Tuesday, April 22, 2014
Four Healthcare Real Estate Trends
You Should Watch
Healthcare providers are getting more savvy about using real estateto support operational strategies and create a competitive advantage. (It's not rocket science, friends... put the orthodontist office near the school, and put the orthopedist near the basketball court.) Working with both tenants and landlords, Lincoln Harris CSG EVP Webber Beall identifies four trends to keep an eye on.
1) Shorter leases
Fort Worth's 3M SF Construction Boom
AllianceTexas inked 5M SF in leases last year and has almost 3M SF of industrial space under construction. (The machines are building their own houses.) Its one part of Fort Worth's amazing growth and another reason we're hosting the fifth annual Bisnow Fort Worth State of the Market event on Thursday at the Omni. (You can get tickets here.)
Monday, April 14, 2014
Sales of homes priced at $1 million and up are surging in North Texas as affluent buyers decide it’s time to hunt for new digs
STEVE BROWN | REAL ESTATE EDITOR
Published March 21, 2014
Atight supply of homes on the market and tougher mortgage standards have kept Dallas-Fort Worth home sales in check so far in 2014. But that hasn’t put the brakes on high-end home purchases, which have surged in the first two months of the year.
Sales of homes priced at $1 million and more have exploded – up 53 percent in North Texas from a year ago, according to the latest real estate data.
At the same time, sales of modestly priced houses in the area have slowed – down by more than a quarter from a year ago. Overall pre-owned home sales by real estate agents are flat this year.
More than 100 North Texas houses priced at $1 million have changed hands since the start of 2014.
And there are another 857 homes in that price range still on the market, according to data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems.
The surge in high-priced home sales has caught the attention of economists and kept real estate agents busy.
“We seeing the same thing in Houston as in Dallas – million-dollar home sales are way up,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M. “We are in a housing recovery, and people with money recover faster than people without money.”
4939 Manson Court
Dallas, TX 75229
This 29,196-square-foot, 10-bedroom, 9-bath home sits on 3 acres in Preston Hollow. Built in 2011, the estate has a 14-car garage, an underground media room, an indoor basketball court and a resort-style swimming pool. Platinum Series Realty is marketing the property.
SEE OUR PHOTO GALLERY
9806 Inwood Road
Dallas, TX 75220
With 14,139 square feet, this 6-bedroom, 7-bath home is on 5.5 acres in Preston Hollow. The house has a movie theater that seats 20, a 10-car garage and 2,200-bottle wine room. It was built in 1996. Briggs Freeman Sotheby’s International is marketing the property.
SEE OUR PHOTO GALLERY
3800 Beverly Drive
Dallas, TX 75205
This 8,938-square-foot, four-bedroom, five-bath Colonial style home is in Old Highland Park. Built in 1922, the home is newly renovated with a full basement, guest quarters and third-floor game room. Allie Beth Allman & Associates is marketing the property.
4906 Park Lane
Dallas, TX 75520
Built in 1939, this English-style estate has 10,005 square feet, five bedrooms and five bathrooms. It sits on 5 acres on Bachman Creek and has a pool, landscaped grounds and four living areas. Dave Perry-Miller & Associates is marketing the home.
Gaines said there is now demand for super luxury homes following the recession.
“They are taking money out of the stock market or they are simply people who have capital and don’t know what else to do with it,” he said. “Putting it into a luxury home is not a bad proposition.”
While many of these deluxe property buyers pay cash or finance only a percentage of the purchase, for buyers who need a mortgage, high-end home financing is now more plentiful and affordable, Gaines said.
“Jumbo mortgage rates are now at or slightly below conventional loan rates,” he said. “And lenders aren’t as risk adverse as they have been.”
If mortgage companies are loosening up on high-end home loans, then they have become more stringent when it comes to financing low-cost housing for some moderate income buyers. People must meet tougher debt to income ratios and have higher incomes and credit ratings to buy a house than in the period before the recession.
“That’s the end of the market where the new mortgage regulations have hit the hardest,” Gaines said. “These are the people who have the most trouble qualifying for loans – generally young people and first-time buyers.
“Otherwise, this lower-end market would be doing better than it is.”
Some loan requirements may be up, but real estate agents aren’t complaining – particularly those who sell exclusive properties.
“Last year was unprecedented — the biggest year I have ever had,” said luxury home agent Erin Mathews. “And this year has seen that continue.”
Mathews said many affluent home buyers sat on the fence during the recession, and they are now ready to make a deal.
“People feel like that if they are going to make a move to upgrade, the time is now,” she said. “We are also getting an influx of relocation buyers, and that’s a nice segment of the market now.”
