesh Gilpin Paxton Architects

9 OAK LAWN HALL

> Amenities include: first-floor lobby with marble fireplace and crystal chandeliers; The Green Dragon bar and restaurant.

> Completed in 2015

> Completed in 2015 > 87,000 square feet

> 40,000 square feet > Designed by The Beck Group and Dalgliesh Gilpin Paxton Architect

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T TOOLBOX

THE MILLENNIAL MOVEMENT PHOTO: MICHAEL SAMPLES

HOW THE WORKFORCE’S YOUNGEST GENERATION WILL SHAPE THE WORLD OF COMMERCIAL REAL ESTATE

BY JEFF BOUNDS

The phone rings constantly at Joseph Cahoon’s office at Southern Methodist University in Dallas.

The director of the Folsom Institute for Real Estate at SMU’s Cox School of Business says the calls come from commercial real estate executives nationwide who need mid-level analysts with several years of experience.

“Those don’t exist,” Cahoon says. “If they did stay in the market, they’re highly valued, have risen in their own firms, and they aren’t trying to make lateral moves.”

Welcome to the new recruiting wars in

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commercial real estate in Dallas-Fort Worth.

A combination of factors, including the region’s roaring economic growth and robust corporate deal-making, are creating challenges for those charged with attracting and retaining industry professionals. “The demand from [corporate] mergers, acquisitions, and split-offs in North Texas continues to increase,” says Jeff Staubach, president of the South Central region at JLL. “They’re all putting new square footage on the market. With more square footage, the industry needs additional analysts, leasing agents, and capital markets professionals to buy or lease the spaces.”

Part of today’s talent gap stems from economic downturns of days past. Take the most recent recession, the storm clouds for which began appearing in late 2007.

“Young talent will always be attracted to the hot industry, and during that time, it wasn’t commercial real estate,” says Blair Oden, senior managing director, occupier services, at CBRE. “From 2008 to 2010, we weren’t hiring anyone out of college. In fact, we weren’t hiring many people at all.”

The lack of jobs nationwide in CRE at the time meant that recent college graduates of that era largely went into other fields. The same phenomenon happened in North Texas after the technology bust that started in 2000, following regional economic issues that surfaced in the 1980s. These generational voids in commercial real estate manifest themselves when the field heats up, such as it did starting in DFW

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T TOOLBOX

“MOST OF THE VACANCIES ARE AT THE JUNIOR LEVEL, SUCH AS ANALYSTS. THERE DEFINITELY AREN’T AS MANY 40-YEAR-OLD BROKERS IN THE OFFICE.”

U.S. 2020 MILLENNIAL POPULATION BY MARKET This map shows the markets with the largest population of millennials in year 2020.

Millennials will likely make up half of the workforce by this time.

14

17

15

12

3

1 19 8

18

6

13

2

10 16

— JEFF STAUBACH, President, South Central Region, JLL

11

7 4

5 20 9

in the 2011-2012 time frame. One of these voids is why, for instance, executives call Cahoon looking for analysts with experience levels that college graduates of the Great Recession would now have—if only they had gone into commercial real estate.

Mega-mergers and consolidation within the industry has also heated up the competition for talent. In 2006, CBRE acquired Trammell Crow Co. Two years later, JLL acquired tenantrep powerhouse The Staubach Co. And just last year, Cushman & Wakefield merged with DTZ (which prior to that had acquired Cassidy Turley). All three were high-impact deals in the Dallas-Fort Worth market.

For now at least, industry executives say their businesses have not seen a significant impact from the shallow talent pool. “Most of the vacancies are at the junior level, such as analysts,” Staubach says. “There definitely aren’t as many 40-year-old brokers in the office.

But we haven’t noticed any sort of negative impact or issues in recruiting the type of talent we need to service our clients.”

MILLENNIALS WILL MATTER

Experts warn, however, that demographic shifts will soon create bigger headaches for recruiting in CRE. A recent report in Area Development Magazine noted that more than 75 million baby boomers will be 55 or older in a few years, and that there simply are not enough younger workers to replace them. As a result, the article warned, power in the employment relationship will shift from boss to employee,

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MARKET 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

MILLENNIAL POPULATION

New York-Newark-Jersey City, NY-NJ-PA Los Angeles-Long Beach-Anaheim,CA Chicago-Naperville-Elgin, IL-IN-WI Dallas-Fort Worth-Arlington, TX Houston-The Woodlands-Sugar Land, TX Washington-Arlington-Alexandria, DC-VA-MD-VN Atlanta-Sandy Springs-Roswell, GA Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Miami-Fort Lauderdale-West Palm Beach, FL Riverside-San Bernardino- Ontario, CA Phoenix-Mesa-Scottsdale, AZ Boston-Cambridge-Newton, MA- NH San Francisco-Oakland-Hayward, CA Seattle-Tacoma-Bellevue, WA Detroit-Warren-Dearborn, Ml San Diego-Carlsbad, CA Minneapolis-St. Paul- Bloomington, MN-WI Denver-Aurora-Lakewood, CO Baltimore-Columbia-Towson, MD Tampa-Sl. Petersburg- Clearwater, FL

6,929,582 4,912,183 3,339,553 2,655,876 2,548.719 2,201,685 2,041,815 2,037,387 1,933,767 1,675,483 1,669,330 1,654,146 1,587,382 1,342.181 1,314,219 1,250,975 1,221.656 999,463 948,654 921,055

4,149100,000

100,001200,000

200,001500,000

500,001920,000

920,0016,929,582

SOURCE: E Smith Realty Partners Site Selection Group

and growing companies that need to add employees will have to steal their rivals’ personnel.

