Wednesday, October 01, 2014

Editorial: Why new homebuilding in West Dallas, North Oak Cliff is so critical

  /Staff Photo
Nearly three years after the opening of the Margaret Hunt Hill Bridge, West Dallas and North Oak Cliff are hot real estate markets.
While this might sound like a chicken-or-egg question — which comes first, housing or residents? — the answer is clear: It’s housing, especially single-family homes, that is key to a neighborhood’s rebirth. Fresh signs of that rebirth are showing up in West Dallas and North Oak Cliff.
Austin-based PSW Homes recently announced plans to build 60 homes on a 5-acre site at Seale Street and Willomet Avenue near the Belmont Hotel, the first new home development proposed in West Dallas in years. It’s a potential game-changer for an area in which developers already have begun to build hundreds of rental apartment units.
Not far away, for example, developer StreetLights Residential and Stonelake Capital Partners are planning hundreds of apartments, retail and homes on a 25-acre old industrial tract on Singleton Boulevard near Sylvan Avenue. Likewise, developer InTown Homes plans to build homes on the 22-acre site of the former Colorado Place apartments at Colorado Boulevard and Fort Worth Avenue in North Oak Cliff.
It’s clear that, nearly three years after the opening of the Margaret Hunt Hill Bridge, West Dallas and North Oak Cliff are hot real estate markets. In addition to these homebuilding projects in the works, several other major developers are rolling out ambitious plans for multifamily, market-rate housing projects to replace vacant lots, crumbling structures and industrial sites. Within the next couple of years, about 1,000 market-rate apartment units are on tap to be built in the area roughly bordered by Commerce Street, Sylvan Avenue and Singleton Boulevard in West Dallas.
Freshly minted apartment units are important, but new homes represent a different level of commitment to a neighborhood and its school district. As a newspaper that has long urged economic redevelopment in neighborhoods south of the Trinity River, we see these as critical developments.
This boom could have a significant effect in Oak Cliff and an even greater impact in West Dallas. Banks, grocery stores and other vital businesses and services are likely to follow, generating economic benefits and stabilizing neighborhoods. That’s what happened in the West Village. When housing hit a certain threshold, retailers opened businesses and services to support the new residents.
A neighborhood-appropriate version of that pattern appears to be taking hold in North Oak Cliff and West Dallas, now, too — a great sign for neighborhood rebirth.
From The Dallas Morning News

Downtown Dallas' Hotel Lawrence to be renovated as a La Quinta

A franchisee of Irving-based La Quinta Inn & Suites hopes to bring more traffic to one of the sleepier downtown corners with a $7 million renovation and rebranding of the historic Hotel Lawrence.
The 10-story hotel on Houston Street, across the street from Union Station, was purchased last summer by BMR Dallas Downtown Investments LLC, an investment company owned by hotel operator Mehul Patel.
The updated hotel will have roughly the same number of rooms, about 120, and the first-floor space will be converted into an expanded lobby and bar area serving “comfort food,” said Rajiv Trivedi, La Quinta’s executive vice president and chief development officer.
Also, some of the meeting space on the second floor will be converted to public space and some will be used to expand the guest room count, he said.
“It is a complete and extensive renovation,” he said of the property, which originally opened nearly 90 years ago. “This being a downtown location, the rooms will have boutique looks with high-end amenities. It will be a brand-new hotel once renovated.”
The property, a short walk from the West End, will continue to operate as Hotel Lawrence until renovation of the rooms is complete, he said.
Once the rooms are done and the project reaches the public area, the hotel will close, he said. The property will open as La Quinta after all renovations are complete.
The hotel now appeals to the budget-minded but has a hard time competing with newer, more modern hotels, including the city-owned Omni Dallas Hotel. Rates can be $40 to $50 a night lower than at nearby competitors, including Marriott’s Springhill Suites in the West End.
Future guests will be able to participate in the La Quinta Returns rewards program. Loyalty programs have increasingly become a big draw in the hotel industry.
Trivedi estimates the revamped hotel will open in late 2015 or early 2016.
The downtown hotel is one of 190 new La Quinta locations in the pipeline, according to hotel company executives who talked about the brand’s expansion plans in an investor presentation Tuesday.
La Quinta is one of the fastest-growing hotel chains in the U.S.