The tightest home inventory in probably 20 years has made it more challenging for home shoppers, agents say. But that doesn’t mean another price bubble is happening.
“You have to be fast on your feet to make a buy,” Mathews said. “But nobody is being crazy with prices.
“Even though prices are inflated from where they were in 2008, buyers want to see what else has sold and at what prices in this boomlet we are in.”
Nowhere to go
Million dollar home sales would probably be even higher this year if there were more properties to purchase.
1That’s keeping some owners of luxury houses from selling, too.
“I had two properties under contract where I could not find another house for either seller,” said top Dallas real estate agent Allie Beth Allman. “They backed off the sales.
“They said they couldn’t find anywhere to go.”
Allman said the demand is strongest in one segment of the luxury market. “The $1 million to $3 million market is going crazy,” she said. “There are multiple offers for properties at that end of the market.”
Allman said there’s also been a shift toward new construction in the higher price ranges.
“They want new houses that they don’t have to do anything to,” she said. “People that can afford the upper end want brand new construction.”
Uptown’s turn: Office building wave starting up in top Dallas market
Crescent Real Estate/Crescent Real Estate
The tower, where Gardere will occupy four floors, will include ground-floor shopping.
The building boom that’s taken hold in the northern suburbs is spreading to central Dallas with a series of new office towers starting in Uptown and the Arts District.
One office high-rise is already under construction downtown, and another is on the way in Victory Park.
And now, one of Dallas’ largest and most prestigious law firms will anchor a tower to be constructed on McKinney Avenue.
Gardere Wynne Sewell LLP is leaving its longtime home in Thanksgiving Tower for Crescent Real Estate’s 20-story Uptown high-rise. Work will start this summer on the building next door to the Ritz-Carlton Dallas hotel.
Gardere will take four floors in the sleek glass tower, which will have a ground-floor shopping center and a lush park stretching along Olive Street. The law firm will move into its 109,000-square-foot offices in 2016.
“We’ve been in Thanksgiving Tower since 1989 — it’s been a good 25 years,” said Gardere chairman Holland O’Neil. “It was a difficult decision for us to make, but we are excited about the move.”
Gardere is renting about 100,000 fewer square feet than in its current downtown location.
“We have a lot of dead space in our current office,” O’Neil said. “When we moved into this building, the way we constructed our space was for a time when there were main-frame computers, big file rooms and libraries.”
New technology has allowed law firms to cut back their office size.
Even so, Gardere had only a handful of choices for its new location, said partner Kevin Kelley.
“Our real estate brokers told us in advance our options would be fairly limited,” Kelley said. “Our competitors are moving out of this area and either moving along Ross Avenue or to Uptown.
“The location for the new building is fantastic.”
Designed by award-winning architect Pelli Clarke Pelli, the 530,000-square-foot Crescent tower has been in the works for more than two years.
“I don’t give up easily,” said Crescent Real Estate CEO John Goff. “I think our timing for this building is very good.
“Once this project is underway, it will attract even more attention from prospective tenants.”
With the signing of Gardere’s lease, the building will move ahead quickly.
The project will have about 50,000 square feet of retail space fronting a landscaped plaza on Olive Street.
Phil Puckett and Jeff Ellerman of CBRE Group represented Gardere in its search for a new location.
The firm looked at two or three older buildings and three proposed projects before making its choice, Kelley said.
Uptown is one of Dallas’ tightest office markets, with less than 10 percent vacancy in first-class business space. And rents are up to twice the cost of space in nearby downtown.
Only one office building is under construction in the neighborhood — a 22-story tower developer Harwood International is building that is anchored by Frost Bank.
“In the Uptown market you can probably find only one building with a full floor of currently available office space,” said Crescent managing director John Zogg. “In my 25-year career, I’ve never seen this market as tight.
“So many people are trying to move to Uptown because of all the great things that are happening.”
But of almost 20 office projects underway in North Texas, only one is being built in Uptown. And downtown Dallas has only one new project, the 18-story Hall Financial Group office tower being built on Ross Avenue.
The high cost of building in Uptown and downtown vs. the suburbs means that most of the projects are outside Dallas’ core.
Also, building sites are more scarce and expensive in central Dallas.
“The dynamic that is different from 10 or 15 years ago is you have very limited development sites,” said Steve Everbach, senior managing director of Cushman & Wakefield of Texas Inc. “It’s pushing pricing for land and construction costs.
“And the market in Uptown and downtown is demanding premium properties.”
Developers can construct a value-oriented low-rise office campus in Plano, Frisco or Irving. But with development sites in Uptown topping $300 per square foot, office buildings have to be taller and more expensive.
