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FEATURE: CITYMAP ROUNDTABLE: CAPITAL MARKETS CRANE REPORT: THE LATEST DFW PROJECTS
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FOR LEASING INFORMATION KIM BUTLER, DIRECTOR OF LEASING 214.269.9550 | KBUTLER@HALLGROUP.COM
ON THE COVER: Highway 75 and the DART Red Line cut through the center of Richardson, also known as theTelecom Corridor. Photo by Michael Samples
19 THE CRANE REPORT
Welcome Letter . . . . . . . . . . . . . . . . . . . . . . . . . .6 Publisher’s Note . . . . . . . . . . . . . . . . . . . . . . . . .8
FOUNDATIONS DFW Market Statistics, Economic Indicators, and Commercial Real Estate News. . . . . . . . . 10
BUILDING TOMORROW TOGETHER Site Selector Perspective . . . . . . . . . . . . . . 15
THE CRANE REPORT
Who’s Building What, Where . . . . . . . . . 19
SCORECARD DFW’s Top Office, Industrial, and Retail Leases . . . . . . . . . . . . . . . . . . . . . . 27
ROUNDTABLE DFW’s Strengths Keep Investors’ Dollars Flowing In . . . . . . . . . . . . . . . . . . . . . 34
D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3
TOOLBOX Labor Market Spotlight Downtown Dallas / Uptown. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Legacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
E XC L USI V E LY P UB L ISHE D B Y D MAGAZINE PARTNERS
D MAGAZINE PARTNERS BUSINESS GROUP PUBLISHER Josh Schimmels
Planning to the People:
Quincy Curé Preston
How CityMAP Democratized Urban Design . . . . . . . . . . . . . . . . . . . . 54
MANAGING EDITOR Lance Murray
CREATIVE DIRECTOR Michael Samples
CONTRIBUTING WRITERS Jeff Bounds Kerry Curry Dave Moore Heather Noel
DIRECTOR OF SALES Kyle Moss
60 ANATOMY OF A DEAL
Comeback of the Corridor After the telecom implosion of the ‘90s, Richardson adds to its economic toolbox to revive North Central Expressway. . . . . . . . . . . 60
SPECIAL ADVERTISING SECTION Economic Development Directory Profiles of cities around the region . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
BUSINESS DEVELOPMENT MANAGER Stephanie Mojonnet 214.523.0311 Stephanie@dmagazine.com
MEDIA DEVELOPMENT MANAGER Callie Head
INTERNS Julia Batlle
COMMUNITY The Real Estate Council, Impact Investors . . . . . . . . . . . . . . . . 75 Dallas Regional Chamber, Top-Level Members . . . . . . . . . . . . . 76 Photos: Young Guns 2017 Casino Night . . . . . . . . . . . . . . . 78 The Real Estate Council, TREC Leadership . . . . . . . . . . . . . . . 79 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
Sarah Bradbury Julia Falcon
Calendar of Events . . . . . . . . . . . . . . 80 Dallas Regional Chamber, Leadership Dallas . . . . . . . . . . . . . . . 80 Placemakers: Mike Ablon . . . . . . . . . . . . . . . . . . . . . 82 View From the Top: Michael Keown . . . . . . . . . . . . . . . . . . 84
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. ©2017 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.
Welcome to the family. Allen is home to many businesses, and weâ€™re proud of every single one. From our diverse, well-educated population to our business-friendly economic development corporation, we give the companies that call us home the tools they need to succeed. To find out if this is the family for you, visit AllenEDC.com.
The Place to Raise Your Business
A letter from the Dallas Regional Chamber and The Real Estate Council
2017 SHOWS NO SIGNS OF SLOWING DOWN
2017 CHAIRMAN OF THE BOARD Hilda Galvan Partner-in-charge, Jones Day PRESIDENT & CEO Dale Petroskey CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER Pat Priest COMMUNICATIONS & MARKETING,
DALE PETROSKEY President and Chief Executive Officer Dallas Regional Chamber
According to our Capital Markets Roundtable participants, 2017 is beginning to look a lot like 2016. While some debate whether the economic boom is in the bottom of the ninth inning or we’re headed into extra innings of a remarkably long, positive commercial real estate cycle, all agreed that the boom is continuing, at least for now. Dallas-Fort Worth continues its unparalLINDA McMAHON leled growth, as new companies are relocatPresident and Chief ing to our region, and others are adding more Executive Officer The Real Estate Council facilities and employees. We are fortunate to be in one of the most dynamic markets in the U.S., as 75 companies have moved their headquarters to our region since 2010, and more than 750,000 new jobs have been created here during that short span. More new companies are joining TREC because they don’t want to miss out on all the good that’s happening in the commercial real estate industry in North Texas. The Dallas Regional Chamber, with a great product to sell —a strong business climate, attractive quality of life, central location, and unmatched airports and transportation and logistics options—continues to recruit more companies to our region and help make it the best place in America to live, work, and do business. Domestic capital continues to flow into our region, as does international investment, which now accounts for more than 50 percent of capital for U.S. commercial real estate projects. With Canada and Asia ranking as two of the most important sources of foreign capital investment, the DRC is planning an economic development trade mission trip this year to Asia —Shanghai and Seoul—and one to Canada—Toronto and Montreal—to strengthen our ties and encourage more business development into our region from those regions. With the new headquarters of Toyota, Liberty Mutual, and State Farm all coming online fully, solidifying their presence in our market and increasing their workforces, the economy of North Texas should continue to be strong and stable throughout the year.
SENIOR VICE PRESIDENT Darren Grubb RESEARCH AND INNOVATION, SENIOR VICE PRESIDENT Duane Dankesreiter C
RESEARCH AND INNOVATION, MANAGING DIRECTOR Eric Griffin
2017 CHAIRMAN Greg Kraus Invesco VICE CHAIR Ran Holman Cushman & Wakefield PRESIDENT & CEO Linda McMahon VICE PRESIDENT, LEADERSHIP & CULTURE Holland Morris VICE PRESIDENT & FOUNDATION DIRECTOR Robin Minick CFO Carla Brandt
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UPFRONT QUINCY CURÉ PRESTON Publisher Dallas-Fort Worth Real Estate Review
A letter from the Publisher
There’s a lot happening in the Dallas-Fort Worth real estate community in 2017, as projects are being planned and others are coming online. In this edition of the Real Estate Review, we not only look at the new, but we also travel back in time to show how one North Texas city has made a remarkable transformation. For the spring edition, our cover story looks at the “Comeback of the Corridor,” an examination of how the city of Richardson bounced back from the telecom implosion of the late ’90s to rise to new heights of economic diversity. That report begins on Page 60. Our roundtable experts discuss capital markets and how 2016 performed in North Texas, as well as what the future might hold under a new administration in Washington. The Roundtable begins on Page 34. Our newest feature, the Labor Market Spotlight in the Toolbox section, starts on Page 49 and examines workforce numbers in Downtown Dallas/Uptown and Legacy. We’ll profile other DallasFort Worth areas that have grown in conjunction with the region’s influx of professionals in upcoming editions. Beginning on Page 54, we examine the CityMAP document in a special feature that looks at why altering how we think about highways and traffic flow could bring massive, positive changes to Dallas’ urban core. In our Placemakers feature, developer Mike Ablon — a leading figure in the redevelopment of the Design District — tells us about how important it is to preserve the history and character of a city as development inevitably brings changes. That’s on Page 82. You’ll find the biggest lease transactions in office, retail, and industrial throughout Dallas-Fort Worth in Scorecard beginning on Page 27, and the latest on construction projects in our Crane Report, beginning on Page 19. And, you can always find extended content on our website, www. dfwrealestatereview.com, and in our Facebook feed. We always enjoy hearing from you.
Quincy Curé Preston Publisher
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R O S S TOW E R .C O M
FOUNDATIONS MULTIFAMILY MARKET SNAPSHOT:
DALLAS’ URBAN CORE AND UPTOWN
URBAN CORE UNITS DELIVERED SINCE 2016
TOTAL UNIT ABSORPTION
16-17 $2,200 $2.25
AVERAGE MONTHLY LEASE-UP PER PROJECT (UNITS)
The substantial job growth in Dallas-Fort Worth continues to translate into solid apartment rental rates in the region. JLL looked at the pulse of Dallas urban core and Uptown areas, where a tremendous number of apartments have been delivered in the past year — some recently hitting the market, and others in lease-up for a year. Unlike office space, which can take 18-24 months or more to deliver, apartments can have a quick construction cycle, JLL says. That can translate into a “narrow window” to gain leasing momentum and stabilize. The urban core — the central business district and Uptown — has seen 60 percent of the units leased, JLL says, with an average lease-up pace (per project) of 16 to 17 units
AVERAGE MONTHLY RENT
AVERAGE RENT PER SF
a month. JLL says that’s not a bad number, but that it’s slower than when it looked at the numbers in May 2016, when the average lease-up was running 23 units per month. JLL cited the number of units hitting the market as the important difference between last year, when the new deliveries totaled 2,700, compared to the 4,500 units that recently hit the market. Also notable is that the rental prices for the new deliveries continue to escalate. JLL says that new properties were averaging $1,900 per month last year. So far in 2017 that number is $2,200. Existing properties, however, have shown slightly lower occupancy and flat rental rates.
UNITS BUILT AFTER 2000 $1,350
DALLAS CBD AND UPTOWN
A baseline for the region’s future BY LANCE MURRAY
EXPANDING ECONOMY LURES NEW RESIDENTS, INVESTORS, RETAILERS TO DFW Healthy in-migration of new residents to Dallas-Fort Worth and strong employment will ignite necessity-based retailers that offer grocery, personal care items, and household items to look for just the right spaces to lease throughout the region, according to research by Marcus & Millichap. DFW employers are primed, for the fourth straight year, to add more than 100,000 positions in 2017. Net migration will rise by nearly 88,000 people. That will lead to North Texas gaining more than 60,000 households, Marcus & Millichap says. According to the research, healthy tenant demand and “robust” completions during the past few years has led to the construction of larger retail centers in North Texas. By year’s end, developer s are scheduled to complete a 380,000-square-foot retail center in Prosper and Tanger Outlets will open a 350,000-square-foot shopping center in north Fort Worth, Marcus & Millichap reports. Research shows that strong preleasing activity for space already underway adds to net absorption outpacing supply additions again in 2017. That will tighten overall vacancy below the national rate. And, the annual average asking rent growth is moving higher than the rate of growth nationally.
PROJECTED NUMBER OF NEW JOBS TO BE ADDED TO DALLAS-FORT WORTH IN 2017
PROJECTED RISE IN NET MIGRATION Thanks, in part, to a thriving tourism industry, Texas is seeing a boom in the number of hotels being built and opened. Dallas is leading the way, according to a report in GlobeSt.com, with 43 hotel openings this year. Houston is next with 22 openings. According to GlobeSt., extended stay hotels are a significant part of that number. What’s fueling the need? In 2015, Texas greeted 255 million domestic travelers and more than 10 million international guests, generating $68 billion in direct travel spending, GlobeSt. reported.
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PROJECTED NUMBER OF HOUSEHOLDS TO BE GAINED IN NORTH TEXAS IN 2017 SPRING 2017
LAS COLINAS OFFICE MARKET HOME TO A BROAD SPECTRUM OF CORPORATE USERS Las Colinas is a 12,000-acre masterplanned business and residential community in the city of Irving, and it continues to grow and show a diversity of industries. Home to a dozen Fortune 1000 headquarters in Las Colinas proper or nearby, Las Colinas is a major part of the DFW economy. Leading industries in the area are energy, technology, communications, and medical/pharma. Las Colinas comprises 22.5 million square feet of office space, as well as 8.5 million square feet of light industrial and distribution space. Retail space totals 1.3+ million square feet, according to the Las Colinas Association.
Real Estate, Architecture & Engineering
Wholesalers & Retailers Technology
Medical & Pharma
CLASS A+B INVENTORY 30 M SF
Communications & Media
Energy & Utilities
Government & Personal Services
Based on size and delivery in 2016. NORTHERN VIRGINIA 557 megawatts (delivered 97 megawatts) DALLAS-FORT WORTH 208 megawatts (delivered 47 megawatts) CHICAGO 192 megawatts (delivered 39 megawatts) NEW JERSEY-NEW YORK 155 megawatts (delivered 5 megawatts) SILICON VALLEY 155 megawatts (delivered 3 megawatts)
The North Texas data center vacancy rate is 19.8 percent, with pricing between $120 and $145 per kilowatt, plus electric,
TOP FIVE DATA CENTER MARKETS IN THE U.S.
1 2 3 4 5
Manufacturing & Transportation
DFW RANKS AS SECOND LARGEST DATA CENTER MARKET According to IBM, we create 2.5 quintillion bytes of data a day, much of it created in the past two years alone. Much of that data for businesses is stored in data centers, and Dallas-Fort Worth has become an important player in that space. DFW ranks second nationally as a data center market, according to research by CBRE. It trails only Northern Virginia. Last year, developers in North Texas added roughly 47 megawatts of data center space in the region. Northern Virginia, by comparison, turned around 97 megawatts of data center space. On average, the data center deals that are coming to Dallas-Fort Worth were 1 megawatt or less, according to CBRE research. In North Texas, data center tenants leased 37.6 megawatts in 2016.
Business Services, Insurance & Accounting
CBRE says. In DFW, there are 49.5 megawatts of new data center space under construction, in 11 projects.
DISTRIBUTION CENTERS AND WAREHOUSES ARE GROWING IN SIZE In the e-commerce fulfillment and warehouse businesses, what goes up apparently continues to get taller. CBRE reports that the rapid growth of the centers in recent years has caused a steady increase in the height and the volume of distribution centers and warehouses. CBRE’s new research shows that likely will lead to a shift to three-dimensional measurement of industrial space. Dallas-Fort Worth is a major e-fulfillment hub with businesses including Amazon.com and scores of other fulfillment and logistics companies operating in the area. DFW added 51.4 million square feet of warehouse inventory with an average clear height of 32.59 feet between 2010-2016, CBRE says. In the 1960s, the average height was roughly 24 feet, and companies are making use of additional vertical space in their operations. CBRE says mezzanine levels are typically included in measures of a property’s or market’s industrial square footage, but says that measuring cubic footage might be a better way to look at the full extent of distribution center and warehouse space.
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FAMILY OFFICE AND HIGH NET WORTH EXPERTS OFFER INDUSTRY INSIGHTS
BY HE ATHER NOEL
High net worth and family office investments were the focus during the Feb. 22 “Industry Insights” event from The Real Estate Council and Real Estate Deal Sheet. The 2017 event series led off with keynote speaker John Calandro’s dive into the stock market and future growth projections. Following his presentation, representatives from family and high net worth offices gave their take on the current market and how it’s impacting their approaches to investments. Here are some takeaways:
“We think we’re in a secular bull market. We think there’s a lot to go. We have some great drivers — real estate is one of the biggest ones that we have right now. And, we’re on our way to a 40,000 Dow.”
“We like the South Dallas industrial market. We’re looking at an assemblage of 120 acres down there. Other than that, we’re revisiting some of the markets that perhaps get overlooked. Everybody wants to be in Frisco, but we’re combing over Mansfield, Rockwall, Garland, Mesquite, Grand Prairie, east McKinney, and north Fort Worth.”
“We’re putting assets to work for multi-generations and are very rarely sellers. We’re starting to look more into some limited partnership-type investments but for the most part, we’re putting capital to work for the long term.”
“We’re going to see a tick up in the cap rates. My career has been the lowest they’ve ever been. So, I would say [we’re] just being conservative and being really careful. When we look at real estate to make the final decision we ask, ‘Are we comfortable holding it through a dialed down cycle? Do we really like this asset?’”
“We’ve turned to development a fair bit in this cycle, and we’ve done it for two reasons: The first being that we get a slightly better yield, and we’re willing to take the risk as long as we can manage the time frame. But, more importantly than that, I think it’s really important that we construct the property we want as a long-term holder.”
“The beauty of a family office is you can move with the market as you see things happening down the road. You can adjust without having to go back and get the approval of 16 partners. That’s been advantageous for us. As you see certain parts of the market maturing, you can shift into areas that feel like they have more margin.”
“We have 26 investments now, and we’re just trying to remain as patient as we can. We’re cash flow buyers whether it’s retail, industrial, multifamily — we’re just trying to get a good yield. It doesn’t have to be day one, but within the first year.”
“Historically, on the big deals, we come with the GP capital and then raise institutional capital. Lately, we’ve formed a few different platforms to capitalize our assets through friends and family.”
“Family offices that their wealth originally came from real estate are still playing. If family wealth was not in real estate, they’re starting to sit on the sidelines a little bit.”
THE CALANDRO GROUP
TAILWIND REAL ESTATE EQUITIES LLC
TUG HILL REAL ESTATE PARTNERS
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WOODBINE DEVELOPMENT CORP
TRT HOLDINGS INC.
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B BUILDING TOMORROW TOGETHER
SITE SELECTOR PERSPECTIVE
MORE INTERNATIONAL COMPANIES WILL BE LOOKING FOR MANUFACTURING LOCATIONS BY MIKE ROSA
I woke up this morning an economic developer fortunate to be marketing the best region, in the best state, in the greatest nation on Earth. Not a bad start to the day. Often at Dallas Regional Chamber meetings someone will say, “aren’t we fortunate that we are working and living here?” We are. You’ve heard it or said it also, I’ll bet. Our region’s ongoing hot streak of companies moving or growing here is remarkable— and rare among cities and regions. Many entire states can’t produce a list of corporate announcements, investments, and job creation like DFW’s. “You guys are already on the list.” We’ve heard that often from companies or location advisers when we’re out marketing. There are a whole bunch of states and cities that aren’t always on the list like we are, and envious of our station. But success doesn’t mean future success. We can’t rest upon these regional compliments, accolades, top rankings, and long lists of corporate moves. We’ve got to keep working hard improving our region and recognizing new opportunities and challenges that impact our ability to recruit companies, investment, and jobs. A great way for me and my team to stay grounded and appreciative of the hard work
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B BUILDING TOMORROW TOGETHER required to maintain corporate recruitment success is regular communication with a very influential group of site consultants, the 43 members of the Site Selectors Guild. The Site Selectors Guild is the only professional association of site selection consulting leaders from around the world. Its members are nominated and approved by their peers after rigorous due diligence. We engage Guild members regularly throughout the year. For example, we worked with Guild-member firms such as Ginovus and McCallum Sweeney, who consulted moves here for Charles Schwab and Hilti, respectively. Each year, members of the Guild gather for an annual conference and invite a limited number of economic development organizations to join them. This convening is an ideal reality check and marketing opportunity for us. It allows us to have many group and private discussions: We learn from consultants how our region is viewed in real time and have the chance to refresh them on our region or catch up on active projects. At the conference a couple of weeks ago, two overall trends stuck with me after two days of listening and talking to these experts. One is that we can expect an uptick, at least for a while, in the number of international companies scouting for U.S. manufacturing locations. A result of the anticipated changes in federal policy, international companies that sell big into the U.S. market but don’t manufacture here are revisiting plans for locating factories. As said by one consultant, companies want to
FINDING, ATTRACTING, AND HOLDING TALENT IS CRITICAL: TALENT IS DRIVING JUST ABOUT ALL THE MAJOR LOCATION PROJECTS AND ALSO REFLECTED IN THE PROJECTS WE ARE WORKING. avoid a “Trump Twitter War,” in addition to being concerned about potential tariffs. We see this in our project activity, both with manufacturing projects on the increase and several that are also international. A second trend is more familiar: The war for talent. Finding, attracting, and holding talent is critical. Talent is driving just about all the major location projects and also reflected in the projects we are working. Privately and individually, some of my takeaway quotes from Guild members were: “In-migration is really saving you right now on the talent issue,” “What’s with this bathroom bill … that’s not going to really pass…is it?” “Hey, is Texas going to eliminate State incentives?” “That airport is fantastic,” “Is that bullet train going to be built?” and “Your team does a great job.” Nice to hear that last one, and I’m sure I don’t need to point out the ones that are of great concern to our efforts to attract companies, jobs, and investment here. We must continue to work hard, sell hard, and fight hard on issues that would derail our great run.
WANT TO LEARN MORE ABOUT HOW TO GET INVOLVED IN BUILDING TOMORROW TOGETHER?
Contact Mike Rosa, Senior Vice President, Economic Development, Dallas Regional Chamber 214-746-6735 | firstname.lastname@example.org
BUILDING TOMORROW TOGETHER The Dallas Regional Chamber’s economic development program, Building Tomorrow Together, provides organizations in Dallas-Fort Worth with an accelerated investment opportunity that helps advance our region’s success. This additional investment made by more than 130 organizations in addition to annual chamber membership dues allows organizations to increase their support of our efforts to further economic prosperity throughout the region. This initiative funds efforts related to direct contact with corporations and location consultants examining the DFW region.