By Karen Robinson-Jacobs

Landmark Richardson retail center gets new name and tenant

Contributed/Cencor Realty Services
Richardson Mercantile will take up over 50,000 square feet at the old Dal-Rich Village, at Coit and Belt Line roads.
A landmark Richardson shopping center is getting new life thanks to a new major tenant.
The 50-year-old Dal-Rich Village shopping center at Coit and Belt Line roads was one of the first large retail centers in Dallas’ northern suburbs.
The longtime shopping venue has suffered in the last year because Whole Foods Market and, earlier, Drug Emporium moved out.
Now a new business, Richardson Mercantile, is taking more than 50,000 square feet of space in the project.
It’s part of a plan to rebrand and upgrade the aging retail complex.
Landlord representative Cencor Realty Services has renamed the project Dal-Rich Towne Square.
“We think the best community centers are those that reflect the mix of uses that could be found in the old-time town squares in all of the pioneering cities in Texas,” Cencor chairman Herbert Weitzman said. “Richardson Mercantile will have all kinds of merchandise, just like those old-time mercantile stores where you could get anything.
“With this new anchor, combined with the already outstanding mix of shops, services, restaurants and medical uses, Dal-Rich exemplifies our town square approach.”
Other tenants in the shopping center include Jason’s Deli, Dollar Tree, Big Shucks Oyster Bar, Thai Soon, Madras Pavilion, McDonald’s, The UPS Store and Edward Jones.
Announced in 1963, Dal-Rich was built by Richardson’s pioneer Stults family, which had owned the land since 1873. Dallas developers Hugh Prather and Charles Brown were partners in the project. Famed Dallas architect George Dahl did the original design.
In 1972, the shopping center was sold by the Stults family to a partnership organized by Weitzman. The retail center’s anchors back then included grocer Safeway, Hubbard’s Cafeteria and TG&Y Variety Store.
Over the years, Dal-Rich was expanded and remodeled several times, and now has a Spanish-style architecture, thanks to a recent renovation.
Dal-Rich’s new Richardson Mercantile store is run by the same company that has a similar outlet in Frisco. Frisco Mercantile opened in 2009 on Preston Road.
“We’re excited to bring Richardson Mercantile to Dal-Rich Towne Square. Our unique shopping experience will be a perfect fit,” said Elke Nutterfield, general manager of Richardson Mercantile. “Our Frisco location is wildly successful, and we expect even more from the Richardson Mercantile. Our distinctive emporium opens Oct. 1.”
Michelle Caplan and Joey Keffler with The Weitzman Group negotiated the new lease with Cencor’s David McNeil and Joe Lea and Ryan Shafer with North Central Texas Realty.
By Steve Brown

Downtown Dallas office leasing up five times more than a year ago

Downtown Dallas has seen a big jump in office leasing this year.
And a new report by commercial real estate firm JLL says that the central business district leads the area in net office occupancy gains.
Expanding and relocating tenants leased about 558,000 square feet of office space downtown through the third quarter of 2014, according to preliminary data from JLL.
That’s more than five times the total downtown net leasing in all of 2013 and the highest office space absorption number downtown in years.
Far North Dallas, which includes the busy Dallas North Tollway corridor, was second on JLL’s top office market list, followed by Las Colinas and the North Central Expressway.
So far in 2014, net office leasing in the Dallas area totals 1.75 million square feet, according to JLL.
Overall office vacancies in the Dallas area have dropped to 19.5 percent, the lowest level in more than a decade.
Downtown Dallas’ office market has been boosted this year by major leases by companies including Santander Consumer USA, Active Network and Omnitracs.
Developers and the city of Dallas have spent billions of dollars on upgrades in the downtown area during the last 10 years.
“We have rebuilt the platform to not only attract new tenants to the center city and have been able to keep what we have through a number of major lease renewals,” said John Crawford, CEO of the economic development group Downtown Dallas Inc.
“The statistics very clearly spell out the importance of a downtown business address and that downtown is making significant revitalization progress as the largest commercial office center in North Texas.”
By Steve Brown