So here’s the good news: seeing opportunities in the field, millennials are flocking to commercial real estate. Enrollment in SMU’s real estate classes is way up, and, according to research from E Smith Realty Partners, the number of commercial real estate brokers in North Texas increased 18.1 percent between 2010 and 2015, from 6,816 to 7,453 brokers.

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GIRDING FOR BATTLE

CONCENTRATION OF COMMERCIAL REAL ESTATE BROKERS IN DALLAS-FORT WORTH 30

1,187

The latest talent war has yet to take a big bite out of the operations or finances of commercial real estate firms.

But that could soon change, as the looming retirements of millions of baby boomers will exacerbate an employee shortage, experts say.

Here are some tips on what commercial real estate firms can do now to prepare: > LEARN ABOUT MILLENNIALS: As Susan Arledge, managing director at E Smith Realty Partners, points out, Forbes has reported this generation overwhelmingly prefers a collaborative work culture and flexible schedules.

DFW 2015 JOBS IN COMMERCIAL REAL ESTATE INDUSTRY: 28,865 (51% above U.S. average) DFW INCREASE FROM 2010-2015: 18.1% | US INCREASE FROM 2010-2015: 1.2% SOURCE: E Smith Realty Partners Site Selection Group

But these are a new kind of real estate professionals—millennials, who lead their lives much differently than their parents have, according to Susan Arledge, managing director at E Smith Realty. Car sales, for instance, have declined 30 percent in that age group, Arledge points out. As of 2010, 26 percent did not even have a driver’s license, she says. This means employers will need to ensure they place their offices in settings close to where millennial employees live.

And they’ll have to make other changes, too, says Cahoon at SMU. “Millennials are getting married later, starting families later, moving more often and changing jobs more often,” he says. “The key phrases you hear among the people I work with are the ‘search for mentorship’ and ‘team-building.’ The emphasis for a lot of firms is to really create

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that environment.”

It’s an opportunity that can give real estate firms a recruiting edge, Arledge says. “One of the drivers behind the firm is our culture, which emphasizes teamwork, collaboration, fielding the best staff, and rewarding the overall team for its effort,” she says. “Our mantra is, ‘demand excellence.’”

The war for talent has given those in commercial real estate an inside look at what many of their clients are experiencing today. After all, it’s a battle in which growing companies across the country are actively engaged. Fortunately, as proven by the numerous corporate relocations and expansions the region has seen in the past couple of years, commercial real estate executives in Dallas-Fort Worth have a distinct home-field advantage.

> EMBRACE STUDENTS: Joseph Cahoon, director of SMU’s Folsom Institute for Real Estate, says mentorship programs, panel discussions, and lunch-and-learns can get employers in touch with people doing undergraduate and graduate studies. And strong internship programs can provide low-risk ways to see who might be a fit for full-time work, he says. > BUILD A STRONG CULTURE: JLL emphasizes work-life balance because the company knows its staffers have commitments outside their jobs, according to South Central Region President Jeff Staubach. CBRE cultivates a “collaborative, transparent team environment,” says Blair Oden, the company’s senior managing director of occupier services.

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C COMMUNITY

Diane Butler, Chairman Greg Kraus, Vice Chairman

CHAMPION’S CIRCLE Balfour Beatty Construction Bank of America Merrill Lynch/ Charitable Foundation, Inc. Bank of Texas BBVA Compass & Foundation BURY CBRE HFF Hoblitzelle Foundation Jones Day

CHAIRMAN’S CIRCLE Behringer BBG Chicago Title Company/ Fidelity National Financial (FNF) Cushman & Wakefield Compatriot Capital Crow Holdings Capital Partners, L.L.C. Deloitte.

EY Gables Residential Granite Properties Holt Lunsford Commercial Hunt Realty Investments, Inc. JLL JPMorgan Munsch Hardt Kopf & Harr P.C. NorthMarq Capital

IMPACT INVESTORS

Each year, The Real Estate Council receives both financial and volunteer support from funding partners and member companies. Special thanks to each of you for contributing your time, talent, and resources to help us achieve our mission.

Republic Title of Texas, Inc. The Howard Hughes Corporation Union Bank

PRESIDENT’S CIRCLE Breitling Royalties Corporation Chief Partners LP Comerica Bank Corgan Cushman & Wakefield Goldman Sachs Grant Thornton Hart Commercial Invesco Real Estate Jackson Walker L.L.P. Jackson-Shaw KDC KeyBank KPMG LegacyTexas Regions Bank Stewart Title StreetLights Residential Trammell Crow Residential US Bank Wells Fargo Bank Winstead PC

BENEFACTOR’S CIRCLE Amegy Bank American National Bank of Texas

Beck Group Berkadia Commercial Mortgage Bradford Companies Capital One Bank Corinth Properties First United Bank Fischer & Company Frost Bank Gaedeke Group LLC Gardere Wynne Sewell LLP Gensler GFF Haynes and Boone, LLP Hillwood Construction Services Independent Bank Inwood National Bank Kane Russell Coleman & Logan PC Kimley-Horn and Associates, Inc Lincoln Property Company Locke Lord LLP Lowery Property Advisors Matthews Southwest Mill Creek Residential Trust LLC NexBank Peloton Commercial Real Estate Schwob Companies Stonelake Capital Partners Strasburger & Price, LLP Stream Realty Thackeray Partners

WHO WE ARE TREC is where 1,700 commercial real estate professionals spark community transformation, influence policy, and propel careers in DFW and beyond. Only TREC provides the road map for success and the platform to Build the City You’ve Imagined.