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750+ real estate professionals
11 locations across the country
BILLION in real estate transactions annually
www . st r ea m r ea lt y . co m
MILLION sf leased and/or managed from coast-to-coast
PHOTO: MICHAEL SAMPLES
THE CRANE REPORT
The demand for office space in Dallas-Fort Worth continues to be strong with many firms looking for a “work, live, play” environment. Lenders have tightened requirements for speculative development, and that could have an impact on preleasing for much of the new developments. In each issue of the Dallas-Fort Worth Real Estate Review, we showcase projects that are underway or planned in the Crane Report. Data for the office and industrial sectors is provided by Xceligent Inc., while data for the multifamily market is provided by Axiometrics Inc. BYLANCE MURRAY
ON-THE-GRO U N D I N S I G H TS
“The DFW metroplex will continue to see new office development because of ongoing tenant demand for new space. However, most of this development will have an impactful preleasing component as lenders have significantly tightened requirements for speculative development.”
“Firms of all sizes are searching for office space that off ers the proverbial “work , live, play” environment. Now that environment can exist within a short walking distance like the new McKinney Olive building in Uptown ... or it can be all self-contained inside the complex like the new Campus at Legacy West.”
“Industrial activity continues to be robust, and the outlook for 2017 is excellent. The challenge for developers will be to determine the maximum economics achievable without risking the loss of a good prospect to a competitor.”
“What residents are demanding is diff erent from a few years ago. A business center is not in demand as much as having Wi-Fi in common areas. Keeping pace with the single-family market, the kitchen is still where it’s at in regard to getting the most return for your investment.”
Managing Director, JLL
Principal, SIOR, Transwestern
First Vice President, CBRE
Senior Director, Cushman & Wakefield
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THE CRANE REPORT:
1317 E MCKINNEY ST
4645 WYND OAKMONT OFFICE CONDOS
ANNOUNCED + UNDER CONSTRUCTION
OLD TOWN BLVD NORTH BUILD TO SUIT PAD # 1
SIZE: 100,000 square feet DEVELOPER: Cawley Partners DETAILS: GFF Architects is designing the three-story office building between Bethany and Legacy Drives along Central Expressway in Allen. The building will be leased in-house by Bill Cawley, Jeremy Duggins, and Addie Ludwig.
SIZE: 90,000 square feet DEVELOPER: Trammell Crow Holdings DETAILS: The six-floor, 90,000-squarefoot office building is the final building at the Old Parkland campus in Dallas with architecture that will complement the other buildings on the 9.5-acre campus. Construction is scheduled to be complete in early 2019. Craig Hamilton of the United Kingdom is architect.
404 KELLER PKWY
SANYO ENERGY HEADQUARTERS CENTRE AT THE COLONY THE REALM MEADOWLANDS PARKE MONTEREY ADDITION CROWN PROFE OFFICE PARK CENTRE OFFIC NORTHWEST TANGLEWOOD INTE PLAZA OFFICE PARK 4101 HIGHWAY 121 BUS BYPASS BLVD PRAIRIE COMMONS INTE OFFICE CONDOMINIUMS BUSINES LAKESIDE MAJESTIC AIRPORT CENTER DFW CROSSING VISTA RIDGE ROCKBROOK 801 ENTERPRISE DR RED HAWK OFFICE VILLAGE 2 GRAPEVINE STATION
OFFICES AT KIMBALL PARK
PARK WEST MIRON GROVE PLAZA OFFICE PARK BEAR CREEK 8821 DAVIS BLVD OFFICE PARK HERITAGE OFFICE PARK PHASE II THE PONDS 5601 N TARRANT PKWY 7105 GOLF CLUB DR PAD SITE
3665 WESTERN CENTER BLVD FOSSIL CREEK STATION
BARTONVILLE TOWN CENTER
TROPHY CLUB TOWN CENTER CARILLON COURT SOUTHLAKE MEDICAL OFFICES
BETHANY AND LEGACY
STEWART CREEK OF
NW OF DALLAS
104 COUNTRY VIEW DR
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
GARDENIA VILL OFFICE PAR
● ANNOUNCED ● UNDER CONSTRUCTION
8621 1501 HUGHES RD MID CITIES ADVENT PARC BLVD BLDG 2
7114 MID CITIES BLVD
9797 ROMBAUER RD 3000 OLYMPUS BLVD THREE FREEPORT HICKO COMMONS CENTR THE APEX AT LAS COLINAS ROYAL TOWER CROSSING PINNACLE TOWE 5400 WHITE TEXAS MUSIC HALL ST FACTORY HIDDEN RIDGE AIRPORT 161 HQ CENTER
THE OFFICES @ HAMPDEN WOODS 2901 WINGATE ST
EXPEDITION PLAZA 9701-9703 WHITE SETTLEMENT RD
3736 CAMP BOWIE BLVD 1200 6TH AVE TEXAS SHALE TOWER CLEARFORK PHASE I 3001 BRYANT IRVIN RD
FROST TOWER FORT WORTH
D. R. HORTON HEADQUARTERS
OVERTON TOWER III NEAR SOUTHSIDE MERCANTILE BLDG 2
701 SECRETARY DR
THE GARDENS AT TOWN CENTER 4015 W I-20
6940 HARRIS PKWY MATLOCK PROFESSIONAL OFFICE PARK
SUMMER CREEK STATION GARDEN OFFICE HULEN VILLAGE OFFICE
CANNON PROFESSIONAL PLAZA HIGHPOINT COMMONS
THE ATRIUM REGENCY STATION
UNDER CONSTRUCTION 3
SIZE: 355,000 DEVELOPER: TD Ameritrade DETAILS: The Good Fulton & Farrell architects-designed two-building complex in Southlake will feature two- and three-story buildings serving as a regional campus for the financial services company. Adolphson & Peterson is the general contractor. The campus is set to open in late 2017.
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COBB FARM WEST OFFICE PARK
1840 LAKE FOREST BLVD
SUMMIT PARK II
3900 S STONEBRIDGE DR WESSEX@ ALMA ROAD 5001 COLLIN MCKINNEY PKWY
FFICE CENTER I
ONE FOUNTAIN COURT
USINESS PARK THE GATE
WARREN PKWY & S NORTH TOLLWAY
PRESTON @ WADE CROSSING
S ON LEGACY
CREEK PRESTON WATTERS OFFICE PARK BEND ONE
CORPORATE CENTER FOUR ALLEN PLACE ANGEL FIELD CENTER WATTERS CREEK AT MONTGOMERY FARM
LEGACY BUSINESS PARK LAKES OF TENNYSON PROFESSIONAL LEGACY CENTRAL 5 LEGACY III ER ROAD WINDHAVEN ESSIONAL PLACE ONE CES DEXTER ERNATIONAL PROFESSIONAL SINESS PARK NW OF W FM 544 ERNATIONAL 3400 @ & N MURPHY RD SS PARK 190 CITYLINE US HIGHWAY 75 @ RENNER ROAD MAPLEPLEX PALISADES CENTRAL NORTH DALLAS OFFICE CENTRE MEDICAL CENTER II
E ORY RE
ER II C
TOWNE SQUARE PLACE
ONE BETHANY AT WATTERS CREEK
SIZE: 80,000 square feet DEVELOPER: Primera Companies Inc. DETAILS: The building will be aimed at companies wanting small, boutique office space. It is 5345 Towne Square Drive in Village 121 in Plano. Prefinished office suites of 1,000 to 3,000 square feet will be available. Completion expected in the fall 2017.
6579 VIRGINIA PKWY
11447-11511 INDEPENDENCE PKWY
TOWER AT FRISCO SQUARE FRISCO SQUARE
THE FORUM AT PROSPER WHISPERING VICTORY AT FARMS WEST STONEBRIDGE
MURPHY MEDICAL OFFICES CAMPBELL CROSSING OFFICE PARK
399 MELROSE DR FOUR GALLERIA TOWER
ROCKWALL COMMONS PHASE II
PARK TOWER AT DALLAS MIDTOWN OFFICE PRESTON HOLLOW VILLAGE PHASE IV
NE OF BAYSIDE N AND BAYSIDE DR
8100 PARK LN PARK CITIES PLAZA
FOUR ENERGY SQUARE
4401 W LOVERS LN WEST LOVE
SPRINGFIELD PROFESSIONAL CONDOS - PHASE II
4437 BUENA VISTA ST 2505, 2727, & 3001 TURTLE CREEK BLVD PARK DISTRICT TOWER TWO ARTS PLAZA THE SPIRE
VICTORY CENTER TWO VICTORY PARK THE UNION
SIZE: 125,000 square feet (first phase) DEVELOPERS: Kaizen Development Partners DETAILS: The four-building luxury office park in Allen will help serve the office corridor along US 75. The first building will be a fivestory, 125,000-square-foot structure. BOKA Powell is project designer and Balfour Beatty Construction is general contractor.
910 N BRYAN BELT LINE RD SUNNYVALE PROFESSIONAL PLAZA
SOLA ON LAMAR DAVIS STREET MARKET
THE CRANE REPORT: INTERACTIVE VERSION
online at dfwrealestatereview.com
SIZE: 200,000 square feet DEVELOPER: Adolfson & Peter Construction DETAIL: The $47 million build-tosuit project on Exchange Parkway and Andrews Parkway in Allen will serve as headquarters for Watchguard Video, the worldâ€™s largest manufacturer of law enforcement video systems. Phase 1 is 140,000 square feet to be completed in early 2018. Phase 2 will be 60,000 square feet scheduled for 2022. GFF designed the building.
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
DENTON CREEK BUSINESS PARK
THE CRANE REPORT:
US 380 BUSINESS PARK
WEST GATE BUSINESS PARK
5075 TIM DONALD RD
ANNOUNCED + UNDER CONSTRUCTION
GATEWAY BUSINESS PARK
SPEEDWAY DISTRIBUTION CENTER FARMER BROTHERS COMPANY
METROPLEX NORTH BUSINESS PARK
TRAMMELL CROW @ 35-EAGLE
ALLIANCE CENTER NORTH 15
SIZE: 850,000 square feet DEVELOPER: TBA DETAILS: The Wisconsin-based furniture retailer will build the $65 million regional distribution hub in Mesquite and add nearly 350 full-time employees to the area. It will sit on a 358-acre tract at 3790 Faithon P. Lucas Sr. Blvd. The building should be occupied by the end of 2019.
PINNACLE 12801 HARMON RD
1005 CHISOLM TRL
1363 BRUMLOW AVE
5951 PARK VISTA CIR
1001 KENNEDY LN
18 RELI PK
RIDGE RAILHEAD RAILHEAD INDUSTRIAL PARK
12500 WILLOW SPRINGS RD
FORMER RAYTHEON CAMPUS
PARKER PRODUCTION FACILITY
SIZE: 800,000 square feet DEVELOPER: Langford Property Co. DETAILS: The 70-acre former Raytheon campus in Garland will be demolished and will become home to two distribution facilities on 40 acres of land, each roughly 400,000 square feet in size. The remaining 30 acres will be set aside for future development. The first phase will be designed by Richardson-based Alliance Architects, with Bob Moore Construction the general contractor.
901 S CHERRY LN
35/820 @ MERCANTILE
1009 NE 11TH ST
2809 SHAMROCK AVE
1431 S CHERRY LN
2317 W ARKANSAS LN
● ANNOUNCED ● UNDER CONSTRUCTION
5105 VICKERY LOOP W
SOUTH CENTRAL DISTRIBUTION CENTER II
KENNEDALE PKWY F
8600 WILL ROGERS BLVD
THE CRANE REPORT: INTERACTIVE VERSION
SIZE: 282,507 square feet DEVELOPER: Duke Realty DETAILS: The tire company’s North Texas distribution hub in Grand Prairie will be expanded by 282,507 square feet, putting the total footprint of the building — Grand Lakes 4003 — to more than 1 million square feet of industrial space.
online at dfwrealestatereview.com
619 S WISTE
UNDER CONSTRUCTION 4
CORE5 LOGISTICS CENTER AT WINTERGREEN
SIZE: 750,000 DEVELOPER: Core5 Industrial Partners DETAILS: The Atlanta-based developer is constructing the logistics center at 1200 W. Wintergreen Road in Hutchins. It sits on 41.53 acres on two adjacent parcels. Completion is expected in June.
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PROSPER BUSINESS PARK MCKINNEY BUSINESS CENTER
ARKET STREET USTRIAL PARK
AK HILL BUS PK NE OF DENA DR & CLARENCE DR 10401 CLARENCE DR
11 PRESTIGE CIR THE TECH CENTER ON GREENVILLE
718 S GREENVILLE AVE LEWISVILLE CORPORATE CENTER
NW OF HILLSIDE DR & N MILL ST PARKVIEW COMMERCE CENTER LAKESIDE RIDGE II KUBOTA TRACTOR CORP
4814 DOZIER RD
PLANO TECH CENTER 8
2910 GUILDER DR MAJESTIC AIRPORT CENTER DFW
815 IANCE KWY
5040 GORDON SMITH DR
DCT MILLER ROAD
2 NORTHGATE DIST CENTER GARLAND LOGISTICS CENTER BLDG
3600 LEON RD
DFW EAST LOGISTICS CENTER 9749 CLIFFORD
PARC GSW BEAR CREEK CORPORATE CENTER LIBERTY PARK GSW NORTH BLDG 1 GSW GATEWAY II 2909 W OAKDALE RD 1460 AVENUE S
MESQUITE INDUSTRIAL BUSINESS PARK FEDEX PROPOSED UPS EXPANSION PROLOGIS/ BUCKNER LAND SKYLINE TRADE CENTER
2231 BUTLER ST
WILDLIFE COMMERCE PARK GRAND LAKES 4003 EXPANSION
360 GLOBAL LOGISTICS PARK
SOUTHWEST DISTRIBUTION CENTER
N PARK 20/360
PROLOGIS VALWOOD CORPORATE CENTER COTTON RIDGE BUSINESS PARK MERCER BUSINESS PARK
PARC 114 DFW/161 DISTRIBUTION CENTER
PROLOGIS PARK 121 PARK WEST CROSSING SIGNET JEWELERS ROYAL TECH 18
SUN RIDGE BUSINESS PARK
PLANO COMMERCE PARK SITE A
FREEPORT NORTH POINT
INTELLIGENT EPITAXY TECHNOLOGY, INC
SIZE: 350,000 square feet DEVELOPER: Skyhawk Partners DETAILS: The Alliance Architects-designed project will be a distribution center on a 24-acre site in Wilmer. Called Interpoint Distribution Center, the facility is next to Union Pacificâ€™s Dallas Intermodal Terminal. The location is near Interstate 45. Skyhawk Partners is involved in real estate development and investment projects in Texas and in other industrial building markets. It will feature 32-foot clear heights. Completion scheduled for July 2017.
LIBERTY PARK MOUNTAIN CREEK
FIRST MOUNTAIN CREEK DISTRIBUTION CENTER
INTERSTATE COMMERCE CENTER STONERIDGE 16
STONERIDGE 15 SOUTHFIELD PARK 35
POINTSOUTH LOGISTICS & COMMERCE CENTRE RIDGE LOGISTICS CENTER
I 35 INTERCHANGE I
INTERMODAL BUSINESS CENTER
CORE5 LOGISTICS CENTER DUKE MIDPOINT INTERMODAL LOGISTICS III CENTER DALPORT TRADE CENTER
SUNRIDGE BUSINESS PARK SUNRIDGE BUSINESS PARK
SOUTHPORT TRADE CENTER
DFW INLAND PORT
SIZE: 700,000 square feet DEVELOPER: Discount Tire DETAILS: The new regional distribution center will be on a nearly 53-acre site on Bonnie View Road in South Dallas, just south of Interstate 20. Arizona-based Discount Tire said the facility will replace a 350,000-square-foot facility on Trinity Boulevard in Grand Prairie. The Discount Tire facility will join other major warehouses in the South Dallas area, including Quaker Oats Foods, BMW, Hyundai, and Amazon. Discount Tire has its regional office in Plano. Discount Tire operates more than 925 stores in 31 states, and has more than a dozen stores in the Dallas-Fort Worth area.
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
CARTER DISTRIBUTION CENTER
ADDRESS: Oak Grove Road, Fort Worth, Texas 76134 SIZE: Two cross dock buildings totaling 488,564 SF DEVELOPER: Crow Holdings LEASING AGENTS: Matt Carthey and Donnie Rohde with Holt Lunsford Commercial DETAILS: Situated on 29.43 acres in south Fort Worth approximately one mile south of Interstate 20 and east of Interstate 35W, CDC provides exceptional access major thoroughfares in DFW.
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:
MAJESTIC ON MCKINNEY
EPIC APARTMENTS AT UNICORN LAKE
ANNOUNCED + UNDER CONSTRUCTION
ANNOUNCED DEVELOPMENTS 1
PRESTON ROAD AND BROOKHOLLOW BOULEVARD
UNITS: 500 DEVELOPERS: Rudman Family Partnership and Westwood Residential DETAILS: The project will be constructed across five lots on 45 acres at the corner of Preston Road and Brookhollow Boulevard in Frisco. Plans show the project will include a dozen three-story buildings situated on a central boulevard. No completion date has been announced.
DISTRICT OF HIGHLAND VILL
THE RIVER W AT CENTRAL
● ANNOUNCED ● UNDER CONSTRUCTION
ELAN LAKESIDE PH
MANSIONS AT TIMBERLAND II
THE CRANE REPORT: INTERACTIVE VERSION
online at dfwrealestatereview.com
SAGEWOOD VILLAGE VERA PRESIDIO DOLCE LIVING HOME TOWN PH 2
FORT201 AT THE FOUNDRY THE SCENIC RESIDENCES AT RIVER EAST PH I
MERRITT STREET APARTMENTS
SOUTH 400 APARTMENTS
UNITS: 324 DEVELOPER: Stonelake Capital Partners DETAILS: Construction will begin in the fall on the next phase of the 25-acre urban residential district along Singleton Avenue in West Dallas. Trinity Green’s Phase 4 will be a 324-unit Class-A apartment project with Wood Partners.
ARLINGTON COMMONS PH I
BROWNSTONE 5TH AND SUMMIT HIGHPOINT ON SOUTH MAIN MAGNOLIA
LOFTS AT OLEANDER WALK RIVERVUE
THE RESE GRAND P
THE MAIN STREET LOFTS I REGALIA MANSFIE
DATA SOURCE: AXIOMETRICS INC.
SIZE: 320 units DEVELOPER: Columbus Realty Partners DETAILS: Ex-Dallas Cowboy Robert Shaw’s company, along with the city of McKinney, is developing the new mixed-use development on the site of the former Collin County Courthouse. It will have 320 apartments, 45,000 square feet of office space and 20,000 square feet of retail. JHP Architecture is the project architect.
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
ADARA WINDSONG RANCH
THE LUXE 3EIGHTY
SOVEREIGN PRESTON RD
THE MANSIONS 3EIGHTY
EMERSON COURT PARKVIEW APARTMENTS PALLADIUM LITTLE ELM APARTMENTS ARTISTRY AT PCR
THE GRAND AT LEGACY WEST
WATERFORD AT FRISCO PH I
HEBRON 121 STATION IV
BRICKYARD AT MERCER PARK
RIVERSIDE PARK APARTMENTS CREST AT LAS COLINAS STATION APARTMENTS
SLOANE STREET ON PARK
AVILLA PREMIER PLACE BROADSTONE EVOKE THE BRIDGE AT HERITAGE CREEK PARK AT GATEWAY
THE PARC AT WYLIE
HEIGHTS AT CAMPFIRE CROSSING HARMONY HILL TERRA LAGO
VITRUVIAN WEST MODERA
JEFFERSON ON LAKE CAROLYN
Situated for business.
