E H T R O F T X E N ’S T A H W ALSO INSIDE
FEATURE: ORTH: DALLAS-FORTNWAL HUB AN INTERNATIO ROUNDTABLE: DISCUSSION ETS CAPITAL MARK PORT: THE CRANE REERWAY, WHAT’S UND ANNED WHAT’S PL
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S HOWS NIGHTLY!
With an intriguing display of lights on the building and a stunning sculpture walk alongside, KPMG Plaza at HALL Arts is becoming a prime attraction in the Dallas Arts District. Add your business to the newest destination location in town. Penthouse floors still available.
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: TOP ROW (LEFT TO RIGHT): Alta Design District, photo by Elizabeth Lavin Design District Tower, rendering courtesy Dunhill Partners The Moth, photo by Elizabeth Lavin Scott + Coomer, photo courtesy Dunhill Partners
BOTTOM ROW Valerie Züger, photo by Elizabeth Lavin 1400 Hi Line, photo courtesy Dunhill Partners The Heart of the Design District, photo by Michael Samples
Welcome Letter . . . . . . . . . . . . . . . . . . . . . . . . . .8 Publisher’s Note . . . . . . . . . . . . . . . . . . . . . . . 10
FOUNDATIONS DFW Market Statistics, Economic Indicators, and Commercial Real Estate News. . . . . . . . . 12
BLUEPRINT FOR PROSPERITY Dallas-Fort Worth Ranked Among Most Competitive Cities . . . . . . . . . . . . . . . 15
19 THE CRANE REPORT
THE CRANE REPORT Who’s Building What, Where . . . . . . . . . 19
SCORECARD DFW’s Top Office, Industrial, and Retail Leases . . . . . . . . . . . . . . . . . . . . . . 27
ROUNDTABLE Feeling the Rush: Job growth, economic diversity, and other strong fundamentals are fueling a thirst for commercial properties . . . . . . . . . . . . . . . . 32
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
An International Hub: why companies from around
the world are choosing to base their operations in Dallas. . . . . . . . . . 42
46 ANATOMY OF A DEAL
D MAGAZINE PARTNERS BUSINESS GROUP PUBLISHER Josh Schimmels
PUBLISHER Quincy Curé Preston 214-523-5215 firstname.lastname@example.org
EDITOR-IN-CHIEF Christine Perez
EXECUTIVE EDITOR Krista Nightengale
MANAGING EDITOR Sarah Bennett
CREATIVE DIRECTOR Michael Samples
Anatomy of a Deal: What’s Next for the Design District Dunhill Partners’ Bill Hutchinson is bringing in new hotels, office space, residences, and amenities—all built around the district’s “heart and soul.” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
COPY EDITOR Keri Samples
Pathway to Sustainability
Private and public entities are discovering innovative ways to improve the efficiency of buildings. . . . . . . . . . . . . . . . . . . . . . . . . . 56
MEDIA DEVELOPMENT MANAGER Courtney Garza
The Real Estate Council, Impact Investors . . . . . . . . . . . . . . . . 59
The Real Estate Council, Associate Leadership Council . . . . 63
Dallas Regional Chamber, Top-Level Members . . . . . . . . . . . . . 60
Calendar of Events . . . . . . . . . . . . . . 64
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Hilary Lau Karen Nielsen
DIRECTOR OF SALES
The Real Estate Council’s 2015 Giving Gala . . . . . . . . . . . . . . . . 62
Dallas Regional Chamber, Leadership Dallas . . . . . . . . . . . . . . . 64 View From the Top: John McCain . 68
Emily Heft Imani Lytle Arisbet Sandoval
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. ©2015 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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www.gatewayplanning.com www.gatewayplanning.com | ph. 214.529.7430 | ph. 214.529.7430
From From CITYLINE CITYLINE Richardson Richardson to to Downtown Downtown Roanoke... Roanoke...
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ADVISORY ADVISORY SERVICES SERVICES
URBAN URBAN DESIGN DESIGN
MIXED MIXED USEUSE ZONING ZONING
A letter from the Dallas Regional Chamber and The Real Estate Council
ENJOYING QUALITY OF PLACE
DALE PETROSKEY President and Chief Executive Officer Dallas Regional Chamber
LINDA McMAHON President and Chief Executive Officer The Real Estate Council
Forbes ranks Texas as the No. 1 place to make a living. Our pro-business climate, central location, and low cost of living are some of the determining factors in making our state No. 1. Dallas also ranks high as a great place to do business—but what about our quality of life? For the last five years, the Dallas region has been aglow as an attractive destination, particularly for business and corporate relocations. Like a beacon of warm light against a dark stretch of Texas highway, the Dallas region has attracted dozens of companies and hundreds of employees from around the country, lured by a strong business climate, low tax burden, and affordable real estate—both commercial and residential. When companies consider relocating or expanding operations, one of their first priorities is to identify a desirable location that fits both their business needs and accommodates the lifestyles of their employees. In today’s highly competitive talent market, workers have leverage when it comes to making choices—about where to begin or continue a career, where to set down roots and start a family, or where to raise and educate their children. Over the past few years, the Dallas region has made impressive strides toward enhancing
many areas where we live, work, and play. Dallas offers an abundance of chic and trendy shops along with some of the very best restaurants in America. Our Arts District is the largest in America and is home to diverse cultural venues including small theater companies and galleries throughout its 13 facilities located on 68 acres in the heart of downtown. Klyde Warren Park has revitalized our urban core, creating a beautiful outdoor space that is home to special events, activities, live music, and the new urban cultural staple: food trucks. The Perot Museum of Nature and Science, the Dallas Zoo, the Dallas World Aquarium, and the Dallas Arboretum are all family-friendly attractions that contribute to the vitality and cultural fabric of the city. Dallas also claims its share of outdoor recreation. Running all the way through Dallas is a 6,000-acre stretch of massive oaks, bubbling springs, and broad meadows known as the Great Trinity Forest. Parks, trails, and lakes are abundant. Dallas is within a 90-minute drive to 22 state parks and dozens of major lakes. And we are also a sports town—DFW is the only region in the U.S. represented in the five major professional team sports and also has a bowl game in the College Football Playoff rotation at AT&T Stadium, the largest and most expensive stadium ever built and home of the Dallas Cowboys. All these amenities are why people love to live and work here and illustrate that quality of place can be a strong competitive advantage for cities hoping to build and keep their workforce. The Dallas Regional Chamber and The Real Estate Council celebrate our region—not only for our business climate but for the many leisure opportunities that make this area the best place to call home. We encourage you to get out and sample all DFW has to offer. Wishing you a healthy and prosperous New Year.
2015 CHAIRMAN OF THE BOARD H. Ralph Hawkins, FAIA, FACHA, LEED AP Chairman HKS, Inc. 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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JOIN THE NEIGHBORHOOD Campbell Henry 214.740.2322 email@example.com Tyler Marshall
A Project Of:
UPFRONT QUINCY CURÉ PRESTON Publisher Dallas-Fort Worth Real Estate Review
A letter from the Publisher
If there’s one thing we know as 2015 draws to a close, it’s that we, as a region, must keep evolving. In this issue of the DallasFort Worth Real Estate Review, we take a look at what DFW is doing right and the ways we can propel forward as an international hub and center for economic growth. As evidence of this, Mike Rosa walks us through some statistics that prove DFW is making waves on a national scale. Check those out on page 15. To reinforce that, we bring you the latest information on new office, industrial, and retail growth in the Crane Report, beginning on page 19. Digging deeper, we take a look at the evolution of the Design District on page 46, beginning with Mike Ablon’s foresight up through Bill Hutchinson’s recent purchase of the area’s key properties. You won’t want to miss it. On the subject of growth, our roundtable discussion features five top minds in capital markets talking about what locals know and international investors are realizing: Dallas-Fort Worth is the place to be. Those insights start on page 32. To attract those international investors, our region must be internationally minded. We consider what that means on page 42. We take a look at companies from across the globe that have chosen to headquarter here, as well as how DFW International Airport acts as a powerful tool in drawing more corporate interest. Finally, our Toolbox feature looks at how companies are keeping sustainability at the top of their list, from water conservation to energy efficiency (page 56). We think that’s pretty innovative, which is a good thing, considering our recent launch of Dallas Innovates—an online resource for all things new, now, next in DFW. It’s another proud collaboration with the Dallas Regional Chamber and our silver sponsor The Real Estate Council. Check it out at dallasinnovates.com. As always, we’d love to hear from you.
Quincy Curé Preston Publisher
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Arlington,â€œThe American Dream City,â€? 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 | firstname.lastname@example.org | 817-459-6155
FOUNDATIONS HOTEL BOOM UNDERWAY IN DOWNTOWN DALLAS Travelers to downtown Dallas will soon have a multitude of options when looking for a place to stay for the night. More than a dozen projects planned or underway in the urban core will add about 2,500 rooms to the inventory. Because many are redevelopments, there’s an added bonus of repurposing long-vacant space and making it productive again. Among the largest is a 323-room property from Starwood Hotels and Resorts and KFK Group. It’s going into One Main Place, a 1 million-square-foot building that occupies a full city block at Main, Elm, Field, and Griffin streets. At 1700 and 1712 Commerce, NewcrestImage is bringing in three hotels—two Marriott brands and a Hampton Inn. Combined, they’ll add about 400 rooms. The highest-profile endeavor may be the redevelopment of the Statler Hilton at 1914 Commerce Street. Mehrdad Moayedi’s $175 million effort will create 161 hotel rooms on five floors and 219 residences on top. Moayedi’s company, Centurion American, bought the historic hotel in 2014 and was awarded $46.5 million in TIF money from the city of Dallas to help fund renovations. New projects include a 25-story hotel-condo tower from developer Craig Hall in his Hall Arts District project at Ross Avenue and Flora Street.
CHECKING IN HOTEL PROJECT
A baseline for the region’s future BY CHRISTINE PEREZ
AN EXCEPTION TO THE RULE
Interest rate increase swamps fundamentals in most markets—except Dallas. In December, the Federal Open Market Committee raised interest rates for the first time since 2006. The 25 basis point increase to the target federal funds was widely expected. “The strong November jobs report, in particular the first evidence of wage inflation in some time, sealed it,” wrote CBRE researchers in a U.S. Market Flash report. CBRE believes the Fed has significantly more room to move before there is any real pressure on cap rates. That being said, certain markets may be more susceptible than others to
interest rate increases. Texas markets, which have lacked strong cap rate compression since 2010, are expected to experience little cap rate adjustment, if any, CBRE reports: “Dallas office assets should also benefit from expected rent growth— with cap rates possibly compressing by another 25 bps by 2018. In fact, under our baseline scenario, forecasted rent growth is the primary cause of continued cap rate compression in Dallas, and will bring Dallas cap rates below their longrun trend within the next five years.”
POTENTIAL CAP RATE CHANGE IN OFFICE MARKETS (BPS) 140 120 100 80 60
2,489 SOURCE: Downtown Dallas Inc.
Workforce growth, corporate relocations, and regional office expansions are fueling diverse demand for data center space in Dallas-Fort Worth, according to a new report from JLL. What’s more, utility rates are at an all-time low, creating favorable pricing in Texas and other states in the Southwestern and Central regions. Breaking down demand by industries, insurance
companies like State Farm are leading the way, followed by financial services and technology concerns like Facebook, which has kicked off a $1 billion build-to-suit in North Fort Worth. New speculative data center developments are offering a full spectrum of services—cloud, managed services, co-location, et cetera—to meet this fastgrowing demand, JLL reports.
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DUE TO RATE INCREASE
DUE TO FUNDAMENTALS
NET CAP RATE CHANGE
SOURCE: CBRE Econometric Advisors, Q2 2015. NOTE: Cap rate analysis assumes 134 bps rise in the 10-year Treasury yield from now until Q4 2018.
SUPPLY AND DEMAND TOTAL INVENTORY: 2.9 million s.f./335 megawatts COMMISSIONED VACANT: 180,000 s.f./20 megawatts
INDUSTRIES ABSORBING DATA CENTER SPACE IN NORTH TEXAS: INSURANCE 35%
UNDER CONSTRUCTION: 89,000 s.f./10.9 megawatts
PLANNED: 462,828 s.f./66.19 megawatts NET ABSORPTION: 16.6 megawatts
FINANCIAL SERVICES 25%
Source: JLL Research, October 2015
DFW: A DATA CENTER FORCE
400 227 128 218 171 237 274 150 161 200 323
Downtown Core Arts District Uptown Arts District Downtown Core The Cedars Downtown Core Downtown Core Downtown Core Design District Downtown Core
1700/1712 Commerce 2000 Ross Dream Hotel Hall Arts Hotel Hilton Garden Inn Lorenzo Ascend Marriott-500 S. Ervay Saint Elm Hotel Statler Hilton Virgin Hotel Westin-One Main Place
F FOUNDATIONS COMPANIES DISINVESTING IN CALIFORNIA, 2008-2014 TOP DFW BENEFICIARIES BY CITY
A new report highlights how California’s poor business climate has led many companies to disinvest in the state. Joseph Vranich of Irvine, Californiabased Spectrum Location Services compiled a list of 1,500 “disinvestment events” between 2008 and 2014— relocations out of California, foregone expansions in California for other states, and facility closures, among others. He also looked at cities, regions, and states that gained the most from California’s losses. With a No. 1 ranking from Chief Executive magazine as the Best State for Business in 2015, it’s no surprise that Texas topped the list among all destination states with 219 events— nearly as many as the next four states combined. Similarly, with a competitive cost of living, central location, talented workforce, and an exploding population and employment base, DFW received 68 California-based company investments. Examples include Coparts’ headquarters relocation to Irving, CBRE’s consolidation of IT operations in Dallas, and Cisco Systems’ new data center in Allen. Among all metro areas, Dallas-Fort Worth came in second only to Austin. The study provides an important caveat that the benefits of California disinvestment to cities like Dallas and Fort Worth are, to a large degree, understated. Vranich says the events in his report are public knowledge, but that “experts in site selection generally agree that at least five events fail to become public knowledge for every one that does.” He concludes that it would be reasonable to project that approximately 9,000 disinvestment events occurred during the 2008-2014 period, indicating that the rush to leave California has likely benefited the DFW region more than we can ascertain. — Eric Griffin
TOP 10 STATE BENEFICIARIES
TOP 10 METRO AREA BENEFICIARIES
HOW NORTH TEXAS STACKS UP DFW’S NATIONAL RANKINGS SECTOR
Sources: CoStar, Witten Advisors
If you’re part of the real estate economy, Dallas-Fort Worth is a great place to be, says Chuck Dannis, senior managing director of National Valuation Consultants Inc. The veteran industry player and real estate professor at Southern Methodist University recently pulled together stats on how DFW ranks in absorption (by units for apartments, and square feet for the other classes), as of the third quarter of 2015, for the office, industrial, retail, and multifamily sectors. As he notes: “It is good to rank high in absorption—it simply means users are using the space. However, one’s ranking at the top of the ‘under construction’ scale can be good, but it can also be bad. Being ranked No. 3 to No. 5 is a reasonable place for DFW to sit, as long as we keep eating up space at this rate.”
THE CASE BUILDING
MULTIFAMILY MANIA GOES HIGH-RISE
Apartment developers are keeping the construction trades busy in North Texas. More than 24,000 units are scheduled to open by the end of the third quarter of 2016, according to MPF Research. Even with the flurry of new deliveries, though, demand is keeping pace. Occupancy is projected at 95.5 percent—the highest level the market has seen in 14 years. Millennial renters are a big reason why, but downsizing baby boomers are driving demand, too. That’s good news for property owners, as land and construction costs are on the rise, and older tenants are more likely and better able to pay escalating rates. The trend also is causing an evolution in the types of apartment projects that are getting built. For the first time in history, Dallas has an active new segment: the high-rise market. According to multifamily guru Brian O’Boyle Sr., vice chairman of ARA Newmark, 30 to 35 apartment towers are under development or planned for the region. Among them is The Case Building, a 17-story complex from StreetLights Residential and investment partner Westdale Properties. Formed just five years ago, StreetLights has quickly become a leader in the high-rise segment, with projects like The Taylor (17 stories) and The Jordan (23 stories) in Uptown and The McKenzie (23 stories) in the Knox-Henderson district. The company also is working with RED Development on The Union in Uptown. Trammell Crow Co. affiliate High Street Residential has been active, too. Along with a 32-story apartment tower at Park District in Uptown, the company is doing a 20-story complex on McKinney Avenue called M-Line Tower. Southern Land Co. also is joining the fray, with an 18-story tower in the Knox-Henderson neighborhood that will kick off in the first quarter of 2016.