“Right now, the fundamentals are the best I’ve ever seen for this market,” Everbach said. “You are going to have premium rents and premium tenants, and they are going to pay for it because they want to be in prime real estate.”
CBRE Group’s Puckett said that expanding and relocating businesses leased most of the prime office space in Dallas’ suburbs as the economy rebounded from the recession.
Puckett said that in the suburbs, he saw “office building construction starting sooner than the Uptown and Arts District market.”
Now it’s Uptown and downtown’s turn.
This week Houston-based developer Hines announced it will build a 23-story office tower starting later this year at Victory Park.
Developer KDC and Invesco Real Estate are working on a smaller office building at McKinney Avenue and Harwood Street in Uptown.
“There are a couple of three other buildings that could conceivably be built in this cycle in Uptown,” said CBRE Group’s Ellerman. “For a long time, the Crescent was the only game in town in Uptown.
“All of the office buildings that have recently been built have done well,” he said.
Downtown skyscraper will be Dallas’ biggest building redo
Tom Fox/Staff Photographer
The former First National Bank tower on Elm Street was constructed in 1965. At 52 stories, it was Dallas’ tallest tower for more than 15 years.
It’s the biggest empty building in downtown Dallas — 52 stories with more than 1 million square feet of space.
The former First National Bank on Elm Street is so big that some prospective buyers were put off by the task of remodeling the vacant skyscraper.
But it was the huge scale of the property and its potential impact on downtown that attracted New York-based Olympic Property Partners to the deal, principal Seth Weinstein said.
“To come down to Dallas and make a substantial investment of time and energy, the size is important to us,” Weinstein said. “We would not have come down here for a quarter-million-square-foot project.
“We think that the sheer size of the project will in itself create a critical mass.”
Since buying the tower last month, Olympic Property Partners execs have been poring over redevelopment plans and working with architects and engineers.
Demolition inside the 50-year-old skyscraper will begin in 60 to 90 days, Weinstein said.
“We plan to start construction around the first of the year,” he said. “We hope to open the building in the summer of 2016.”
First, the developers have to rip out the insides and haul away tons of construction debris and asbestos before starting to rebuild.
Expected to cost $175 million, the redevelopment will be the largest such venture to date in downtown Dallas, where more than a dozen old office buildings have already been repurposed for new apartments, retail and commercial space.
The Elm Street tower has been closed since 2010, when the previous owners could no longer afford to operate the mostly vacant high-rise.
Since then, the tower has changed hands three times while developers pondered potential remodeling plans.
Olympic Property Partners finally stepped up to the plate when it received a promise of $50 million in development incentives from the city.
“Without those tax increment finance district dollars, we would not be able to motivate the capital to do this job,” Weinstein said. “It showed me that the city of Dallas is really committed to this project.”
Dallas has a lot riding on the building redo.
“Leaving any major asset like that to just sit there and continue to decay is not a plan,” said John Crawford, CEO of the economic development group Downtown Dallas Inc. “It is a drag on everything around it and the entire downtown area.”
Crawford said it’s important for the project to succeed as a mixed-use venue.
“It’s not just some more apartments going in,” he said. “They are trying to create a destination.”
Much more parking
Olympic Property Partners’ redevelopment scheme calls for turning the lower floors of the building into retail, office space and parking.
The tower section of the project will house about 500 apartment units.
“The whole base will really change,” said architect Jerry Merriman with Merriman Associates Architects. “The tower itself will remain pretty much intact.
“On the lower levels, that’s where the radical new designs come.”
The redevelopment will add about 500 parking garage spaces.
“It will be the best parked building in downtown Dallas when we are done with 950 parking spaces,” Weinstein said.
On the ninth floor of the building, the developers plan to create a large outdoor park area with restaurant space, outdoor dining and recreation facilities for the apartment residents.
“We are going to reopen the old observation deck on the 50th floor,” said Bryan Dorsey with BDRC 4Site, the local partner in the project. “We are ready to take this project all the way.”
The developers will blow out enclosed areas on the lower floors for new public spaces and install bright graphics and signage.
“These buildings in the ’60s and ’70s were built fortress-style,” Weinstein said. “They didn’t encourage people to walk into the building.
“We’ve opened up all four sides of the building to invite people in.”
Weinstein said he has secured equity and debt to pay for remodeling the building. The company has a track record of developing apartment and commercial projects.
He said he saw the potential for the tower when he first toured the property.
“As soon as I took a look at this, we decided to pursue it,” he said. “Very few office buildings of this scaleactually lay out appropriately for conversion to residential.
“This is a much better residential building than it is an office building.”