DOLCE LIVING TWIN CREEKS PH I
ALTA PALISADES I JEFFERSON BROADSTONE GALATYN PARK 5151 JEFFERSON IMT ROUTH PRESTONWOOD CREEK AURA 5515 THE MALLORY JEFFERSON EASTSIDE LANDMARK
JPI MERCER CROSSING I
THE MANSIONS OF MCKINNEY
COMMONS OF CHAPEL CREEK TWIN CREEKS CROSSING II VERUS
THE RESIDENCES AT LEGACY
THE VENUE AT CRAIG RANCH I
PARKSIDE AT CRAIG RANCH III
STATIONHOUSE AMLI FRISCO CROSSING RAVELLO STONEBRIAR
THE HUDSON AT AUSTIN RANCH
DAVIS ST AND MCDONALD ST
DISCOVERY AT THE REALM
SANCTUARY AT WESTRIDGE
VILLAGE OF ROWLETT
CREST AT PARK CENTRAL II MODENA HANOVER MIDTOWN PARK LAKE HIGHLANDS THE ROYAL TOWN CENTER GALLERIES AT PARK LANE THE LAUREL PARC AT WHITE ROCK THE ELLISON THE ATWOOD JEFFERSON THE KATY THE ASH AT WEST LOVE THE BRANCH MARK AT MIDTOWN PARK
PARC AT GARLAND
MAGNOLIA AT LAKEWOOD
Try our location on for size.
THE COLORADO BISHOP PLACE HIGHLINE
BISHOP ARTS STATION MAGNOLIA AT ZANG CRESCENT BISHOP ARTS
ERVE AT PRAIRIE
B&F FLATS AURA ON MCKINNEY
ALEXAN MAPLE ALEXAN KATY TRAIL
UADRANGLES EAGLE CROSSINGS
ALTA STRAND CYPRESS AT TRINITY GROVES I THE AUSTIN AT TRINITY GREEN
THE 23 DALLAS
BROADSTONE TRINITY THE STATLER GROVE RESIDENCES
MAGNOLIA ON HENDERSON
ALEXAN HENDERSON WEST VILLAGE TOWER HASKELL FLATS THE CHRISTOPHER THE CASE BUILDINGS 1900 PACIFIC (CORRIGAN HARVEST TOWER) LOFTS
Thirty minutes north of Dallas and conveniently located at the crossroads of three major highways, McKinney is ready for business. Direct access to domestic and world markets, the newly widened U.S. 75 corridor, McKinney National Airport and a nationally acclaimed quality of life are just a few reasons why companies ﬁnd success in McKinney. Discover how McKinney can be the gateway to your business future.
UNDER CONSTRUCTION 4
Start Your Property & Land Search
2000 ROSS AVENUE
UNITS: 400 DEVELOPERS: Stream Realty Partners LEASING AGENTS: Aaron Stephenson and John Giesler of Retail Street Advisors are leasing retail spaces DETAILS: Upon build-out, the dual-tower mixeduse development — affiliated with a $135 million renovation adjacent to Trammell Crow Center — will include a 400-unit high-rise residential tower, a 200-key boutique hotel, a 2,000-space parking garage and 26,000 square feet of retail space that could accommodate up to eight restaurant sites. The project is designed by HKS Architects.
McKINNEY ECONOMIC DEVELOPMENT C O R P O R AT I O N McKINNEYEDC.COM INFO@McKINNEYEDC.COM 972-547-7651 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
BANK OF AMERICA’S NEW LEASE AT SUNDANCE SQUARE IN FORT WORTH (RENDERING)
The overall markets for office and industrial leases remain strong in the Dallas-Fort Worth area. Companies continued to move to Dallas-Fort Worth, many seeking amenity-rich buildings in prime locations. The retail sector saw several large lease deals spread throughout the area. Here, we examine the top five office, industrial, and retail leases in the past three months throughout North Texas. As always, data is provide by Xceligent Inc. BY LANCE MURRAY
ON-THE-GRO U N D I N S I G H TS
Executive Vice President, Colliers International
“Corporations are seeking amenity-rich offices and locations that cultivate environments which reflect their brand and culture. DFW is one of the top destinations for millennials, and developers and existing landlords are focusing on creating work/ life synergy for this growing workforce to thrive.” SPRING 2017
NATALIE SNYDER BODE
Director, Cushman & Wakefield
“Demand for office space in the first quarter of 2017 was very strong. We saw several dozen new requirements over 20,000 square feet hit the market. I do expect vacancy rates (direct and sublease) to rise, as leasing plays catch-up with development.”
“Industrial demand, led by new jobs, population growth, and e-commerce initiatives, remains robust. The overall supply/demand fundamentals are as healthy as ever, despite the perpetual question of ‘what inning we are in’ that so many continue to ponder. We see no signs of a slowdown as we head into Q2.”
“The DFW retail sector is firing on all cylinders with occupancy levels the highest in 30 years. Rapidly advancing technology and demands from consumers will push retailers to adapt, improve, and integrate technology into the physical store experience.”
Managing Director and Partner, Stream Realty
Senior Vice President, CBRE
D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 7
THE CLIENT GIVES EVERY INVESTMENT PURPOSE. EVERY PROPERTY A SOUL. EVERY TRANSACTION A PULSE.
Real estate is a powerful asset. It helps define the business of a company. The spirit of a startup. The values of an investor. Weâ€™re 43,000 employees in over 60 countries, helping our clients put ideas into action. Across industries. Within budgets. And without fail. Around the globe and in Dallas-Fort Worth.
What can we do for you? cushmanwakefield.com/action
IDEAS INTO ACTION
10,46444,530 SF 44,531126,715 SF 126,716327,183 SF 327,184750,000 SF
LARGEST OFFICE LEASES
SIZE: 216,300 square feet TENANT REPS: Rick Hughes, Maureen Kelly Cooper, and Robbie Baty of Cushman & Wakefield LEASING AGENT: Marijke Lantz of Billingsley Co. DETAILS: After occupying space along LBJ Freeway in Dallas since the 1980s, the restaurant company behind Chili’s and Maggiano’s has leased a new build-to-suit at Cypress Waters, developed by RICK HUGHES Billingsley Co.
SIZE: 175,000 square feet TENANT REPS: Lewis Miller, Jeff Ellerman, and John Ellerman of CBRE represented Goldman Sachs LEASING AGENT: Ramsey March, Sara Terry and Scott Sowanick of Stream Realty Partners DETAILS: Financial giant Goldman Sachs has signed a lease deal to take seven floors within the 50-story Trammell Crow Center at 2001 Ross Ave. in the Dallas Arts District. The building will undergo a massive renovation. Move-in is expected in early 2018.
THE DALLAS MORNING NEWS
SIZE: 90,000 square feet TENANT REPS: Phil Puckett, Jeff Ellerman of CBRE LEASING AGENT: Russ Johnson of Peloton Commercial Real Estate, Michael VanHuss of Commerce Statler Development LLC DETAILS: The daily newspaper company will occupy all 90,000 square feet of The Old Dallas Library that sits adjacent to the historic Statler Hotel renovation. The company signed a 16year lease, moving The Dallas Morning News to other side of downtown Dallas from its present location.
BANK OF AMERICA
SIZE: 68,000 square feet TENANT REPS: Blake Lloyd with CBRE LEASING AGENT: Bill Booker and Robert Gamblin for Sundance Square DETAILS: The Sundance Square Tower 2 in downtown Fort Worth will be renamed Bank of America Tower in Sundance Square. Roughly 180 employees will work there. The move is a part of BofA’s North Texas expansion.
SIZE: 64,916 square feet TENANT REPS: Steve Thelen and Kimarie Ankenbrand of JLL LEASING AGENTS: Chris Taylor of Cushman & Wakefield and Russ Johnson of Peloton Commercial Real Estate DETAILS: The automotive repair company will move its headquarters to the newly renovated Galatyn Commons in Richardson this summer. Dallas-based Corgan has been selected to design Service King’s office interiors.
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
No matter who you are or where you’re from, when you Say Yes to Dallas, you’re Saying Yes to more than you might think. s ayye stoda l l a s .co m
INDUSTRIAL LEASES 53 4
150-39,000 SF 39,00115,5068 SF 155,069556,600 SF
556,6011,440,000 SF 1,440,0013,018,708 SF
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
UNITED PARCEL SERVICE
SIZE: 1 million square feet TENANT REPS: N/A LEASING AGENT: N/A DETAILS: UPS will lease the almost-completed 1-million-square-foot facility in the Arlington Commerce Center industrial park. The new regional hub is south of Interstate 20 near Bardin Road and State Highway 360. UPS will add another 200,000 square feet. The facility should be in full operation late next year with 1,400 workers.
LARGEST INDUSTRIAL LEASES
SIZE: 229,000 square feet TENANT REP: Ann Huntington LEASING AGENTS: Liberty Property DETAILS: Geodis Logistics leased the space at 951 Valley View Lane in Irving from Liberty Property. Geodes is one of North Americaâ€™s largest third-party logistics providers.
SIZE: 200,000 square feet TENANT REPS: Cushman & Wakefield LEASING AGENTS: Matt Dornak, and Ryan Wolcott of Stream Realty Partners DETAILS: The logistics solutions provider renewed and expanded into a 200,000-square-foot lease at 1201 Big Town Blvd. in Dallas.
SHIPPERS WAREHOUSE INC.
SIZE: 556,000 square feet TENANT REPS: Al Leon, Larry Leon of Logistics Realty LEASING AGENT: Matt Hyman DETAILS: The logistics company has signed a long-term lease for 556,000 square feet for a build-to-suit distribution facility within Prime Pointe industrial park near Interstate 45 and E. Wintergreen Road in Hutchins near the Union Pacific Intermodal Terminal.
5 PLATINUM PRESS SIZE: 150,000 square feet TENANT REP: ML Realty Partners DETAILS: The supplier of health-care packaging solutions signed a lease for 150,000 square feet of space at 4251 Empire Road in Fort Worth.
D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 1
Perfect Location | Vibrant Economy | Can-Do Culture
ARLINGTON: WHERE DEALS GET DONE Arlington is in the spotlight and perfectly situated at the epicenter of North Texas. Beyond our world-class entertainment is the backbone of our city: Economic vitality, a diverse, skilled workforce and a culture of global opportunities. Office of Economic Development ArlingtonTX.gov/ecodev | 817-459-6155 | email@example.com
RETAIL LEASES 3 4
1 1002,915 SF 2,9157,117 SF 7,11717,856 SF
17,85648,000 SF 48,000106,207 SF
DATA SOURCE: XCELIGENT INC., A COMMERCIAL REAL ESTATE RESEARCH FIRM IN PARTNERSHIP WITH NTCAR
WEST VICTORY PLAZA
SIZE: 24,002 TENANT REP: Harrison Hughes of Viceroy Realty Advisors LEASING AGENT: Daniel Goldware of Trademark Property Co. DETAILS: 8020 Hospitality and Brooke Humphries will open a 24,022-square-foot restaurant and entertainment concept occupying the entire ground floor of the west Victory Plaza building in the space formerly occupied by Nove and N9NE. Led by Elias Pope, 8020 Hospitalityâ€™s other DFW-area concepts include HG Sply Co. and Standard Service.
TEXAS FAMILY FITNESS
SIZE: 23,000 square feet TENANT REP: Dan Avnery, NAI Robert Lynn LANDLORD: Goveia Commercial Real Estate LEASING AGENT: N/A DETAILS: The lease is at Main Marketplace at FM 423 and King Road NW in Little Elm
LARGEST RETAIL LEASES
TEXAS FAMILY FITNESS
SIZE: 21,000 square feet TENANT REP: Dan Avnery, NAI Robert Lynn LANDLORD: Sam Moon Properties LEASING AGENTS: Andrew Sudderth and Brandon Trimble, The Retail Connection DETAILS: This fitness center will be in the Sam Moon Center, 9120 North Freeway in North Fort Worth
TEXAS FAMILY FITNESS
SIZE: 20,700 square feet TENANT REP: Dan Avnery, NAI Robert Lynn LEASING AGENTS: Brad Quine and Randy Scott of Quine & Associates DETAILS: The new fitness center will be in Cimarron Plaza, 1320 Airport Freeway, in Bedford
SIZE: 14,000 square feet TENANT REPS: Jeremy Zidell with The Retail Connection LEASING AGENTS: Easley Waggoner Jr. and Amanda Throckmorton of Venture Commercial
DETAILS: Dallas-based Tuesday Morning expanded its footprint in Hulen Fashion Center in Fort Worth by signing a lease expansion adding 5,000 square feet to bring its total to 14,000 square feet.
D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 3
DFW’S STRENGTHS KEEP INVESTORS’
DOLLARS FLOWING IN
North Texas has been a hotbed for real estate investment for years, with an increasing number of sellers and buyers active in the market. From multifamily to office and industrial, investment capital has helped shape the Dallas skyline. We brought together five of the top minds in the capital investment field in DFW — Maureen Kelly Cooper, Tim Jordan, James Dunn, Tony Dona, and Paul Rowsey — to talk about the capital markets in recent years, and what the future will hold for North Texas.
BY LANCE MURRAY / PHOTOGRAPHY BY MICHAEL SAMPLES
3 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
LANCE MURRAY: We’ll start by asking each panelist to give us a recap of the real estate investment picture in 2016. Were things better, were they worse, or were they about what you expected?
TONY DONA: 2016, in our view, was more of the same. It was a better time to be a seller than a buyer. The markets remained extremely liquid, and Dallas was no exception in that regard. To the extent there was a difference year over year, it felt like there was [a smaller] pool of buyers. On the buy side, debt maybe wasn’t as available as it was in 2015, but it was still adequate. MAUREEN KELLY COOPER: For sales of properties, it was a record year, and the price was perfect, which goes to the fact that there’s a lot of competition for buyers out there. ... We had some of the largest transactions — with State Farm and the Verizon transactions, and then also Uptown prices — and at first look, they were higher historically. JAMES DUNN: It was pretty much as expected ... stable environment, good fundamentals, liquidity in the environment. The why and for of the region — we’ve had a lot of corporate relocations. I think that’s due to our limited government by design, and limited regulations. State legislators [meet every other year]. They can’t
mess it up that badly. So, that’s good. That’s attracted a lot of businesses and a lot of population growth. We’ve had huge job growth. Since the 1990s, we’ve nearly doubled the nation’s growth rate. That’s all because of a pro-business, can-do attitude, low taxes, and affordable living. All those positive things have underlined what is happening in the region, which is really positive. TIM JORDAN: While we’re hitting pricing peaks, we’re also hitting rent peaks. Rent has come up dramatically, and we’ve recovered nicely. DFW recovered [well] on the job side, and that continues to drive rents in all product types. You see it in office, multifamily, and industrial properties. It’s been very strong for those products. PAUL ROWSEY: Activity was a little better than I expected. That reflected as more of a bear than a bull. Relocations have had a big effect. Obviously, the business environment here is very good, and there’s been a lot of population growth.
Quick follow-up with Tony. You mentioned that there might have been less capital available in 2016 than in 2015. Is there an overriding reason? DONA: Banks pulled their horns in a little bit on development debt, and for certain value-add assets — maybe debt was a little less available. But there’s still plenty of debt. In our world, 2015 felt perfect when you were a borrower, whereas 2016 was a little less perfect.
Let’s talk about the new administration in Washington. Perhaps there’s going to be a new regulatory environment for the financial markets — for investing in general. Give us an idea about how that could affect the availability of capital in North Texas. JORDAN: Again, this is a national picture, not merely a regional picture. The regulation really affected the banks, and it specifically affected construction financing available at the banks. If there’s any relief on regulation on the regulatory side for
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the banking industry, it probably will show up most prominently on the bank side of the market and then for construction, too. MURRAY: So you think construction lending could free up even more? JORDAN: It could free up, but it’s been fairly constricted over the last couple years. DUNN: On that note, it’s actually been good for our business. We’re a nonbank financial company. We’ve seen a lot of things come our [region’s] way: Look at the $500 million of construction primarily. We’ve seen some of that come our way, which has been very good for us. It’s good because it tempers the possible oversupply in the DFW area. It causes people to leverage less, and we’re seeing banking capital at low leverage points. You see this new market forming between the 50, 55 percent leverage up, and then management or preferred equity coming in to fill the gap. We’ve seen a lot of supply in Houston just coming out of the ground now and a pretty soft market. We’re thinking it’s positive overall. The Trump administration will a lot of choices in terms of policies — the expectation and the reality may be different. ... That could cause a little bit of a bubble. Small business sentiment spiked in January, and that’s very bullish for job growth, and we haven’t seen that since 2004. It’s really strong. It went from the mid 90s to 105 or 106. It’s really bullish, in terms of what’s potentially coming into Washington. Only time will tell. COOPER: The reason I think it’s high on the stock market, too, is that people are thinking that it will be good for business — maybe some relaxing of the Dodd Frank Act. DONA: For Dallas specifically, and maybe stepping away from regulation, if the administration is successful in increasing defense spending, that’s going to be a net positive for Dallas-Fort Worth. If Dallas-Fort Worth would have a concern with the new administration,
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[it would be] what happens on trade and immigration. Given Dallas’ diversified business activity, that could be a negative. ROWSEY: There’s going to be some modifications to Dodd Frank. In this administration, there’s going to be a move away from globalization in the regulation of financial markets. We could move away from Basic Three. That should increase the flows of capital and the availability of capital. Offsetting that, with the potential of a stronger dollar, it could retard foreign investment and the available capital from foreign sources. COOPER: On the global road, we would definitely have gotten some uncertainty with Asia and Europe regarding what’s happening in the United States — the viewpoint internationally. That might deter some investments in the United States on foreign capital.
Would that hit DFW particularly hard? Is there enough foreign investment here? COOPER: I think foreign investment is around 10 percent in Dallas. So it’s not going to be a major impact right now.
In the past couple of years, multifamily has been very strong in DFW. Is it still, and what sectors do you think will surprise you in 2017? ROWSEY: Multifamily is still fairly strong in the region, but rent growth is moderate. You have seen some concessions, a preemptive market. There’s some concern about supply, especially at the high end of the market. Overall, things seem to be fairly steady. Absorption continues to be good with some rent growth. That’s all positive. In terms of the sectors that are going to be positive in the coming year, small industrial — “the last mile” — is going to continue to be a favored asset class. JORDAN: The multifamily side can’t get much better than what it is right now. We’ve seen between 95 to 96 percent occupancy across sectors A, B, and C. You have over 25 percent growth in rents in the As, Bs and Cs over the last four years. It’s been very dynamic. The opportunity for redevelopment will continue. Older product that needs some tender loving care and rehab, will be a move-up market. Are people getting into a better product if they can’t afford the super high end, which is where most of the new construction is, as you would expect? Job growth is what’s driving that, and it’s the in-migration. We’re going to worry about the supply of housing, and not having enough, more than overbuilding from that standpoint. DUNN: I agree that multifamily is super strong, and job growth continues. COOPER: Industrial is probably the other sector that’s going to be seeing some major investment. It’s getting back to the administration. If they’re going to have more manufacturing jobs — bringing things back to the U.S. — that’s a sector that will see a benefit. DONA: Apartments and warehouses are the two sectors where we’re active. On the apartment side, our belief is that you’re going to have overbuilding on the high end.
In this cycle, almost 90 percent of the new product delivered is at the super high end of the market. It will all lease, but I don’t think it’s going to lease at the desired rents. Meanwhile, you have the good job growth in the broader band of what we would call obtainable rents. That sector is going to continue to perform extremely well. On the warehouse side, it’s interesting. The supply and demand dynamics are going to be about the same in 2017 that they were in 2016, but the capital that wants to buy what is now called “last mile industrial” is massive. You’ll see record prices paid for that product in Dallas this year.
Are there certain areas of the region that you see having the highest potential with multifamily or industrial? The southern part of the county seems to have a big industrial boom. Where do you see that, moving forward? DUNN: Multifamily housing and new jobs are going to far northern Dallas county. I think one thing that could surprise us a little bit ... is if we have some sort of a rift with Mexico. That’s one of our largest trading partners. That could hurt the industrial segment and surprise us in a negative way. Hopefully, that wouldn’t happen, but it’s possible for a negative outcome for a Trump policy — people are trying to read into everything. Who knows what’s going to happen? But that could surprise the downside. If his policies are as effective as people believe they will be, then you could see hotel construction really continue to outperform because hotels are GDP correlated. ROWSEY: The multifamily sector, the value-add space, as Tim mentioned, is extremely frothy. A lot of capital is adjacent value-add to multifamily and that will continue. It addresses the affordability issue on higher-end multifamily. You may just ask “Can the demographic that’s attracted to that product afford the high-end product?”
MEET THE PANEL PAUL ROWSEY Paul Rowsey is President and Chief Executive Officer of Compatriot Capital, which directs the real estate investment strategy for Sammons Enterprises Inc. Previously he was a founder and the managing partner of E2M Partners LLC, where he still serves as Chairman of the Investment Committee.
TIM JORDAN Tim Jordan is a Managing Director at JLL, and serves as the Capital Markets Lead for the South Central Region. His primary areas of responsibility include the financing of commercial real estate including office, data centers, hotel, retail, mixed use developments, and multifamily products.