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DOING BUSINESS DOWNTOWN?
Your #1 source for doing business Downtown downtowndallas.com/business downtowndallas.com/business
B BLUEPRINT FOR PROSPERITY
MOST COMPETITIVE CITIES
MOVING UP THE RANKS BY MIKE ROSA
Dallas-Fort Worth is perceived as a very competitive location for attracting new and expanding corporate facilities, particularly with headquarters. If asked, I believe a vast majority of CEOs for major national or global corporations would include our region among top-of-mind best places to base their businesses. The opinions of major real estate firms and site selection consultants who advise corporate moves would be similar. The Dallas Regional Chamber team and our partners have worked hard and logged a lot of miles over the past several years to shape that perception, and with excellent results. There are polls and surveys each year that prove this, and there is nothing an economic developer like me loves more than an independent audit that has Dallas-Fort Worth at or near the top as a corporate location—whether for headquarters or other types of projects. Those reports have a reserved space in the suitcase for our next marketing trip to California. Recently, I received a great one in the mail. It’s a report from Conway, which publishes Site Selection magazine, a leading and widely distributed economic development and corporate location trade publication. The 161-page report is called “The World’s Most Competitive Cities.” In it, Conway breaks the world into six regions: North America; Western Europe; Eastern Europe and Central Asia; Asia Pacific; Africa and the Middle East; and Latin America and Caribbean. For each world region, Conway researched all cities with a population at or above 500,000 to choose the five most competitive cities in the 12 major economic sectors. The 12 economic sectors are: aerospace; automotive; business and financial services; chemicals and plastics; electronics; energy; food and beverages; information technology and communications; life sciences; machinery and equipment; metals; and transportation and logistics. To determine the five best locations in each world region for all sectors (72 rankings in all), Conway used a combination of executive perceptions (surveying
A GENERATION AGO, DALLAS-FORT WORTH WAS THE NINTH-LARGEST U.S. METROPOLITAN AREA. TODAY, WE ARE FOURTH. corporate executives and location consultants), actual corporate location history (documenting where corporate facilities in those sectors decided to move or expand), and “apples-to-apples” econometrics, such as industry cluster data from Oxford Economics, Moody’s, and others. Cracking open the report, I knew that DFW competes well against other North American cities across all 12 sectors. I thought our region might be ranked top five for several sectors, but I figured we would be a lock in only four: aerospace, business and financial services, information technology and communications, and transportation and logistics. Shame on me. I was right about the four locks, but DFW CONTINUED 16
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B BLUEPRINT FOR PROSPERITY actually ranked as a top five North American region in six additional sectors for a total of 10—ranking more often than any other U.S. metro. Only for life sciences and metals was Dallas-Fort Worth not a top five location, though we do have significant strengths in those sectors, too. Our area ranked first in North America for financial and business services and food and beverages; and ranked second in energy, information technology and communications, machinery and equipment, and transportation and logistics. We ranked third in both aerospace and automotive, and ranked fifth in chemicals and plastics, and electronics. After DFW’s 10, the most-ranked U.S. metros were Houston in eight of 12 sectors (ranking first in energy, chemicals and plastics, metals, transportation and logistics, and machinery and equipment), Atlanta in seven, and Chicago in six. Texas was also represented by Austin, which ranked in two of the sectors (fourth for electronics, fifth for energy). Twenty different North American cities ranked at least once. Globally, 80 cities ranked at least once. Only Dubai and Shanghai were as frequently ranked as Dallas-Fort Worth. Dubai dominated the Middle East and Africa region, and Shanghai the Asia Pacific region. It’s great to see our region included and so prominently acclaimed in a global study like this, which to my knowledge, is the first of its kind by Conway. We’ll make great use of it. A generation ago, Dallas-Fort Worth was the ninth-largest U.S. metropolitan area. Today, we are fourth. And considering the business climate and cost issues in New York, Los Angeles, and Chicago, it’s fair to say that ours is now the largest U.S. metropolitan area with a prosperous climate for business and for people. So, not to brag, but DFW is the biggest and best location in the best state and greatest nation on earth. That’s a powerful, distinctive platform from which to market this region internationally—and stake our claim as a rising and major global city.
DALLAS-FORT WORTH’S RANKINGS AMONG THE
WORLD’S MOST COMPETITIVE CITIES INUSTRY SECTOR
BUSINESS & FINANCIAL SERVICES
CHEMICALS & PLASTICS
FOOD & BEVERAGE
IT & COMMUNICATIONS
LIFE SCIENCES MACHINERY, EQUIPMENT & CONSTRUCTION METALS TRANSPORTATION & LOGISTICS
The World’s Most Competitive Cities 2015
To see the complete report, visit siteselection.com, and click on Special Reports.
NO. 2 NOT RANKED
WANT TO LEARN MORE ABOUT HOW TO GET INVOLVED IN BLUEPRINT FOR PROSPERITY?
Contact Mike Rosa, Senior Vice President, Economic Development, Dallas Regional Chamber 214-746-6735 | email@example.com
BLUEPRINT FOR P R O S P E R I T Y,
BLUEPRINT FOR PROSPERITY
OUR NEXT STEPS FORWARD
region’s success. This additional investment made by more than 130 organizations in addition to annual
The Dallas Regional Chamber’s economic development program, Blueprint for Prosperity, provides organizations in Dallas-Fort Worth with an accelerated investment opportunity that helps advance our 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.
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we exist to build a better tomorrow.
RENDERING: BILLINGSLEY COMPANY
ONESOURCE VIRTUAL’S NEW CORPORATE HEADQUARTERS IS UNDER CONSTRUCTION AT CYPRESS WATERS.
THE CRANE REPORT
The development boom continues in North Texas, with solid activity in every commercial real estate sector. 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
JEFF ELLERMAN Vice Chairman, CBRE
“Rents continue to grow. We have several million square feet of new office construction, but a large portion is preleased. Deal flow is healthy, the economy is strong, and job growth numbers are excellent.”
Executive Vice President, Colliers International
Director of Leasing, Hall Financial Group
“We are seeing small and midsize companies relocate to Dallas in unprecedented numbers, and expect this trend to continue. The fundamentals are still very strong, and demand is driving new construction.”
“We’re seeing more construction of buildings in the 200,000 to 450,000 square-foot range. There are currently about 18 buildings under construction in DFW in this size range.”
“The DFW multifamily development pipeline is relatively full, with 38,000 units under construction or in lease-up. To this point, demand has kept pace with deliveries.”
Managing Director, JLL Capital Markets
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BONNIE BRAE MEDICAL OFFICE CONDOS RAYZOR RANCH MEDICAL PARK BLDGS 1-4 35 MEDICAL CENTRE
THE CRANE REPORT:
THE PRESIDIO @ 3 EIGHTY BLDG 2
8500 E HIGHWAY 380
FIRST CHOICE EMERGEN ROOM SE OF SMOTHERMAN RD AND FM 423 BLDG 1
UNICORN LAKE BLDG 2
OAKMONT OFFICE CONDOS BLDG 4
ANNOUNCED + UNDER CONSTRUCTION
WESTSIDE MARKET PHASE II FRISCO STATION
OLD TOWN BLVD NORTH
STONEBRIAR CO ON LEGA BARTONVILLE TOWN CENTER THE BRIDGES AT CASTLE HILLS
4431 LONG PRAIRIE RD
4101 HIGHWAY 121 BYPASS BLVD
PRAIRIE COMMONS 801 ENTERPRISE DR AVONDALE HASLET CENTER
MEADOWLANDS ADDITION BLDG I
PARKER RD AND OLD DENTON RD
SOHCO LAKESIDE VILLAGE
2111 E SOUTHLAKE EXECUTIVE KIRKWOOD BLVD MEDICAL CENTER
SE OF GOLDEN TRIANGLE BLVD AND OLD DENTON RD
SIZE: 115,000 square feet KEY PLAYERS: Miyama USA, Pillar Commercial DETAILS: With the first two office showroom buildings in this complex fully leased, Miyama USA has announced plans for a third facility. The complex includes distribution space and offers a park-like setting with lake views.
10740 OLD DENTON RD
610 STONEGLEN DR
2320 DEAN WAY
THE PLAZA OFFICE CONDOMINIUMS BLDG 3
SW OF FM 2499 AND GERAULT RD
RED HAWK OFFICE VILLAGE 2
THREE 7 ELEVEN HICKORY CORP. HQ CENTRE SOUTHLAKE 8821 DEVELOPMENT DAVIS BLVD HERITAGE OFFICE CONNECTION WILCOX 8825 N PARK PHASE II TARRANT PLAZA PARK 4501 HERITAGE PKWY AT LAS TRACE PKWY 1501 COLINAS THE PONDS HUGHES RD TEXAS BLDGS A-E BEAR CREEK THE APEX AT MUSIC OFFICE PARK LAS COLINAS FACTORY CROSSING AIRPORT 161 DECKER HQ CENTER COMMONS 7114 3665 WESTERN BLDG 400 &600 MID CITIES CENTER BLVD BLVD BLDGS 1 & 2 PEDERSEN OFFICE PARK SE OF MID CITIES BLVD AND PRECINCT LINE RD
FAA CORPORATE CAMPUS
7105 GOLF CLUB DR PAD SITE
THE OFFICES @ HAMPDEN WOODS EXPEDITION PLAZA
111 BOLAND ST
NE OF W 7TH ST AND ARCH ADAMS ST
640 TAYLOR OVERTON TOWER III
CLEARFORK I & II TEXAS SHALE TOWER WATERSIDE BLDG L
D. R. HORTON HEADQUARTERS
906 W CANNON ST
1000 FOREST PARK BLVD 1200 6TH AVE
VICTORY MEDICAL CENTER
NW OF W PLEASANT RD AND S BOWEN RD LOT 4 BLDG A
2337 S BELT LINE RD
4015 IH 20 W
CLEARFORK RIVER CAMPUS
TEXAS HEALTH SOUTHWEST MOB
212 N MA
MATLOCK PROFESSIONAL OFFICE PARK BLDGS 2 & 3 CANNON PROFESSIONAL PLAZA BLDGS 4, 8, & 9 1756 BROAD PARK CIR
624 N MILLER RD NE OF E BROAD ST AND N MILLER RD
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
SIZE: 313,000 square feet KEY PLAYERS: Anthracite Realty Partners (an affiliate of Jetta Operating Co.), Stream Realty Partners LEASING AGENTS: Seth Koschak, Ramsey March, and Tyler Maner of Stream Realty Partners DETAILS: This 25-story steel-and-glass tower will be built in downtown Fort Worth at Taylor and West 5th streets. Jetta Operating Co. is anchoring the project with a 70,000-square-foot lease for its new headquarters. Along with street-level retail, amenities include a restaurant, events center, fitness center, and tenant terraces.
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MIDTOWNE SIZE: 502,000 square feet KEY PLAYERS: Trammell Crow Co., Met Life, HKS Inc., Balfour Beatty Construction DETAILS: Building permits were filed in October for Trammell Crow Co.’s huge new mixed-use project along Klyde Warren Park in Uptown. The 19-story office tower and adjacent 34-story, 257unit residential tower will both feature groundfloor retail space.
NW OF E MAIN ST AND GEORGE HOPPER RD 2
TUSCAN TOWN SQUARE
SE OF PROSPER TRL AND COIT RD
SW OF W UNIVERSITY DR & N STONEBRIDGE DR
181 S MAIN ST
2020 E MELISSA RD
BAYLOR MCKINNEY II 1831 HARROUN AVE
METHODIST 5801 VIRGINIA MCKINNEY PKWY PHASE II OFFICE CONDO BLDGS 3600 C, D & E NE OF ELDORADO ELDORADO PKWY AND TEEL PKWY PKWY THE FORUM AT PROSPER WEST
T E NCY M
9255 DALLAS PKWY
STONEBROOK PARK I
SE OF TECHNOLOGY DR & DALLAS N TOLLWAY
CHESTNUT COMMONS PHASE I & 2
SW OF MAIN ST AND COLEMAN BLVD
SUMMIT PARK II
SW OF MAIN ST AND FRISCO ST STEWART CREEK OFFICE CENTER I & V
RIDGEVIEW BUSINESS CENTER WATTERS JUNCTION
STONEBROOK PARK II-IV STARWOOD PROFESSIONAL BUILDING THE FORUM AT WADE PARK BLDGS 1-6 VICTORY AT STONEBRIAR BLDG 1-5
VILLAGES OF EXCHANGE PARKWAY
GRANITE PARK V LAKES ON TENNYSON
5 QUEST RESOURCES
NW OF CHAPEL HILL BLVD & DALLAS NORTH TOLLWAY ALCATELLUCENT
4401 LOVERS LN
NW OF W FM 544 AND N MURPHY RD
CITYLINE STATE FARM BLDG 4
PALISADES CENTRAL 399 MELROSE DR BLDG 2
FOUR GALLERIA TOWER
PARK TOWER AT VICTORY AT DALLAS RIVERSIDE MIDTOWN BUILDING 4
ANGEL FIELD CENTER BLDG 3
INTERNATIONAL BUSINESS PARK
CUSTER CREEK MEDICAL BLDG 2
MCKINNEY MEDICAL OFFICE PARK BLDG 5
WESSEX@ ALMA ROAD
A CLOSER LOOK AT COLLIN COUNTY
CONLEY COMMONS PHASE I & 2
MURPHY OF FM MEDICAL NW 544 AND OFFICES WESTGATE WAY CENTRE AT THE COLONY PHASE II
CAMPBELL CROSSING OFFICE PARK
US HWY75 @ RENNER SHOAL ROAD CREEK BLDG 1 6901 ROWLETT RD BLDGS 1 & 2
MIDTOWN MEDICAL CENTER
MEADOW GREEN MEDICAL CENTER THE TERRACES 8421 PRESTON RD DEVELOPMENT PARK CITIES PLAZA 6517 HILLCREST AVE
2727 TURTLE CREEK BLVD 3000 TURTLE CREEK PLZ 2505 TURTLE CREEK BLVD TWO ARTS PLAZA ROLEX TWO 1900 VICTORY PARK N PEARL 1018 N ZANG BLVD SOLA ON LAMAR DAVIS STREET MARKET
METHODIST MCKINNEY OFFICE CONDO BLDG B, C, E
WESSEX@ ALMA ROAD
FRISCO SQUARE BLDGS A1, B1, B2, B5, B9, C2, C5, C8, C9, D1, E5 STONEBROOK BUSINESS PARK
ALMA OFFICE CONDOS IN CRAIG RANCH BLDGS & B
3600 ELDORADO PKWY
RIDGEVIEW VILLAGE MEDICAL CONDOS BLDG C
6351 PRESTON RD NW OF SH 121 AND PHASE II INDEPENDENCE PKWY FRISCO HIGHLANDS OFFICE PARK THE STAR
VICTORY PLAZA AT CUSTER UNIT 6 LAKE FOREST VILLAGES OF OFFICE CONDOS SUNCREEK & BLDG A & B MCDERMOTT TWIN CREEKS OFFICE PARK
ONE CHAMPIONS PARK STONEBRIAR COMMONS ON 5540 GRANITE PKWY LEGACY BLDG 9 PRESTON BEND ONE STONEBRIAR COMMONS ON LEGACY BLDG 9 LEGACY PRESTON PARC II SANYO ENERGY WEST HEADQUARTERS LEGACY CENTER TOYOTA HQ PRESTON LEGACY CENTER LEGACY BUSINESS LAKES OF TENNYSON PIZZA HUT PARK PROFESSIONAL HEADQUARTERS PARKWAY SPRING CREEK PROFESSIONAL VILLAGE OF COMMONS CENTER COMMUNICATION BLDG C, E, F, & G BLDGS 1-7 OAK TREE OFFICE PARK
CORPORATE CENTER THREE & FOUR
ALLEN PLACE I-IV WATTERS CREEK THE BLUFF ON OFFICE PARK I-IV MCDERMOTT ANGEL FIELD CENTER BLDG 2
● ANNOUNCED ● UNDER CONSTRUCTION
NW OF CHAPEL HILL BLVD & DALLAS NORTH TOLLWAY
UNDER CONSTRUCTION 3405 N BELT LINE RD SHALEM PARK GALLOWAY MEDICAL ARTS
SIZE: 1 million square feet KEY PLAYERS: KDC, Omniplan, KimleyHorn, Studio Outside, LA Fuess, Telios, Balfour Beatty
DETAILS: Joining Toyota Motor North America and FedEx Office, Liberty Mutual Insurance has begun work on its new office tower at Legacy West in Plano. Upon completion, the 19-story building will house about 4,000 employees.