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The Retail Connection TIER REIT, Inc. Trammell Crow Company Venture Commercial Real Estate, LLC

PATRON’S CIRCLE* Coleccion Riviera c2mtech Eliza Solender ENTOS Design Fauxcades Gilley’s Dallas GXA Network Solutions Hilton Anatole Hotel Hillwood J&S Audio Visual Imlach & Collins Brothers Ryan Britt Productions SCHMIDT & STACY South Side on Lamar Lofts Steve Crosson Texas Land Care Tyler Berns * Donors who have provided in-kind goods and services

Learn more at recouncil.com or by calling 214-692-3600.

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C COMMUNITY The Dallas Regional Chamber recognizes the following companies and organizations for their membership investment at one of our top levels. Bolded companies are represented on the DRC Board of Directors. For more information about the benefits of membership at these levels call Diana Rivas-Smith at (214) 746-6744.

STRATEGY BKD Texas Instruments Toyota Motor North America

CATALYST Active Network AT&T Baylor Scott & White Health Capital One Bank Chase Chickasaw Nation Comerica Bank Dallas Fort Worth Int’l Airport Hilti North America Hunt Consolidated, Inc. JC Penney Company, Inc. ONCOR Tom Thumb Food & Pharmacy Wells Fargo

ADVOCATE 7-Eleven, Inc. Akin Gump Strauss Hauer & Feld Amegy Bank of Texas American Airlines Axxess Baker Botts L.L.P. BB&T BBVA Compass CBRE Group, Inc. Children’s Medical Center Citi Copart Corrigan Investments, Inc. Dallas Morning News Dal-Tile Corporation Deloitte LLP Dr Pepper Snapple Group Energy Future Holdings Exxon Mobil Corporation EY FedEx Office Fidelity Investments Fluor Corporation Forest City Texas, Inc. Frito-Lay North America Glazer’s Golden Living

Haynes and Boone, LLP HEB and Central Market Highland CapitalManagement LP HKS IBM Corporation Invesco Jones Day KPMG LLP Kroger Food Stores Littler Mendelson, P.C. Locke Lord LLP Lockheed Martin Luminant Manpower Medical City Dallas Hospital/ Medical City Children’s Hospital Methodist Health System Microsoft Corporation NEC Corporation of America New York Life Regional HQ Omni Dallas Hotel Omnitracs PwC Reliant Energy Rent-A-Center Sheraton – Dallas TDIndustries Tenet Healthcare Corp.

Texas Central Partners Texas Health Resources Texas Scottish Rite Hospital for Children Thomson Reuters, Tax & Accounting TM Advertising Torchmark Corporation TXU Energy UT Southwestern Medical Center LegacyTexas Bank Winstead PC

BOARD OF ADVISORS Abbott Labs Abilene Christian University Acadian Ambulance Accenture ActivTek Global LLC Airbus Helicopters, Inc.

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Alcatel-Lucent Alix Partners Americas Auto Auction Ameriflex Andrews Distributing Andrews Kurth LLP Army & Air Force Exchange Arthur J Gallagher & Co. AustinCSI Austin Industries Avanade Baker & McKenzie, LLP Bank of America Bank of Texas, N.A. Barnes & Thornburg BDO USA, LLP The Beck Group Blue Cross and Blue Shield of Texas Blur Group Big 12 Conference Bracewell & Giuliani LLP Boston Consulting Group Brierley & Partners Brinker International, Inc. Bury C.C. Young Cantex Continuing Care Capital Institutional Services Cassidy Turley Century 21 Judge Fite Co. Choctaw Casino Resort CHRISTUS Health CIGNA Healthcare ClubCorp Inc. Coca-Cola Refreshments Colliers International Commemorative Air Force Commerce Bank Consolidated Communications Cook Children’s Healthcare Corgan Associates, Inc. CP&Y, Inc. Cushman & Wakefield Dallas County Community College District Dallas Cowboys Football Club Dallas Marriott City Center Dallas Stars Hockey Club

Dallas Women’s Foundation Dean Foods Company DFW Excellerator DHD Films E Smith Realty Partners Ebby Halliday, Realtors Edelman PR Worldwide EF Johnson Technologies Emerge Education EN Consulting, Inc. Etihad Airways The Fairmont Dallas Federal Reserve Bank of Dallas Flowserve Corporation Fossil Fox Sports Southwest Freeman Frost Bank Furniture Marketing Group Gardere Wynne Sewell LLP Generational Equity Gensler Goldman Sachs Grant Thornton LLP Greatbatch, Inc. Greenberg Traurig, LLP Gulfstream Aerospace Corp.

Gupta & Associates HDBD HFF Hill & Wilkinson Hilton Anatole Hilton Worldwide HNTB Corporation Holland & Knight LLP HollyFrontier Corporation HOLT CAT HPI Real Estate & Ross Tower HUB International IBC Bank InStaff Interceramic, Inc. Int’l Leadership of Texas Ivie & Associates Jackson Walker L.L.P. Jacobs JE Dunn Construction JLL Johnson Controls Inc. LeTourneau University Life School Linked Executive Search Live Nation Lockwood, Andrews, & Newnam

SPRING 2016

McKissack & McKissack MHBT, Inc. Midway Press, LTD Mission Foods Montgomery Coscia Greilich Moss Adams LLP NACD North Texas Chapter Neiman Marcus Nestle Waters North America Nextt Northwood University The Novo Group NTT Data, Inc. NYLO Hotels, LLC Oliver Wyman ORIX USA Corporation Parker University Parkland Foundation PDS Technical Services People Performance Resources Pioneer Natural Resources PlainsCapital Bank Pollock Paper Distributors Point B Poo-Pourri Premier Truck Group Publicis Hawkeye Reflect Systems Regions Bank Responsive Ed Solutions Rosewood Crescent Hotel Rosewood Property Co. Santander Consumer USA SAP- America Saulsbury Industries Schneider Electric Sidley Austin, L.L.P. Slalom Consulting Southern Methodist University Southwest Airlines Southwest Office Systems Squire Patton Boggs (US) LLP Staffelbach, Inc. State Farm Insurance Strasburger & Price, LLP Strategic Staffing Solutions Susan G. Komen Taste of Dallas TDJ Enterprises Texans Can Academies Texas A&M University Texas Star Alliance Texas Woman’s University Thompson & Knight LLP Time Warner Cable TopGolf Town of Addison Trane Commercial Systems