JAMES DUNN Jim Dunn is Managing Director and Head of ORIX Real Estate Americas. He manages the ORIX business that originates bridge and construction loans, invests in securities backed by commercial real estate properties, and maximizes the resolution of defaulted loans through its rated special servicer.
MAUREEN KELLY COOPER Maureen Kelly Cooper is Senior Managing Director at Cushman & Wakefield, where she guides corporate real estate and corporate finance teams involved in some of the company’s largest and most complex real estate endeavors.
What’s driving the pricing trends in DFW right now? JORDAN: It’s rent growth. You’re seeing people pay up, and some people paid up in ’15 and ’16, in anticipation of that good, strong job growth. You’re marketing to certain rents in buildings where you’ve got a sevento 10-year-old lease in an office building, and it’s been marketed maybe up 30 percent from what it was. The rent growth is the biggest driver by far.
TONY DONA Tony Dona co-founded Thackeray Partners in January 2005, and focuses his efforts on overall strategy, capital structure, limited partner communications, asset management, and deal sourcing.
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R ROUNDTABLE DUNN: I would also say monetary policy is a big driver. Monetary policy has been very loose and very pro real estate, maybe to our detriment in the end. But, in some ways, you could argue it’s created a bubble. In confluence with the high volatility regulations in terms of construction, now banks are into bridge lending and those types of things — a lot more capital for the value of apartments and things of that nature. COOPER: Job growth is supporting all of that. New people are moving into the city from other areas, and the continued growth is the backbone for everything. DONA: To piggyback on the comment on monetary policy — this is not unique to Dallas, but there’s a starvation for yield. It has a tendency to create a bit of a bubble, whether it’s apartments or warehouses. Whatever the product is, you see people starved for yield who are willing to forget about replacement cost when they buy a product. And that’s going to continue to drive capital flows in Dallas and elsewhere. ROWSEY: Clearly, employment and population growth are a major driver on the positive side. If you look at population growth in the U.S., it’s about .8 percent. We’ve been at two to three times that. And, if you see a recovery in the energy sector, you could even see greater growth. A lot of investors are looking for demand-driven markets and the Sunbelt Region has attracted the most population and created the most demand. Dallas-Fort Worth has been the leader in that entire realm.
Talk a little bit about Janet Yellen’s recent comments that the Federal Reserve will need to raise rates at an upcoming meeting. Would it affect investment in DFW? DONA: I hope they do. It would be healthy to have a little more balanced monetary policy. There’s so much demand for real estate right now that a moderate increase in interest rates might not even affect pricing that much. I would expect it. We assume that a 100 basis-point increase and interest rate would cap rates 50 basis points. The reality is, demand for real estate is so great right now, I’m not sure if there would be that much impact. It would be healthy to start going to a more normalized interest rate situation. JORDAN: Returning to the mean, it’s not like rates have increased so dramatically beyond what would be normal. This is normal. We’re
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getting back to normal. We haven’t been at a normal state. They’ve been unbelievably low. Domestically and internationally, rates have been phenomenally low. That’s driven a lot of people into real estate for that yield that they can’t find in other places. DUNN: I would say it a bit differently. I agree that rates need to go up, but I don’t think that will revert to the mean. The mean being Fed funds rated at 5 percent: I don’t think it’s going to go there. I don’t think it’s going to go there, maybe, in our lifetime. I could be wrong, of course. But at the same time, we have very inflationary trends in terms of demographics and other things. It’s not the same as it was back in days of Reagan — a lot of people were saying Reagan passes tax reform, and it caused this boom. But that was on the tails of the baby boom generation entering their peak earning and spending years. Now they’re starting to downsize, and you see that shift. I don’t see our rates moving up materially. I think if they move up to 200, that would be a surprise — and that being not even close to the norm. ROWSEY: Rising interest rates can affect pricing somewhat, but not necessarily the amount of investment activity. As Tony said, there’s still a lot of appetite for yield. And, over the last two years, a lot of performance and a lot of the impact of rising interest rates has already been priced into the market. There’s been an expectation. We’ve seen forward expectation rates being 100 to 150 — 200 basis points higher than they actually have been. I don’t see it affecting this activity that much. We’ve seen the cap rates spread over the 10-year treasury tighten over the last two quarters. There’s probably still a little of bit of cushion there. JORDAN: You’ve also seen spreads moderated by mortgages. When the interest rates went up toward the end of the year, you didn’t see spreads moderate much. The early part of this year, spreads have moderated 30 to 40 basis points. You’re offsetting part of the interest rate increase per the spread compression.
Last year, during the capital markets panel, we asked how buyer and seller expectations were matching up. What are you seeing right now? JORDAN: For retail, they’re not matching up. That would be the one segment where there’s probably the biggest gap. For multifamily, there’s a bit of a gap for the newbuild product. People may not be paying quite the price that the developer had hoped for. Industrial is meeting expectations. If the seller is not meeting his expectations, his expectations were crazy. ROWSEY: There’s a fair amount of equilibrium in expectations between buyers and sellers. Some sectors obviously are better than others. They’re starting to see some pressure especially on land. Land prices are high, and that’s always the accordion for real estate pricing, obviously on the development side. Overall, the number of buyers has probably shrunk in terms of a property coming
R ROUNDTABLE to market, but pricing expectations have been pretty much at equilibrium. DONA: On multifamily, on apartment deals that are $50 million and less, there’s more of a buyer/seller meeting. When you get up into the very large assets where there’s a smaller pool of buyers, there’s been a bit of buyer/seller mismatch. But otherwise, it’s a pretty good equilibrium. COOPER: When dealing with the good-credit tenant, there’s still plenty of demand and plenty of buyers, which is making it expensive for the buyers with all the competition. Depending on what type of risk they are, it’s impacting buyer/seller match up.
What do you see as the region’s biggest selling points, and on the other side, what roadblocks are out there to getting deals done locally in 2017? DUNN: It’s already stated, but it’s the pro-business environment. It’s limited government by design, set constitutional limits to government—two years instead of every four years. It’s monetary policy. It’s job growth. It’s because we have a lot of millennials here, too. A lot of millennials are brought to this region. We’ve a fairly young population, relative to most of the nation. These people are attracted to this environment, and the dynamics of this environment, which is also driving the demand for multifamily product and things of that nature, since they can’t afford a home. It’s a nice sweet spot for multifamily as a result of that. ... Regulations are somewhat of an impediment to the banks. They’re slowing them down a little bit. There’s been a pullback in terms of construction, which is probably a positive in some respects. On balance, I don’t see a lot of things holding us back. It’s really more about the unknown things that could happen globally we’re just not seeing right now. It’s the unexpected that you just don’t know. That’s going to get us in the end, or pop the bubble, so to speak — or it could cause a recession. We’ve had a long run. It’s the second-longest run in terms of growth, consistent growth, in U.S. history. It’s definitely time to be a little cautious in terms of what could happen, but maybe the Trump policies will change that image. We’ll see. JORDAN: You’ve got to add the airports, having DFW and Love Field. Ridership at Love Field has doubled since the lifting of the Wright Amendment. Chicago’s got a similar circumstance, but there aren’t many major cities [with the] robust infrastructure we have relative to air travel. That’s a big piece. And you mentioned the workforce: It’s a well-educated young workforce. That’s a huge positive for DFW. If you think about the magnitude of what’s happened since 2010, we’ve added 732,000 jobs to the Metroplex. Putting that in context, that’s the jobs that exist in Salt Lake City. So you drop Salt Lake City into the Metroplex, and that’s the number of jobs that have been created. It’s phenomenal what’s happening here. We all live here, and you take for granted how dynamic that’s been. It can’t be overstated. DONA: There’s no place better than Dallas to be if you’re in commercial real estate. Getting to Tim’s comment about a well-educated workforce. Not a short-term concern, but a very long-term concern, is the state of Texas proudly underfunds education. In particular, since so many of our population under the age of 18 are in a low-income environment, we have to figure out how to substantially increase our investment in public education if we want to be as dynamic in 20 years as we’re today. ROWSEY: This is a business-friendly political environment. We were recently involved in a corporate relocation — a company from California. Going through the entitlement process, the regulatory approval process here took less than 12 months. Their estimate was that it would take 10 years to get similar approvals in California. That’s a big difference, believe me. We’re seeing more and more companies realize that, in moving to different parts of the country, whether it’s the Northeast or the Midwest or the West Coast. Dallas has become a major market for real estate investment. People have finally gotten over the ’80s. There’s not as much volatility in the market. We’re not one of the “Sexy Six” [New York City,
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R ROUNDTABLE Boston, Washington DC, Chicago, Los Angeles, and San Francisco] yet, but I think more and more capital, both domestic and foreign, are coming into this region. On the roadblock side, the concern is whether infrastructure can keep up with population and job growth, whether it’s transportation or other infrastructure. [It’s] going to take an investment in infrastructure, and it has to get out ahead of growth to some extent. We’re behind right now. To get out ahead of growth, that means that you’re going to be to have to make those investments before the tax base is there. You have to anticipate it. Hopefully, we’ll start to see more infrastructure investments in the region. DUNN: I’ll highlight something as an example: We’re about to close on a deal in California, and it took them 17 years to get the land entitled — literally 17 years. ROWSEY: It’s like a career.
Let’s talk for a minute about something that’s been in the news a lot in the last year, and that’s the Dallas Police and Fire Pension Fund. Is that affecting investment interest in DFW, and if it is, how does the city overcome it? JORDAN: We haven’t seen it brought up as a subject from the buy side. To date, it hasn’t seemed to have affected people’s mindsets on when they’re buying. They’re buying for other reasons. That isn’t getting in their way. COOPER: We haven’t seen any comment on that from investors outside of Dallas. That hasn’t been something that’s come up at all. DUNN: I would worry about the morale of the police force and what happens to them. They’ve had a lot of issues this last year. But I think the morale of the police force long term is the real issue, both the pay and otherwise. I think that could be a problem if you see crime moving up significantly in Dallas now, because the police are retiring and leaving and quitting and moving to other precincts. We’re bleeding more money into the suburbs. That could be a real problem in the long run but nobody’s mentioned it. ROWSEY: It’s not a big issue from the investment standpoint. It’s a big issue from the city standpoint that needs to be addressed. We have a reasonably large footprint in the Chicago market, and if it’s not affecting investment in the Chicago market, I don’t think it’s going to affect investment in Dallas. Because our problem is a tiny fraction of the problem they have in Chicago.
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MAUREEN KELLY COOPER
What is the state of foreign investment coming into DFW? Maureen mentioned it’s about 10 percent. Do you see that growing? We’ve talked about the uncertainties of policy as far as trade and the other things that would affect it. DUNN: One concern would be the elimination of EB-5, which is probably driving some of that demand. That’s one aspect of it. I don’t know the numbers on how much is coming from EB-5 versus some other sector. That would be one thing that if that goes away, you could see some of that dry up a little bit. Another factor is the negative interest rates overseas. Negative interest just causes flight of capital. That’s not good for their economies or their environment. It’s a pretty material tax to the poor, but I don’t think it’s good for their economies, and that’s what’s driving a lot of the demand for the United States. We’re relatively better than a lot of other countries, even though we’re very fiscally irresponsible as far as the reserve currency. DONA: We don’t see foreign capital in the size asset we invest in, but to Paul’s comment earlier, Dallas isn’t the “Sexy Six” yet, but it’s just outside of that. We’re on the radar of international capital. I recently heard there’s almost 7 trillion of sovereign wealth money, and that money is currently 2 to 3 percent in real estate and going to grow. In particular, China is pulling back a little bit now, but the negative interest rate countries — Japan, Germany, are gearing up to try to do more U.S. investment. I think Dallas is going to capture a fair amount of that over the next several years, and I think it will probably be material. COOPER: It’s gotten expensive [in] the other cities. So, that’s why they’re looking to places like Dallas with the pro-business environment to be investing here. Just on the global macro view, if that’s where there could be uncertainty in the future, depending on how the policies turn out. That would affect everybody, not necessarily just Dallas. But assuming everything stays stable in that perspective, Dallas is going to see more relative investment from foreign capital because they’re recognizing all the benefits of being here from an investment perspective. JORDAN: Foreign investors tend to want to buy assets of size. And you look at the number of transactions over $100 million and over $200 million: There just aren’t that many in DFW. So the size of and the cost of our real estate is not so exorbitantly expensive to be able to fill those buckets. You don’t see as much foreign investment just because of the size of the projects done here are just not that large. ROWSEY: There’s a fairly good chance of tax reform under the new administration. And one of the things that has been discussed pretty robustly in Washington is changing some of the tax on foreign investment. That could free up additional investment capital from foreign sources.
Let’s look ahead. What areas of DFW are really ripe for investment right now? ROWSEY: Pretty much every place right now. From a regional standpoint, the increase in defense spending could be a real positive thing for Fort Worth. The studies I have seen show that it probably is the third-largest beneficiary of increased defense spending. That’s a real positive for Fort Worth. The success of Uptown in Dallas has created an opportunity for other areas to be successful. As prices have risen, you’ve seen a migration of activity to the Knox Henderson area, to the Design District, to the South Side Flats area on Lamar. When you look at it, there’s some real positives for the whole Deep Ellum area — it’s kind of languished for a while — but you have concentration of ownership there. Its location is very attractive. There’s been some infrastructure investment in that area, and I think it could become a really hot area. Hopefully, that [will lead] south from Deep Ellum, which I think would be great for the city. COOPER: I concur with Deep Ellum and going down to The Cedars area — especially with the train and the population that’s in downtown and Uptown now. [People] could be in The Cedars area and be close to those businesses, without having to deal with coming from the north and the traffic ... We could see some real positives. DONA: Everything is right for development because the level of job growth and population growth is so spectacular in Dallas-Fort Worth right now. There are many places to invest. You’re going to see a lot of markets emerge. An example is two of our new investments in the area: One is a very high-end apartment next to Stevens Park Golf Course in Oak Cliff. Another is a very nice apartment on the east side of Fort Worth, up on the bluffs overlooking downtown. That area of Fort Worth is not really redeveloped yet. In the next 10 years, with continued growth, you’re going to see that whole area transformed, just like the west side has. There’s a lot of opportunity for anything that’s somewhat in-fill, given the population growth. DUNN: Dallas’ Trinity Groves hasn’t been mentioned. That’s a big one. And, the State Fair could be interesting if someone could come up with something unique there. I don’t know what it would be. But a mayor that will go and make a big mistake by letting the Dallas Cowboys go to Arlington — that would have been huge for Dallas — but that’s in the past.
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Just look at what American Airlines [Center] has done, and that’s really created Uptown in a lot of ways. Frisco and Midtown are going to be interesting — what happens to Midtown and that development. It’s very in-filled and has a lot of good traffic connectors. They could do some interesting stuff there. Obviously, Frisco is not a secret, but a $6-billion model.
Is this a time to take risks or to be cautious? What are the main challenges that you’re facing in commercial real estate investing? DONA: I’m probably like Paul. I’m pretty negative. JORDAN: That’s why we put you guys at the ends. DONA: I haven’t recovered from 1990 yet. Times are great, but I don’t think you should make any investments that you don’t want to hold through a recession. I don’t know that there’s a recession any time soon, but I don’t want to do anything that I would be scared to own in a recession right now. DUNN: We have to take a longer view on [construction]. Another part of it is commercial mortgage-backed securities. So in both areas, we look at it exactly like Tony — [we] just have to get a lot of cushion for understanding the basis: Be very careful, have enough cushion for a downside, and make sure you protect your capital. As a lender, we want participation on the upside and not on the downside. We want to make sure we get our money back. We’re always looking at that. We’re very basis oriented, and we really try to measure our downside risk. We do a lot of hotels. Right now, we’re dealing with a lot of low-leverage hotel lending. We’re very careful about what we go into, and what exit pricing it is. The exit price is double or triple our book value. JORDAN: If you’re going to invest in real estate, there’s no better place than North Texas to invest. Just the dynamics of North Texas are as good as you can find anywhere in the country. If you have a recession nationally, it’s going to affect North Texas like it will any market. We’re going to fare better than most markets through a recession, so the picture is as bright here as it is anywhere in the country. ROWSEY: If we go into a recession, we’ve got a bigger safety net with all of the activity that we’ve gotten in the last couple of years ... That actually happened during the last recession as well. There’s a lot of uncertainty out there — politically, financially, overall — in terms of monetary policy. In uncertain times, people tend to become financially more conservative. There’s a tendency today not necessarily to cut back on the level of activity, but to be much more risk averse. We’re seeing people de-risk, de-leverage — we’re doing that — and basically position themselves to ride out the cycle if there’s a downturn. That probably means there will be a little less pricing momentum going forward. People take more of a defensive posture
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and focus more on the return from cash flow, as opposed to residual. We’re 92 months into a recovery. The long-term average is 60 months, but if you look at the last four recoveries, we’ve averaged about 94 months. We’re getting to the top end of that. People take a more conservative view, but not necessarily a negative view. JORDAN: If you look at the job growth we were talking about earlier, it’s the diversity of that growth. There’s no one sector driving the economy in DFW. Moody’s ranks it the fourth most-diverse economy in America. And you look at the people who are talking to the Chamber about migrating or moving to Dallas — that’s a very diverse workforce that’s coming and looking at Dallas. The fact that we’re not driven by any single sector: You’ll fare any downturn very well from that standpoint.
What are your overall predictions for the capital market activity next year? DUNN: Since we invested in commercial mortgaged-backed securities, I guess I’ll go first. We invest in everything but the traditional commercial mortgage-backed securities (CMBS) model. We typically will invest with people that are using the capital market to finance their business, not to arbitrage their business — absolve the risk of somebody else. Most of our investments are around traditional models. That being said, we’ve seen a dramatic decrease in [capital markets] spreads just because there’s no supply because of retention requirements. We’re seeing the CMBS markets shrink pretty dramatically. Back in the summer, there’s $230 billion of CMBS. Last year was $65 billion and thus far into the year, we’re half of what we were last year at the same time. We’re seeing credit radically drop in terms of yield. It’s almost taking us off the playing field. We’re not really interested in buying lots at this point. But last year, it was just the opposite of that because some of the regulations came in and basically eliminated liquidity, depending on the capital markets. Prices have gone down materially, and we saw that as a really good buying opportunity. This year, the capital market you can see spread compression, just because of a lack of supply. And that’s going to filter into rates moving up, as Tim was saying. We see some probabilities shrink as people try to compete on yield, and there’s so much competition and liquidity involved. Those are things that lead to bubbles, and that’s when things snap the opposite way. It’s again time to be cautious. It’s a good time to have a lot of liquidity to capitalize on that, on some of the snapback. JORDAN: I’m optimistic about where the market is because the fundamentals are so good. It will have continued strong investment in DFW. You’ve got good liquidity across all sectors, other than maybe the construction market. I think we’re going to be at a good, steady state for investment in DFW. ROWSEY: Things are going to be about the same as they were last year, absent
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R ROUNDTABLE some black swan event. If the political environment changes its regulatory tax policy, it might create a little bit of tailwind. That might be slightly offset by uncertainty, and maybe some moderating real estate fundamentals, although I agree they’re still positive. COOPER: It’s a positive outlook for 2017. There’s still interest in investing in Dallas. And so for this year, pending some big huge event, I don’t see that changing. It’s still strong. DUNN: I think Dallas-Fort Worth is on fire ... We will weather a recession much better than everybody else. DONA: The only thing I would add to Tim’s comment about a pullback on construction lending: If you’re an owner, that’s fabulous. I hope that we do see a slight contraction in construction development financing because that’s going to help keep us in balance. We’re very bullish on Dallas.
Jim, you mentioned the long view. How far ahead are you all looking in the big picture? DUNN: Well, the average life of every construction deal we do is five-years — it’s a three-year, with a two-year or one-year extension. Everything we look at is pretty long, and we think we’ll be holding something during the recession. We always look at it that way. We’ll always weather the storm. I’m going to put my money in it. So we’re very cautious about what we enter, and what we invest in for that reason. And basis is always kind of a first thing — fundamentals. We always go to sponsorship last, whereas banks typically go to sponsorship first. We’re OK with a low down. We don’t want to own, but we know that sponsorship is great. ROWSEY: Visibility in the capital markets beyond five years is very murky. It gets
Industry Insights: Institutional Capital Delve into the minds of institutional investors and hear how the experts plan to meet the challenges of market volatility, a low yield environment and meeting total return objectives.
murkier every day that you look forward. We probably try to convince ourselves that we look five years forward. Beyond that it gets very difficult. We do look longer term in anticipating demographic trends, social trends in terms of where you want to be. But I think beyond five years gets really difficult. JORDAN: That will be good for the next two weeks. That’s as far out as I can see. We’ve been on a rolling two-week program.