280 S COLLINS RD
THE CRANE REPORT: INTERACTIVE VERSION
online at dfwrealestatereview.com
SIZE: 217,169 square feet KEY PLAYERS: Billingsley Co., GFF, Colliers International DETAILS: Billingsley Co. broke ground in early December on a new corporate headquarters for HR services firm OneSource Virtual at 9001 Cypress Waters Blvd. in Dallas. About 1,000 workers will take occupancy of the building when construction wraps up in late 2016.
GRANITE PLACE AT SOUTHLAKE TOWN SQUARE
SIZE: 160,000 square feet KEY PLAYERS: Granite Properties, Cooper & Stebbins, Beck Architecture, The Beck Group DETAILS: After more than a decade of talks, Granite Properties and Southlake Town Square developer Cooper & Stebbins have broken ground on the first phase of what could be a 500,000-square-foot, multi-tenant office project off State Highway 114. It’s scheduled for completion in October 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 1
US 380 BUSINESS PARK BLDGS 1-5
2834 GEESLING RD 1450-1500 N WESTERN BLVD DENTON CREEK WESTGATE BUSINESS PARK BUSINESS PARK BLDG 1-5 BLDG 2 MARKET STREET WESTGATE INDUSTRIAL PARK BUSINESS PARK BLDG 4 & 5 BLDG 3
THE CRANE REPORT:
INDUSTRIAL ANNOUNCED + UNDER CONSTRUCTION
GATEWAY BUSINESS PARK LOT 6, 7 & 8
SPEEDWAY DISTRIBUTION CENTER BLDG C
NORTHPORT 35 BUSINESS CENTER BLDG C
FARMER BROTHERS COMPANY
MIDPOINT LOGISTICS CENTER
● ANNOUNCED ● UNDER CONSTRUCTION
SIZE: 4 million square feet DEVELOPERS: Metropolitan LIfe Insurance and Panattoni Development Co. LEASING AGENTS: Terry Darrow, Kurt Griffin, and Nathan Orbin with JLL DETAILS: This new complex at Dallas Avenue and Interstate 20 in Lancaster will include four buildings totaling 3.9 million square feet, with spaces available for lease that will range from 340,200 to 1.6 million square feet.
1005 CHISOLM TRL
RAILHEAD INDUSTRIAL PARK BLDG 1, 3, 5, 7 & 8
MAJESTIC AIRPORT CENTER DFW BLDGS 4,6,&7 PROLOGIS PARK 121
FREEPORT NORTH LOGISTICS CENTER V DFW TRADE ROYAL CENTER VIII TECH 18 LOGISTICS CENTER III & IV LOGISTICS CENTER II
TRINITY PARK SOUTHLAKE
1001 KENNEDY LN
DCT WATERS RIDGE
KUBOTA TRACTOR CORP
12500 WILLOW SPRINGS RD
RIDGE RAILHEAD BLDG 1 & 2
PARKVIEW COMMERCE CENTER BLDG 4 DFW AIRPORT NORTH DISTRIBUTION CENTER II & III
NORTHPORT 35 BUSINESS CENTER BLDGS A & B
NORTH FORT WORTH LAND
1363 BRUMLOW AVE BLDG 7
1815 RELIANCE PKWY
GSA FBI BUILDING
PARC 114 BLDGS 7, 8, & 9 DFW EAST LOGISTICS CENTER BLDG A, B, & C
DFW/161 DISTRIBUTION CENTER 100, 200, & 300
COUNTY LINE RD LIBERTY PARK GSW NORTH BLDGS 1-3
CENTREPORT BLDGS 1-8
PARC NORTH BLDGS 1-4
GSW GATEWAY PHASE II BLDG 4 & 5
TRINITY CROSSING BLDGS 1 & 2 2909 W OAKDALE RD
1460 AVENUE S PARK 161 DISTRIBUTION CENTER - AVERA
WILDLIFE COMMERCE PARK FALKEN TIRE
LOGISTICS CROSSING 2
MOUNTAIN CREEK CORPORATE CENTER
SOUTH CENTRAL DISTRIBUTION CENTER II
KENNEDALE PKWY F
DFW EAST LOGISTICS CENTER
SIZE: 259,555 square feet KEY PLAYER: Bradford Commercial Real Estate DETAILS: The DFW International Airport submarket is getting some inventory relief with a new, three-building industrial complex on Walnut Hill Lane at Polaris Drive. Buildings range in size from about 43,600 to 161,800 square feet. They’re scheduled to be ready for occupancy in the second quarter of 2016.
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THE CRANE REPORT: INTERACTIVE VERSION
online at dfwrealestatereview.com
MOUNTAIN CREEK BLDGS 1 & 2
FIRST 120/161 COOPER IH 20 BLDGS A & B ARLINGTON CROSSING COMMERCE CENTER II
1102 ENTERPRISE PL
619 S WISTERIA ST 1475 HERITAGE PKWY BLDG 2
UNDER CONSTRUCTION 3
RAILHEAD INDUSTRIAL PARK
SIZE: 230,000 square feet DEVELOPER: Scannell Properties BROKER: Dan Cook, Cushman & Wakefield DETAILS: This multitenant warehouse within Railhead Business Park in North Fort Worth will be shared by Euromax, which has leased 105,549 square feet, and American Tile, which will occupy the remaining space.
MOUNTAIN CRE BUSINESS PA
FRISCO CENTER II BLDGS A, B, & C
1406 W AUDIE MURPHY PKWY
FRISCO COMMERCE CENTER BLDG D
4 TECH CENTER ON GREENVILLE BLDGS A, B, & C
CREEKVIEW 121 BLDGS 1-4
DOZIER PLACE PLANO TECH CENTER 1, 8, 12, 13, & 14 315 W FM 544 WORKPLACE RESOURCE GROUP
2910 GUILDER DR
VALWOOD CORPORATE CENTER BLDGS 1-4 CHANNELL COMMERCIAL
DIPLOMAT I & II
SW OF MARQUIS AND NICHOLSON BLDGS 1-2
MERCER BUSINESS PARK BLDGS 2-4 11070-11090 N STEMMONS FWY
3600 LEON RD BLDGS A, B, & C
9726 BROCKBANK DR
9749 CLIFFORD DR
PROLOGIS/ BUCKNER LAND
MUSTANG CREEK BUSINESS PARK NORTH
I-30 BUSINESS CENTER BLDG 3
SOUTHWEST DISTRIBUTION CENTER NW OF IH 20 AND JJ LEMMON RD SOUTHFIELD PARK 35 BLDGS 2-4
SOUTHPOINTE BLDGS A & B
PLANNED POINTSOUTH LOGISTICS & COMMERCE CENTER I-III INTERMODAL BUSINESS CENTER
RIDGE LOGISTICS CENTER BLDGS 1-5 STONERIDGE PROLOGIS BUSINESS PARK SUNRIDGE BUSINESS PARK EAGLE BLDG 11 PARK BLDGS 1 & 2 20/35 PARK CROSSROADS 20/35 SOUTHPORT TRADE CENTER RADE CENTER BLDG III BLDGS 1-5 I 35 DALPORT INTERCHANGE I TRADE CENTER 6
SOUTHPORT LOGISTICS PARK BLDGS 1-9 SE OF PLEASANT RUN RD & SUNRIDGE BLVD DALPORT TRADE CENTER 2-3 DFW INLAND PORT BLDGS 1-2
Xceligent reports 61 North Texas industrial projects totaling 13.6 million square feet are underway; another 76 projects totaling 17.8 million square feet are planned or proposed.
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
FRISCO COMMERCE CENTER II
SIZE: 137,020 square feet KEY PLAYERS: Crow Holdings, Alliance Architects, McFadden & Miller Construction LEASING AGENT: Bob Hagewood, Stream Realty Partners DETAILS: The second phase in this 33-acre business park sits in the fast-growing Frisco market. Three other buildings in the park have already been leased.
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
WOODLANDS APARTMENTS I
THE CRANE REPORT:
MULTIFAMILY ANNOUNCED + UNDER CONSTRUCTION
DISTRICT OF HIGHLAND VILLA
RIVER WAL APARTMEN
ANNOUNCED DEVELOPMENTS 1
● ANNOUNCED ● UNDER CONSTRUCTION
UNITS: 457 DEVELOPER: Tonti Properties DETAILS: This Tarrant County project will sit on 43 acres west of State Highway 121 in Euless. It will feature a mix of product types, from four-story, wrap-style buildings to townhomes with private residences and garages. About 19 acres have been set aside for retail development.
ENCLAVE AT WESTPORT
THE CRANE REPORT: INTERACTIVE VERSION
DOLCE LIVING HOME TOWN
online at dfwrealestatereview.com
THE KELTON AT CLEARFORK
PINNACLE BANK PLACE
HIGHPOINTE ON SOUTH MAIN
THE BERKELEY II
THE GROVE AT WATERSIDE
VILLAS DI LUCCA II
THE DOMAIN AT FIREWHEEL
UNITS: 300 DEVELOPER: ArchCo Residential DETAILS: Construction will get underway in the second quarter of 2016 on this new project at State Highway 190 and Bunker Hill Road in Garland. Most buildings will be three stories; amenities include detatched garages and a resort-style pool and spa.
MANSFIELD ON THE GREEN
UNDER CONSTRUCTION 3
GABLES WATER STREET
UNITS: 316 DEVELOPER: Gables Residential DETAILS: Construction got underway in November on this Las Colinas project near State Highway 114. Designed by WDG Architecture, the waterside development also will include about 60,000 square feet of retail space.
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
STRATFORD LAND MCKINNEY RANCH DEV
PARKVIEW APARTMENTS THE ABLON AT FRISCO SQUARE STREETLIGHTS AT THE CANALS AT GRAND PARK LAKESHORE LANDING
ROSE HILL APARTMENTS
PARKSIDE AT CRAIG RANCH II
VILLAS AT CHAPEL CREEK II
TWIN CREEKS CROSSING II BELLA TERRA AT TWIN CREEKS I
JEFFERSON STONEBRIAR AMLI AT TH BALLPARK II
ORIGIN AT FRISCO BRIDGES
DISCOVERY AT THE REALM
MCKINNEY URBAN VILLAGE
LOFTS AT WATTERS CREEK III
THE GRAND AT LEGACY WEST
Just north of Dallas. Far from ordinary.
THE BOAT HOUSE BROADSTONE PARK PLACE ELAN PLANO
K SALADO APARTMENTS
HEBRON 121 STATION III
AURA 5515 MODERA GALLERIA PARSON`S GREEN II
MERCER CROSSING AT LUNA II
AMLI ON RIVERSIDE ALEXAN LAS COLINAS GABLES WATER STREET
CREST A PARK CENTRAL I MARK AT MIDTOWN PARK EVERTON APARTMENTS HEIGHTS AT PARK LANE
THE ATWOOD THE MCKENZIE
HARRY HINES BOULEVARD MIXED MAPLE DISTRICT
GREENVUE APARTMENTS CARRIAGE HOMES ON THE LAKE I
LINCOLN PRESTON HOLLOW WATERS EDGE II VILLAGE JEFFERSON RIVERSIDE BANDERA APARTMENTS
3 CAMPION TRAIL
AURA ONE90 LOT B AT CITYLINE ALEXAN CITYLINE I THE STANDARD AT CITYLINE I LOT A AT CITYLINE EASTSIDE II
ALTA MARKET CENTRAL
KELLER SPRINGS CROSSING
HARMONY HILL I TERRA LAGO
VILLAGE OF ROWLETT
VISTA DEL LAGO THE TEAK AT THE BRANCH
FRMR SALTILLO APARTMENTS THE ARMSTRONG AT KNOX VILLAS AT NORTH CENTRAL PROJECT VANSTON PARK LEMMON AND OAK GROVE ELAN CITY LIGHTS THE CASE BUILDINGS ALTA FARMERS MARKET BROADSTONE FARMERS MARKET FLATS OAK SOUTHSIDE FARMS BY JEFFERSON DAIRY
TRINITY GREEN CANYON IN OAK CLIFF MIXED USE ALTA YORKTOWN ALEXAN WEST DALLAS
VILLAS GRAND PRAIRIE
THE ENCLAVE AT MIRA LAGOS I
C AT NSFIELD
DATA SOURCE: AXIOMETRICS INC.
MODERA TURTLE CREEK
UNITS: 207 DEVELOPER: Mill Creek Residential
DETAILS: This six-story complex will sit a block south of Oak Lawn Avenue on Cedar Springs Road. It’s expected to open in late 2017.
UNITS: 262 DEVELOPER: High Street Residential, an affiliate of Trammell Crow Co. DETAILS: Construction is underway on this 12-story tower at 3200 McKinney Ave. in Uptown. It will include include streetlevel retail anchored by a Cafe Express restaurant and a new McKinney Avenue Transit Authority trolley barn.
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 5
The region continues to benefit from strong job and population growth, solid market fundamentals, and a diverse economic base. Even with new construction that’s underway, vacancies are tightening as tenants continue to move in and expand. Here we look at the top five office, industrial, and retail leases of the past three months, with data provided by Xceligent Inc. BY CHRISTINE PEREZ
ON-THE-GRO U N D I N S I G H TS
“Dallas is becoming one of the most attractive markets in the country for millennials. This means continued growth in the office markets—as long as the buildings get built where millennials want to work.”
“Dallas will continue to see an influx of technology companies, and landlords trying to cater to their needs. Investors will also continue to have a large target on Dallas.”
“DFW is the most soughtafter markets for companies to expand into, and local businesses are also wanting to upgrade their image and expand their footprint, too. I don’t see a slowdown anytime soon.”
Managing Director, E Smith Realty Partners
Principal, Peloton Commercial Real Estate
NAI Robert Lynn
Senior Vice President, CBRE
“Numerous new retail projects will deliver over the next 12-18 months. Development seems to be tenant-driven, with very little spec space. Grocery, fi tness, and sporting goods all continue to be active.”
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
OFFICE LEASES 1
3 4 25
649,052 SF 9,05232,419 SF 32,41988,000 SF 88,000232,000 SF 232,000399,788 SF
LARGEST OFFICE LEASES
SIZE: 217,169 s.f. at Cypress Waters TENANT REP: David Wetherington with Colliers International LANDLORD: Billingsley Co., represented inhouse by Marijke Lantz DETAILS: OneSource Virtual is the latest tenant to sign on for space Billingsley Co’s bustling Cypress Waters development off Interstate 635 in Dallas and Irving.