Tuesday, September 30, 2014

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Monday, September 29, 2014

Trammell Crow eyes Uptown restaurant site for 20-story apartment and retail tower

An expanded facility for the McKinney Avenue Transit Authority, including a trolley barn, is part of the plan.
A familiar Uptown property is being eyed for a new high-rise project.
Trammell Crow Co. is seeking zoning permits to build a vertical mixed-use development on the Cafe Express site at McKinney Avenue and Bowen Street.
The single-floor Dallas restaurant occupies a tract of more than an acre that’s zoned for high-rise office and retail construction.
Crow Co. says the planned project at 3230 McKinney Ave. will have 271 apartments in a 20-story tower.
There will be 13,000 square feet of ground-floor retail, including a spot for Cafe Express.
Crow will also build an expanded facility for the McKinney Avenue Transit Authority. The streetcar line would get new trolley barn space, offices and an exhibit area in the building on Bowen Street.
The developer has been quietly working on the project for more than a year.
“It’s taken a lot of time to put together,” Crow senior vice president Joel Behrens said. “The cafe has a great restaurant, and they like that spot.”
The restaurant has operated on the busy corner since 1996.
Cafe Express would move in the new retail to a space that faces McKinney. The apartment tower will be moved to the back of the lot on Oak Grove Avenue.
“We think it creates for a better street scene to push the tower back off of McKinney,” Behrens said. “We didn’t want a massive structure coming up on the whole site.”
Crow’s zoning application asks for more density in the building. The request does not involve the additional height of the project. “With the height, we are planning on staying under what’s already allowed,” Behrens said.
“The current zoning doesn’t allow a trolley barn,” he said. “We learned they were actively looking for a site where they [the transit authority] could build a trolley barn for their expansion.”
The McKinney Avenue Transit Authority is currently enlarging its route through downtown Dallas.
“Adding another trolley, barn space and a museum with leadership offices has been a goal of ours for years, but the opportunity to do it the right way has never presented itself,” Phil Cobb, founder of the McKinney Avenue Transit Authority, said in a statement. “This space adjacent to where we are currently headquartered is exactly what we needed to realize the vision and grow.”
Good Fulton & Farrell designed Crow’s planned McKinney Avenue mixed-use development, which includes a swimming pool and recreation deck with a view of downtown.
If the project gets the nod from city planners, construction would start next year, Behrens said.
The development is one of two large projects Trammell Crow has in the works in Uptown. Crow and partner Metropolitan Life Insurance plan to build two towers in a mixed-use development at Woodall Rodgers Freeway and Pearl Street overlooking Klyde Warren Park.
By Steve Brown
Downtown Dallas office leasing has grown by more than 550,000 square feet so far this year. (Steve Brown)
Downtown Dallas has seen a big jump in office leasing this year.
Expanding and relocating tenants leased about 558,000 square feet of office space downtown through the third quarter of 2014, according to preliminary data from JLL.And a new report by commercial real estate firm JLL says that the central business district leads the area in net office occupancy gains.
That’s more than five times the total downtown net leasing in all of 2013 and the highest office space absorption number downtown in years.
Far North Dallas – which includes the busy Dallas North Tollway corridor – was second on JLL’s top office market list, followed by Las Colinas and North Central Expressway.
So far in 2014, net office leasing in the Dallas area totals 1.75 million square feet, according to JLL.
Overall office vacancies in the Dallas area have dropped to 19.5 percent – the lowest level in more than a decade.
Downtown Dallas’ office market has been boosted this year by major leases by companies including Santander Consumer USA,  Active Network and Omnitracs.