JOINING IN Duane Dankesreiter, Dallas Regional Chamber Senior Vice President of Research and Innovation, and Linda McMahon, TREC President and CEO, joined the conversation, contributing questions from their perspectives.
DUANE DANKESREITER: Are we competing from an investment standpoint more now against the “Sexy Six,” or who are the other markets that we compete against?
ROWSEY: We do compete against the “Sexy Six” markets more than we ever have. If you
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R ROUNDTABLE look over the last 10 years, you have seen more volatility in those markets than you have here. We do compete with them. In terms of direct competition, in terms of the capitals versus the buyers that we see in this market, they tend to be focused more on what I call “command-driven” or Sunbelt markets. Obviously Dallas, Austin, Houston, Phoenix, Atlanta, Charlotte, maybe some of the D.C. area. DONA: Central Florida. ROWSEY: Tampa [and] Florida are probably our biggest competitors in terms of capital. DONA: The class of investor that looks at Dallas is typically going to be someone whose investment thesis believes in growth and employment. If that’s your focus, then the cities Paul mentions are the ones that are your competition for capital. JORDAN: But as you compare, look at our job growth since 2010 compared to those cities: We have a much better fundamental picture than Atlanta. Atlanta has been good, but we’re outpacing them dramatically. DANKESREITER: We had 113,000 new jobs last year. That’s second to New York. That’s kind of where I was leading with the question. JORDAN: We actually exceeded New York in 2016. We exceeded New York and LA. So we were No. 1 nationally in job growth at the end of 2016.
DANKESREITER: You mentioned that investment might be coming from negative-rate countries. What countries should we be thinking about in terms of serving as their North American headquarters? From the Chamber’s perspective, we work international markets looking for corporate relocations.
DONA: The big capital flows — and Paul might know better than me — but Canada is big. Norway is big. Everybody thinks Germany is going to become big again. China is big, but everybody expects them to reduce. Who would you add to that? JORDAN: Korea. ROWSEY: You will see some capital. JORDAN: Some of the relocations like Toyota really put Dallas on the map because they’re making 50-year decisions. It’s a generational decision, and that speaks volumes nationally and internationally when they come to Dallas. That’s a huge calling card.
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LINDA MCMAHON: I’ve often said that what happens in the economy here is going to be dictated by decisions from elsewhere, like big New York banks. I have some experience there. Where do you think the center of influence is, in terms of that as an external investment, and how that dictates investing in this market? Is it still the same dynamics as it always has been?
JORDAN: I would say the investment into DFW is a pretty diverse investor base. It’s not driven by New York or the coast in that regard. It’s a pretty broad base of investment here.
MCMAHON: I was surprised, frankly, that the pension fund crisis hasn’t had an impact on investor opinion. What about the bond downgrades that we have experienced and could potentially experience as a result? Does that have an impact?
ROWSEY: I haven’t seen any impact this far. DUNN: We’ve a municipal group — I asked them. They were saying with Dallas bonds, I have no idea, but I would say that would obviously impact the municipal market. DONA: I think there’s an assumption that it’s going to get worked out, and I don’t think it will impact Dallas-Fort Worth. But if you wanted to invest in Dallas, and if the pension crisis doesn’t get worked out, you might do Frisco instead of Uptown. I don’t know. At some point they’ve got to figure it out, because otherwise you have to assume if you were making an investment in Dallas, you can’t predict what your tax rate is going to be, for example, because you don’t know how the issue is going to get resolved. It’s a very big deal, but I agree that I don’t think anybody has seen any impact to date. ROWSEY: I would add that there are over 3,000 counties in the United States. Seventeen percent of those 3,000 counties experienced positive population growth last year, 17 percent. And it’s not hard to figure out where those counties are. Growth can solve a lot of problems. Capital can flow. It’s very portable. It can go wherever it wants to go, and you have to look at the competitive set. You take those 17 counties that are growing and you look at their physical condition, and then you compare Dallas to them. We look pretty darn good, even though we have our issues. And the other thing I agree with 100 percent is, there’s a can-do, positive attitude in this community. If there’s a problem, there’s an expectation that problem will get addressed and solved. Hopefully, that will continue to be true. That’s not true in a lot of places. MCMAHON: You all should be talking to the mayor. ROWSEY: We’re counting on the mayor.
DOWNTOWN DALLAS / UPTOWN PHOTO: MICHAEL SAMPLES
LABOR MARKET SPOTLIGHT A talented and highly-skilled workforce is a driving force behind North Texas’ booming commercial and residential real estate markets. In this section of the Dallas-Fort Worth Real Estate Review, we profile specific areas that have grown in conjunction with the influx of professionals who continue to relocate to the Dallas region. We also profile worker commuting preferences, and highlight the proximity of employees’ homes to their places of work.
PHOTO: CITY OF PLANO
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LABOR MARKET SPOTLIGHT:
DOWNTOWN DALLAS / UPTOWN BY DAVE MOORE
INDUSTRY SECTORS BY PERCENTAGE OF EMPLOYEES
The number of attorneys and other proAccommodation & Food Services fessional and technical service-related oc11.3% cupations — auditors, financial advisors, Finance & Retail Trade management analysts, and market reInsurance 6.2% search/marketing specialists — working in 12.3% downtown Dallas has been climbing fast. Information All Other So has the number of software developers 5.3% Industries* and computer systems analysts. Jobs of 13.0% Real Estate, Rental, & Leasing those types are projected to grow in Dallas’ 5.1% Central Business District faster than the national average. Public Administration Professional, These types of jobs pay exceptionally well 4.4% Scientific & — ranging from high $80s to mid-$100s on Tech Services Transportation & Warehousing average — far outpacing the average annu27.7% 3.9% al wages for all occupations in DowntownHealth Care & Social Assistance Uptown Dallas. Regardless of pay, more than 3.9% a quarter of all downtown area workers’ Other Services homes are less than 10 miles from the workArts, Entertainment, & Recreation (except Public Administration) place. And nearly half live 10 to 24 miles 3.8% 3.1% from their jobs. *Includes Agriculture and Forestry; Unclassified Establishments; Wholesale Trade; Educational Services; Manufacturing; Mining; Nearly one in five of all employees in the Utilities; Mgt. of Companies; Construction; Administrative and Support; and Waste Mgt. and Remediation. downtown area work in professional, scientific or technical services; nationwide, they make up only about 7 percent of the workforce. N Major employers in the DowntownThe U.S. Census Bureau pairs home/work Uptown Dallas business area include maNW NE census blocks in order Accommodation & to describe geographic % of All DT Employees jor consulting and advisory firms like PwC, patterns Food related Servicesto the workforce. Mapping Deloitte, KPMG, and EY; finance and banking commuter flows, for example, can help 11% employers like Comerica, Santander, ORIX, employers determine where potential workers live, as well as how far they might be willing and the Federal Reserve Bank of Dallas; and E to travel for work. Radar images dynamically W legal services firms like Thompson & Knight, 6000 Retail Trade Finance & communicate several important aspects Winstead, and Jones Day. 6% 18000 Insurance about worker commute patterns. 12% Lawyers, especially, have a bright outlook 30000 The radar indicates primary and secondary Information for job growth in the Dallas region. Over the cardinal directions from which a worker 5% next 10 years, economists project that the travels to a job, and the distance traveled as SE SW All Other Industries Real Estate,by Rental & of each pie piece. The number of attorney jobs will increase by determined the color 13% Leasing size of each pie piece indicates the volume of about 20 percent — from 17,408 to 20,880. S 5% workers who commute from that direction And there is virtual full-employment for Professional, DISTANCE TOScientific JOB & % OF WORKERS Public Administration and distance as indicated by the dashed and lawyers; they have a .5 percent unemployTech Services 5% Less than 10 miles 28.4% numbered concentric circles. 28% ment rate. Downtown Dallas even has its 10 to 24 miles 45.1% Transportation & own law school — the University of North Source: ESRI Total Residential Population forecasts for 25 to 50 miles 12.4% Warehousing 2016; U.S. Census Bureau, Longitudinal Employer-Household Texas College of Law, which de-emphasizes 4%(data based on 2014 employment estimates). Dynamics Greater than 50 miles 14.1% LSAT scores in the admissions process and Other Services Health Care & Social seeks to prepare lawyers for public service (except Public Arts, Entertainment Assistance & Recreation 4% practices, such as criminal legal defense, at Administration) 4% 3% lower-than-average tuition costs.
DISTANCE AND DIRECTION OF WORKER COMMUTE
TOTAL JOBS: 144,567
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SAMPLE OF MAJOR EMPLOYERS IN DOWNTOWN DALLAS / UPTOWN*
31 32 33 34 35 36 37 38 39 40 41
45 46 47 48 49 50
*Excluding public agencies.
LE MM ON
MA PL E
EARNINGS $1,250 per month or less . . . . . . . . . . . . . . . . . . . . . . . . . . . 9% $1,251 to $3,333 per month . . . . . . . . . . . . . . . . . . . . 22.9% More than $3,333 per month . . . . . . . . . . . . . . . . . . . 68.1%
3322 50 27 19
17 32 12
L AL OD WO
WY FR RS GE D RO
28 25 5
13 48 39 41 8 30 PE
S 35 1 26 T 29 6 7 47 9 15 21 49 31 T 2 ELM S 40 T 10 18 MAIN S CE ST ER 37 COMM 34
ST ERCE COMM
INDUSTRY SECTORS BY PERCENTAGE OF ALL BUSINESSES Unclassified Establishments
AGE Age 29 or younger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4% Age 30 to 54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.8% Age 55 or older . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9%
45 AV E
IN ST GRIFF
42 43 44
Jacobs Engineering Jones Day KPMG Lanyon Lockton Dunning Benefit Co Luminant McKinsey & Co MoneyGram International Neiman Marcus Omnitracs Oncor Electric Delivery ORIX USA PFSweb PwC Santander Consumer USA Stream Realty Partners Tenet Healthcare The Beck Group The Dallas Morning News The Richards Group Thompson & Knight TracyLocke Vinson & Elkins Vistra Energy Winstead
MCKIN NEY AV E
26 27 28 29 30
CEDAR SPRINGS RD
1 ACTIVE Network 2 Akin Gump Strauss Hauer & Feld 3 Ambit Energy 4 AT&T 5 Bain & Co 6 Baylor Scott & White Health 7 Builders FirstSource 8 CBRE 9 Chubb Group of Insurance Companies 10 Comerica Bank 11 Corgan Associates 12 Cushman & Wakefield 13 Deloitte 14 EY 15 Federal Deposit Insurance Corp 16 Federal Reserve Bank of Dallas 17 Gardere Wynne Sewell 18 Grant Thornton 19 Harwood International 20 Hilltop Securities 21 HKS 22 HollyFrontier 23 Hunt Oil 24 ISN Software 25 Jackson Walker
Real Estate, Rental & Leasing
Finance & Insurance
Accommodation & Food Services
All Other Industries*
6.7% Professional, Scientific & Tech Services
Other Services (except Public Administration)
EDUCATIONAL ATTAINMENT Less than high school. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6% High school or equivalent, no college . . . . . . . . . . . 17.0% Some college or Associate degree . . . . . . . . . . . . . . 25.8% Bachelorâ€™s degree or advanced degree . . . . . . . . . 30.2% Data not available (workers aged 29 or younger) . . . . . . 18.4% SPRING 2017
Administrative, Support, Waste Management, and Remediation Services
*Includes Agriculture and Forestry; Mgt. of Companies; Utilities; Educational Services; Manufacturing; D A LWarehousing; L A S - F O R TArts, W O REntertainment, T H R E A L E Sand TATRecreation; E REVIEW / 51 Wholesale Trade; Mining; Transportation and Information; and Healthcare and Social Assistance.
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d ssifie Uncla ments lish
LABOR MARKET SPOTLIGHT: LEGACY BY DAVE MOORE
INDUSTRY SECTORS BY PERCENTAGE OF EMPLOYEES
Beyond the Shops at Legacy and behind Accommodation & Food Services the shining new Ford Center at The Star in 12.3% Frisco, tech firms and companies not traditionally perceived as tech are snapping up Health Care & Social software and computer system developers Assistance All Other 7.2% left and right. Industries* 12.8% Capital One and Toyota North America — primarily concerned with banking and Finance & Insurance car-manufacturing, respectively — are among 7.0% Professional, dozens of employers in the Frisco/Plano Scientific & Tech Services Legacy area that have adopted the concept Information 20.8% that all 21st century companies are tech 6.0% companies, and they are hiring accordingly. Our analysis shows that businesses in this Manufacturing Retail Trade area represent a wide cross section of the U.S. 5.5% 21.0% economy — retail, health care, and finance — all of which benefit from the skills of digital Wholesale Trade workers. And compared with other employ4.3% Real Estate, Rental & Leasing ment centers in the Dallas region, people who 3.1% work in the Legacy area tend to live close by. Nearly half of the workers (roughly 42 per*Includes Utilities; Agriculture and Forestry; Public Administration; Mgt. of Companies; Transportation and Warehousing; Arts, Entertainment, and Recreation; Educational Services; Construction; Mining; Administrative and Support; Waste Mgt. and cent) employed in the Frisco/Plano Legacy Remediation; Other Services; and Unclassified Establishments. area commute less than 10 miles to their jobs. Thousands of software developers, coders, and systems analysts are already on-campus in Legacy area businesses, integrating and analyzing company data and N The Bureau pairs home/ market intelligence to improve efficiency, s U.S. Census 25.0% loyeework p census blocks in order to describe % m .0 E 0 2 y profit margins, and meet customer expecNW l Legac10.0%NE 15.0% geographic patterns related to the l A f o tations. Labor analysts predict that jobs % 5.0% workforce. Mapping commuter flows, for 0.0% like these will grow at an average annuexample, can help employers determine al rate of about 4 percent over the next 10 where potential workers live, as well as how rade Retail T years, more than a percentage point higher far they might be willing to travel for work. E W Radar images dynamically communicate than the average job growth rate over all. rvices 3200 e S h c e T ntific & ie c several important aspects about worker S l, a 9600 Those jobs average more than $100,000 ion ies Profess commute patterns. r Industr e th O ll in wages a year, nearly double the average A 16000 The radar indicates primary and s e ic rv pay for all jobs in that area. While not all of e S & Food n secondary cardinal directions from which o ti a d these professionals are building the nextAccommo a worker travels to a job, and the distance tance SW SE is s s A l Facebook, they’re essential in helping these alth Care & Socia traveled as determined by the color of each He nce companies build and keep an edge in the pie piece. The size of each pie piece indicates & Insura e S c n a Fin the volume of workers who commute from marketplace. As Wired Magazine writes, n o ti a DISTANCEInfoTOrmJOB % OF WORKERS that direction and distance as indicated by “For decades, pop culture … has promoted Less than 10 42% g rinmiles the dashed and numbered concentric circles. tu c fa u n the ‘lone genius’ coder. We’ve cooed over Ma 10 to 24 miles 33% the billionaire programmers of The Social Source: ESRI Total Residential Population forecasts for le Trade lesamiles 25Wtoho50 13% 2016; U.S. Census Bureau, Longitudinal Employer-Household Network and the Anonymized, emo, leathDynamics (data based on 2014 employment estimates). Greater lthan 12% singmiles ea50 L & ta er-clad hackers of Mr. Robot. But the real n tate, Re Real Es heroes are people who go to work every day and turn out good stuff — whether it’s cars, coal, or code.”
DISTANCE AND DIRECTION OF WORKER COMMUTE
TOTAL JOBS: 74,029
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SAMPLE OF MAJOR EMPLOYERS IN LEGACY*
12 22 26 35 30
1 JP Morgan Chase 2 Hewlett Packard Enterprise 3 Ericsson 4 Toyota 5 Liberty Mutual
6 JC Penney 7 Frito-Lay 8 Capital One Auto Finance
9 PepsiCo 10 nThrive 11 FedEx Office & Print Services 12 Conifer Health Solutions 13 Dr Pepper Snapple Group 14 McAfee 15 Abbott Laboratories 16 Rent-A-Center
18 17 24
17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
CROSSMARK Denbury Resources CA Technologies CompuCom Systems Pizza Hut T-Mobile IKEA Tyler Technologies Intuit AmerisourceBergen Heartland Payment Systems loanDepot.com Research Now Fiserv Huawei Technologies Infosys Stonebriar Mall Brierley & Partners Jamba Juice *Excluding public agencies.
WORKER CHARACTERISTICS AGE Age 29 or younger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1% Age 30 to 54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.0% Age 55 or older . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9%
EARNINGS $1,250 per month or less . . . . . . . . . . . . . . . . . . 11.7% $1,251 to $3,333 per month . . . . . . . . . . . . . . . . . . . . 21.9% More than $3,333 per month . . . . . . . . . . . . . . . . . . . 66.4%
EDUCATIONAL ATTAINMENT Less than high school. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4% High school or equivalent, no college . . . . . . . . . . . 15.6% Some college or Associate degree . . . . . . . . . . . . . . 23.1% Bachelorâ€™s degree or advanced degree . . . . . . . . . 33.8% Data not available (workers aged 29 or younger) . . . 20.1% SPRING 2017
INDUSTRY SECTORS BY PERCENTAGE OF ALL BUSINESSES Unclassified Establishments
Real Estate, Rental & Leasing
Accommodation & Food Services
Finance & Insurance
Other Services (except Public Administration)
All Other Industries
Administrative, Support, Waste Management & Remediation Services
Professional, Scientific & Tech Services
*Includes Utilities; Agriculture and Forestry; Public Administration; Mgt. of Companies; Transportation and Warehousing; Mining; Arts, Entertainment, and Recreation; Manufacturing; Wholesale Trade; and Educational Services.
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PLANNING TO THE PEOPLE
HOW CITYMAP DEMOCRATIZED URBAN DESIGN BY DAVE MOORE , DATA JOURNALIST AND STAFF WRITER
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F FEATURE It’s been 60 years since President Dwight Eisenhower launched an interstate highway system that connected cities while bisecting neighborhoods across the country. These highways have encircled downtowns across America for decades, providing a means of escape or entry for cars and trucks, often at the cost of disconnecting adjacent neighborhoods. In North Texas, urban planners, transportation experts, activists, and interested citizens have banded together to assemble a plan designed to embrace an approach that is sensitive to both transportation needs and livability of the neighborhoods surrounding Downtown Dallas. In the process, they might have created the secret sauce to reconnect Downtown USA. This is the story of how the plan, called CityMAP, came to be.
AGING HIGHWAYS AS OPPORTUNITIES
Most solutions present themselves first as problems. In this case, the highways that surround Downtown Dallas are in need of significant improvement to smooth traffic flows as Dallas-Fort Worth has grown. Rather than simply rebuilding Interstates 30 and 45, U.S. Highway 75 and Interstate 35E, highway officials took a different tack. Texas Transportation Commissioner Victor Vandergriff called for the creation of an objective team of professionals to bring people together for a more-inclusive conversation.
In response, the Texas Department of Transportation, with the assistance of Dallasbased architecture, civil engineering, and construction management firm HNTB, met with hundreds of people of diverse backgrounds who have an active interest in the neighborhood and its thoroughfares. Members of the public — from elected officials to people who live and work near that area of Dallas — were asked open-ended questions about their ideas and priorities in the process. Eighteen months later, the result was the aforementioned City Center Master Assessment Process (CityMAP), TxDOT’s ground-breaking initiative that harnesses the creativity of residents and community leaders and uses their ideas to formulate various scenarios to address traffic problems while reconnecting neighborhoods. Bringing in neutral planners, landscape architects, engineers, and outreach specialists helped participants free their thinking, said James Frye, lead consultant for HNTB, a Dallasbased architecture, civil engineering and construction management firm. Frye and deputy project manager Brandi Crawford — both
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F FEATURE licensed landscape architects through the American Society of Landscape Architects — shepherded the project through its completion. “There was a sense of neutrality in the consulting team,” Frye said. “When we met with people, it was very conversational. We said, literally, ‘Tell us your thoughts regarding the Dallas downtown freeway network.’ ” The feedback was sometimes surprising. “For example, some people asked, ‘How do we fix schools, or how do we bring the middle class back downtown?” Frye said. Some participants in CityMAP reasoned that if development and planning were done right, it could foster additional development that would substantially increase land values, boosting property tax funds for school districts. Many recurring thoughts or themes found their ways into CityMAP as scenarios, which planners assembled, right down to the cityblock level. The geographic area discussed by participants encompassed 30 miles of freeway and land near highways. Hundreds of conversations, ideas, and interactions later, planners assembled eight geographically-specific scenarios that addressed recurring points of public interest
BEGINNING WITH A BLANK SLATE
One scenario in the study outlined the impacts of removing I-345: The scenario would open space for retail, residential, and/or commercial developments, and would allow for some small parks. CityMAP estimated that within a 25-year period, the removal of the highway could foster up to $500 million in development, boosting neighborhood property values by about $2.5 million, adding 39,000 jobs and increasing property tax revenue by $80 million. Estimates of development and tax revenue also were developed for related scenarios that would modify the existing I-345 or move the highway below ground. Another scenario focused on Dallas’ southern gateway: a two-mile stretch of land along Interstate I-35E, including the Dallas Zoo. The concept for that stretch of highway would include sunken lanes, similar to Dallas’ North Central Expressway, and a deck park, similar to Dallas’ Klyde Warren Park. Planners projected those and other improvements would bring about $167 million in new land value and nearly 1,000 new jobs. The estimated cost for that
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Dallas Mayor Mike Rawlings, Dallas County Judge Clay Jenkins, Texas Highway Commissioner Victor Vandergriff and Dallas City Councilman Lee Kleinman take part in the unveiling of the CityMAP planning document.
scenario: $662 million.