SIZE: 102,000 s.f. at One Lincoln Center TENANT REPS: Steve Thelen, Jeff Staubach, and Jeremy McGown of JLL LANDLORD: Teachers Insurance & Annuity Association of America, represented by Matt Schendle and Meredith Durham of Cushman & Wakefield DETAILS: Matador STEVE Resources is an THELEN independent energy company involved in the exploration, development, production, and acquisition of oil and natural gas resources in the United States.
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VINSON & ELKINS
SIZE: 80,000 s.f. at The Union in Uptown TENANT REPS: Phil Puckett and Harlan Davis of CBRE LANDLORD: RED Development, represented in-house by Paul Rowsey IV and by John Brownlee and Sarah Hinkley of Peloton Commercial Real Estate DETAILS: One of the nation’s largest law firms, Vinson & Elkins will occupy the top three floors of this 800,000 square-foot, mixed-use development when the project opens in 2017.
SIZE: 73,110 s.f. in NorthPark Central at 8750 N. Central Expwy. TENANT REPS: Jeff Staubach and Kimarie Ankenbrand of JLL LANDLORD: Cornerstone Real Estate Advisers, represented by Fletcher Cordell and Duane Henley of Transwestern DETAILS: About 350 employees of the world’s largest online dating service will move to the company’s new headquarters near The Shops at Park Lane in August.
SIZE: 60,000 s.f. at The Union in Uptown TENANT REP: Scott Morse of Citadel Partners LANDLORD: RED Development, represented in-house by Paul Rowsey IV and by John Brownlee and Sarah Hinkley of Peloton Commercial Real Estate DETAILS: It was a big quarter for The Union, which, in addition to the V&E deal (above), also secured a twofloor lease from the North Texas accounting firm Weaver.
17,34053,000 SF 53,000108,800 SF 108,800209,000 SF
209,000401,600 SF 401,6001,002,620 SF
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
FARMER BROS. COFFEE
SIZE: 537,000 s.f. in Northlake TENANT REPS: Gary Lindsey and Terry Reitz of Newmark Grubb Knight Frank LEASING AGENTS: Cannon Green and Bob Hagewood of Stream Realty Partners
LARGEST INDUSTRIAL LEASES
DETAILS: This $40 million campus for Farmer Brothers Coffee includes 70,000-s.f. corporate headquarters, state of the art roasting plant, and distribution center. The company’s relocation from California will bring more than 350 new jobs to the region.
SIZE: 442,035 s.f. in Mesquite Distribution Center TENANT REP: Steve Berger and Dave Anderson with CBRE LANDLORD REP: Terry Darrow with JLL DETAILS: The Wisconsin-based home furnishings giant is opening a new distribution operation in North Texas, at this Prologis development in Mesquite. The landlord recently upgraded to all LED lighting throughout. STEVE BERGER
SOUTHWEST MOULDING CO.
SIZE: 367,262 s.f. at 501 Danieldale Road in DeSoto TENANT REPS: Michael Swaldi and Nathan Orbin with JLL LEASING AGENTS: Terry Darrow and Kurt Griffin with JLL DETAILS: Established in Dallas in 1952, the tenant is a leader in moulding and specialty millwork products throughout Texas, Oklahoma, and bordering states. The property owner is US Real Estate LP.
C&S WHOLESALE GROCERS INC.
SIZE: 355,577 s.f. at 777 Freeport in Coppell TENANT REP: Dave Anderson with CBRE LANDLORD: IIT Freeport DC LP, represented by Chris Teesdale of Colliers International DETAILS: This is a new lease from C&S Wholesale, a leading supply chain company in the food industry and the largest wholesale grocer in the United States. DAVE ANDERSON
DAIMLER TRUCKS NORTH AMERICA
SIZE: 272,000 s.f. at RiverPoint Commerce Center in Grand Prairie TENANT REP: Bob Scully of CBRE LEASING AGENTS: Cannon Green and Matt Dornak of Stream Realty Partners DETAILS: Daimler Trucks North America’s lease of 271,177 square feet brings RiverPoint Commerce Center, a speculative 603,000 s.f. joint-venture between JP Morgan Asset Management and Stream Realty Partners, to 62 percent leased.
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
2,9157,117 SF 7,11717,856 SF 17,85648,000 SF 48,00010,6207 SF
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
LARGEST RETAIL LEASES
FLOOR & DECOR OUTLETS OF AMERICA
SIZE: 72,597 square feet LOCATION: Sam Rayburn Tollway and S. Colony Blvd. in The Colony TENANT REP: Daniel Taylor of CBRE|UCR LANDLORD: Colony 5 Partners LLC.
GANDER MOUNTAIN CO.
SIZE: 60,031 square feet LOCATION: Eldorado Parkway and the Dallas North Tollway in Frisco TENANT REP: Daniel Taylor of CBRE|UCR LANDLORD: Eldorado Marketplace Associates LLC DETAILS: Gander Mountain is the nation’s largest retail network of specialty stores for shooting sports, hunting, fishing, camping, and other outdoor activities.
SIZE: 60,000 square feet LOCATION: Ridgmar Town Square in Fort Worth TENANT REP: John Graul of Burlington Coat Factory LEASING AGENT: Scott Rose of The Retail Connection DETAILS: This new store from leading national retailer Burlington creates as many as 100 new jobs in Fort Worth.
DICK’S SPORTING GOODS
SIZE: 50,000 square feet LOCATION: Glade Parks in Euless TENANT REPS: Greg Bracchi and Megan Nabholtz Trimble of EDGE Realty Partners LEASING AGENTS: Steve Ewing and Josh Flores with EDGE Realty Partners LANDLORD: North Rock Real Estate DETAILS: The new 193-acre Glade Parks center is on the west side of State Highway 121 at Cheek-Sparger and Glade roads.
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TEXAS FAMILY FITNESS
SIZE: 45,000 square feet LOCATION: Towne Square Shopping Center in Plano TENANT REP: Dan Avnery of NAI Robert Lynn LANDLORD: Norman Hopperstein
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
Best Places to Live in the U.S.
Most Affordable Homes in the U.S.
in Best Suburbs List
of 50 Safest Texas Cities
Keri Samford, Economic Development Director 972.624.3127 • firstname.lastname@example.org • www.TheColonyEDC.org
FEELING THE RUSH Investors are flocking to Dallas-Fort Worth, where job growth, economic diversity, and other strong fundamentals are fueling a thirst for commercial properties in all sectors. Hereâ€™s what to expect in 2016. BY CHRISTINE PEREZ
PHOTOGR APHY BY MICHAEL SAMPLES
3 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
Gary Carr is vice chairman of CBRE’s investment properties-institutional group in Dallas. He has more than 30 years of experience in commercial real estate, specializing in the sale of office investment properties for institutional and private clients, and is consistently a top national producer in investment sales.
Randy Fleisher has been involved with commercial real estate since 1993, and now serves as managing director of JLL Dallas’ debt and equity platform. Before this, he was the founding managing partner of Quadrant Realty Finance, a boutique real estate investment banking firm located in Dallas, which JLL acquired in 2013.
Senior managing director Trey Morsbach coleads the Dallas office of HFF. He’s primarily responsible for originating debt and equity transactions throughout the United States, with particular focus on construction, portfolio, and equity/joint venture deals. Before joining HFF, he worked in real estate lending at Guaranty Bank.
Brian is founder and vice chairman of the Dallas office of ARA, a Newmark Co., and a partner in the company’s national senior housing group and its operations in Austin and Washington, D.C. He has more than 30 years of industry experience, specializing exclusively in the brokerage of multihousing projects and land.
Bill Vanderstraaten founded Chief Partners LP in 2007 with oil and gas executive Trevor Rees-Jones. The commercial real estate investment company invests in the retail, industrial, multifamily, medical office, and office sectors. He previously held top leadership posts at Thackery Partners and CarrAmerica. WINTER 2015
R ROUNDTABLE In its highly respected annual Emerging Trends report, the Urban Land Institute and PWC identified Dallas-Fort Worth as the No. 1 real estate market for 2016. The report cited DFW’s impressive employment growth, supported by a business-friendly environment, an attractive cost of doing business, and low cost of living. The findings supported what investors all over the world are discovering: Dallas is the place to be. The outlook is strong across all property types, in both acquisition and development potential. To get more details on capital markets activity in the region, we recently gathered a panel of some of the top minds in the business. The discussion was moderated by Christine Perez, editor-in-chief of the Dallas-Fort Worth Real Estate Review. CHRISTINE PEREZ: Let’s get your take on commercial real estate investment activity across North Texas in 2015. Were things better, worse, or about what you expected?
GARY CARR: I think it was about what we expected. We knew going into 2015 there was a lot of momentum. Leasing activity was so strong in 2014, and we had a lot of liquidity in the market, both debt and equity. In transactional volume, we’ll probably be up in the office sector by 8 to 10 percent in 2015, and probably hit about $4 billion in transactions. BILL VANDERSTRAATEN: For us, it was a slightly better year than we were expecting. The interest rate environment and cap rate environment kept a pretty open window on the sales side, and I think there were still some opportunities on the buy side as well. RANDY FLEISHER: It has been good across all the property types. Apartments showed a 22-percent increase, year over year; office was up 19 percent; industrial was at 28 percent. Retail lagged at 3 percent. But overall, good growth over 2014. TREY MORSBACH: I guess we’d have to say it was as expected, because we’re optimists. We go into every year suggesting that next year is going to be great. But in all honesty, I would say we’re probably a little bit surprised. Through the third quarter, the trailing 12 months, Dallas eclipsed its largest transactional volume in commercial real estate ever, at just over $18.5
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R ROUNDTABLE billion. There’s no doubt there was liquidity in the market—enough capital to certainly support that kind of activity, and the fundamentals in the market are as good as maybe they’ve ever been. You combine those two and you end up with the most transaction activity ever. BRIAN O’BOYLE: On the multifamily side, it has been another year. In the last 12 months, there’s probably been about $5.5 billion in multifamily transactions. And we still have a very active market ahead of us.
Are we seeing more foreign money targeting Dallas, and why or why not?
O’BOYLE: In the last 90 days, I’ve closed more than $500 million worth of deals. And of that amount, more than 40 percent involved foreign capital. For the most, it was China and the Middle East. CARR: Dallas has always been attractive to cross-border capital, but a large percentage of that has traditionally come from Mexico or Canada or Europe. As O’Boyle said, we’re seeing a lot of interest today from all over the globe. There’s a lot of capital trying to get into the United States right now because the economy is strong. In the last six months in Dallas, we’ve had big contingencies of people coming in from Japan, China, and Korea. The airports allow people from all over to get into this part of the country on direct flights, which is a great asset. FLEISHER: We’ve also seen tremendous job growth—100,000 per year for the past five years. We’re expected to grow by 2.1 million people from 2015 to 2030. So that’s a huge driver, too. Dallas-Fort Worth is the fourth-most economically diverse market, when you look at all the major cities across the U.S. Foreign capital is realizing that Dallas is a gateway market—a market that they want to be invested in. O’BOYLE: I think especially some of the countries where there’s a political situation and some of the instabilities that exist, a lot of these foreign investors look at the U.S. as a safe haven. We may have some issues, but long-term, we’re probably the most stable and low-risk investment. VANDERSTRAATEN: I think they look at stability first and then within the U.S., they see high growth in a place like Dallas, so it’s making them consider the middle of the country more than they did in the past, when the focus was either California or the East Coast. Texas is now getting more attention. MORSBACH: I looked at some data this past
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weekend. There has been more foreign capital in the United States in the last 12 months than ever: $17.1 billion. That eclipsed all of 2007. By mid-year this year, there was more than all of last year. The flow of foreign capital into the U.S. is extraordinary, and increasing. In terms of specific markets, Dallas came in at No. 2, in terms of total dollars, behind Manhattan. This is surprising, when you think about Los Angeles and San Francisco and Washington, D.C., and all of the gateway markets. Carr’s comment about the airport is so true. We just hosted 20 Chinese investors—for the fourth time this year, a contingent of Chinese investors have come in— and their real simple mantra is, “We’re going to invest where we have a direct flight from Beijing.” So the fact that DFW International opened up direct flights to Beijing literally is a direct connection to how and where they’re going to invest. CARR: A lot of times it’s not very transparent that it’s coming offshore, because a lot of the offshore capital will come in through institutional advisers like Invesco or MetLife, so you don’t actually realize where the money is coming from.
What are DFW’s biggest selling points as an investment market, and what are its biggest challenges?
VANDERSTRAATEN: Randy touched on this, but I think the economic diversity is a very big part of what’s attracting investors. There are so many different kinds of businesses here. We’re not dominated by a single industry the way a lot of other markets are. From an investor’s standpoint, the biggest drawback remains in the ease of getting competitive product started in this market; investors are sometimes a little cautious about jumping in where they know they can get surprised by competition. MORSBACH: I think some of the more supply-constrained markets of the country have gotten out and ahead of their skis more than we have, in this cycle, and even in last cycle. Now, we’ve been saved by demand, so it’s not that we don’t develop. We have probably the best development community in the country, and we have the ability to develop because we have land. But if you think about where we are on supply-and-demand metrics on almost every asset class, through last cycle and even into this one, we outperformed almost all the major gateway markets, maybe with the exception of Manhattan. VANDERSTRAATEN: What do you mean by perform? MORSBACH: Occupancy. We had better supply-and-demand performance on every asset class. So I’m really talking about how did they stay occupied, and do we have assets that were not languishing. We had rent pressures, like everywhere else. VANDERSTRAATEN: Most of you guys know much about the reality of new product, but the perception from the investment community is that we have the ability to pop up buildings on fairly short notice—multifamily, office, and industrial. That perception is a headwind.
MORSBACH: You can go back to 1988— that was the last time this city was materially out of equilibrium. So we’re still sort of living with the sins of two and three decades ago in this city. A lot of people in the 212 area code still forget that this market has actually performed better than all the supply-constrained markets. O’BOYLE: When you talk about the 1980s, the amount of equity that was put in deals was very small. Today, we’ve built in more controls. Your typical deal is somewhere between 25 and 35 percent now. So we have more checks and balances in the system. To your point, Morsbach, the Urban Land Institute just ranked Dallas as the No. 1 investment market in the United States for 2016. Over the past 18 months, I’ve seen so many new buyers come to the marketplace. We’re on more radar screens today. CARR: The stars are aligned in Dallas right now. It’s a job-growth engine, you’ve got all this relocation activity because of the no-tax environment, you’ve got a balanced state government, you’ve got these great airports, you’ve got the central time zone, and you’ve got great housing stock. North Texas is seen as a safe haven, which is why we’re seeing so much relocation activity. FLEISHER: JLL is tracking 21.4 million square feet of tenants that are looking in our market, and they’re looking at all those factors that everyone has pointed out. You’ve got market diversity, the business-friendly environment,
you’ve got a local time zone, and you’ve got great transportation with DFW and Love Field. VANDERSTRAATEN: The quality of the workforce is another huge draw, particularly in corporate relocations. FLEISHER: We’re reaching near peak employment. If you graduate now with a college degree, the unemployment rate is 2.4 percent, which is really low. But we just continue to see net migration, so we’re offsetting the demand for new employees with people who are moving here. They’re following corporations, which also is helping fuel investment. VANDERSTRAATEN: It will be interesting to see if down-shifting by some of the energy companies contributes to more looseness in the job market.