Another huge mixed-use development is on the drawing boards in Richardson

The 55-acre project is just to the west of the new CityLine development with State Farm Insurance.(City of Richardson)
Next door to State Farm Insurance’s towering new office campus in Richardson, developers are working on another huge mixed-use development that will bring millions of square feet of additional construction.
The proposed project – which was just approved by Richardson’s planning and zoning commission – would take up the vacant 55 acres between U.S. Highway 76 and the CityLine development anchored by State Farm.
DART’s Bush Turnpike commuter rail station sits in the middle of the two properties.
The vacant property, which is being rezoned, is at the southeast corner of Bush Turnpike and U.S. 75 and is owned by the Caruth Foundation.
Real estate investor and developer Parliament Group Inc. is buying the property and has been working with the owners, city officials and Good Fulton & Farrell architects to plan the new project.
The huge State Farm campus is just across the DART rail line from the new development. (Steve Brown)
Zoning was just approved by the Richardson Plan Commission for 1.35 million square feet of office space, a 150-room hotel and 60,000 square feet of shopping.
There will be 1,250 urban style apartments, to be developed by Trammell Crow Residential.
“The velocity and scope of this is impressive,” said Richardson City Manager Dan Johnson. “We are excited that these firms see the value of Richardson.”
Johnson said the just-approved zoning changes for the Caruth property were “tweaks” on planning done back in 2010 and 2011.
That’s when initial designs for the Caruth land and the adjacent CityLine property were down.
In 2012 developer KDC bought the 186-acre CityLine tract on the south side of Bush Turnpike at Plano Road and began work on a $1.5 billion mixed-use project.
The smaller Caruth property – which fronts on U.S. 75 – has remained vacant while State Farm’s office towers have gone up to the east.
But that’s soon going to change.
“The projects will be very symbiotic to each other,” Johnson said. “Combined they are over $2 billion in tax base.”
The latest zoning allows for high-rise office construction at the northeast corner of Renner Road and U.S. 75 and “freeway hi-rise” buildings of up to 300 feet tall at the southeast corner of Bush and 75.
Mid-rise mixed-use buildings would be constructed along the DART line.
Designs for the project include a greenbelt along Spring Creek.
“A corridor has been left to construct the proposed Cotton Belt rail line,” Johnson said.
Parliament Group plans to start taking ownership of the property in December, according to partner Joe Altemore.
“This project is going to be huge,” Altemore said. “It’s going to be a bookend for the CityLine development.
“We are getting a great reception to the project,” from commercial real estate firms that will buy development sites and build, he said.
Trammell Crow Residential is working on plans for the first phase of apartment communities it will build, which will be designed by Good Fulton & Farrell, Altemore said.
Next door at CityLine, construction is already underway on four office towers for State Farm, a half-million-square-foot campus for Raytheon Corp. and almost 1,000 apartments.
A shopping center anchored by Whole Foods Market and an Aloft Hotel are about to start construction.
Combined, CityLine and the Caruth tract development will create one of the largest, most dense transit oriented, mixed-use developments in the country.
“This is an active urban market – not suburban,” Johnson said. “The intensity and quality of the development is so strong.”