OFF THE PAPER, ON THE RADAR
The potential of Dallas’ CityMAP plan has gained the attention of Dallas’ real estate developer/investment community, and the City of Dallas. Dallas Assistant City Manager Majed Al-Ghafry said the objective, open-ended nature of CityMAP makes it valuable. “It’s a fresh look at what we, the community, desire, without biased opinions or fiscal constraint,” Al-Ghafry wrote, in an email on the topic. The Real Estate Council (TREC) member and INVESCO senior director Sam Gillespie said CityMAP’s blend of specifics — right down to dollar estimates — and conceptual planning make it too valuable not to use. “You don’t want this incredible document to sit on the shelf,” said Gillespie, chairman for the CityMAP sub-committee within The Real Estate Council’s Mobility Working Group. Gillespie said CityMAP’s emphasis on reconnecting neighborhoods while improving traffic flow were key elements in drawing support from the group. “Mobility is a core, core issue for The Real Estate Council,” said Gillespie, a member of TREC’s Mobility Task Force. “The economic health and vitality are dependent upon a strong central city, which is dependent on the strong transportation network.” Gillespie said the task force’s 25-member committee is especially interested the I-30/I-345 corridor, and will likely create a series of recommendations for that area, and present them in October. “TREC is going to get behind this,” Gillespie said. “We’ve got 2,000 members, and we’re going to raise awareness among the membership,” adding that TREC successfully championed the underground version of Dallas’ second downtown light rail line. Gillespie said if anyone needs an example of the transformative power of reconnecting neighborhoods via foot and bicycle traffic, they need look no further than the Klyde Warren deck park. “I haven’t done the math, but what’s been the investment in that area?” he asked, alluding to the booming construction projects surrounding the 5-acre park that arches over the Woodall Rogers Freeway, and connects Downtown Dallas to Uptown Dallas. That includes the $200 million Museum Tower project,
From Downtowns to Suburban Destinations
WE SET THE STAGE Urban Design Entitlements Infrastructure
REPRESENTATIVE PROJECTS CITYLINE TOD TRINITY LAKES TOD MONTGOMERY RIDGE HERITAGE CREEKSIDE DOWNTOWN MCKINNEY DALLAS CITYMAP (depicted)
214.529.7430 | 817.348.9500
F FEATURE the Hunt Oil Company headquarters, and others. “Billions. We can do the same thing connecting I-30 and I-345, connecting South Dallas to Deep Ellum. Connecting downtown to Fair Park … a deck park could be part of it.”
DIFFERENT THINKING , DIFFERENT SOLUTION
Frye compares the CityMAP process to building a custom home, rather than a mass-produced home. “You wouldn’t design a house without talking to the customers,” he said. “We’re not building a spec home. We’re trying to design something that meets the needs of a city long-term. That also impacts the region and regional development patterns.” Frye added: “I think what worked very, very well was, before putting pen to paper, was talking to people and really understanding. It saves time and money. You’re not designing based on one need.” Public policy and planning experts say the CityMAP process is a step above a more traditional corridor feasibility study (which is a combination of preliminary conceptual engineering, environmental impact assessments, public outreach, and agency coordination), because CityMAP literally covers more ground, and identifies positives and negatives of scenarios earlier in the planning process. In addition to collecting input from individuals, HNTB and consultant team member Kimley-Horn and Associates Inc. used advanced tech to get a more complete picture of where traffic goes when it converges in Downtown Dallas. Consultants did so by installing 34 Bluetooth signal-capturing devices along highways leading into and out of the downtown area; those devices captured Bluetooth signals emitted from vehicles, and from drivers’ smart phones. That data — which didn’t include confidential cell phone information — was then analyzed to allow researchers to count the number of drivers commuting and staying in the city, and the number of vehicles that kept moving on. Cameras were also deployed to allow analysts to determine how many of the vehicles were cars and light trucks, and heavy trucks. The analysis of Bluetooth data adds complementary information for CityMAP scenarios.
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Members of the public review aerial maps of Dallas neighborhoods, as part of the CityMAP effort to collect input from people who have a stake in changing how vehicle and pedestrian traffic flow through Dallas neighborhoods.
The CityMAP process would work in other communities as well, planners say. “It’s absolutely scalable,” said Frye. “Every city has its own personality. Neighborhoods are different. The demographics and the politics are different.” Victor Vandergriff, who inspired the inaugural CityMAP study, said the final, 426-page document helped the concepts discussed during listening sessions take form. “CityMAP illustrates what TxDOT and other DOTs can do when they sit down together with local stakeholders and discuss the art of the possible,” he said. “This effort, in going beyond TxDOT’s typical project planning outreach, shows how dreams and visions can be developed long before any formal corridor studies even begin.” Frye said the CityMAP planning process has been presented at 17 events across Texas, including at the November gathering of the Texas Chapter of the American Planning Association conference in San Antonio. CityMAP also has received the 2016 Texas American Council of Engineering Companies Silver Award. Dallas’ full CityMAP report stops short of recommending any specific courses of action, however. “That decision rests with the taxpayer and community leadership,” says the executive summary of the CityMAP project. Will other cities follow Dallas’ path? “I think lots of people are waiting to see what happens,” Frye says. “Where we go from here is going to be very important. The beauty of this so far, has been the collaboration, the sharing of ideas, the working together, the spirit of camaraderie that was built,” he says. “We presented the ideas and now the hard part is that they just need to move forward. Now, the City of Dallas and other partner agencies have to inform the state as to what Dallas’ priorities are. That prioritization will need to be established and agreed upon and formalized by all parties.” Aside from Raleigh, N.C.- based transportation and infrastructure consulting firm Kimley-Horn and Associates Inc., subcontractors working on CityMAP included Dallas-based Gateway Planning Group Inc. (for urban design/economic development); Dallas-based Catalyst Commercial Inc. (for economics); Dallasbased EJES Inc. (engineering/cost estimation); and Fort Worth-based OCG PR (for public engagement).
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The Dallas Office of Economic Development is here to partner with you on your project, big or small. When youâ€™re ready to discuss your business or development needs, contact us: (214) 670-1685 DallasEcoDev.org
BUSINESS. SKILLS. IDEAS. NETWORKS. LIVING. CULTURE. Photography: Large Dallas skyline, Dallas Love Field Airport - Urban Fabric Photography; Winspear Opera House - DCVB
A ANATOMY OF A DEAL
COMEBACK OF THE
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AFTER THE TELECOM IMPLOSION OF THE ’90S, RICHARDSON ADDS TO ITS ECONOMIC TOOLBOX TO REVIVE N O R T H C E N T R A L E X P R E S S WAY. BY JEFF BOUNDS
A speculative real estate bubble is fun until it pops, just as it did nearly 20 years ago along the Telecom Corridor in Richardson. Motorists in the early 2000s got a first-hand glimpse of the impact of telecom’s implosion in Richardson by traveling the 5.5-mile stretch of U.S. Highway 75 that runs through the city. Traveling that stretch now is like watching a comeback by the home team, a rousing revival built on redevelopment, marketing, perseverance, and a revised real estate tool box. Around the turn of the century, US 75/North Central Expressway through Richardson reflected a city coping with the realities of a technology industry in contraction. To the east of Central, just north of Campbell Road, was the 800,000square-foot, mostly-empty headquarters campus for Nortel Networks’ U.S. unit. The Canadian business was among the biggest casualties of the telecommunications mania of the late ’90s, with Wall Street having reportedly valued the equipment maker at $283 billion in July 2000. Heading south on Central, drivers saw empty storefronts at Richardson Heights Shopping Center, a 200,000-plus square foot property at Belt Line Road that dates to the 1950s. Richardson’s office vacancy rate, which was 9.5 percent in the first quarter of 2001, climbed to 25.9 percent by the fourth quarter of 2003. Telecom Corridor, the T-shaped business area in Richardson that U.S. 75 roughly bisects, lost as many as 30,000 jobs tied to the industry. “The tech and telecom bust hit Richardson around 2000 to 2001 and continued to have a dramatic effect on the Telecom Corridor area through the end of 2004,” said John Jacobs, executive vice president at the Richardson Economic Development Partnership, or REDC. Although the dot-com crash may be better known, the telecommunications implosion that largely took down Richardson real estate was 10 times larger, according to The Economist.
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A ANATOMY OF A DEAL
REALPAGE'S HEADQUARTERS AT THE FORMER NORTEL COMPLEX PHOTO: MICHAEL SAMPLES
The bubble’s severity may have stemmed from what the magazine in July 2002 calculated was the telecom industry’s nearly $1 trillion debt load. But in a from-the-back-of-the-pack charge that would make a stock car racer proud, Richardson real estate along Central — like the rest of the city — today has surpassed the championship form it exhibited in the late 1990s. On 186 weed-covered acres near the George Bush Turnpike and Central, Dallas developer KDC this decade built CityLine, a $1.5 billion project now home to both large employers, such as State Farm, and numerous restaurants. Further south, the former Nortel campus is now Galatyn Commons, following multimillion dollar improvements from Spear Street Capital and prior owner Champion Partners. And, thanks partly to a tax increment-finance (or TIF) district the city established in 2006, Richardson Heights became home seven years later to North Texas’ first location of Alamo Drafthouse Cinema. To diversify Central’s real estate beyond telecom, Richardson adopted techniques such as development tied to light rail stations, tax increment finance (or TIF) districts, and an alternative to traditional zoning. “They’ve finished the first midterm exam and received an ‘A,’” says Joseph Cahoon, director of the Folsom Institute for Real Estate at the Cox School of Business at Southern Methodist University, using a classroom
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analogy. “We don’t know their final grade yet. It looks positive right now, but we don’t know where the rest of the course is going to go.”
Though it can be difficult to envision today, much of the Richardson area that North Central real estate encompasses today was farmland in the 1950s. A large amount of that farmland produced cotton, whose economic importance was a major reason why Dallas appeared on the prairie to begin with. Richardson’s embrace of the electronics industry began in 1951, when Iowa’s Collins Radio opened an office. In 1957, the business started the process of moving its defense electronics business to Richardson by kicking off construction of what would become a multi-building campus near Central and Arapaho Road. In 1956, Texas Instruments had chosen a site east of Central, just north of Interstate 635, for a campus of its own, according to Tech Titans, a trade group for North Texas’ tech sector that shares space and staff with parts of the REDP. Although Collins Radio (acquired by Rockwell in 1971) and TI both attracted engineers en masse, it took the telecom deregulation that began in the 1980s to truly spur the creation of what remains one of world’s largest conglomerations of businesses in that field. MCI, at the time an emerging Mississippi-based telecom company, set up a local shop close to what was then Rockwell, whose technology was key for MCI’s microwave-based network. Equipment vendors such as Nortel, Fujitsu, and Ericsson later established Richardson operations in part for proximity to MCI. The Richardson Rockwell unit became part of France’s Alcatel as part of a 1991 transaction. “With the breakup of the Bell (phone) companies, choosing a central location for manufacture and distribution made good business sense,” said Doug Moore, executive vice president and chief operating officer at Fujitsu Networking Communications. An arm of the Japanese tech conglomerate, Fujitsu Network still runs a Richardson manufacturing plant whose equipment touches much of the world’s internet, phone, and cable TV traffic. All told, the 845,000-square-foot Fujitsu campus employs 1,386 people across eight of the mothership’s business affiliates, and sits on land the business originally bought from billionaire H. Ross Perot. “Fujitsu, along with a large number of technology players from around the world, began setting stakes in what would become known as Richardson’s Telecom Corridor,” Moore says.
A ANATOMY OF A DEAL DIVERSIFYING BEFORE THE BUST
The TIF was key in data center giant Digital Realty’s 2009 joint venture to redeRichardson’s city limits comprise the Telecom Corridor, along with Texas velop the 69-acre Collins Technology Park Instruments, and Richland College nearby in Dallas. — the spot where Collins Radio set up its Although the Richardson Chamber of Commerce trademarked the Telecom pioneering campus in the ’50s. The firm Corridor name in 1992, the area became a household name in the late ‘90s, when later acquired full ownership of what is now bubble-infused investment had made the North Central corridor a boomtown. called Digital Dallas. Behind the scenes, though, Richardson officials had started working on diver“In seven years, Digital Realty has comsifying nearly a decade before the crash. pleted eight buildings totaling approxiIt began with planning for the arrival of the Red Line, the piece of Dallas Area mately 1.1 million square feet in size,” says Rapid Transit’ light rail network that now extends to Parker Road in Plano. Bryan Marsh, Digital Realty’s vice presiIn summer 2001, Richardson officials spent a week with Urban Land Institute dent, global asset management. (ULI) experts discussing transit-related development near forthcoming Red “The first seven buildings are 100 perLine stops at what today are the Spring Valley, Arapaho, Galatyn Park and the cent leased,” while the eighth was 12 perCityLine/Bush Turnpike stations. cent leased as it was completed at the end DART also plans to add a station at the University of Texas at Dallas in of 2016. Richardson for its forthcoming Cotton Belt line, which will connect southwest The park now is one of the company’s Fort Worth with northeast Dallas suburbs such as Wylie. flagship developments, Marsh says. Experts from ULI, a Washington, D.C.-based nonprofit that fosters better uses for “It’s amazing how people affiliated with land and real estate, advised using commercial development as the major function Collins Radio have shared stories about of sites near the Red Line stations, Richardson City Manager Dan Johnson says. the history of the property,” he says. “This, “They also recommended the city be flexible in its policies to allow for a mix of along with Texas Instruments, was the land uses,” Johnson says. “Larger parcels could incorporate retail and residential birthplace of the Telecom Corridor. It’s reuses, as well as office development. The panel recommended that these options be warding to see it reborn as part of the interleft open to allow prospective developers to respond to market demands.” net and digital revolution.” The 2006 creation of Richardson’s first TIF, running along the city’s Spring Valley area and up through its Central corridor to Campbell Road, created new development and redevelopment alike. To increase the TIF zone’s allure for outside capital, the city made a number of infrastructure improvements from Spring Valley north. Those included building a Spring Valley underpass at Central to speed traffic flow, improving drainage along a creek that goes under the highway, and Learn how a Richardson location will help you putting up a Galatyn overpass that recruit and retain young professionals spans Central. From a separate bucket of money, they used the TIF to finance city work such as hike-and-bike trail enhancements and the purchase and clearing of property for other significant new developments in the corridor. All the improvements, combined with the TIF’s financial flexibility, helped bring redevelopment (and the Alamo Drafthouse outlet) to Richardson Heights. The district also spurred the overhaul of what is now Richardson Restaurant Park north of Spring Valley.
Metroplex living without compromise
PM/ 6 3 D A L L A S - F O R T W O R T H R E A L 1/24/2017 E S TAT E R4:06:20 EVIEW
A ANATOMY OF A DEAL
CITYLINE PHOTO: MICHAEL SAMPLES
REGULATORY CHANGES IMPROVE DEVELOPMENT The CityLine project came about in large measure because Richardson began tweaking its system for regulating land development. That started with a zone encompassing two large parcels of then-vacant land next to Dart’s Bush Turnpike Station. The parcels, which totaled nearly 140 acres, had a hodge-podge of zoning, from office and research to religious, hospital, even light manufacturing, according to public records. Building upon the ULI experts’ previous recommendations, the City Council in February 2011 adopted “form-based codes” to instead regulate the zone’s development. It changed and added form-based code four times after that. Conventional zoning is roughly akin to drawing a line around a stretch of dirt and saying, “Here’s what you can use this land for.” Form-based codes regulate the physical form of whatever is done with a parcel, from how building facades look to the types of streets it has. “A big part of our success was attributable to the city’s help in fast-tracking the process,” said Walt Mountford, executive vice president at KDC. Richardson’s flexibility allowed KDC to give CityLine features that professionals increasingly demand from their work environments, including outdoor amenities and
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eateries in walking distance, he says. “The whole of the project is doing quite well.” Although conventional zoning remains the rule for most Richardson development, the city now uses form-based codes in certain spots. “Each code is crafted uniquely for the area it regulates,” says Michael Spicer, the city’s director of development services. The CityLine-related shift from old school zoning fostered mixed-use developments that use ideas for public transit and urban villages previously not found in Richardson, according to Bill Sproull, president and CEO of the REDP. For instance, CityLine helped pave the way for Richardson’s embrace of multifamily residential developments near light rail stations. “This appeals to many professionals working in Telecom Corridor’s innovative companies,” Sproull says. “In tandem with mature neighborhoods across the city, we now offer greater diversity of housing stock to attract professionals at all stages of their lives.” Form-based codes turned out to be the missing piece that helped Richardson’s Central puzzle come together— albeit with an assist from Texas Instruments.
MORE ENGINEERS, MORE JOBS Thanks to seeds that Collins Radio and TI planted with their 1950s campuses, Richardson has for decades had a large base of engineers and other tech-trained workers. To help land a 1.1-million-square-foot chip factory that TI needed to build, then-Gov. Rick Perry in 2003 committed $300 million from the state Enterprise Fund to the Erik Jonsson School of Engineering and Computer Science at the University of Texas at Dallas. Jonsson and fellow TI co-founders Eugene McDermott and Cecil Green created the university. “UT Dallas supports companies like TI both from a research perspective and as a pipeline for talent,” TI Director of Government Relations Gray Mayes says. “The investment in the school of engineering was arguably a transitional step in that institution’s journey to Tier One status and becoming a nationally-recognized research university.” TI’s million-square-foot factory today sits just off Central in Dallas, between
A ANATOMY OF A DEAL
Renner Road and the Bush Turnpike. The Jonsson School upgrade also helped Richardson add Central corridor employers in non-telecom technologies such as property management software (RealPage) and tech-reliant businesses such as Fossil (wristwatches and other high-end accessories). “Richardson offers easy commuter access and provides all necessary quality-of-life components, including recreational and art-related amenities and a responsive city government,” says Tim Terrell, an executive vice president and partner at Stream Realty who represented RealPage. Among recent additions on Central are operations of Germany’s Kathrein, one of 14 businesses from outside U.S. borders that have set up Richardson shops since the city brought in tech veteran Mike Skelton to lead its international charge in 2011. To further diversify its employer base, the REDP targeted financial services and insurance, both stable industries that rely heavily on technology workers. A mortgage lender, Countrywide Financial (now part of Bank of America) in 2004 took three buildings in the former Nortel complex, and was followed later in the Central corridor by large operations from United Healthcare, State Farm and GEICO. State Farm, in fact, has become the city’s largest employer with 8,000 workers. Richardson officials were especially jazzed to retain the corporate headquarters of the parent company to Blue Cross Blue Shield of Texas, Health Care Service Corp. Previously situated in a campus near Spring Valley that Fossil later took over, Blue Cross Blue Shield of Texas now employs some 3,100 people at a $265 million headquarters on East Lookout Drive. “We've been pleasantly surprised at how the immediate area has grown since we moved in,” says Jason Kaye, vice president, corporate real estate.
Richardson is the second-largest employment center in the Dallas-Fort Worth metropolitan area, and includes a diverse range of businesses. The city’s four largest employers represent three separate industries — financial services|insurance, telecommunications, and public education. Other major employers represent Richardson’s deep technology roots and global focus — the very things that made it known as the Telecom Corridor around the world. RICHARDSON’S LARGEST EMPLOYERS:
PHOTOS: MICHAEL SAMPLES
TELECOM CORRIDOR. CITY OF RICHARDSON. BY EITHER NAME, THEY ARE ONE AND THE SAME.