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R ROUNDTABLE MORSBACH: The economic diversity comment is one that can’t go under-discussed. All of us, particularly in the transactional space, went into this year with what was going on in Houston, and we were waiting with bated breath to see whether this energy was going to affect Dallas. We looked at it statistically, and you could look at the percentage of mining and refining, and Dallas is de minimis and all, but there’s all those extra layers of jobs. Has anybody felt any impact from energy in Dallas? O’BOYLE: Zero. Zero. MORSBACH: I mean, to the contrary, right? In some ways, I think capital has almost reversed. We actually saw capital that wants to be in Texas becoming somewhat resistant to Houston, so they’re coming to Dallas. I don’t know if that’s sustainable, but I don’t think the energy has played out as significantly. Maybe it will, maybe it won’t. VANDERSTRAATEN: I think it’s a little early, which I know sounds funny because we’ve had depressed oil prices for some time now. These organizations take a long time to adjust to that, and oil and gas is only a small percentage of Dallas, relative to most other Texas markets. It may only be 10 or 12 percent, but it’s the best 10 or 12 percent. So it does have a little bit of a headwind effect. O’BOYLE: To your point, Morsbach, I’ve seen a lot of the funds come into town saying, “Look, I don’t want to have to get up in front of my investment committee and have to go through a big, hard sale.” So it’s like a balloon that’s filled with water—you squeeze Houston out, and that money shifts to Dallas and Austin. O’BOYLE: One of the things that Dallas has going for it is the fact that it’s one of the cheapest costs of living of any major metro area. If you look at the percentage of rents to income, Dallas may be 18 percent on a national scale and New York is 38 percent. That’s a big deal. Fleisher mentioned our ability to have a pipeline of qualified employees—what’s the bench strength of that, with Toyota and Liberty Mutual and the others. One thing to look at is the annual graduating classes of college seniors. We get a high percentage of the SMUs and the TCUs and other Texas schools, but there’s a lot of other annual in-migration of people coming from all over. I have a son who graduated from TCU a year ago. He had 31 kids in his pledge class, representing geographical diversity from all over the country. Fifteen of the 31 came to Dallas, to the Uptown area. And if you look at the quality of life that
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these kids have—I kid my son and tell him, “I want to come back as you.” MORSBACH: People are looking at millennial markets because it goes back to quality job growth and where the best talent wants to be. What our city has done in Uptown and with the bridge and downtown—everything that is going on in our urban core is starting to attract a lot of millennials. We’re hiring a lot of people, and we interview a lot of people, and they all want to live right here. VANDERSTRAATEN: For that age group, the diversity of entertainment options for them is bigger than it has ever been, between Bishop Arts and Deep Ellum and Trinity Groves and Uptown, the list goes on and on.
We talked a little bit about supply and demand. Let’s break it down by property type. O’Boyle, you’re the multifamily guru; I cannot believe the amount of development going on in that sector.
O’BOYLE: It’s a beautiful thing. We’ve got about 38,000 units in the pipeline, of which we’ll deliver, by the end of the third quarter next year, probably 24,000 units. But since 2010, we’ve absorbed almost 100,000 units in this market. It’s amazing, the absorption we’ve had. The pipeline is probably as big as it’s ever been, but we’re also creating a lot of jobs. We may be a little short of absorbing all the units, but it’s nothing I would consider being out of balance. FLEISHER: On the other side of multifamily is single-family residential and a tremendous under-supply there. Developers are having a really difficult time doing horizontal lot development, so that will help keep multifamily going. MORSBACH: The fact that we have not been able to deliver the supply, and the fact you still have a lot of disruption in the mortgage market, and the difficulty getting lending has all led to more success in the multifamily side. If there’s any product type that is questioned about whether it is potentially being overbuilt, it’s multifamily. What about Uptown, and all of the towers getting built? O’BOYLE: There are 11 high-rises under construction right now, and a bunch more planned. MORSBACH: In the Uptown submarket? O’BOYLE: Yes. It will be interesting to see how it pans out, but the ones that have come online have done incredibly well. We’re also seeing some of these new towers getting $3 a square foot.
It’s the boomers.
O’BOYLE: Exactly. A lot of friends I know are selling their homes, whether it’s in the Park Cities or Preston Hollow, and they’re moving to the Uptown area or downtown and living in high-rises, where you’ve got walkability, you don’t have any yards, and if you want to leave town, you just walk out the door. VANDERSTRAATEN: We’ve got four different multifamily investments, and we’ve
been surprised with how resilient that market has been through the course of the year, even as it continues to deliver a record level of units. We think the highrise market is going to have some softness in it. I don’t think it will be long-term, but there will be some softness, just because so many are happening at the same time. MORSBACH: Softness defined as just rent? VANDERSTRAATEN: Rent concessions, for some period of time. I do think the long-term Dallas job growth is such that demand will eventually catch up, but I think over the next 18 months, we are going to start to see some softness in that part of the market. But we’re long-term bullish on high-rise and urban. I wouldn’t just focus on Uptown; there’s quite a bit of other urban housing options happening, in every direction from downtown. O’BOYLE: If you look at what’s happening to the east and now there’s activity going down in the Cedars, and then you look at what’s west of downtown, we’re basically seeing entire new submarkets pop up. VANDERSTRAATEN: Yeah. There are five or six projects between Bishop Arts, Trinity Groves, and Deep Ellum.
What about the other sectors—office, industrial, and retail?
CARR: Generally, office investors are comfortable with the new supply that’s coming on for a couple of reasons. One, demand has been so strong. Through the first three-quarters, we saw 4.6 million square feet of net absorption, and there’s roughly 6 million square feet of construction underway right now. Additionally, construction costs are going up pretty rapidly, and you can’t go out and get nonrecourse financing, so you’ve got to have real equity in a deal. The rents have to be there in order to justify it and investors come in and they see new construction and they feel good about where things are going. In previous cycles, we’ve gotten ahead of ourselves with new development, but that was driven by different sets of circumstances, and we don’t see that this time around. FLEISHER: On the retail side, there’s a strong belief that there’s undersupply. In pockets like Far North Dallas and in Plano and Frisco, where a lot of the job growth is going on, there’s certainly an undersupply. VANDERSTRAATEN: We have a retail investment in Frisco that has done phenomenally well. We’ve seen a 180-degree change in just the last two years. CARR: Which property is that, Bill? VANDERSTRAATEN: Frisco Market Center. It was very quiet two years ago, and there’s not enough time in the day to get everybody in there right now. MORSBACH: You could make an argument that we don’t need more retail, if you just look the global statistics. But retail has a place-making element to it. Look at the success of Legacy and Legacy West: you see anywhere that has retail becomes
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R ROUNDTABLE a destination. You can’t build it fast enough; the demand is quite extraordinary. In the right market, retail demand is strong. And it’s very difficult to capitalize. It’s as hard as anything to get a project off the ground in that particular product type, because you need pre-leasing and you need all the alignment of all these things to happen.
What about the industrial sector?
MORSBACH: On the big-box side, again, that’s such a tough market to comp because the numbers can grow and shrink so fast. There’s speed of development, but they can also be absorbed extraordinarily quickly. We’re the No. 2 or No. 3 industrial market in the country, for a lot of reasons that aren’t going to change. We’ve got some of the best developers in the world here. If everyone is one box ahead of the market, and they’re 800,000 to 1 million square feet each, you can look at the numbers, but a quarter later, it could be full. Statistically, it’s the only market that looks a little out of line in terms of new deliveries relative to current absorption, but that absorption number is so variable, it’s just so hard to predict. It’s healthy; no one is concerned. If there’s anything that can get done quickly, from a capital perspective, it’s spec industrial.
Let’s talk a little bit about pricing. What are you seeing out there, and what’s driving pricing trends?
FLEISHER: Cap rates are low and we’re seeing it across all property types. The investors are seeking yield, so that’s driving low cap rates. We have low interest rates right now, so those are the big drivers. There are a lot of ways to look at the pricing. In every asset class, I would guess we could all point to something in this market that we set a record on, price per foot on the office side, price per on the multifamily side, et cetera. But if you look at it relative to the riskfree rate, cap rates are just in a premium over where you could otherwise place your money, to the treasury market. So if you look at the spread—cap rate spread over treasuries—we’re still at or greater than historical averages. We probably reached the limits of where pricing can go from a cap rate perspective; if you’re an institutional investor or if you’re an insurance company or a pension fund, you just have certain actual returns that you have to deliver. And I would submit that we’ve probably reached that, and it’s sort of around a 5.5 or 6 IRR. In
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a market like Dallas, price increases are going to be due to net operating income growth. So the cap rate compression play that the capital markets play in the world, we believe is largely played out, and it’s all about fundamentals. CARR: I tend to agree that pricing is getting to a point where if we’re not at the low in terms of caps, we’re getting close. There’s been so much appreciation since the last correction that there’s been a lot of value creation, so there are a lot of profit-takers looking to monetize. That’s why there’s a lot of product on the market across the country right now. It will be interesting to see as we start moving up closer to new replacement thresholds if pricing clears as easily as it has over the last couple of years. When we first came out, it was pretty easy to make a bet, because you were buying so far below new replacement, but as we start to push up, investors are going to be a little more cautious. O’BOYLE: Another thing that’s driven pricing has been the cost of construction. I know in the multifamily sector, if you compare today’s costs with where they were two years ago, you may be up 20 percent. VANDERSTRAATEN: There’s probably $100 swing even in the last 18 months per foot on an office building, relative to where we were. Quite a bit of that is land, which has run up. To start a building from scratch today would put you, with structured parking, well over $400 a foot in an urban location.
How are buyer and seller expectations matching up?
MORSBACH: There are a lot of people meeting in the middle on a trade. I think we’re still hitting pricing expectations, since we haven’t seen any price degradation across asset class; but the depth of the bid pools has been shrinking. That’s not just a pricing metric. That also is sort of a human resources issue. There are more transactions, people have less time to look at them, so you have, by definition, fewer people at the finish line. It’s always an art keeping that together. VANDERSTRAATEN: Well, there are a lot of transactions in every product type. So they’re clearing the market. People are finding investments that they think make sense, even in the long-term. O’BOYLE: One property we sold in Plano had 65 property tours. There’s so much money chasing value-add deals because it’s like, “Well, here’s what I think I can do, and I can raise it to this level.” VANDERSTRAATEN: They say it’s easy to find yield, but it’s hard to find margin. So when you see a deal that has margin, then you’ve got a lot of people … MORSBACH: “Margin” defined? VANDERSTRAATEN: … higher profitability. MORSBACH: Potential? VANDERSTRAATEN: Potential.
So what is the biggest roadblock to getting deals done?
VANDERSTRAATEN: There’s quite a bit of capital searching for a home, and that’s who we tend to compete with on the buy side. It’s getting more difficult. MORSBACH: Despite the velocity and the amount of capital and real estate really being an attractive asset class, deals are still really hard to get done. Because when people are pricing at what they perceive to be at the margin, underwriting gets refined to a level where there’s a lot of angst and there’s a lot of homework and there’s a lot of diligence and there’s a lot of tours and you’ve got to prepare for an investment committee. People are asking a lot of really tough questions. Dallas has held up to those questions heretofore, but they’re not easy. And this is certainly not the Wild West. These are highly disciplined, mostly institutional investors that are making some significant bets. Every trade has roadblocks; it’s just a tricky market. FLEISHER: These aren’t really roadblocks, but there are things we’re looking at or concerned about. On the construction side, HVCRE, which is high volatility commercial real estate, how the banks are going to understand that regulation and how that’s going to impact their ability to make construction financing, requirement of certain amount of equity, and how that equity has to be counted. We’re seeing that there has to be some absorption of that change and how that impacts the construction. Also, in the CMBS market, with the requirement for the issuer of the securitization to make representations for all the contributors to the class of that securitization, there’s some concern about how that’s going to impact the CMBS market, which is a large component of refinances or acquisitions—will it affect pricing, and will that crowd out some of the smaller investors?
Let’s talk about redevelopment projects in the core. What is the status of the downtown Dallas market, and what is the outlook?
CARR: I’m very bullish on what’s going on in the Dallas central business district. There are a lot of new stakeholders that are investing millions of dollars. There are 10,000 people living downtown; it’s transitioning into a 24/7 environment, with neighborhoods like Main Street and the Arts District, there has recently been a lot of investment made in the West End—and these are smart people who are looking at transitioning into a creative space environment—and then you’ve got Victory. If the economy stays on the same trajectory, you’re going to continue to see capital invested. MORSBACH: When you have a base of well-capitalized stakeholders, that’s an important distinction. Because a lot of these buildings—downtown in particular—were the definition of “zombie owner:” they couldn’t reinvest in their assets, so the buildings were languishing, and, therefore, the tenants weren’t
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R ROUNDTABLE happy. It’s a natural degradation. The inverse of that is happening now. You have really well-capitalized owners that have business plans to put more capital back into the market and regentrify some of these buildings. When I say “well-capitalized,” I mean there are three billionaires who have invested in downtown Dallas in the last six to 12 months, and they’re continuing to invest. VANDERSTRAATEN: New buyers are local decision-makers. That bodes well for us, because they’re trying to help the city move up a level. It’s much healthier to have that decision-making local at this point in the market. O’BOYLE: The way that it’s spread around the core of downtown, as you go into East Dallas, or the Cedars, or what’s going on in the area around Knox and McKinney … you’ve got so many of these submarkets in Dallas, surrounded by the core—it’s lifting up the entire city. FLEISHER: Just look at the rent disparity between Uptown and downtown: we’re talking about $20 in just two blocks. To me, just a two-block disparity in price and rent gives
developers that opportunity to try and create something.
Let’s get everyone’s predictions for capital markets activity next year and maybe two or three years out.
CARR: We’re very optimistic about the next three to four years. If you take a look at the drivers—the population growth and the job growth, for the foreseeable future, things are going to be very good for this region of the country. FLEISHER: In 2006 and 2007, there was a tremendous amount of loans—commercial real estate loans that were put on a lot of investment sales. Those deals are now cycling, so we’re seeing a demand to refinance or sell or recapitalize the 2006 and 2007 vintage. That leads to activity in 2016 and 2017. In my mind, 2018 is a question of whether that will be a slower year because activity breeds activity, and
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R ROUNDTABLE without the need for a capital market transaction, there could be a slowdown. O’BOYLE: The next three to five years in the multifamily market is going to continue to be bright. We hit a 14-year high on occupancies, at 94 to 95 percent occupancy, and we’ve had the best same-store rent growth that we’ve had in 20 years. MORSBACH: I would like to find a reason to disagree. I really would. People want to understand the potential headwinds, things that could be issues. And Fleisher referenced a great data point, which we talk about all the time. Again, we’re transactional people, so our focus is on transactional flow. There’s almost $1.5 trillion of mortgages that mature from 2015 through 2018, so those are forced transactions that will have to happen. One way or the other, whether it’s a workout or refinance, something has to happen, because there’s a maturity event. But maybe more interesting from our perspective is what’s happening on the equity side of the balance sheet. There has been more capital invested in real estate than ever before, and it continues to be the most sought-after asset class. VANDERSTRAATEN: I would agree the short-term feels like it’s pretty baked in. 2016 feels very positive. Two things we track on the short-term risk factor would be if the interest rate is going up, it causes the stock market to have an overreaction, and sometimes you get institutions that become overweighted in real estate. That’s about the only thing I can think of that would restrict capital coming into the market. I don’t think that that’s very likely, but that’s something we would track. On a longer-term basis, what we always try to pay attention to is how much debt is in the typical capital stack. I think what we got in trouble with in 2007 was not really valuation, but it was that we had CMBS and things pushing debt up into the 90 percent range. You’re starting to see mezzanine funds kind of creeping up again. It’s not
New Series: Industry Insights
DESPITE THE VELOCITY AND THE AMOUNT OF CAPITAL AND REAL ESTATE REALLY BEING AN ATTRACTIVE ASSET CLASS, DEALS ARE STILL REALLY HARD TO GET DONE. — TREY MORSBACH, HFF very prevalent yet, but I think that’s one thing that we would just keep an eye on, if you start getting second-note debt pushing up into those same sort of higher debt levels. I don’t think any of those things are very likely, but they’re things that we track. Short-term, I’m very positive on deal activity, in Dallas particularly.