Historic downtown Dallas office tower sold for hotel project

The 1700 Commerce tower was built in 1922. (Steve Brown)
A historic downtown Dallas office tower has changed hands for the first time in 20 years.
Boxer Property has sold the 21-story 1700 Commerce building at Commerce and Ervay streets to Irving-based hotel firm NewcrestImage LLC.And the new owners plan to convert the 132,000-square-foot high-rise into a hotel.
That’s the same firm that recently looked at converting a building in downtown’s West End Historic District.
Instead, the company has purchased the 92-year-old 1700 Commerce building, which is located across the street from Neiman Marcus’ flagship downtown store.
Boxer Property founder Andrew Segal said he sold the historic office tower after NewcrestImage approached his firm about a deal.
“It was one of our first buildings which we bought back in the dark days of downtown Dallas,” said Segal, whose Houston-based firm now owns properties all over the state. “In hindsight, back then I should have bought everything I could.
“It turned out to be a great asset and everything is getting better in downtown Dallas,” he said.
Segal said redeveloping the old office tower into hotel rooms will add more life downtown and be a catalyst for further development.
“It takes office space off the market and brings people there at night,” he said.
Boxer Property still has its Pacific Place office building on Elm Street, which recently became the home of Texas A&M University’s expanded downtown Dallas campus.
“In that building we can’t build new space fast enough, there’s so much demand,” Segal said.
The 1700 Commerce Building – which Segal acquired in 1992 – was originally constructed as the Allen Building.
It was developed by prominent Dallas attorney Arch C. Allen and was designed by architect James N. McCammon.
The brick and stone office building cost about $1.5 million when it was new.
By the time Segal bought the property 70 years later, he only paid about $525,000.
Terms of the latest sale were not disclosed.
NewcrestImage owns and operates more than a dozen hotels, with five properties under construction and more in planning stages. The company has new hotel developments in East Texas, the Houston area, Waco, Midland and Oklahoma City.
NewcrestImage just opened two hotels in Grapevine, a Courtyard by Marriott and a TownePlace Suites hotel.
And it’s developing a historic downtown New Orleans hotel into an AC Hotel, Marriott’s new urban-style hotels, which are similar to Starwood’s Aloft brand.
The 1700 Commerce building is one of several downtown commercial buildings repurposed as hotels.
The former United Fidelity Life Insurance Building at 1025 Elm St. was converted to a Homewood Suites by Hilton Hotel.
And the historic Magnolia Building on Commerce has been a hotel since 1997.
The Santa Fe warehouse building on Young Street at Field was remodeled into an Aloft hotel.
Owners of the historic Tower Petroleum Building on Elm have proposed turning the art deco high-rise into a boutique hotel.
Hotel rooms are under construction at the former LTV Building on Elm Street and planned for the One Main Place tower on Main Street.

Saturday, September 27, 2014

ALERT: 60% Of All Home Purchases Are “Cash Only” – A 200% Jump In Five Years

Remember when housing was the primary aspirational asset for a still existent US middle class, to be purchased with some equity down by your average 30 year-old hoping to start a family in his or her brand new home, and, as the name implies, aspire to reach the American dream? Those days are long gone. Back in those days the interest rate on the 10 Year bond mattered as it determined the prevailing marginal affordability of leveraged real estate. That is no longer the case, at least not for about 90% of Americans, because as Goldman shows, while before the great crisis only 20% of home purchases were “all cash”, since then the number has soared threefold, and currently the estimated percentage of cash transactions (by count and amount) has hit a record 60%. In other words, less than half of all home purchases are debt-funded, and thus less than half of all home purchases are actually representative of what middle-class America is doing.

Goldman’s take:
  • The estimated cash transactions as percent of total home sales both by transaction count and by transaction dollar amount. Relative to the pre-crisis years, percent cash transactions has risen by about 30 percentage points. This change is broadly in line with the increases suggested by DataQuick data. The 30 percentage point increase in percent cash transactions explains almost the entire decline in the “mortgage per dollar transaction” series (with the remainder explained by small changes in average LTV ratios per mortgage). We do not have data to assess who these all-cash homebuyers are, but presumably investors who have been purchasing distressed properties and turning them into rental units have played an important role.