SPRING 2016

TravisWolff, L.L.P. TrustPoint Management Turner Construction Co. Universal Mind UMB Bank N.A. University of Texas at Arlington University of Texas at Dallas UnitedHealthcare URS Corporation Verizon Wireless Village Green Holding, LLC Vinson & Elkins L.L.P. Walgreen’s Company Weber Shandwick Southwest WFAA-TV Whitley Penn, LLP Weil, Gotshal & Manges LLP WFF WNA Worldlink

LEAD 1820 Productions AAA Texas, Inc. Account Control Technology, Inc. Ackerman McQueen Acme Brick Company Adolfson & Peterson Construction Adolphus Hotel Advocare International, L.P. Alcuin School Alliance Data Allsteel Wilson Ameriflex APAC - Texas, Inc. Ash Grove Cement Company Automatic Data Processing Aviall, A Boeing Company Bain & Company, Inc. Balfour Beatty Construction Beasley, Hightower & Harris, P.C. Berger Engineering Co. Beshear Group Boka Powell, LLC Brunswick Group, LLP Business Jet Center Carlo’s Bakery Carrington, Coleman, Sloman & Blumenthal, L.L.P. Carter Financial Management Cawley Partners Champion Partners Chandler Signs L.L.P. CityDoc Urgent Care Commercial Metals Company Community Coffee Consumer Credit Counseling Service of Greater Dallas, Inc. Costco Crowe Horwath LLP CyrusOne

D&M Leasing Dallas Foundation Dallas Mavericks Databank, Ltd. Dave and Busters DCT Industrial DeGolyer and MacNaughton Domain at Midtown Park EnLink Midstream LLC Essilor of America, Inc. Estrada, Hinojosa & Company, Inc. Gables Residential Trust George W. Bush Foundation Guardian Mortgage Co. Gibson, Dunn & Crutcher LLP H Mart Companies Inc. Halff Associates, Inc. Hampton Inn & Suites Hart Group, Inc. Hazel’s Hot Shot, Inc. Hill + Knowlton Strategies Holmes Murphy and Associates Huawei Technologies Huddle Productions Hunt Construction Group Hunton & Williams LLP Huselton, Morgan & Maultsby, PC Hyatt Regency Dallas Hyatt Regency DFW Imaginuity Interactive, Inc. In-N-Out Burger J-BJ Marketing LLC Joule, A Luxury Collection Hotel KidsCare Therapy Kimberly-Clark Corporation LBJ Infrastructure Group LLC Linebarger Goggan Blair & Sampson, LLP Linkex, Inc. Lucas Group Martin Marrietta Mary Kay Inc. McAlister’s Deli – Dallas McKinsey & Company, Inc. Mend Metl-Span, LLC Metrocare Services Monogram Apartment Collection MW Logistics, LLC MWH Americas, Inc. Munsch Hardt Kopf & Harr, P.C. Nationwide Networking Results, Inc. New York Life Regional Headquarters North Central Surgical Hospital Ocean Prime Restaurant Office Depot Business Solutions OHL

PdvWireless Pegasus Community Credit Union Peter O’Donnell, Jr. Polsinelli PC Post Properties, Inc. Prudential Asset Resources Questcare Medical Services The Ritz-Carlton, Dallas Rehab Synergies Republic Title of Texas Rone Engineering Services Ltd. Ruth’s Chris Steak House Russell Reynolds Associates, Inc. Securadyne Systems Sewell Automotive Companies SevenTablets Signet Jewelers Limited Smile Workshop Stream Realty Southwest International Trucks Sparks Agency Spine Physicians Institute Stahls’ Staff One HR State Fair of Texas Stream Realty Partners Structure Tone Southwest Sun Holdings, LLC Summit Financial Group Texas A&M University Texas Capital Bank Texas Oncology Texas Rangers Baseball Club The Taylor The Westin Dallas Downtown Towers Watson Tradition Senior Living Trinity Basin Preparatory Triumph Learning Union Pacific Railroad University of Phoenix University of South Carolina Career Center USAA VeepWorks Virgin America Airlines VNA Vonage Business VOX Global W Dallas – Victory Hotel Walton Development and Management Weaver Westin Galleria Dallas Woodbine Development Corporation Worldwide Express XO Communications Yates Construction

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SPECIAL ADVERTISING SECTION

ECONOMIC DEVELOPMENT DIRECTORY Looking for a new place for your company to call home?

Consider this the start to your search.

Dallas-Fort Worth is a great place to do business, and its vibrant and thriving communities offer myriad resources to help companies grow.

With its high quality of life, strong state and regional economies, low cost of living, skilled labor force, and lack of corporate and personal income taxes, companies in DFW are well positioned to flourish in a market that ranks among the top three U.S. metropolitan areas for business expansions, relocations, and employment growth. The hardest part of your relocation search might just be choosing between DFW’s various communities, as they each provide unique qualities and impressive benefits. This guide to area economic development agencies at some of the best and most rapidly growing cities can help you get started.