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AN INTERNATIONAL HUB WHY COMPANIES FROM AROUND THE WORLD ARE CHOOSING TO BASE THEIR OPERATIONS IN DALLAS
BY K AREN NIELSEN
After years of striving to be known as a global city, Dallas has arrived. Its international airport, renowned Arts District, and other factors have compelled numerous foreign companies to base their North American headquarters here. And they’re not alone. Since 2010, 70 companies—including about 30 from California—have moved their headquarters to the Dallas area, says Mike Rosa, senior vice president of economic development at the Dallas Regional Chamber. One of the most anticipated relocations is Toyota Motor North America, which is building a 1 million-square-foot campus in the Legacy West development in Plano. The Japanese automaker is relocating its U.S. base from Torrance, California, and plans to employ 4,000 in Plano by 2017. John Stich has served as Dallas’ honorary consul-general of Japan for 11 years, and he has noticed a significant uptick in Japanese companies’ interest in North Texas, particularly since Toyota’s announcement in 2014. “Toyota is well respected around the world as a strategic company who thinks before they do things,” he says. “Companies are taking a look and asking why Toyota is going from California to North Texas.” Stich says more than 150 Japanese companies have operations here, including NEC, Fujitsu Network Communications, ORIX USA, Trend Micro Inc., and a newer entrant, Kubota Tractor Corp. In May, California-based Kubota announced it was moving its North American headquarters to a $50 million campus in Grapevine, where it’s expected to employ more than 400 workers. CBRE brokers Steve Berger and Ann Huntington represented Kubota in their quest for space, which includes a 125,000-square-foot office building and a 68,000-square-foot research and development facility. “They were focused on keeping their leadership and professional staff close to the major markets they serve, and close to their manufacturing and distribution facilities in Georgia and Kansas,” says Berger, first vice president at CBRE. “They wanted to be more centrally located to respond quickly to industry and changing markets, and Dallas-Fort Worth placed them in a better place to do that.” Narrowing down the right North Texas city took about a year, and Berger and Huntington credit the Dallas Regional Chamber, which hosted meetings where
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“COMPANIES ARE TAKING A LOOK AND ASKING WHY TOYOTA IS GOING FROM CALIFORNIA TO NORTH TEXAS.”
— JOHN STICH, Dallas’ honorary consul-general of Japan
Kubota could become more familiar with various communities. “The fact that we have a chamber that provides a level playing field where all the communities in the area can participate was very helpful,” Berger says. “The combined effort makes the area look coordinated and was very effective.”
NATIONAL AIRPORT A PRIORITY Ultimately, proximity to Dallas Fort Worth International Airport and access to a skilled labor force were key factors in Kubota’s site selection, says Huntington, senior vice president at CBRE. Stich notes the airport’s 18 nonstop flights a week between DFW and Tokyo Narita
International Airport are a huge draw for Japanese companies. In September, the two airports announced a partnership to foster close relations and share best practices, allowing for opportunities to “promote increased trade and tourism” between the Dallas region and Japan. As CEO of DFW Airport, Sean Donohue is focused on making the airport one of the best in the world, another compelling lure for global companies looking to make their North American home here. Over the last four years, DFW Airport has been one of the fastest-growing airports in the international sector. During that period, it has added 29 new international routes, which include 22 new international cities and 11 new airlines, Donohue says. And there’s more coming. “We expect some more announcements in terms of international service over the next several months,” he says. According to Donohue, long-haul international flights such as Tokyo, Shanghai, Sydney, and Hong Kong generate $150 million to $200 million a year each in economic activity. A great airport was high on John Rauscher’s list when deciding where to locate his artificial intelligence software company, Yseop Inc. The Frenchman considered Chicago, Boston, New York, and the Silicon Valley before meeting with then-Dallas
mayor Tom Leppert on a trade mission trip to Paris. After meeting for dinner, Rauscher was convinced. “My No. 1 priority as the CEO of a global company is direct flights to the most important cities of the world,” he says, noting good weather, a central time zone, the Dallas International School, and a welcoming city ready to assist in the transition were other factors. As executive vice president of French American Chamber of Commerce in Dallas, Rauscher is actively promoting the Dallas region to prospective companies. “Dallas is one of best choices to make when you come from Europe,” he says.
READY FOR NEW BUSINESS Texas is a leading global destination for foreign direct investment, with DallasFort Worth capturing 24 percent of new businesses between 2009 and 2013, according to a Texas Wide Open for Business report. KONE, a global elevator and escalator company based in Finland, is centralizing
CONNECTING THE WORLD PUTS DALLAS-FORT WORTH IN THE SPOTLIGHT The Connecting the World initiative, which involves Dallas/Fort Worth International Airport, local chambers of commerce, and convention and visitors bureaus, is continuing to raise the profile of the North Texas region outside the country. Its goal is to establish DFW as the premier U.S. airport gateway connecting North America with Europe, Asia, and South America, and showcase the benefits of doing business here. In November, a team of representatives traveled on a trade mission to Dubai,
Abu Dhabi, and Doha, Qatar. They brought along local hospital leaders who met with United Arab Emirates health officials to discuss treatment options for citizens who often travel outside the country for major healthcare needs. “Our initiative is to get the DFW brand far more globally recognized so that corporations, tourism, and foreign-direct investments understand the opportunities here from a global perspective,” says Sean Donohue, CEO for DFW Airport.
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DALLAS FORT WORTH INTERNATIONAL AIRPORT
7-ELEVEN (Japan) ACCOR NORTH AMERICA (France) ALON USA ENERGY INC. (Israel) ALCATEL-LUCENT (France) ALCON (Switzerland) AMERICAN EUROCOPTER (Netherlands) BALFOUR BEATTY CONSTRUCTION (U.K.)
PHOTO: DALLAS FORT WORTH INTERNATIONAL AIRPORT
Here’s a look at some of the more recognizable foreign brands with a significant presence in Dallas-Fort Worth.
BLACKBERRY (Canada) ERICSSON INC. (Sweden) ESSILOR OF AMERICA (France) FUJITSU (Japan) HUAWEI TECHNOLOGIES (China) HYUNDAI CAPITAL AMERICA (South Korea) INTERCERAMIC (Mexico) KONE (Finland) KUBOTA TRACTOR CORP. (Japan) LG ELECTRONICS (South Korea) MISSION FOODS (Mexico) NEC (Japan) NESTLÉ USA (Switzerland) ROLEX WATCH USA (Switzerland) SAMSUNG TELECOMMUNICATIONS AMERICA (Korea) SANTANDER (Spain) TOYOTA MOTOR NORTH AMERICA (Japan) TREND MICRO (Japan)
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sourcing, engineering, and testing in Allen with the addition of a light manufacturing facility to its operations in North America. Its new 169,000-square-foot facility, which will occupy about a quarter of the 700,000-square-foot AllenPlace office park, is expected to employ 80 and open in the first half of 2016. “Allen’s centralized location and proximity to both U.S. and Canadian suppliers and customers made it a perfect location,” says Ron Bagwill, vice president of supply operations for KONE Americas. Swedish telecom firm Ericsson employs about 4,000 at its Plano campus, compared to the 1,100 employees when it opened in 2001. It expanded its North American headquarters in 2013, adding 273,360 square feet of office space. Officials have said the business-friendly climate and access to skilled workers were factors in locating to Plano. The Dallas area also is home to a number of the top Mexican companies with U.S. operations, including milk processor Grupo Lala; Gruma, owner of Mission Foods Inc.; and Interceramic, a manufacturer and distributor of ceramic tile and natural stone. Interceramic USA opened its first U.S. base in Carrollton in the early 1980s, and moved to its current location in Garland, which includes corporate offices, a distribution center, and manufacturing facility, in 1994. The company employs 370 here, and operates 13 company-owned Interceramic Tile and Stone stores in three states. It plans to relocate its Forest Lane store location to 50,000 square feet at Mercer Business Park in North Dallas in the second quarter of 2016. “People from all over the world look at Texas as a healthy economy and they look at Dallas as an ideal, centrally located destination where you can gain a foothold and entry into this market with international connections, access, and easy entry growth potential, which is much higher than other possibly competing areas,” says
MANCHESTER AMSTERDAM BRUSSELS SHANGHAI HONG KONG
MOSCOW FRANKFURT LUXEMBOURG BAKU
DFW’S INTERNATIONAL CARGO NETWORK SERVES 17 MAJOR CARGO HUBS AROUND THE WORLD.
Humberto Maese, the company’s president of U.S. operations. A central location is key for access to major markets across the country, and for proximity to its operations in Chihuahua, Mexico. But access to quality suppliers and professional service providers in the legal, banking, and insurance industries is also a big plus that Maese regularly shares with executives considering locating in the Dallas region. “Anything an international company would require to operate, you can find it here,” he says. The number of relocations is expected to rise as the Dallas Regional Chamber steps up its recruitment efforts in 2016. Companies in locations where DFW Airport offers direct international flights will be one focal point since North Texas has much to offer in a business-friendly environment. “There are companies around the world looking at ways to do better with greater efficiencies,” Rosa says. “The critical mass and size that we have, combined with the business-friendly and cost-friendly environment, makes our message very powerful.”
EB-5 PROGRAM DRAWS FOREIGN INVESTMENT A unique foreign investment tool called the EB-5 program has drawn $311 million to 16 commercial projects in Dallas over the last six years. The program was created by Congress in 1990 to stimulate the economy and job creation via capital investment by foreign investors. In Dallas, the EB-5 program is administered through the City of Dallas Regional Center, a publicprivate partnership between Civitas Capital Group and the City of Dallas. Civitas manages the CDRC and ensures each investment meets job creation requirements while preserving invested capital. “We believe that we are filling a gap in the marketplace where private capital has not been willing or able to go,” says Drexell Owusu, a managing
director at Civitas, noting that it saves tax payers money that might be used in a tax increment financing district. Foreign investors must invest at least $500,000 in the project, which is required to create 10 jobs (per investment) within two years. In return, they receive permanent residency for the entire family. More than half of the investors are from China, but the rest hail from 30 countries. Many are choosing to live in Dallas, bringing their families, wealth, and businesses to the area, Owusu says. Developer Craig Hall’s KPMG Plaza is one of CDRC’s most recent projects, drawing 130 investors and $65 million to the project in the Dallas Arts District. “We’re truly proud of what we’ve been able to get done,” Owusu says. “And we’re excited to continue to bring more capital to Dallas.”
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what’s next for the
DUNHILL PARTNERS’ BILL HUTCHINSON IS BRINGING IN NEW HOTELS, OFFICE SPACE, RESIDENCES, AND AMENITIES— ALL BUILT AROUND THE DISTRICT’S “HEART AND SOUL.”
BY HIL ARY L AU
Dallas-based Dunhill Partners isn’t known as a development company. But for nearly eight years, Dunhill President and Founder Bill Hutchinson had kept his eye on then-owner and friend Mike Ablon, whose PegasusAblon had spent years repositioning and reorganizing the area. Hutchinson realized the district’s potential, and threw his hat in the ring to buy it. When it acquired the Dallas Design District in November 2014, it wasn’t taking another one of its signature, commercial shopping center-style investments.
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PHOTO: MICHAEL SAMPLES
“I had watched what Mike had done with interest and amusement,” Hutchinson says. “I knew that the potential was there to create much more significant value and continue to develop the area into what could be, in my opinion, the hottest district of the city. I look at it a little bit differently than everyone else. I look at it as, the Design Center needs to stay a Design Center that focuses on the showrooms, the designers. They are the heart and soul of the district. All we’re going to do is compliment them with residential and retail and restaurants, and build around them.” This tenet, shared by Hutchinson and Ablon—and Trammell Crow before them— has long been crucial to the Design District’s integrity as its own piece of Dallas. Ablon says that although the area has been through several distinct iterations of ownership and personality over the course of its history, its industrial and manufacturing roots have
THE DESIGN DISTRICT’S NEWEST PIECE OF PUBLIC ART, “THE HEART OF THE DESIGN DISTRICT” BY ANDREW MYERS
A ANATOMY OF A DEAL held steady. “There was this whole notion about taking it from a warehouse/industrial district to a showroom/gallery/light-manufacturing center to this multifaceted piece of city fabric that could have a living experience and a dining experience,” he says. “It kept the ethos of what it already had and held it for the future, as opposed to scrapping everything and putting in more of the same.” One of the earliest additions to PegasusAblon’s Design District was Meddlesome Moth, famed restaurateur Shannon Wynne’s modern gastropub concept at the corner of Oak Lawn Avenue and Hi Line Drive, which opened its doors in 2010. Setting up shop in an old tile and flooring showroom, Wynne was the perfect tenant to serve as a steward of the district’s existing personality. “We kept the tile on the floor and on the walls to support the notion that those spaces had been designed as — BILL HUTCHINSON a showroom of tile,” Ablon PRESIDENT AND FOUNDER, DUNHILL says of Meddlesome Moth and neighboring Ascension Coffee, which Australian native Russell Hayward opened in 2012. “When you’re there, you’re unmistakably in the Design District. You walk in off the street and the environment on the inside carries on what the whole area’s about, and that’s the feel that’s so different, because you wouldn’t have an Ascension like that in Plano.” Hutchinson’s plans are bigger and bolder. First up is the world’s fourth Virgin Hotel from Sir Richard Branson’s British Virgin Group hospitality subsidiary. It follows other Virgin hotels in Chicago, New York, and Nashville. Dunhill Partners also is working to secure tenants for the Design District Tower, a 240,000-square-foot office building at Edison Street and Stemmons Freeway. Also in the works is a Joie de Vivre boutique hotel, between Richard Ellman and John Tesar’s Oak and the Kim Dawson Talent Agency. It will be topped by more than 250 apartments from Ilume. Dunhill’s plans don’t stop there. It recently inked a lease with Richard Ellman and Joe Palladino to build Quill, which will open next to Oak. “There’s nothing like that right now in the Design District,” Hutchinson says of the high-end lounge. “With that in place for people to come hang out, mix, and mingle, soon they
“ the design
PHOTO: MICHAEL SAMPLES
center needs to stay a design center that focuses on the showrooms, the designers. they are the heart and soul of the district. ”
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“ when you’re
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there, you’re unmistakably in the design district. you walk in off the street and the environment on the inside carries on what the whole area’s about. ”
PHOTO: ELIZABETH LAVIN
won’t have to leave the area when they want to stay out later.” Dunhill also signed two new concepts from Tim Headington restaurant group, Raised Palate, which will occupy 10,000 square feet in the Decorative Center at Oak Lawn and Hi Line. (Headington is an investor with Hutchinson in the Design District.) “They’re still figuring out what concepts they want to put in, but we have a fully executed lease, and they’re going to make it unbelievable,” says Andy Crosland, executive vice president and director of leasing and acquisitions at Dunhill Partners. “They’re put— MIKE ABLON, ting a lot of money into the space. ON MEDDLESOME MOTH AND There’s going to be two concepts ASCENSION COFFEE side-by-side with a breezeway cutting in between that backs up to Oak Lawn where they can do some seasonal vendors—whether it’s selling popsicles or hot chocolate or coffee—to create more of a pedestrian-friendly environment for some of these showroom tenants that are open to the public.” Dunhill Partners is also implementing public art initiatives in the district, which honor the heart and soul of its showroom and designer tenants. It recently unveiled a new Andrew Myers statue on Hi Line called “The Heart of the Design District,” which features a 20-foot-tall, hammer-wielding craftsman with an exposed, LED-lit heart
design district timeline 1908: The Trinity River floods after days of steady torrential rainfall, leaving 4,000 people homeless and causing $2.5 million in property damages.
to replace a wooden structure washed away by the flood. It opens to 58,000 spectators as the longest concrete structure in the world.
1911: Leading urban planner George Kessler proposes an initial plan for the city and the Trinity River, which includes diverting its flow.
1919: The revised Kessler Plan is reviewed and found to be feasible. The Dallas County Levee Improvement District No. 5 is subsequently created, consisting of a 4,500-acre footprint adjacent to and upstream of the confluence of the West Fork and Elm Fork of the Trinity River.