State Farm Insurance AT&T Blue Cross & Blue Shield of Texas The University of Texas at Dallas Richardson ISD (schools within Richardson only) RealPage GEICO United Healthcare Raytheon Fujitsu Network Communications Fossil, Inc. Cisco Systems Samsung Mobile Qorvo iQor City of Richardson Traveler's Insurance Methodist Richardson Medical Center Amdocs Towers Watson Rockwell Collins Lennox International Associa Bank of America Verizon Business Fujitsu America Inc. CommScope
CVS Caremark MetroPCS HBS Systems ARGO Data Trident Metals Dell EMC Texas Instruments Education Service Center Flexjet Aprima EO Innovations | Raytheon AMX Corporation RGS Financial U.S. Oncology Texas Capital Bank Armor Simplex Grinnell Hill & Wilkinson Vertex Data Utility Services ETC (Electronic Transaction Consultants) Genpact Sherwin Williams Boeing Service Co. Avnet Honeywell Texans Credit Union ACD (Automated Circuit Design) Yahoo! id Software
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TIMELINE DEC. 2012
Countrywide Financial announces Texas expansion [500,000 SF]
CityLine development announced At full buildout, CityLine will contain 5 million SF of office space, 3,925 multifamily residential units, more than 60 dining and service retail options, two hotels, and two parks.
RealPage announces relocation of HQ to former Nortel Complex [400,000 SF]
Fossil announces relocation to new HQ [535,000 SF]
3 3400 at CityLine 4 Cityline (State Farm) 5 University of Texas at Dallas
6 Blue Cross Blue shield SPRING VALLEY STATION
SPRING VALLEY RD.
7 Galatyn Commons 8 RealPage (Former Nortel Complex)
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2 Texas Instruments RFAB
3400 @ CityLine breaks ground [310,000 SF] Service King Collision Repair Centers announces HQ move to newly remodeled Galatyn Commons [64,916 SF]
1 United Healthcare
BELT LINE RD.
9 Geico AVE .
Raytheon Intelligence, Information & Services hosts ribbon-cutting for new office complex at CityLine [489,000 SF]
Redevelopment of major data center campus at Collins Technology Park/Datacenter Park (later Digital Dallas) [Over 1 million SF of data center space]
ARAPAHO CENTER STATION
GEICO announces regional office relocation [242,000 SF]
United Healthcare moves operations to Granite 190 Business Park [153,734 SF]
State Farm begins to take occupancy of new regional campus at CityLine [Now over 2 million SF in four towers]
Blue Cross and Blue Shield of Texas â€“ construction begins on new HQ [1.1 million SF]
MetroPCS announces HQ relocation to Richardson [115,583 SF lease]
GALATYN PARK STATION
Associa occupies new National Shared Services Center [62,500 SF]
Richardson Heights Shopping Center renovations begin [Over 200,000 SF of space renovated]
CITYLINE / BUSH STATION
THE 5.5-MILE STRETCH OF U.S. 75/NORTH CENTRAL EXPRESSWAY IN RICHARDSON IS THE HEART OF THE TELECOM CORRIDOR
Texas Instruments RFAB groundbreaking with Gov. Rick Perry, TI, UT Dallas and City officials [1.1 million SF]
DA RT R
LAY O F T H E LA N D
10 Eastside 11 Collins Technology Park 12 Richardson Heights shopping center 13 Richardson Restaurant Park 14 Fossil 15 Texas Instruments
A ANATOMY OF A DEAL
“We’re empowering people to discover more.” JUPITER RD.
“DART provides mobility, stimulates economic development and improves quality of life. We’re proud to help people from all walks of life discover the places they want to go.”
Gary C. Thomas President/Executive Director, Dallas Area Rapid Transit SPRING 2017
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TURNING LEMONS INTO LEMONADE BY JEFF BOUNDS
WHEN A MAJOR TENANT MOVED OUT OF AN HISTORIC RICHARDSON CAMPUS, SPEAR STREET C A P I TA L M O V E D I N – AND IS NOW REAPING THE BENEFITS.
Never let a good crisis go to waste. That axiom underlies the revival of a landmark corporate campus in Richardson. The crisis came from insurance giant State Farm’s 2014 move from the 800,000-square-foot campus that once was the U.S. headquarters of telecom equipment giant Nortel. The four buildings in what was called Galatyn Park boasted great-looking glass lines and ceilings of 9 feet plus. The structures also have backup electrical service — via dedicated generators — that is atypical for office buildings. State Farm vacated its 600,000 square feet in favor of Richardson’s CityLine, which offered more amenities that can help retain top-notch professionals. Spear Street Capital, a real estate investor with offices on both coasts, swooped in to buy the property from Dallas-based Champion Partners, which had acquired it
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A ANATOMY OF A DEAL via separate transactions in 2010 and 2013. Inside Galatyn’s four buildings, Spear Street added a full-service cafeteria, coffee shop, conference center, and a large employee lounge with collaboration areas, says Chris Taylor, executive managing director at Cushman & Wakefield. “In an effort to attract a revitalized tenancy, the new owner had a chance to create a one-of-a-kind environment in the heart of one of most attractive corporate markets in the country,” he says. What separates Galatyn are Spear Street’s improvements to the exterior, says Russ Johnson, principal at Peloton Commercial Real Estate, who handles leasing the property with Taylor. “Social amenities include an expansive outdoor kitchen, multiple outdoor dining and meeting areas, bocce ball courts, a fire pit, bicycle checkout stations, a food-truck court, and an outdoor stage and amphitheater for large company events,” Johnson says. The multimillion dollar overhaul, which Spear Street started in February 2016, is done except for the expected completion of a fitness center in December. Though the complex’s occupancy was 35 percent in early March, Service King Collision Repair Centers has announced that it will move its headquarters into 64,916 square feet at Galatyn this summer. “Galatyn Commons offered best-in-class features at a competitive market rate,” says Michelle Frymire, Service King’s chief financial officer. “The key differentiator of our new office will be the teammate-friendly amenities and layout, both in our own space, and in the complex overall.”
BUYING LOW, SELLING HIGH For its part, Champion Partners upgraded the campus’ common areas and lobbies, along with outside landscaping during its ownership, says Steve Modory, who serves as Champion’s co-managing partner with fellow owner Jeff Swope. In 2010, when Champion first invested in Galatyn, it also acquired a nine-story, 229,307-square-foot building just up the road at 2600 North Central. The deal, which Modory credits to real estate veteran Jack Minter’s referral, gave Champion the Class A space for a total price and improvement budget of half its replacement cost. When it sold what it re-branded as Tower 2600 in 2014, Champion’s upgrades to the property had increased occupancy to 97 percent. Still, Modory tips his cap to Spear Street. “They have done significant improvements that enhanced Galatyn’s value, allowing them to get historically high rental rates in the Richardson submarket,” he says.
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SPECULATIVE, BUT SELECTIVE L I K E A L L D E V E LO P E R S O F S P E C U LAT I V E R E A L E STAT E , T R A N SW E ST E R N I S TA K I N G A R I S K W I T H 3 4 0 0 AT C I TY L I N E . B U T T H E H OT N O RT H C E N T R A L M A R K E T M A K E S I T L O O K L I K E A G O O D B E T, E X P E R T S S AY.
3400 AT CITYLINE
BY JEFF BOUNDS
Somebody’s got to be first, but that doesn’t make it easy to be that somebody. Transwestern Development Co. in June 2016 ended a nearly 15-year drought in Richardson by breaking ground on the city’s first speculative office building since the telecommunications bust. Dubbed 3400 at CityLine, the 310,000-square-foot, five-story structure will seek to catch some overflow from the adjacent CityLine project, which has revolutionized Richardson’s 5.5-mile section of North Central Expressway. “We felt demand drivers in this submarket supported new construction if located, conceived, and priced properly,” says Carleton Riser, president of Transwestern Development, an arm of the Houston real estate company. On paper at least, it seems like a sensible gamble. Office vacancy rates in the Dallas suburb are 15.9 percent, compared with 25.9 percent at the trough of the bust in the third quarter of 2003, according to the Richardson Economic Development Partnership, or REDP. Some 111,200 people work in Richardson, according to JobsEQ, 85.3 percent more than in 2004 (after the bust bottomed out) and 39 percent more than in 2001, before the carnage began. Real estate along Central is alluring for companies that need engineering talent, especially businesses in high technology, finance, and insurance. Transwestern is giving 3400 at CityLine features that talented young professionals increasingly demand, such as amenities both indoor (on-site fitness center and deli) and outdoor (one-acre event lawn, with access to a jogging trail). “It has floor-to-ceiling glass around the entire exterior, high-quality common
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area finishes, and options for exterior gatherings and exercise,” Riser says. Why spec? Why not? Investors may now be willing to accept risks like speculative real estate because safer vehicles, such as U.S. treasury bonds or a bank’s certificates of deposit, provide abysmal returns. That’s according to Randall Guttery, director of real estate programs at the Jindal School of Management at the University of Texas at Dallas. Lenders for real estate projects, in turn, have higher standards than they once did. Borrowers must show preleasing of 50 percent-plus to quality tenants, make larger down payments, and retain a greater portion of cash flow available to make loan payments, Guttery says. “Being adjacent to CityLine reduces these investors’ risks, all things being equal,” he says. The insurance giant State Farm in October sold its CityLine towers for about $800 million to a pair of investors, South Korea’s Mirae Asset Global Investments and Transwestern’s investment arm. State Farm then signed a lengthy leaseback deal on the properties. “It's no secret that CityLine is a success by nearly every measure, especially taking the State Farm transaction into account,” Guttery says. With CityLine serving as a catalyst, Richardson real estate could be one of the next markets to “pop” like Frisco and Plano have in recent years, according to Joseph Cahoon, director of the Folsom Institute for Real Estate at the Cox School of Business at Southern Methodist University. “CityLine really does inspire confidence in the market,” he says. “And most buildings along Central are high quality. It’s much more attractive to me as a growing company when I look at my employee base.”
BUSINESS WORKS BETTER HERE Explore for facts supporting why Dallas Fort Worthâ€™s business climate is more than favorable, the workforce is highly skilled, and highly educated, and the location is about as close to perfect as it comes. Each page contains a snapshot of the DFW region, our people, companies, and industries. Use this fact-rich tool to promote the region, attract businesses to your community, and expand existing ones.
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Located 15 minutes south of downtown Dallas. DeSoto’s competitive advantage lies in a great business park location, excellent transportation access, low-cost building-ready land with an existing space inventory, a skilled workforce and development plans that ensure our partners achieve maximum ROI. The Eagle Business and Industrial Park offers more than 400 acres of land with superb access to Interstate 35 E, Interstate 20, and Interstate 45 via Centre Park Boulevard and Polk Street. For executive air travel, Dallas Executive Airport is less than a 10 minute drive away. In addition, DeSoto offers a wide variety of competitive incentives to help your business grow and prosper. Whether your company needs a new commercial office building on I-35, a manufacturing facility on a hill overlooking downtown Dallas, a fulfillment warehouse, or a service-oriented facility, DeSoto is the place to build your business, raise your kids, enjoy life and retire in style. MURPHY D. CHEATHAM II, Chief Executive Officer DESOTO ECONOMIC DEVELOPMENT CORPORATION 211 E. Pleasant Run Road DeSoto, Texas 75115 (972) 230-9611 firstname.lastname@example.org dedc.org
Looking for a new
Conveniently located 21 miles east of Dallas, Forney provides businesses and residents access to big city amenities in a peaceful environment. Complete with U.S. Highway 80 and Interstate 20, Forney offers a coast-to-coast transportation network and plenty of room to grow, including 800+ acres of available light industrial land. Forney’s primary trade area population of 45,000 offers businesses a builtin workforce of white and blue collar employees, along with an average household income of over $97,000. In addition, our quality of life is hard to beat, complete with state recognized public schools, a 170-acre park, community festivals and a unique historic downtown. When it comes to opportunity, Forney knows no boundaries. That’s why we’re called the “City Without Limits.” WARREN KETTEMAN,
FORNEY ECONOMIC DEVELOPMENT CORPORATION
101 E. Main St. P.O. Box 826 Forney, Texas 75126 (972) 564-5808 wketteman@ cityofforney.org
SPECIAL ADVERTISING SECTION
place for your company to call home? Consider this the start to your search.
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
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. DARRELL AUTERSON, President and CEO MCKINNEY ECONOMIC DEVELOPMENT CORPORATION / CITY OF MCKINNEY 5900 S. Lake Forest Dr., Ste. 110 McKinney, Texas 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, Texas 76180 firstname.lastname@example.org / 817427-6090 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 Trail Rockwall, Texas 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 St., The Colony, Texas 75056-1133 972.624.3127 firstname.lastname@example.org thecolonyedc.org
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HAVANA KNOCKOUT!!! April 27 | 6:30 p.m. | Hilton Antole
Thank you to all the generous sponsors, members and guests at FightNight XXIX! This event, benefiting TREC Foundation, unites commercial real estate professionals in raising funds that TREC Foundation funnels back into our community. Since inception, FightNight has raised more than $25 million to fuel the mission of local nonprofits.
fIGHTNIGHT xxix Sponsors TITLE FIGHT
PRize fight United Commercial Development
Platinum CAPITAL MANAGEMENT
merriman a n d e r s o n
Learn more at recouncil.com
Greg Kraus, Chairman Ran Holman, Vice Chairman
CHAMPION’S CIRCLE Balfour Beatty Construction Bank of America Merrill Lynch/ Bank of America Charitable Foundation Bank of Texas Champion Advisory Partners Compatriot Capital Deloitte Granite Properties HFF JLL U.S Department of Treasury CDFI Fund CHAIRMAN’S CIRCLE BB&T BBG CBRE Crow Holdings Capital Partners, L.L.C. Cushman & Wakefield of Texas, Inc. EY Invesco Real Estate Jackson Walker L.L.P. Jones Day JP Morgan KDC KPMG LegacyTexas Munsch Hardt Kopf & Harr P.C.
NorthMarq Capital Republic Title of Texas, Inc. Stantec Stewart Title StreetLights Residential Texas Capital Bank The Howard Hughes Corporation US Bank Winstead PC
PRESIDENT’S CIRCLE BBVA Compass Beck Group Billingsley Company Chicago Title Company/Fidelity National Financial (FNF) Chief Partners LP Corgan DPR Construction, Inc. Gables Residential GFF Goldman Sachs Grant Thornton Holt Lunsford Commercial Jackson-Shaw NexBank Spirit Realty Capital Stream Realty Partners Thackeray Partners Todd Interests Trammell Crow Company
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.
View Dynamic Glass Wells Fargo Bank
BENEFACTOR’S CIRCLE AECOM AG&E Structural Engenuity American National Bank of Texas Austin Commercial Bank of America Plaza Bank of the Ozarks Berkadia Commercial Mortgage Bradford Companies CallisonRTKL Capital One Bank Capital Title of Texas Colliers International Corinth Properties Cortland Partners EMJ Corporation Fischer & Company Frost Bank Gaedeke Group LLC Gardere Wynne Sewell LLP Gensler HALL Group Haynes and Boone, LLP HKS Humphreys & Partners Architects LP Hunt Realty Investments, Inc. Invitation Homes
WHO WE ARE TREC is where 2,000 commercial real estate professionals spark community transformation, influence policy, and propel careers in DFW and beyond. Only TREC provides the road map for success and the platform to Build the City You’ve Imagined. SPRING 2017
Kane Russell Coleman & Logan PC Kimley-Horn and Associates, Inc Lincoln Property Company Locke Lord LLP Matthews Southwest Meyers Research, LLC Mill Creek Residential Trust LLC ORIX Real Estate Americas PegasusAblon Properties Peloton Commercial Real Estate Perkins + Will Prudential Mortgage Capital Company Regions Bank Sarofim Realty Advisors Strasburger & Price, LLP The LaSalle Group, Inc. The Retail Connection The Spencer Company TIER REIT, Inc. Trammell Crow Residential Union Bank Foundation USI Southwest
PATRON’S CIRCLE Fauxcades Hilton Anatole Hotel OMNI Hotels
Learn more at recouncil.com or by calling 214-692-3600.
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C COMMUNITY The Dallas Regional Chamber recognizes the following companies and organizations for their membership investment at one of our top levels. Bolded companies are represented on the DRC Board of Directors. For more information about the benefits of membership at these levels call Diana Rivas-Smith at (214) 746-6744.
STRATEGY AT&T* BKD* Texas Instruments* Toyota Motor NorthAmerica
CATALYST ACTIVE Network* Baylor Scott & White Health* Capital One Bank* Chase* Chickasaw Nation Comerica Bank* Dallas Fort Worth International Airport* EY* Hilti North America* Hunt Consolidated Inc.* ONCOR* Tenet Healthcare* Tom Thumb Food & Pharmacy Vistra Energy* Wells Fargo*
ADVOCATE 7-Eleven* Amegy Bank of Texas* American Airlines* Atmos Energy* Axxess* Baker Botts L.L.P. BB&T* BBVA Compass* CBRE Group Inc.* Children’s Health System of Texas* Citi* Copart* Corrigan Investments Inc.* Dallas Morning News Dal-Tile Corp.* Deloitte LLP* Dr Pepper Snapple Group Exxon Mobil Corp. FedEx Office* Fidelity Investments* Fluor Corporation* Forest City Texas Inc. Frito-Lay North America*
Golden Living* Haynes and Boone LLP* HEB and Central Market Highland Capital Management LP* Hilton Anatole* HKS* IBM Corp. Imaginuity Interactive Inc. Invesco Jones Day* KPMG LLP* Kroger Food Stores* Littler Mendelson P.C.* Locke Lord LLP* Lockheed Martin Medical City Dallas Hospital/ Medical City Children’s Hospital Methodist Health System* Microsoft Corp.* NEC Corporation of America* New York Life Regional HQ Omni Dallas Hotel Omnitracs* PwC* Reliant Energy* Rent-A-Center* Sheraton - Dallas Southern Glazer’s Wine & Spirits* Spirit Realty Capital TDIndustries* Teladoc Texas Central Partners Texas Health Resources* Texas Scottish Rite Hospital for Children Thomson Reuters, Tax & Accounting* TM Advertising* Torchmark Corp.* UT Southwestern Medical Center* LegacyTexas Bank Winstead PC*
BOARD OF ADVISORS 1820 Productions Acadian Ambulance
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Accenture* ActivTek Global LLC Adastra Addison Law AECOM Hunt* AlixPartners Altair Global Ameriflex Andrews Distributing Andrews Kurth LLP Austin Industries* At Home Bain & Co. Inc. Baker & McKenzie LLP Bank of America* Bank of Texas* Barnes & Thornburg BDO USA LLP* BG Staffing* Bell Nunnally & Martin LLP Brasfield & Gorrie The Beck Group* Blue Cross and Blue Shield of Texas* Big 12 Conference Bracewell & Giuliani LLP Boomtime Boston Consulting Group* Bottle Rocket Brierley+Partners Brink’s Inc. Brinker International Inc. Business Wise C.C. Young Carrington, Coleman, Sloman & Blumenthal, L.L.P. Century 21 Judge Fite Co.* Choctaw Nation of Oklahoma* CHRISTUS Health City Electric Supply Civitas Capital Group* CliftonLarsonAllen LLP ClubCorp Inc.* Coca-Cola Refreshments* Colliers International* Commemorative Air Force Commerce Bank Consolidated Communications
Conway MacKenzie Cook Children’s Healthcare Corgan Associates Inc.* CP&Y Inc. CSI GlobalVcard Dallas County Community College District* Dallas Cowboys Football Club Dallas Marriott City Center Dallas Wings Dallas Stars Hockey Club* Dallas Women’s Foundation DataMob Dean Foods Co. DHD Films* DTZ Dunavant Distribution Group Emmitt Smith Enterprises* Ebby Halliday, Realtors* Edelman PR Worldwide Elemetal Recycling EN Consulting Inc. Etihad Airways The Fairmont Dallas FastSigns Federal Reserve Bank of Dallas Fossil Fox Sports Southwest Freeman* Frost Bank* Furniture Marketing Group* Gardere Wynne Sewell LLP* Gensler* Generational Equity Grant Thornton L.L.P.* Greatbatch Inc. Greenberg Traurig, LLP Gruber Elrod Johansen Hail Shank LLP Gulfstream Aerospace Corp. Gupta & Associates Hall Financial Group HDR Inc. Heritage Health Solutions Hill + Knowlton Strategies Hill & Wilkinson* Hilton Garden Inn Downtown Dallas Hilton Worldwide HNTB Corp.