Perfectly situated in the heart of North Texas and only 8 miles from Dallas/ Fort Worth International Airport, Arlington enjoys unparalleled access to the Metroplex. Its convenient location, combined with a strong economy, businessfriendly environment, and a skilled, diverse workforce continues to attract high-profile investments to the city.

Arlington has an extensive track record of recruiting globally recognized corporations and developing largescale projects. Arlington is home to the only General Motors assembly plant that builds GM’s award-winning, full-size SUVs. It is also home to the University of Texas at Arlington, Texas Rangers’ Globe Life Park, Six Flags Over Texas, and the Dallas Cowboys’ $1.2 billion AT&T Stadium.

Arlington is increasingly becoming known as a hub for engineering, advanced manufacturing, technology and medical sciences. This emerging innovation center is fueled in part

by Arlington’s skilled, educated workforce.

BRUCE PAYNE, Economic Development Manager CITY OF ARLINGTON OFFICE OF ECONOMIC DEVELOPMENT 101 West Abram Street PO Box 90231 MS 01-0300 Arlington, Texas 76004 bruce.payne@ arlingtontx.gov arlingtontx.gov

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Opportunities grow naturally in Cedar Hill, with its vibrant businesses, natural beauty, and a familyfriendly quality of life. With a location just 20 minutes from downtown Dallas, 30 minutes from Dallas Fort Worth International Airport, and 40 minutes from downtown Fort Worth, Cedar Hill offers outstanding amenities for business growth and relocation.

ALLISON J.H. THOMPSON, Director CEDAR HILL ECONOMIC DEVELOPMENT 285 Uptown Blvd., Bldg. 100 Cedar Hill, TX 75104 972.291.5132 ext. 3 allisonthompson@ cedarhilltx.com cedarhilledc.com

The City of Dallas Office of Economic Development is a fullservice shop that offers business development and area redevelopment programs, small business assistance, and innovative programs such as the City of Dallas Regional Center and New Market Tax Credits. We can successfully usher a project from beginning to end. The Office of Economic Development offers a range of programs and services to assist developers, investors, and businesses looking to expand or relocate, and small businesses looking to grow. With innovative programs, a supportive business climate and a city full of opportunities, we are ready to make your project a success.

HAMMOND PEROT, Assistant Director, Business Services CITY OF DALLAS OFFICE OF ECONOMIC DEVELOPMENT 1500 Marilla St. Dallas, TX 75201 214.670.1685 joseph.perot@ dallascityhall.com dallas-ecodev.org

Frisco is DFW’s boomtown. It’s hard to believe the area was a stretch of farmland a decade ago; now, it’s exploding with urban growth, and its population and skyline continue to reach new heights. The city is located across Collin and Denton counties, and boasts an easy 25-mile commute to downtown Dallas. Frisco’s residents have pride, and they’ve created a close-knit community atmosphere.

They gather for Christmas parades on Main Street, and catch games at Dr Pepper Ballpark. Locals love Stonebriar Centre and Frisco Square, both filled with upscale stores, tiny restaurants, and street musicians. Kids adore Frisco’s abundance of playgrounds, such as the special-needs-friendly Hope Park, and with some of the best schools in North Texas, Frisco is a family’s dream. Luxe mixed-use communities, a pedestrian-friendly atmosphere, and the laid-back bar scene draw young professionals, too.

Frisco has unbounded potential, and today is just the beginning.

JAMES L. GANDY, CECD, CCIM, President FRISCO ECONOMIC DEVELOPMENT CORPORATION 6801 Gaylord Parkway, Suite 400 Frisco, Texas 75034 972-292-5150 JGandy@FriscoEDC.com www.friscoedc.com

SPRING 2016

SPECIAL ADVERTISING SECTION

ECONOMIC DEVELOPMENT DIRECTORY Lewisville is a thriving economic hub in the Dallas/ Fort Worth (DFW) region with numerous advantages including superior access and infrastructure, a low tax environment, and quality workforce.

With millions of square feet of new commercial and industrial development in the pipeline and new single family, townhome, multifamily, and TOD projects underway, Lewisville’s population and economic outlook is poised to continue its boom into the future.

Lewisville provides a variety of attractive location options for new businesses.

Visitors and residents enjoy a variety of recreation and shopping opportunities including a 2000+ acre nature preserve, a historic downtown, Lewisville Lake, and Vista Ridge Mall.

Lewisville continues to benefit from one of the lowest combined property tax rates in DFW, making Lewisville an attractive location for business and residents.

Many companies call Lewisville home and a number of them are familiar names. Lewisville has a strong and dynamic business community, with a robust blend of businesses from Fortune 500 companies to innovative start-ups.

NIKA REINECKE, Director of Economic Development & Planning Department 151 W. Church Street, Lewisville, TX 75057 nreinecke @cityoflewisville.com 972-219-3750 www.ecodevlewisville.com

SPRING 2016

The McKinney Economic Development Corporation (MEDC) was created in 1993 to support the development, expansion, and relocation of new and existing companies. The MEDC is an organization with a mission to work to create an environment in which communityoriented businesses can thrive.

JIM WEHMEIER, President and CEO MCKINNEY ECONOMIC DEVELOPMENT CORPORATION / CITY OF MCKINNEY 5900 S. Lake Forest Dr., Ste. 110 McKinney, TX 75070 info@mckinneyedc.com 972.547.7651 mckinneyedc.com

Centrally located between DFW Airport and Downtown Fort Worth in affluent Northeast Tarrant County, North Richland Hills (NRH) is the third largest City in Tarrant County behind Fort Worth and Arlington.