1912: Dallas Morning News publisher G.B. Dealey proposes a 1.5-mile concrete bridge be built between Jefferson Boulevard in Oak Cliff and Cadiz in Dallas
1926: The Dallas County
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Commissioners Court dissolves the Dallas County Levee Improvement District No. 10 and creates the City and County of Dallas Levee Improvement District (or Levee District), which is jointly owned by real estate and fire insurance salesman Leslie Stemmons and the Trinity Farm Securities Co. A Joint Plan of Reclamation covers 10,553 acres—including 3,336 acres from District No. 5—to be reclaimed along the riverfront. 1927: The City of Dallas approves a detailed expansion of the
Kessler Plan that will protect 10,500 acres from flooding via 13 miles of levees on each side of the river. Financing is secured through a $23.9 million bond issue, which prevails in a December vote. 1928: Leslie Stemmons is appointed to head the Levee District Board of Supervisors and manage construction efforts. The project breaks ground in June, with G.B. Dealey speaking at the groundbreaking ceremony. The $14 million endeavor protects 20 districts
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DALLAS IS BIG... BUILDINGS, BUSINESS, ARTS, CULTURE, STEAKS, SPORTS, FUN, IMAGINATION & MORE!
City of Dallas Office of Economic Development Dallas-EcoDev.org \ 1500 Marilla Street, Room 5CS \ Dallas, Texas 75201 \ 214.670.1685 Photography: Iwan Baan, Winspear Opera House; Brian Birzer Photography, The Traveling Man
Concept and Design: Dennard, Lacey & Associates
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1400 HI LINE
“ i felt like we
weren’t just doing another commercial real estate deal, but we were actually becoming a part of a community. ”
— BILL HUTCHINSON
PRESIDENT AND FOUNDER, DUNHILL
that beats as if it were alive. Crosland says that Dunhill will continue with these efforts, as well as with programming like farmers markets and seasonal and holiday events. “We want to be able to try and paint some of the buildings, and do murals on the sides of buildings to really improve the landscape and the lighting so it’s safe, and you can walk around and shop and eat,” he says. “We want to keep the integrity of what it is, and the way and the style that
design district timeline from flooding, and reclaims 7,317 acres of land on the west and 3,333 acres on the east. The levees are built to contain a flood about 2.5 times the magnitude of the one that happened in 1908. Stemmons also helps organize the Industrial Properties Corp. to pull together real estate interests in a 1,500-acre tract adjacent to the river. 1932: After a series of construction hiccups and bureaucratic lags related to the Great Depression, the Levee District’s Board of Supervisors
resign, stating that its work was as complete as it could possibly be “until such a time as the city of Dallas completes its part of the drainage program as voted by the citizenship.” 1939: Leslie Stemmons dies, leaving his holdings near the Trinity to his son, John. 1930 TO 1950: Dallas’ population grows from 260,475 to 432,805, while its land mass triples from 45 to 120 square miles. Investors flock to the city after World War II.
1942: The Trinity River floods again in April. The levees hold, but John Stemmons realizes that they are again in poor shape—and getting worse. 1945: Stemmons succeeds with the state legislature in creating the Dallas County Flood Control District, thus repowering the financial status of the Levee District and securing congressional support to fix the whole levee system. A “sunset provision” allows the Dallas County Flood Control District to operate for 23 years until its
expiration in 1968. Stemmons is named president of Industrial Properties Corp. 1948: Trammell Crow, a Dallasborn grain salesman, builds his first warehouse, breaking into the real estate industry by developing commercial space on parcels he acquired from Stemmons in what would be the early stages of a decades-long partnership between the two business leaders. Crow also revolutionizes warehouse design by making them single-story, with offices in the front.
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A ANATOMY OF A DEAL those old buildings are, because architecturally, it’s really cool.” Although it now holds the biggest piece of the pie, Dunhill isn’t the only developer with projects underway in the district. Trammell Crow Residential broke ground on the 309-unit Alexan Riveredge apartments in March 2015. It’s planning to have put the first units online in October 2016 and complete construction in June 2017. Additionally, Wood Partners announced plans to construct a 400-unit apartment building called Alta Strand that will open in 2017. They’ll join the Trinity Loft residential project developed by Jim Lake Cos., which has owned property in the Design District property for more than 40 years. With more residents moving in and more projects coming online, the still-unwritten fourth chapter in the Design District’s history is bound to be a lively one. “When we bought the Design District, I felt like we weren’t just doing another commercial real estate deal, but we were actually becoming a part of a community,” Hutchinson says. “Now we’re responsible for over 100 tenants—700,000 square feet of showrooms and galleries. These people have become friends of ours, they have become businesses we want to help grow and do better.”
PHOTO COURTESY DUNHILL PARTNERS
SCOTT + COONER
design district timeline 1952: The Fort Worth District of the U.S. Army Corps of Engineers creates detailed plans for components of the Dallas Floodway reconstruction project. John Stemmons donates more than 100 acres to the Texas Highway Department for the construction of Interstate 35, which would later be renamed the Stemmons Freeway, in his family’s honor. 1953: Dallas Floodway construction begins, and is completed in 1960 at a cost of $8.3 million, reducing the
floodway by roughly 30 feet in width. 1955: Trammell Crow’s 71,000-square-foot Dallas Decorative Center opens as the first design center in the nation. It’s joined two years later by the Homefurnishings Mart to form the Dallas Market Center. 1958: The Decorative Center doubles in size to 150,000 square feet, and the Homefurnishings Mart grows to 400,000 square feet. A new 470,000-square-foot opens. Two years later, the world’s
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largest privately owned exhibition hall, Market Hall, opens. It’s joined in 1964 by the 800,000-squarefoot Apparel Mart.
amicably dissolve their partnership, with Crow retaining building equity and IPC retaining land ownership.
1968: The “sunset provisions” of the Dallas County Flood Control District’s operation responsibilities expire, and the cities of Dallas and Irving commit to responsibility for operations and maintenance held by the Dallas County Flood Control District.
1974: The Dallas World Trade Center opens. Dallas Fort Worth International Airport also opens this year, further solidifying North Texas as an international trade hub.
1972: Trammell Crow and Industrial Properties Corp.
LATE 1990S: As 50-yearold industrial buildings and warehouses begin to deteriorate, tenants begin leaving the Design District.
DESIGN DISTRICT TOWER
2004: Crow Holdings, led by Harlan Crow, acquires Industrial Properties Corp., and a partnership that first began in the 1950s in the Trinity Industrial District comes full circle. 2005: The Design District TIF District is established to transform 180 acres along the Trinity River (the old Stemmons Industrial area) into a mixed-use neighborhood. Plans include connecting the district to the DART Northwest Corridor light rail line. Crow Holdings sells its stake in the Dallas Market
Center complex to CNL Income Properties. 2006: The City of Dallas approves $4.4 million TIF funds for Crow Holdings to develop a 214unit multifamily property with Atlanta-based Wood Partners. 2007: Houston-based Lionstone Group purchases a Design District portfolio of nearly 40 buildings and 700,000 square feet of showroom space on 30 acres from Crow Holdings. It partners with PegasusAblon to begin redeveloping the area around Oak
Lawn Avenue and Hi Line Drive. 2008: An Oak Lawn Avenue exit is added to the Dallas North Tollway, providing easy access to the Design District. 2009: Dallasâ€™ TIF Board adopts a Design District TIF Strategic Implementation Plan to guide future phases of development in the district.
A ANATOMY OF A DEAL
neighborhood. Over that time, Ablon and partners increased the districtâ€™s value by nearly $500 million, adding more than 1,300 multifamily units and revitalizing 500,000 square feet of commercial space with new restaurant, retail, and design tenants.
2014: PegasusAblon and Lionstone sell the Dallas Design District to Dunhill Partners after nearly eight years of managing and developing the
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lay of the land
R H I L IN E D
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TB LV D
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E O A K LA W N AV
R R IV ER ED G E D
K B LV D TU RT L E C R E E
E XP RE S S S T
T G S
NR IV E
T E LE VE E S
R A T IO N D R
T SLOCUM S
E D IS O N S T
LL S T
E D IS O N S T
AV E O A K LA W N
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“ we want to keep the integrity of what it is, and the way and the style that those old buildings are, because architecturally, it’s really cool. ” — ANDY CROSLAND.
EXECUTIVE VICE PRESIDENT, DUNHILL PARTNERS
LOCATIONS MENTIONED IN THIS FEAUTURE 1 “Heart of the Design District” sculpture 2 1400 Hi Line
IN S P
3 Meddlesome Moth/ Ascension 4 Decorative Center 5 Joie de Vivre boutique hotel, topped by 230 apartments from Ilume 6 Quill (planned) 7 Alta Strand (planned) 8 Trinity Lofts N.
10 Alta Design District M
9 Virgin Hotel (planned)
ST NE PA Y
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RETAIL AND SERVICES
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PATHWAY TO SUSTAINABILITY IN NORTH TEXAS, PRIVATE AND PUBLIC ENTITIES ARE DISCOVERING INNOVATIVE WAYS TO IMPROVE THE EFFICIENCY OF BUILDINGS— SAVING BOTH RESOURCES AND MONEY IN THE PROCESS. BY JEFF BOUNDS
Water is vital to AT&T. “The network that forms the core of our business requires a controlled and cooled environment,” explains Shannon Carroll, director of sustainability operations, and citizenship at the Dallas telecom services provider. “Water is oftentimes a critical input to the cooling equipment we use to create those conditions.” For the past three years, the company has been working to cut its own water use, and has saved some 236 million gallons since the beginning of 2013. Now, AT&T is taking the next step by helping its customers and other businesses conserve water as well. In 2012, AT&T teamed with the Environmental Defense Fund to build a framework to identify potential savings for water, energy, and other expenses in buildings—and to thus help build stronger business cases for investing in water efficiency in those structures. The result was a Water Management Application, or WaterMAPP, a toolkit for managing water and finding opportunities for conserving it. “If adopted by all companies nationwide, the toolkit could help save an estimated 28 billion gallons of water annually,” Carroll says. “That’s as much water
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as more than 750,000 Americans use at home in a year.” AT&T is not the only North Texas business concerned with conserving natural resources in the buildings they occupy. Companies are increasingly putting sustainability high on the list of attributes they consider in their commercial real estate decisions in this region. “For the smart businesses, the focus is less on the resource-saving technologies, and more on the results,” says Betsy del Monte, North Texas-based principal at Transform Global, an England-based concern that is creating an investment fund to address economic, social, and environmental issues worldwide. “Knowing there are more efficient options,” del Monte says, “businesses are realizing it is foolish to pay more for electricity.” For developers, landlords, and tenants alike, conserving natural resources in commercial real estate starts long before dirt goes flying on construction. “The idea of outfitting the building with technologies is the idea of applying technological solutions, rather than starting
the design with efficiency in mind,” del Monte says. Thus, for instance, a structure facing east-west can be made more efficient on the same site, simply by turning it to face north-south, she says. Adding an extra layer of insulation and painting the roof white will be a far more effective strategy for most commercial buildings than buying solar panels, she adds. “Window placement and size can have a huge impact on heat loads in our climate,” she says. “Decisions like this are easy at the start, and impossible to make later.”
DOING IT RIGHT
A number of North Texas commercial properties have made smart use of sustainability advancements, including: SOUTHERN METHODIST UNIVERSITY Since 2007, all new buildings for the Dallas school have been LEED certified.
LAYING THE FOUNDATION
ONE VICTORY PARK (pictured below) The 436,049-square-foot office building was Dallas’ first multitenant office building with a pre-certified LEED Silver designation.
In 2009, Dallas became one of the first large municipalities to adopt comprehensive green building standards for both new residential and commercial construction, according to Meenal Chauk, the city’s manager of sustainable development and construction. “Dallas now stands out as one of the few large cities that is enforcing a green building code,” she says. The first phase of Dallas’ green construction ordinance focused mainly on energy efficiency, water conservation, and the reduction of the “heat island” effect through cool roofs, Chauk notes. The term “heat island” means built-up areas that are hotter than nearby rural areas, according to the Environmental Protection Agency. In the evening, this difference can be as high as 22-degrees Fahrenheit, the federal watchdog notes. Phase two of the green building code began in 2013 and expanded the first phase’s provisions. Among other things, the second phase incorporated green building technologies and practices that had advanced rapidly in the interim. Dallas is “enforcing strong methods to achieve its goal of being carbon neutral by 2030 and, eventually, the ‘greenest city in the U.S.,’” Chauk says.
RFAB Texas Instruments’ 1 million-square-foot facility in Richardson includes the world’s first chip manufacturing plant to receive Gold LEED certification. TI invested less than $1.5 million into sustainability and LEED-related items, but at full build-out, should reap savings of more than $4 million a year. Sources: Betsey del Monte, Transform Global; Cushman & Wakefield, Texas Instruments
One easy way for tenants to check the sustainability of a building is to see if the structure is certified in Leadership in Energy & Environmental Design. A program from the U.S. Green Building Council, LEED recognizes buildings for everything from saving money and resources to having a positive impact on the health of the people who populate them. Structures can receive one of four levels of certification, depending on how they measure up on a ratings scale. “Most class-A office buildings are now built to LEED Silver or better standards,” del Monte says. The resource-conservation advances of the last 10 years include lighting fixtures that use long-lasting, lowheat light emitting diodes; water-saving low flow plumbing systems; and variant refrigerant flow technologies, which allow buildings’ heating and cooling systems to save energy and money by running at lower speeds. “For a 100,000-square-foot office building, landlords have seen an average of a 20-percent reduction in their power and water bills due to technologies like these,” says Brian
PHOTO: VICTORY PARK
TOOLS FOR TENANTS, LANDLORDS
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TEXAS INSTRUMENTS’ RFAB FACILITY PHOTO: MICHAEL SAMPLES
SMU’S ANITA AND TRUMAN ARNOLD DINING COMMONS
Here’s a look at some key sustainability advances for commercial properties that experts expect to see in the next three to five years:
PHOTO: COURTESY SMU
Straley, director of project management at CBRE. Building tenants are getting into the sustainability act with an eye on improving the health of the employees and visitors who inhabit commercial spaces. Companies are adding stairwells in central locations, to encourage employees to skip the elevators, and some are implementing “hoteling” arrangements, creating open-work areas where people are allowed to sit anywhere. Walkability is a big trend, Straley says: “Amenities within commercial spaces have become a priority, allowing employees to stay close to their workplace and become more productive.”
WALKING THE WALK
Commercial development has reached a new norm in sustainability, according to Robert Folzenlogen, vice president of development at Hillwood Properties. “A decade ago, LEED buildings could cost between 10 percent and 20 percent more in order to meet those requirements,” he says. “Today, building system efficiencies and building code requirements have caught up, and we are largely building to LEED standards whether or not we get certified.” Hillwood is going the extra mile in developing a three-story campus in Dallas’ Turtle Creek area to serve as a headquarters for the Perot family’s varied business interests. The operation will have everything from a 100,000-gallon cistern to store runoff water for irrigation, to oversize stairs to encourage stair use. Hillwood is also rebuilding the adjacent Turtle Creek trail system, along with cleaning vines and underbrush from the Katy Trail berm. “Although we are tracking our LEED status, we are not approaching the project with a set target of LEED points in mind,” Folzenlogen says. “We are making decisions based on environmental responsibility, employee health, and long-term ownership and occupancy.”
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> LOW-VOLTAGE WIRING FOR LED LIGHTING FIXTURES. By allowing controls to be part of the building communication system, this advancement allows lighting to be matched with the air conditioning system. Thus, light and conditioned air can be delivered to parts of a building, depending on how much sun is in that area. > WINDOW-SCREENING DEVICES. These can be tied to wiring systems (as above) to help in controlling lighting levels and temperature. > VRF HVAC SYSTEMS. These allow room-by-room control of temperature, and give employees empowerment to control the condition of their workplaces. > DISTRIBUTED ENERGY GENERATION. By producing their own energy, either on-site or through a microgrid serving a campus or neighborhood, these networks would provide more power options in times of stressful events. Sources: Brian Straley, CBRE; Betsy del Monte, Transform Global
Diane Butler, Chairman
Greg Kraus, Vice Chairman
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.