The WSJ has a few thoughts to add:
  • The surprisingly large cash-share of purchases helps to explain why home sales have jumped over the past two years despite more muted increases in broad measures of new mortgage activity, such as the MBA’s mortgage application index.
  • There’s no exact way to know who is responsible for all of these cash purchases, though they are likely to include some combination of investors, foreign buyers, and wealthy homeowners that don’t want to go through the hassle of getting a mortgage before closing on a sale. Mortgage lending standards have sharply tightened up since the housing bubble, with banks scrutinizing borrowers’ tax returns and bank statements to verify their incomes and the source of their down payment.
  • Our personal thoughts: just like the stock market has been levitating on zero volume and virtually no broad distribution, so the entire housing market appears to have morphed into a “flip that house” investment vehicle used by the usual suspects (wealthy foreign oligarchs abusing the NAR’s anti-money laundering exemption to park their stolen funds in the US, government sponsored firms such as BlackStone using near zero cost REO-to-Rent subsidies, and other 0.01%-ers) who piggyback on cash flows deriving from alternative cheap credit-funded investments and translate their profits into real-estate investments.
  • It also means that if nobody used leverage (i.e., mortgages) to buy houses before, they certainly won’t do it now, all the more so with interest rates soaring and purchase affordability imploding in front of everybody’s eyes.
  • Finally, due to the very thin marginal source of bidside interest (flipper flipping to flipper and so on), it means that most of America has not participated in this mirage “recovery”, and all it will take to send the buoyant housing market crashing is for the one marginal buyer to become a seller. What they will next find, is that when dealing with a bidside orderbook that has zero depth, one indeed takes the escalator down from where the lofty heights achieved courtesy of Fed-funded stairs.

Friday, September 26, 2014

Uptown tower changes its name; work underway at former Hard Rock site

The site where One Uptown is being built in the Uptown area of Dallas where the former Hard Rock Cafe stood. The bustling Uptown area can be seen up McKinney Avenue in the background.
One of Dallas' most highly anticipated luxury residential and retail towers will get a new name.

With construction well underway on the 20-story high-end tower on the former Hard Rock site at the northeast corner of McKinney Avenue and Routh Street, Stoneleigh Properties President Rick Cavenaugh has decided to rename the tower 'One Uptown' instead of 'One Dallas.'

The move better reflects the luxury tower's presence in the neighborhood, officials said. At completion, the tower will be one of the tallest and most high profile developments in Uptown.

Workers have begun digging out the underground parking garage for the 1-acre property, which is expected to be complete by mid-2016.

Cavenaugh says the hole will be twice as deep as the one Gables dug to build the parking garage beneath the Whole Foods-anchored developed kitty-corner to the site for One Uptown.
Hunt Construction is the general contractor on the project. Humphreys & Partners is the project architect.

At completion, Stoneleigh expects to deliver about 200 luxury apartment homes — fulfilling a need for Uptown residents wanting a home in the neighborhood.
The tower will also include 30,000 square feet of retail in two restaurant spaces. The leases have yet to be finalized.
By: Candace Evans

Construction begins on much-debated, design intensive 12-story Uptown tower

The first floor of 1920 McKinney will feature a restaurant, which has yet to be selected. The ground floor has about 8,000 square feet of retail space.
The developers behind the latest office tower planned for Uptown — the 12-story, 150,000-square-foot office building at 1920 McKinney — started construction on the project Tuesday morning, breaking ground on the site.
Invesco Real Estate and KDC officially kicked off the office tower, which will sit kitty-corner to Crescent's new $225 million high-rise. The new tower was the subject of much debate between residents at the neighboring 1900 McKinney, who had placed zoning restrictions on the adjacent property.

Phillip Kingston, the Dallas city councilman for District 14, led a mediation between the two parties that led to a settlement of more than a half-million dollars.

"I'm proud of how this turned out," he told the Dallas Business Journal."I will use this case as an example of how to conduct formal mediation for zoning issues in the future."
Invesco and KDC reportedly have signed an undisclosed anchor office tenant, which signed a lease for a full floor, or 22,350 square feet of office space.
JLL's Daryl Mullin and James Esquivel are leasing the office building, which is expected to be completed by spring 2016. The office floors are smaller than in typical office buildings.
BOKA Powell is designing 1920 McKinney, which will include a six-story Class A office building atop a six-story parking garage with ground floor retail space for an 8,000-square-foot restaurant. The building has a parking ratio of three parking spaces for every 1,000 square feet of space.
The architecture firm had to design the building to scale away from the sidewalk on the six-story parking garage, with an office building atop the smaller parking structure to accommodate the zoning restrictions, said Andrew Bennett, a principal with Dallas-based BOKA Powell.
" We had to work hard on the entitlements to maximize the square footage of the building, but we were able to do it with the architecture and have some fun," Bennett said.
By: Candace Evans