Rapidly growing, NRH added over 500 new single family homes valued over $350,000 in the past 3 years within the highly rated Birdville and Keller ISDs. Growth is expected around two transit oriented developments (TODs) along the Fort Worth Transportation Authority’s new commuter rail system TEXRail. Scheduled for 2018, TEXRail will run along the famous Cotton Belt line connecting Downtown Fort Worth to DFW Airport along two separate NRH rail stops.

Late 2015 business additions include the expansion of Santander Consumer USA into 200,000 SF and 1,650 employees, the new addition of Southwest ADI, a distributor that purchased and converted a former Sealy bedding plant into their corporate headquarters, and the addition of Digital Alchemy, a technology company occupying 24,000 SF of office space.

CRAIG HULSE, Director of Economic Development 7301 NE Loop 820, North Richland Hills, TX 76180 chulse@nrhtx.com 817-427-6090 Website: www.nrhed.com

Rockwall Economic Development Corporation assists new and existing companies, both large and small, in the development, modernization, and expansion of business in a booming global economy. We are dedicated to your company’s growth through incentive programs, financial assistance, comprehensive sites, and resource collaboration. While collaborating with city leaders, we have secured the necessary infrastructure, services, and high-tech amenities to maintain thriving, profitable businesses. Rockwall has big-city conveniences yet maintains a small-town atmosphere. Rockwall offers quality of place and peace of mind.

SHERI FRANZA, President and CEO ROCKWALL ECONOMIC DEVELOPMENT CORPORATION 2610 Observation Trl. Rockwall, TX 75032 972.772.0025 sfranza@rockwalledc.com rockwalledc.com

The Colony is a growing city on the east side of Lewisville Lake, 25 minutes from downtown Dallas and 15 minutes from the Dallas Fort Worth International Airport located along the Sam Rayburn Tollway.

Home to approximately 40,000 residents with businesses and retail locating here daily, The Colony continues to maintain its “hometown” feel.

Affectionately known as “the city by the lake,” The Colony features 23 miles of shoreline along Lewisville Lake and two lake parks with boat ramps, camping and many other amenities.

Golf courses within the city all provide outstanding lake views with two courses being recognized among Golf Magazine’s top-five in Texas in 2010.

The Colony is the proud home of the nation’s largest home furnishings store, the new Nebraska Furniture Mart of Texas, anchoring the 400-acre Grandscape development. When complete, Grandscape will feature unique entertainment, dining and retail venues.

KERI SAMFORD, Economic Development Director THE COLONY ECONOMIC DEVELOPMENT CORPORATION 6800 Main Street The Colony, TX 750561133 972.624.3127 edc@thecolonytx.org thecolonyedc.org

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C COMMUNITY THE REAL ESTATE COUNCIL YOUNG GUNS 2016 CASINO NIGHT

The Real Estate Council Young Guns hosted the 10th annual Casino Night at One Victory Park on February 18. More than 500 guests enjoyed the Miami-themed event with casino-style games, cocktails, networking, and the chance to win raffle prizes while listening to DJ Jason Esquire’s playlist. Young Guns chair Elias Bahar of Pritchard & Associates kicked off the evening with Casino Night chair Bonner McDermett of Highland Capital Management by explaining the importance of the event: raising funds to better the community through the Young Guns Foundation Project at Bachman Lake Together Family Center. This year’s Young Guns will provide fundraising, project management, and landscape architecture services to support the construction and beautification of Bachman Lake Together Family Center. The center will serve as a community hub for families where they can easily access quality early childhood education, benefit from social services, and positively transform their neighborhood.

PHOTOGRAPHY BY JAMES EDWARD

YOUNG GUNS FOUNDATION PROJECT MANAGER BRAD BARTON, DPR CONSTRUCTION; YOUNG GUNS CASINO NIGHT CHAIR BONNER MCDERMOTT, HIGHLAND CAPITAL MANAGEMENT, L.P.; YOUNG GUNS VICE CHAIR JAY DREILING, GFF; YOUNG GUNS CHAIR ELIAS BAHAR, PRITCHARD ASSOCIATES, JERRY HAWKINS, BACHMAN LAKE TOGETHER

HOLDEN LUNSFORD, HOLT LUNSFORD COMMERCIAL; CAMPBELL ROCHE, HFF; DE’ON COLLINS, HFF

REPUBLIC TITLE’S MISTI HAMPTON, EUNICE GUZMAN, MEGAN FORTUNE, LINDSEY CARROLL, KAYLEY CORREA, TIFFANI LANGBEIN, ESTHER COX, LIZ STUTTS, SAN CASTRO, HEATHER HINES

WINSTEAD PC’S SETH EATON, ESMERALDA TINAJERO, DREW SLOAN, JESS STRALEY, JEREMY WILKINS

BRIAN SMITH, TRT HOLDINGS; AMBERLY WASHINGTON, JLL; ARTHUR SANTA-MARIA, TRAMMELL CROW COMPANY

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SPRING 2016

L LEADERSHIP

A HIGH-IMPACT EXPERIENCE HFF’s Trey Morsbach says TREC’s ALC program helped him blend business with leadership.

BY JUSTIN POLLARD

CROW HOLDINGS’ CHRISTINA MORROW, MADELINE LEWIS, ALINE BASS, KENDALL BRATTON

RIDGEMONT CONSTRUCTION’S EMILY GUERRA AND SAM BALUNDA

Dallas native Trey Morsbach has always held a passion for finance and real estate.

After graduating from Texas A&M University in 1992, not even a downturn in the economy could stop him from moving back to Dallas and breaking into the industry. Today, as senior managing director, Morsbach coruns the Dallas operations of capital markets powerhouse HFF. A graduate of The Real Estate Council’s 2000 Associate Leadership Council program, Morsbach credits his ALC project benefiting the Boys and Girls Club of East Dallas for helping him to develop his leadership and team-building skills. “What we were able to accomplish could not have been done with one person,” he says. “That is still relevant to me today, because that is how we run our business.”