Holland & Knight LLP* HollyFrontier Corp* Hoar Program Mgmt.* HOLTCAT* HPI Real Estate & Ross Tower* HUB International* Interceramic* Int’l Leadership of Texas Invitation Homes Jackson Walker L.L.P.* Jacobs* JE Dunn Construction JLL* Johnson Controls Inc. Ketchum PR Kilpatrick Townsend & Stockton LLP Life School Live Nation Lockwood, Andrews, & Newnam Manpower Corporation Mary Kay, Inc.* Mission Foods MHBT, Inc.* Miller, Egan, Molter & Nelson LLP Moss Adams LLP Munck Wilson Mandala, LLP Neiman Marcus Newmark Grubb Knight Frank Northwood University Norton Rose Fulbright NTT Data Inc. Origin Bank ORIX USA Corp. Parker University Parkland Foundation PDS Technical Services* Perkins+Will* Perkins Coie LLP People Performance Resources PlainsCapital Bank* Premier Truck Group PSA Constructors Inc. Reflect Systems Regions Bank RMG Networks RML Automotive Rosewood Crescent Hotel Rosewood Property Co. Saulsbury Industries Schneider Electric Showcall Sidley Austin, LLP Slalom Consulting Southern Methodist University* Southwest Airlines* Southwest Office Systems* Spectrum Enterprise* Squire Patton Boggs
Staffelbach Inc.* Stantec* Stifel State Farm Insurance* Stout Risius Ross Strasburger & Price, LLP* Strategic Staffing Solutions Susan G. Komen TDJ Enterprises* Texans Can Academies Texas A&M University Texas Star Alliance Texas Woman’s University* TGI Fridays Thompson & Knight LLP* TopGolf* Trane Commercial Systems TravisWolff LLP Trinity Groves* TrustPoint Management Turner Construction Co.* Universal Mind UMB Bank N.A.* University of North Texas* University of Texas at Arlington* University of Texas at Dallas* UnitedHealthcare Universal Mind Verizon Wireless* Village Green Holding LLC Vinson & Elkins LLP Walgreen’s Co. Weber Shandwick Southwest WFAA-TV Whitebox Real Estate Whitley Penn LLP* Weil, Gotshal & Manges LLP Wordlink Inc. WorldVentures Women’s Food Service Forum* LEAD AAA Texas Inc. Account Control Technology Inc. Ackerman McQueen Acme Brick Co.* Addison Law Adolphus Hotel Advocare International LP Alcuin School Alamo Drafthouse Cinemas Alliance Data Ameriflex APAC - Texas Inc. Ash Grove Cement Co. Aviall, A Boeing Co. Balfour Beatty Construction*
Beasley, Hightower & Harris PC Benchmark Title Beshear Group BMO Transportation Finance BOKA Powell LLC* Business Jet Center* Carlo’s Bakery Cawley Partners Champion Partners* Chandler Signs LLP CityDoc Urgent Care Collective Residential Commercial Metals Co. Crowe Horwath LLP* Dallas Foundation Dallas Mavericks Dave and Busters DeGolyer and MacNaughton Domain at Midtown Park Essilor of America Inc. Estrada, Hinojosa & Company Inc.* Fogo De Chao Foster Blair Consulting LLC Gables Residential Trust Gaedeke Group* George W. Bush Foundation* Gibson, Dunn & Crutcher LLP H Mart Companies Inc. Halff Associates Inc.* Hart Group Inc. Hazel’s Hot Shot Inc. Holmes Murphy and Associates* Hotels.com Huawei Technologies* Hunt Construction Group* Hunton & Williams LLP Huselton, Morgan & Maultsby, PC* In-N-Out Burger J-BJ Marketing LLC Joule, A Luxury Collection Hotel Kiewit Infrastructure South Co. Kimberly-Clark Corp. Kofax Linebarger Goggan Blair & Sampson, LLP Martin Marrietta McAlister’s Deli – Dallas Metrocare Services MW Logistics LLC MWH Americas Inc. Munsch Hardt Kopf & Harr P.C. Networking Results Inc. New York Life Regional Headquarters Novataris Ocean Prime Restaurant One Uptown Apartments
Peter O’Donnell Jr. Polsinelli PC Post Properties Inc. Prudential Asset Resources The Ritz-Carlton, Dallas REES Rehab Synergies Republic Title of Texas Rising Fall Rone Engineering Services Ltd.* Ruth’s Chris Steak House Russell Reynolds Associates Inc. ScienceSoft SCORE Dallas Securadyne Systems Serta Mattress Co. Sewell Automotive Companies* SevenTablets Inc. Stream Realty Southwest International Trucks Sparks Agency Stahls’ State Fair of Texas Stream Realty Partners* Structure Tone Southwest* Texas A&M University Texas Capital Bank* Texas Oncology Texas Rangers Baseball Club* The Taylor The Westin Dallas Downtown Willis Towers Watson* Tradition Senior Living Trinity Basin Preparatory Uber Technologies Union Pacific Railroad United Site Services University of Phoenix USAA Virgin America Airlines VNA Vonage Business VOX Global W Dallas – Victory Hotel WageWorks Walter P Moore* Walton Development and Management* Weaver* Whiting-Turner Construction Woodbine Development Corp. YP Marketing Solutions
* Building Tomorrow Together Fund Investors
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THE REAL ESTATE COUNCIL YOUNG GUNS 2017 CASINO NIGHT On Thursday, March 2, The Real Estate Council Young Guns hosted its 10th annual Casino Night at Cityplace Tower. More than 600 attendees enjoyed the classic event with casinostyle games, cocktails, networking and the chance to win amazing raffle prizes while listening to DJ Connection’s ultimate playlist. This year’s event proceeds benefit the Young Guns Foundation Project, Aberg Center for Literacy. TREC Young Guns will help expand adult literacy and early childhood education programming to a second location and assist with classrooms and playground renovations. Young Guns will provide project management, architecture, engineering, and construction services. Young Guns will provide fundraising, project management, and landscape architecture services. PHOTOGRAPHY: BRUNO
REPUBLIC TITLE’S JOHNNY BEGZOS, SARAH EAST, LINDSEY CARROLL, ESTHER COX, RICHARD HUDICEK, SAN CASTRO, BRANDI WICKS, EUNICE GUZMAN
AG&E STRUCTURAL ENGENUITY’S LAUREN KLINGSPORN AND HANNAH HANSING; RIDGEMONT COMMERCIAL CONSTRUCTION’S EMILY GUERRA
MILL CREEK RESIDENTIAL’S KATHRYN ROWLAND, ANGELA COMER, TYLER TIMBERLAKE
ABERG CENTER FOR LITERACY’S JANET SCHOENECKER, SHANA HARRISON, MAURY PURNELL
MUNSCH HARDT’S JACKIE DYER, CATE AFROOZ, LAUREN SMYTH, CLAIRE CARROLL
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A RELATIONSHIP APPROACH Development’s progress excites Invesco’s Greg Kraus BY KERRY CURRY
2017 CASINO NIGHT CHAIR TEDDY LEATHERMAN, HFF; ALEX ZUBEY
MARVIN F. POER’S JUSTIN GOERTZ; PARMENTER REALTY’S RYAN UMBERGER, JOSH HEDDERICH
BIANCA PORITZ, BALFOUR BEATTY CONSTRUCTION’S KELLIE JASSO AND KEITH MCCOY SPRING 2017
Legacy West, the 250-acre mixed use development in Plano recently saw its first retailer open, and the residential component already is attracting new people to the area. That has Invesco Managing Director Greg Kraus excited, even as work continues on the development that will include retail, dining, residential, hotel, and office spaces. “The residential component is nearing 50 percent occupancy, while the overall project is still a construction site,” Kraus said. Invesco has partnered with developer Fehmi Karahan, Columbus Realty Partners, and Open Realty on Legacy West. The development’s first retailer, West Elm, has opened, and Kraus said more are expected to follow soon. West Elm sells furniture and other items for the home, and its opening is a sign that Legacy West is moving toward completion. And, office tenants also are beginning to occupy space. “We are very excited for the public to soon see the finished and fully-open project,” Kraus said. For the past 17 years, Kraus has been at Invesco Real Estate, an arm of global investment management firm Invesco. He leads Invesco Real Estate’s North American investment activities, overseeing the real estate transaction team as managing director of acquisitions. Legacy West is an expansion of the 2,600acre Legacy business park and is a prime example of Invesco’s philosophy: To seek to provide a capital solution across the risk spectrum for sellers, joint venture partners, and borrowers globally. “We’re actively investing in core, valueadd, and opportunistic real estate strategies, while also providing both mezzanine debt and preferred equity,” Kraus said. Kraus, 2017 TREC chairman, has been involved in The Real Estate Council for about 17 years and has held various leadership positions including past stints on the board of TREC and its foundation. Last year, he was chairman of the foundation and vice chairman of TREC.
WE’RE ACTIVELY INVESTING IN CORE, VALUEADD, AND OPPORTUNISTIC REAL ESTATE STRATEGIES, WHILE ALSO PROVIDING BOTH MEZZANINE DEBT AND PREFERRED EQUITY. —GREG KRAUS “A lot of my professional role at Invesco requires me to be out of town,” he said. “The ability to be able to ground myself in my community through an organization like TREC has been invaluable.” Kraus, an SMU graduate, has been involved in the real estate community since Craig Hall of Hall Financial Group took a chance on him in 1983, hiring him to do property level due diligence and financial analytical work.
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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.
APRIL.. APRIL 25 Leadership Dallas Information Session 5pm, Axxess Join us for an Leadership Dallas Info Session, hosted by Axxess, and seize the opportunity to ask questions and speak with LD Alumni attendees. A panel of Alumni will share first-hand program experiences that greatly impacted their life and remind the audience of crucial do’s and don’ts for Leadership Dallas and the application process.
APRIL 27 FightNight 6:30 p.m., Hilton Anatole Join us for the commercial real estate industry’s hottest event. This sure-to-sell-out Havana knockout offers professional boxing, exceptional cuisine, casino gaming, Vegas-style entertainment, unrivaled networking, and most importantly, benefits TREC Foundation’s good works.
APRIL 28 Women’s Business Conference 8am, Hyatt Regency Dallas The Dallas Regional Chamber’s 21st Annual Women’s Business Conference (WBC), presented by Jackson Walker LLP, celebrates women who are achieving excellence in their professions, serving the community in a meaningful way, and helping other women reach their full potential.
MAY.. MAY 24 Industry Insights: Institutional Capital 7 a.m., Dallas Country Club Delve into the minds of institutional investors and hear how the experts plan to meet the challenges of market volatility, a low yield environment and meeting total return objectives. TREC and Real Estate Deal Sheet have partnered to bring you the Industry Insights series, presented by D CEO.
JUNE. Dallas Summer Intern Mixer Time and location: TBD
When college interns Say Yes to Dallas, they say yes to more than you might think. The DRC is excited to host college interns from DRC member organizations for a mixer with the new Say Yes to Dallas campaign. Interns will interact with fellow Dallas college interns, DRC Young Professionals, and community leaders from across the Dallas region as they find out why Dallas is the ideal place to start their careers after college. 8 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W
OPENING DOORS FOR A DALLAS NATIVE Atmos’ Susan Harris finds new ways to understand, appreciate her hometown in DRC’s Leadership Dallas BY KERRY CURRY
As a Dallas native who’s lived her entire live in North Texas, Susan Harris thought she knew quite a bit about Dallas. But she learned even more after going through the Dallas Regional Chamber’s flagship leadership development program: Leadership Dallas. “Being a native Dallasite, I really thought that I knew Dallas,” Harris said. “Until I went through the program, I didn’t understand that there’s a totally different level of understanding and appreciation for Dallas once you have access to all the avenues of Leadership Dallas.” The program opened many doors to nonprofits, businesses, and key city departments, she said. Harris, manager of public affairs at Atmos, said she found it easy to get involved in the Chamber as her employer, Atmos, is a corporate member. She began her involvement in the Chamber about 10 years ago by attending luncheons to learn more about what was going on in the community and then represented Atmos on the Chamber’s education committee for several years. In 2009, she was selected to participate in Leadership Dallas. The group’s community project involved refurbishing a gym at Jeffries Street Learning Center in South Dallas where a member of the group was serving on the board. The group bonded and still stays in touch with occasional get-togethers, Harris said. “The professional relationships
PHOTO: SARAH BRADBURY
CALENDAR OF EVENTS
and the friendships that were made in Leadership Dallas will last a lifetime,” she said. “We also learned there is a great deal of need in Dallas, and we learned so much about all the worthwhile organizations that have needs and how we could better help them. It was just eye opening.” Harris said she enjoys staying connected to the program through the chamber’s annual Leadership Dallas alumni program. The event gathers all graduates from Leadership Dallas and sends them out to different venues to participate in community outreach events. Overall, Harris said Leadership Dallas helped her form relationships that she finds meaningful today. Those connections range from people in the utility industry to contacts at city hall and local nonprofits. “It’s provided the connections with which to do business,” she said. “You can’t put a dollar value on that.”
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.
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KEEPING WHAT’S GREAT Mike Ablon believes that preserving an area’s history is key to successful development BY LANCE MURRAY
PHOTO: MICHAEL SAMPLES
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Mike Ablon says that as a city or neighborhood evolves through time, it’s important to preserve their character and history. Ablon, a founding principal partner at Dallas-based PegasusAblon, is turning areas that were designed for a vehicle-based society into ones that are focused on a pedestrian-based world. In short, he develops while preserving. He builds value while maintaining history. He allows neighborhoods to evolve while maintaining what made them great. “Cities are a collection of moments,” Ablon says. “Great cities like New York—it has a Meatpacking District, it has a Garment District, it has a Wall Street, it has a Greenwich, it has a Soho. Each of them has their own mythology.” So does Dallas, and Ablon believes he has a responsibility to improve on the greatness and livability of the areas in which he works. For example, PegasusAblon led the redevelopment of the Dallas Design District from a 1950s-’70s warehouse district into a neighborhood of showrooms and galleries, restaurants and local retailers, and lofts and apartments. His company has a major presence in the Preston Center office submarket, which has the highest average rent and occupancy of any office submarket in Dallas-Fort Worth. PegasusAblon’s multifamily practice includes creating innovative developments in the high-growth Frisco submarket and the Design District, among other areas. And, he has a new project in the works after buying The Harbor development in Rockwall. Regardless of where he’s working, Ablon strongly believes in preserving the character of the neighborhood, which often is fragile and can be destroyed unless a solid plan is put in place. That was especially true with the redevelopment of the Design District. “That area had something that is very rare. It becomes more common in older cities but which in younger cities is rare: a history that is theirs—a mythology of the area,” Ablon says. “All of those old industrial buildings came out
P PLACEMAKERS THE DESIGN DISTRICT: CORBUSIAN LETTERS CREATE A SENSE OF IDENTITY AT THE ENTRANCE
PHOTO: MICHAEL SAMPLES
THE HARBOR, ROCKWALL
PHOTO: CITY OF ROCKWALL
of light manufacturing design, and they had a mythology about them of what went on there.” He says he made a great effort to keep the buildings along the street in the Design District as single story structures, with taller buildings as a supporting part of the neighborhood’s fabric. “It creates a sense of scale that slows you down,” Ablon say. “That was the whole intent of the master plan … keep the mythology because pieces like that are what come to make a city great.” He says you can fortify the sense of neighborhood once it’s done. “You don’t have national chains, but you have local-designed food, craft beer, a different twist on Thai food or Americana, but they’re all local entrepreneurs,” Ablon says. “Then it’s designed food. It doesn’t have to be designing, it just has to be creative and different—one off.” Proper planning kept the “design” element to the Design District, and that was critical for Ablon. For instance, the distinctive sign at the district’s entrance had to be appropriate for the neighborhood’s history. “How do I sign it? You don’t put a brick wall that says ‘Design District.’” Ablon says. “You use Corbusian letters in an abstract way, and if you don’t know anything about it, then you go there and it’s a neat sign. But, if you’re from a design background, you notice Corbu letters and it’s another layer of design.” It’s all about identity. “You still see garments in the Garment District — that’s what keeps the feel, that something that gives the ability to be a Design District, as opposed to razed and flattened and putting in something new,” he says. “For the next 50 or 100 years, those moments, — neighborhoods like that, that fabric
put together —that makes for really interesting cities,” Ablon says. It’s not just “as people come here, they can have more options,” but that the people who are here can have the variety that cities should have, that has real context,” he says. Sometimes things shouldn’t change, he says. Ablon was against the renaming of Industrial Boulevard to Riverfront Boulevard in 2008, for example. “That was a part of the history of Dallas,” he says. “I don’t care what name you use on it: To give up the history and mythology of what started that part of town, it’s clear that you’re losing it. “How we get our names, that’s good stuff, and you don’t lose that,” he says. He also believes it’s imperative to overcome some of the consequences of past decisions that may have been necessary at the time but now place barriers on the city’s growth and livability. Among those areas of interest are Deep Ellum and The Cedars neighborhoods downtown, where the demolition of I-345 could reconnect the two and make them walkable, and the Trinity River Project that would add greatly in finding valuable use for lands that became barriers when the river levees were built in the 1930s to control flooding. As for his The Harbor project in Rockwall, Ablon sees a great future. “The most important part of The Harbor is the rare commodity that it has, which is a beachfront sunset linear park on the water,” he says. “You have water, you have sunset, you have linear park, and you have a pedestrian environment, and that is an incredible framework.” Ablon says what people experience is as much the product as the product that is being sold. “I don’t go to a bar to have a beer — I go there to see you and we have a beer and we talk,” he says. He said he is going to focus the “experience product” along the water’s edge on retail and dining and other group sets “that you can’t have anywhere else.” Ablon says that cities have natural cycles, and first encountered the phenomenon in the Germantown area of Philadelphia. “That was the first place I saw the cyclical nature of a neighborhood in America,” he says. Dallas became a city in 1936, Ablon says, because of the Texas Centennial celebration. “That was the moment Dallas morphed from a town to a city,” he says. Fast forward 100 years, and Ablon says Dallas is approaching another milestone. “2036 should be a golden moment for the city,” he says.
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VIEW FROM THE TOP
BY LANCE MURRAY
MICHAEL KEOWN President and CEO, Farmer Brothers Farmer Brothers is one of several companies that have relocated to North Texas from Torrance, California, joining a former neighbor there, Toyota Motor North America. The company imports, roasts, and sells coffee to the foodservice, hospitality, health care, gaming and retail establishments. We had a chance to visit with President and CEO Mike Keown at Farmer Brothers new headquarters in Northlake.
WHAT WERE THE MAIN REASONS BEHIND FARMER BROTHERS’ RELOCATION FROM TORRANCE, CALIFORNIA TO NORTH TEXAS? It was fundamentally about repositioning the company for the next 100 years, which sounds a bit cliché, but we’d been in a space since 1912 and the business has changed quite a bit — the needs of the business had changed quite a bit. As we studied where we might go, the Metroplex shone, both from a cost-savings/freight, logistics/ability to serve our customers— those kinds of things—but also access to talent [and] the ability to bring our customers in to these types of places. We thought it was going to be win-win, and it appears to be that and more.
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WHY DID YOU CHOOSE THIS LOCATION IN NORTHLAKE? We had a team evaluate where we might go on roughly 23 criteria. Everything began from access to talent, coffee sourcing, freight logistics, and ability to acquire and retain talent. That led us to a corridor ... from north of Houston to Oklahoma City. That’s what we first announced. Then as we refined it, the Metroplex looked better and better, and we began to evaluate properties within the Metroplex. Ultimately, we came to the corridor from Alliance along 35 north into Denton County. This piece of property came up, and it really checked every box: the logistics potential from this in terms of outbound freight, but also bringing coffee in from the Port of Houston, and then other aspects of it — like for those of us who travel quite a bit, the proximity to DFW. This plot had everything.
WHERE ARE EMPLOYEES WHO MADE THE MOVE FROM CALIFORNIA CHOOSING TO LIVE? Really, it’s across the Dallas-Fort Worth area, and I include Denton County in that. We have employees [in] the city of Dallas, down the corridor into Fort Worth, and north into Denton County, which is, I think, a testament to what the area has to offer. I’m not sure there’s one location that they’re gravitating to. My sense is, depending on what their unique situations are, the needs are for their families. They’re living all over the area, which is what we wanted, what we’d hoped.
OFFICE/FLEX • INDUSTRIAL • RETAIL • RESIDENTIAL IDEAL FOR CORPORATE RELOCATIONS AWARD-WINNING COMMERCIAL DEVELOPMENTS BUILDING FOR THE FUTURE UPSCALE LIVING & RECREATION IN THE HEART OF D/FW METROPLEX
Keri Samford, Economic Development Director 972.624.3127 • email@example.com • www.TheColonyEDC.org
Comeback of the Corridor; CityMAP, Capital Markets, The Crane Report