Locke Lord LLP
Balfour Beatty Construction
Munsch Hardt Kopf & Harr PC
Wells Fargo Bank
Lowery Property Advisors
Bank of America Merrill Lynch & Bank of America Merrill Lynch/ Charitable Foundation, Inc.
Mill Creek Residential Trust LLC
Bank of Texas
Republic Title of Texas, Inc. The Howard Hughes Corporation
NexBank Peloton Commercial Real Estate
American National Bank of Texas
Stonelake Capital Partners
Breitling Royalties Corporation
Strasburger & Price, LLP
Chief Partners LP
Berkadia Commercial Mortgage
Capital One Bank
The Retail Connection
TIER REIT, Inc.
First United Bank
Trammell Crow Company
Fischer & Company
Venture Commercial Real Estate, LLC
Invesco Real Estate
Gaedeke Group LLC
Jackson Walker LLP
Gardere Wynne Sewell LLP
Crow Holdings Capital Partners, LLC
Haynes and Boone, LLP
Hillwood Construction Services
Ernst & Young
Inwood National Bank
Holt Lunsford Commercial
Kane Russell Coleman & Logan PC
Hunt Realty Investments, Inc.
Kimley-Horn and Associates, Inc.
Jones Lang LaSalle (JLL)
Trammell Crow Residential
Lincoln Property Company
BBVA Compass & BBVA Compass Foundation Bury CBRE HFF Hoblitzelle Foundation
CHAIRMAN’S CIRCLE Behringer Butler Burgher Group Chicago Title Company/ Fidelity National Financial (FNF)
WHO WE ARE 1,500 commercial real estate professionals strengthening our industry and community by connecting members, developing leaders, advocating for business, and investing financial and human resources in good works.
PATRON’S CIRCLE* Fauxcades Hilton Anatole Hotel South Side on Lamar Lofts Texas Land Care * 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. Bold-faced companies are represented on the DRC Board of Directors. For more information about the benefits of membership at these levels, call 214-746-6600 .
STRATEGY BKD Chase Texas Instruments Toyota Motor North America
CATALYST Active Network AT&T Baylor Scott & White Health Capital One Bank 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 Caregiver Support Systems 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 Capital Management LP HKS IBM Corporation Invesco Jones Day KPMG LLP Kroger Food Stores Littler Mendelson, P.C. Locke Lord LLP Lockheed Martin Luminant Medical City Dallas Hospital/ Medical City Children’s Hospital Methodist Health System Microsoft Corporation NEC Corporation of America 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 Aetna
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Airbus Helicopters, Inc. Alcatel-Lucent Alix Partners Americas Auto Auction Ameriflex Andrews Distributing Andrews Kurth LLP Army & Air Force Exchange Arthur J Gallagher & Co. Austin Industries AustinCSI 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 Breitling Energy Brierley & Partners Brinker International, Inc. Bury C.C. Young Cantex Continuing Care Capital Institutional Services Cassidy Turley CHRISTUS Health CIGNA Healthcare ClubCorp Inc. Coca-Cola Refreshments Colliers International Commerce Bank Consolidated Communications Cook Children’s Healthcare Corgan Associates, Inc. CP&Y, Inc. Cushman & Wakefield of Texas, Inc. Dallas County Community College District Dallas Cowboys Football Club Dallas Marriott City Center Dallas Stars Hockey Club
Dean Foods Company DFW Excellerator DHD Films E Smith Realty Partners Ebby Halliday, Realtors Edelman Public Relations Worldwide EF Johnson Technologies Emerge Education EN Consulting, Inc. Etihad Airways The Fairmont Dallas Federal Reserve Bank of Dallas Flowserve Corporation Fossil Freeman Frost Bank Furniture Marketing Group Gardere Wynne Sewell LLP Generational Equity Gensler Goldman Sachs Grant Thornton LLP Greatbatch, Inc. Greenberg Traurig, LLP GSSW Real Estate Investments Gulfstream Aerospace Corp. Gupta & Associates HDBD HFF Hill & Wilkinson Hilton Anatole Hilton Worldwide HNTB Corporation Holland & Knight LLP HollyFrontier Corporation Holman Boiler Works, Inc. HOLT CAT 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 MHBT, Inc. Midway Press, LTD Mission Foods Montgomery Coscia Greilich 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 Publicis Hawkeye Regions Bank Responsive Ed Solutions Rosewood Crescent Hotel Rosewood Property Co. Schneider Electric Sidley Austin, L.L.P. SimplexGrinnell Site Selection Group, LLC 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 TDJ Enterprises Texas Woman’s University Thompson & Knight LLP Time Warner Cable TopGolf Town of Addison Trane Commercial Systems TravisWolff, L.L.P. TrustPoint Management
Turner Construction Company UMB Bank N.A. University of Texas at Arlington University of Texas at Dallas Univision UnitedHealthcare URS Corporation Verizon Wireless Village Green Holding, LLC Vinson & Elkins L.L.P. Vorex, Inc. Walgreen’s Company Weber Shandwick Southwest WFAA-TV Whitley Penn, LLP Weil, Gotshal & Manges LLP WFF WNA Worldlink
LEAD AAA Texas, Inc. Ackerman McQueen Acme Brick Company Adolfson & Peterson Construction Adolphus Hotel Advocare International, L.P. Alcuin School Alliance Data Allsteel Wilson Alston & Bird, LLP 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 Boston Consulting Group Brunswick Group, LLP Business Jet Center Callison LLC 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 DeGolyer and MacNaughton EnLink Midstream LLC Essilor of America, Inc. Estrada, Hinojosa & Company, Inc. FC Dallas Gables Residential Trust George W. Bush Foundation Guardian Mortgage Co. Gibson, Dunn & Crutcher LLP 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 Jefferson Tower Events 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. Networking Results, Inc. New York Life Regional Headquarters North Central Surgical Hospital North Texas Endoscopy Centers 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 RISE The Ritz-Carlton, Dallas Rehab Synergies Republic Title of Texas Ruth’s Chris Steak House Russell Reynolds Associates, Inc. Securadyne Systems Sewell Automotive Companies Shepard Agency Stream Realty Southwest International Trucks Sparks Agency Spine Physicians Institute 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 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 VOX Global W Dallas – Victory Hotel Walton Development and Management Weaver Westin Galleria Dallas Woodbine Development Corporation Worldwide Express XO Communications Yates Construction Zale Corporation
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C COMMUNITY THE REAL ESTATE COUNCIL’S 2015 GIVING GALA
On Thursday, November 12, The Real Estate Council hosted its annual western-themed Giving Gala presented by Deloitte. The energetic crowd of 1,200 was treated to a southwestern-themed dinner, a performance by Jana Kramer, and a heart-warming video highlighting The Real Estate Council Foundation’s impact in the community. With the move to Gilley’s Dallas, this year’s event featured entertaining pig races. Sixteen companies cheered their sponsored pigs to the finish line, with Balfour Beatty Construction taking home the championship trophy.
PIG RACES SPONSORED BY JACKSON-SHAW
TREC CHAIR SUE ANSEL, GABLES RESIDENTIAL; TREC PRESIDENT LINDA MCMAHON; TREC VICE-CHAIR DIANE BUTLER, BBG
BRIAN BISCHOFF, CHIEF PARTNERS LP; DIANE BUTLER, BBG, REPRESENTING COMPATRIOT CAPITAL; KATE CAVANAUGH, STEWART TITLE, REPRESENTING MOHR PARTNERS; TOM BAKEWELL, STREETLIGHTS RESIDENTIAL
IAN FAIRCHILD AND ZACH MARTIN WITH MUNSCH HARDT KOPF & HARR PC, JEFF MONTGOMERY WITH REPUBLIC TITLE, AND PHILL GEHEB WITH MUNSCH HARDT KOPF & HARR PC
THE BALFOUR BEATTY CONSTRUCTION TEAM
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BUILDING RELATIONSHIPS THAT SPAN CAREERS Pillar Commercial’s Manny Ybarra built connections that have lasted decades. BY SARAH BENNETT
NICOLE HALLIDAY WITH DELOITTE AND WILLIAM CAMPBELL
JEFF WHEELER AND MICHELE WHEELER WITH JACKSON-SHAW
Eleven years ago when Manny Ybarra founded Pillar Commercial, he was looking to fulfill a lifelong dream—starting his own business in the commercial real estate sector. He believed the previous five years at TPMC Realty had prepared him for this step. “In the course of that experience, it planted the seed to start my own company,” Ybarra says. “I always had the idea that I would own my own company at some point in the future.” Today, Pillar Commercial invests primarily in office buildings by identifying underperforming properties, implementing new leasing strategies, and improving tenant relations. His firm is “vertically integrated,” meaning it handles its own property management, leasing, and asset management. Through his company, it’s obvious that the Dallas native and University of Texas at Dallas graduate is passionate about relationship-building. And that’s exactly what he got out of The Real Estate Council’s Associate Leadership Council in 1999-2000. “The program had only been in existence for about four years. It had been growing in popularity, and I knew if you were a young professional in the real estate business, it was a great way to network and to learn more about the industry and community,” he says. “It was also a great way to build lasting relationships with peers in our industry.” And build he did. Ybarra can recall a lawyer from his leadership class with whom he has done lease negotiations, and another friend from the same class with whom he
“I KNEW IF YOU WERE A YOUNG PROFESSIONAL IN THE REAL ESTATE BUSINESS, IT WAS A GREAT WAY TO NETWORK AND TO LEARN MORE ABOUT THE INDUSTRY AND COMMUNITY.” — MANNY YBARRA, PILLAR COMMERCIAL
works out on a regular basis. “We go to the same church, we know each other’s families—it’s just a relationship that, to me, only deepened because of the ALC experience,” he says. “There’s an element of trust that exists with my ALC peers. It just makes the process easier.”
ASSOCIATE LEADERSHIP COUNCIL
STEWART TITLE’S MELISSA EASTMAN AND KATE CAVANAUGH
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 “LEADERSHIP DALLAS MAKES ONE AWARE OF ALL THE DIFFERENT KEY ELEMENTS THAT MAKE THE CITY.”
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.
— GREG WILKINSON, HILL & WILKINSON
JANUARY.. JANUARY 22 Education To Employment Series: Bridging the Talent Gap - How Texas Higher Education Meets the Challenge. 7:30 a.m., Dallas Regional Chamber. Join
us for the first Education to Employment Series event where Woody Hunt, chairman of the Texas Higher Education Strategic Planning Committee, will look into the state’s new higher education plan to meet evolving workforce demands. [Dallas Regional Chamber]
JANUARY 26 Annual Meeting. 11:30 a.m., Omni Dallas. Join TREC at the Annual Meeting to learn what’s in store for 2016, including new membership levels and the unveiling of the new brand. [The Real Estate Council]
FEBRUARY.. FEBRUARY 3 Annual Meeting: Building the Future Together.
Noon, Hilton Anatole. We will begin executing our new strategic plan to meet the economic development, workforce, and policy needs of our region’s business community. Mark your calendar and learn more about how we will work to ensure that our region is the center of economic prosperity in Texas. [Dallas Regional Chamber]
FEBRUARY 4 Bank of Texas Speaker Series. 7:30 a.m., Hilton
Anatole. Featuring Robert Kaplan, President and CEO of the Federal Reserve Bank of Dallas. Presented by The Dallas Morning News. [The Real Estate Council]
MARCH.. MARCH 2 Industry Insights. 7:30 a.m., Dallas Country Club. TREC and Real Estate Deal Sheet work together to bring you these unparalleled opportunities to gain expert insights, access to networking, and the highest quality educational content. [The Real Estate Council]
MAY.. MAY 12 FightNight. 6:30 p.m., Omni Dallas. The community fundraising 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]
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PLUGGING INTO THE COMMUNITY FOR A BETTER BUSINESS CLIMATE Greg Wilkinson knows civic engagement leads to a better playing field for businesses. BY SARAH BENNETT
Greg Wilkinson first got into construction by working summers in high school and college because he enjoyed the outdoors. A strong math and science student, he decided to pursue a mechanical engineering degree at Southern Methodist University without knowing where it would lead. Today, the Dallas native is the co-chairman of Hill & Wilkinson General Contractors—a role he stepped into in 1985. That’s after a long line of experiences, from subcontracting to estimating. “Our company has a succession plan in place to where the folks that have put in sweat equity are going to end up owning the company,” he says. “It’s all about who are the folks that have paid the price personally to get there.” It’s that same idea of getting back what you put in that led him to the Dallas Regional Chamber’s Leadership Dallas program in 1987. He admits to having a longtime interest in city and county governments, and his experience with Leadership Dallas allowed him to explore those passions for civic engagement and education. “I thought it was something that would benefit me my whole life, both personally and business-wise,” he says. “I went through the Dallas public school system and know how critical Dallas ISD and Fort Worth ISD is to those big cities and the overall benefit of the area.” In addition to Leadership Dallas and the Chamber’s education committee, Wilkinson is involved with the Salesmanship Club, Boy Scouts, and the Park Cities YMCA—which is undergoing a massive rebuild this year. “Leadership Dallas makes one aware of all the different key elements that make the city,” he says. “It’s critical that business people support the Chamber for the best future business climate we can possibly have. Dallas represents that great business climate, and that’s why we’re seeing a lot of companies move from other places.”
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.
Imagine. Empower. Impact.
Celebrating the past, looking to the future. Introducing the new TREC. RECOUNCIL.COM
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
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
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 email@example.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 firstname.lastname@example.org 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 email@example.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 firstname.lastname@example.org thecolonyedc.org
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VIEW FROM THE TOP
BY SARAH BENNETT
JOHN McCAIN NTT Data, based in Tokyo, Japan, is part of NTT Group, one of the world’s largest technology companies with more than $100 billion in revenues. NTT Data pulls in about $14 billion in annual revenue. With more than 25 years of history under its belt, the company has offices across the United States. When it came time to find a home for the North American division, NTT Data chose North Texas. As CEO of the North American division, based in Plano, John McCain oversees roughly 22,000 employees—with about 12,000 of those individuals in India and the rest in the U.S. and Canada. That made DFW’s central location and easy travel two strong appeals.
WHY WAS DALLAS-FORT WORTH THE RIGHT PLACE FOR YOUR DIVISION?
First and foremost is workforce—access to the kind of talent we need to run our business and support our clients is second to none. Second would be that we love the central location within North America to travel to the coasts or the Midwest, but also from an international standpoint. We go around the world on a regular basis, and DFW International Airport allows us to do that about as easily as you can do it. Third, from an employee perspective, the overall quality of life. There’s a great university system, Mayor Harry LaRosiliere here in Plano is pro-business, and it’s a great cost of living for a major metropolitan area.
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CEO, NTT Data
ONCE YOU NARROWED IT DOWN TO DFW, WHY WAS PLANO THE RIGHT SPOT?
Prior to us establishing North Dallas as our North American headquarters, I was running a company called Keane, which is based in Boston. When NTT Data acquired Keane, I put into consideration the opportunity for us to relocate. Part of my plan was to be more centrally located. We love the DFW area for workforce access, so we set up shop here in Plano. We’ve had three offices here in Plano since we’ve been here. Every time we set up an office, we outgrow it in nine months.
WHERE ARE YOUR EMPLOYEES CHOOSING TO LIVE?
A lot of North Dallas—the Plano, Allen, McKinney, Frisco area covers the vast majority, although we have several reverse commuters who live in the Park Cities. This is a great location—very good school systems in all those places. With no traffic and no rain, you’re about 22 minutes to downtown, and it’s about the same to DFW Airport. That’s a really short commute compared to any other major metropolitan area. Being at the crossroads of State Highway 121 and the Dallas North Tollway, if you draw a circle with a radius of about two miles, there’s $7 billion of development going on up here, I think. So we’re in the heart of it.
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 ° email@example.com ° 972.291.5132 ext.5 ° cedarhilledc.com Rolling Hills and Panoramic Vistas
Uptown Village at Cedar Hill
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What's next for the Design District; Dallas-Fort Worth as an international hub; Sustainability; The Crane Report