His participation in the ALC program led him to become more heavily involved in TREC, Morsbach says. Since graduating from the ALC program, he has gone on to serve TREC in a number of ways, including chairing both FightNight and the Giving Gala and serving on the organization’s executive board for a total of 10 years.

Through the ALC, The Real Estate Council hopes to enhance its member companies and the wider community. “That’s the meat of it,” Morsbach says. “TREC is exposing people to the ALC program and the city, but it wants them to be involved as leaders in their own organization, too. That is an important byproduct of the ALC program.”

Morsbach is proud to say that HFF has filled a spot in the ALC program nearly every year since his own graduation in 2000.

The program alum encourages emerging

“TREC IS EXPOSING PEOPLE TO THE ALC PROGRAM AND THE CITY, BUT IT WANTS THEM TO BE INVOLVED AS LEADERS IN THEIR OWN ORGANIZATION, TOO.” — TREY MORSBACH, HFF

business leaders—not just HFF employees— to participate in ALC and get involved in TREC. Founded in the mid-1990s, the ALC is a leadership development program for commercial real estate professionals who are 27 to 37 years old.

“ALC opened up my eyes to things that I was not focused on,” Morsbach says. “I learned about the strengths and weaknesses of our city. It gave me a lens to think of the things that are important to the city and how the city is run. It was a very impactful experience.”

ASSOCIATE LEADERSHIP COUNCIL

BALFOUR BEATTY’S RANDE PATTERSON AND ADAM LECOURS

SPRING 2016

The Real Estate Council’s Associate Leadership Council (ALC) is a 10-month leadership development program for 27- to 37-year-old commercial real estate professionals designed to inspire and educate future leaders. For more details, visit recouncil.com.

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CALENDAR OF EVENTS

L LEADERSHIP “THE DALLAS REGIONAL CHAMBER HOLDS SOME OF THE SAME CORE VALUES THAT TURNER TRIES TO EMBODY—TO SUPPORT AND COMPLEMENT THOSE WITHIN AND OUTSIDE ITS COMMUNITY.”

Make plans now to attend these upcoming real estate and business events. For information on programs hosted by The Real Estate Council, visit recouncil.com. For details on events presented by the Dallas Regional Chamber, visit dallaschamber.org.

— MATT PAPENFUS, TURNER CONSTRUCTION

APRIL..

APRIL 27 Multifamily Summit, 7 a.m., Dallas Country Club Leading decision makers in multifamily share expert insights through a keynote address and panel discussions. TREC and Real Estate Deal Sheet have partnered to bring you the Industry Insights series, presented by D CEO. [The Real Estate Council]

APRIL 22 2016 State of Public Higher Education Luncheon, noon, Westin Galleria Dallas What role does public higher education play in the future of our workforce? Join us to hear top leaders from three of the state’s largest university systems discuss Texas’ new 60x30TX higher education plan to have 60 percent of Texas residents ages 24-34 hold a higher education credential by 2030. Each will share how their individual systems and campuses are addressing this new charge and ensuring that all Texas students enter the workforce with marketable skills. [Dallas Regional Chamber]

APRIL 26 Leadership Dallas Information Session, 5:00 p.m., Axxess Headquarters An informational session designed to help potential applicants gain a better understanding of the selection and application process for the Leadership Dallas class of 2017 and hear from alumni about their experiences going through the program. [Dallas Regional Chamber]

MAY..

MAY 12 FightNight, 6:30 p.m., Omni Dallas Join us for one of North Texas’ largest philanthropic events, benefiting TREC Foundation. The evening features professional boxing, exceptional cuisine, casino gaming, Vegas-style entertainment, and the opportunity to be among the top decision makers in the real estate industry and political community. [The Real Estate Council]

MAY 26 Speaker Series, 7:30 a.m., Hilton Anatole Tim Keith, CEO of Texas Central Partners, joins us at our next Bank of Texas Speaker Series presented by The Dallas Morning News to discuss the new highspeed passenger rail system that will connect Dallas/ Fort Worth and Houston. [The Real Estate Council]

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GIVING A NEWCOMER A HANDS-ON LOOK AT THE COMMUNITY The DRC’s Leadership Dallas program helped Wisconsin transplant Matt Papenfus get involved.

BY HARRISON LONG

Raised just outside Milwaukee, Wisconsin, Matthew Papenfus studied architectural engineering at the prestigious Milwaukee School of Engineering before moving to Dallas in 2003. One of the first things he did was get involved in the Leadership Dallas program offered by the Dallas Regional Chamber, graduating as part of the 2005 class. “Being still relatively new to the area, it was a great opportunity to plug in,” he says. “I had always heard positive things regarding it and the Chamber itself, and it’s turned out to be a great way to get involved and meet new people.”

Papenfus also felt drawn to the program’s mission of enriching the lives of future and current area leaders while also giving back to the community at large. Each graduating class takes on a project within the community, given participants a direct, hands-on experience. Papenfus describes it as being more than the average “let’s build something” venture, because it focused on creating a dialogue about areas in Dallas that need help. “It’s definitely not your run-of-the-mill endeavor,” he says.

Now a vice president for Turner Construction, Papenfus says the benefits have extended to his professional career as well. He sees many similarities between the two: “The Dallas Regional Chamber holds some of the same core values that Turner tries to embody—to support and complement those within and outside its community.”

Although the busy executive’s life can be a bit hectic at given times due to the nature of his occupation—not to mention his six children and wife—Papenfus makes it a priority to stay in touch with his Leadership Dallas classmates. “We regularly email back and forth, and I’ll see some of my old classmates at the Mayor’s Breakfast and other events and functions put on by the Chamber,” he says.

Papenfus went on to serve on the executive board of Leadership Dallas’ organizing body for a number of years, and he intends to remain involved as long as he can. “It truly is a great program,” he says.

Leadership Dallas, the flagship program of the Dallas Regional Chamber for leadership development, is aimed at increasing the leadership pool for community activities in the Dallas area.

Visit dallaschamber.org for more information.

SPRING 2016

P PLACEMAKERS

PHOTO: JIM LAKE COMPANIES

ALL IN THE FAMILY

Jim Lake, Jr. continues the legacy his father built.

BY HARRISON LONG

Having owned property in Dallas-Fort Worth for nearly 40 years, Jim Lake Companies adds a personal touch to each development it undertakes. Its head, Jim Lake, Jr., believes in family values—it was this commitment to virtue that led him to become a part of the company his father, Jim Lake, Sr., started. It’s also what drives him to think big picture rather than short-term profit.

“I worked construction on that development [in the Design District] in high school. It was my father’s,” Lake says. “It was redone for creative purposes. We let the market decide what it was going to be.”

Apart from the Design District, Jim Lake Companies has also been known for its involvement in Bishop Arts, having first purchased property there in 1985. Though the company has shifted into residential real estate in recent years, it still maintains a watchful eye on the gem that is one of its oldest developing areas.

“We held on to property there through the recessions—we were clear in that we didn’t want to gentrify it, but have individual proprietors define the area for themselves,” Lake says. “You can’t get what’s there anywhere else.”

Despite staying busy most of the time, Lake also stays devoted to his family life, having coached over 40 Little League teams while raising his children.

“Both [my sons are] grown now, but it was definitely something I enjoyed doing at that time,” he says. “It can teach you to manage people and is a good way to use that after-hours energy you sometimes have left over at the end of the day.”

SPRING 2016

Lake speaks highly of his father’s methods of doing things, describing him as a man who stuck to a proven way of doing things.

Jim Lake Sr. brokered property in Bishop Arts through the lens of a real estate collector, investing his time in money in buildings with heritage and history behind them.

“He was a classic car collector, so it makes sense that he would love old buildings as well,” Lake says. “He wanted to go places others wouldn’t.”

Lake insists that he is in the service business, backing this assertion up through his actions. He cites the commitment and patience of his father as a motivation he holds in helping to build the Dallas community.

“Neither of us believed in the short term. I want to collaborate and work to develop the community,” he says. “Bishop Arts took a long time, but I’ve learned a lot from it.”

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VIEW FROM THE TOP

BY SARAH BENNETT

JAY ADAIR Copart began the process of relocating its global headquarters from just outside Napa Valley in California to Dallas in the fall of 2011. By December 2013, the company had successfully moved about 250 employees. With the five-year anniversary of the move in sight this year, the company— which sells more than $4 billion worth of product each year—is celebrating a job well done. After all, the provider of online vehicle auction and remarketing services does business in about 150 U.S. cities at 175 locations. That’s in addition to the South American headquarters in Sao Paulo, its European headquarters in London, and international operations in Germany, Spain, the United Arab Emirates, and India.

WHAT INSPIRED THE MOVE FROM CALIFORNIA FIVE YEARS AGO? We picked it for “the three Ps”—people, place, and position. The amount of talent you can get because it’s a metropolitan area is second to none. It’s also an easy place to get people to move to. Having done business in California, you couldn’t get the deal done because of the cost of living. It’s easy to get talent here. Dallas also has a winning attitude. We looked at a number of cities, and the can-do, “we’re going to win” attitude here makes it that much easier.

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COURTESY PHOTO

CEO, Copart

WHAT HAVE YOU FOUND IN THE FIVE YEARS SINCE?

WHY WAS DALLAS PROPER THE RIGHT SPOT WITHIN DFW?

California has some beautiful scenery and weather. We were concerned about that. Is it going to be cold? Will it be snowing? Will it be super hot? These are the stereotypes Californians were worried about. But when we got here, we thought, “Why do people worry about the weather? It’s really great.”

Dallas has a warmer spring than California and about the same winter, barring a couple of ice storms or occasional dusting of snow.

We were in a more rural town in California with a view of vineyards from our building.

In Dallas, we drove McKinney, Frisco, Plano, and Las Colinas. When we got done, everyone agreed. We chose the area around the Dallas North Tollway and Interstate 635.

We have a lot of tech people who like to be downtown. At the same time, we have people who are married with kids. The point we picked was really center—you could live anywhere.

SPRING 2016

610 Uptown Class A Office

Build-to-suit Sites Available

THIS is Cedar Hill

L A N D OF OP P OR T U N I T I E S Cedar Hill’s robust development has made it a prime location for commercial, industrial, residential, retail and recreational opportunities. Located in the beautiful hill country environment of Joe Pool Lake and

° Pro-business environment with a workforce of over 1 million within a 30-minute drive time

° Low taxes, low cost of living, quality education,

over 3 million sf of retail, and Class A office space

° To facilitate and energize relocation and

expansion, Cedar Hill offers aggressive economic development incentives

the Cedar Hill State Park, Cedar Hill is the natural choice for those who want big-city amenities with a small-town ambience.

° 20 minutes from Downtown Dallas ° US 67/Rail-served Business Park 285 Uptown Boulevard • Bldg 100 • Cedar Hill, Texas 75104

Allison J. H. Thompson, CEcD, EDFP - Director ° allison.thompson@cedarhilltx.com ° 972.291.5132 ext.5 ° cedarhilledc.com Rolling Hills and Panoramic Vistas

Uptown Village at Cedar Hill

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