Tuesday, October 17, 2017
It's been a year since the Urban Land Institute held its big annual conference in Dallas, and in that time North Texas stakeholders have brought some new ideas to the table for ULI North Texas' third annual Impact Awards gala.
“DFW is where we are putting our chips in today. We see the risk-adjusted returns are better in Dallas today and the profit spread is wider in Dallas today and the growth opportunity is better in Dallas today,” JPI Senior Vice President Matt Brendel said. But are too many multifamily developers saying it?
Pixabay Dallas In a city with consistent job growth, it is no wonder developers are in love with Dallas. People flock here by the hundreds every day, and demand for multifamily product is unquestionably present, as occupancy is up around 95% in DFW.
But there are some concerns with the market, namely that there are too many developers high on Dallas’ strong multifamily fundamentals. High levels of interest in a market outperforming most of the rest of the U.S. are spurring nervous mutterings about overbuilding among some experts in the field.
Research from multiple firms shows that consistent, significant construction deliveries through the end of this year and into 2018 are slowing rent growth. CBRE Director of Research and Analysis Robert Kramp said labor shortages and increased material costs could decrease construction, preventing Dallas from oversupplying itself.
Bisnow: Jeremiah Jensen JPI Senior Vice President Matt Brendel But Brendel believes Dallas is still in balance. “Dallas is a demand story. Everybody talks about the supply, but it is about the demand. When you are creating over 100,000 jobs a year consistently for a 24-month stretch, that’s a demand story.
When you are delivering 20,000 to 25,000 units within that same time frame, that is balanced supply and demand,” Brendel said at Bisnow's Dallas Multifamily Explosion event Wednesday. According to Brendel, his assertion holds up based on the historical rule of thumb that for every four or five jobs there will be demand for one additional unit.
Dallas looks just about perfect to developers who are doing the same math. JPI and others that are still looking for new deals in Dallas are not unfounded in thinking there is still room to lean into this booming market.
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Friday, September 29, 2017
Every few days I drive past Valley View Center and can't believe there's still a Valley View Center.
The mall at Preston Road and LBJ Freeway was supposed to have been torn down starting no later than last Dec. 31. That deadline was set by a vote of the Dallas City Council in the summer of '16 intended to pave the way for the Dallas Midtown development, a sprawling multibillion-dollar sea of shiny with a nice big chunk of green planted right in the center. More than five years in the making, though, Midtown remains unmade — less a tease than a taunt at this late date.
The dead mall refuses to fall down. Pieces of it have been excised — the exterior of the old Sangers, a chunk of a parking garage. But that's it. Whole thing looks like hell. The mall of my wasted youth, which sits on one of the most valuable stretches of real estate in the city, has turned into a zombie.
And here's the awful secret: It's going to remain that way for the foreseeable future.
Turns out, the city has terminated its agreement with Beck Ventures to kick in $36 million in tax incentives intended to help cover a whopping initial price tag that was around $290 million more than a year ago and shot up to $500 million a few months back, so who knows. The done deal was undone over the summer, quietly, almost concurrently with a ceremonial groundbreaking in late June — months after the tear-down deadline — that was just a last-ditch effort to keep that $36 million from vanishing altogether.
Beck Ventures' Scott Beck, who owns the mall with his dad, Jeff, blames the city for the holdup, insisting that zoning issues at City Hall led to delayed approvals that caused problems with the bank that left leases with anchor tenants in limbo. For instance, he said the city told him a planned Cinèpolis movie theater and Life Time Fitness facility couldn't have anything above the first floor with ceilings taller than 15 feet — absurd! He said officials took so long to get things rolling that even with an extension, he missed the New Year's Eve demo deadline.
So he's back to zero, once again filling out paperwork in hopes of getting the city to cough up incentives already approved and removed. City staffers say he wants more — around $50 million. Except this time, the new people in charge at City Hall are going to look at the books, do the math and tell Beck how much he's getting.
Meanwhile, city officials say they've done plenty for the Becks in the more than five years since they announced they'd bought the mall. As in: The city hustled through an area plan for the whole Valley View-Galleria area, wrote up a development plan that rezoned all that wasted concrete and gave the Becks plenty of leeway to build just about anything, created a Mall Area Redevelopment TIF District to help stimulate private investment there and at Red Bird Mall, rezoned some of that early rezoning (twice!), and then agreed to kick in that $36 million.
Which is all true. I've attended more Midtown meetings than I care to think about since 2012, including an October 2015 sit-down with the city's Urban Design Peer Review Panel where Beck was told the planned development was just too confusing. And, yeah. It was.
And now it's a mess, with both sides likely to blame — the novice developer who's never attempted to build something so Brobdingnagian, and a labyrinthine City Hall with all-new people and all-new rules. No wonder everyone, including Mayor Mike Rawlings, is pitching the Valley View site to Amazon for its second HQ. Feels almost do-or-die at this point. Bezos or bust.
Beck said Wednesday that by now he expected Valley View would be demolished and replaced by high-rise hotels and apartment buildings and a grocery store and that movie theater and that gym.
"And I am disappointed," Beck said when I asked if he's frustrated with the process. "We're in the development business. We're used to things going through a process. I am not frustrated. Just disappointed."
Robert Wilonsky/Dallas Morning News
The executives at Downtown Dallas Inc. are pulling together potential development sites in the city's central business district that could appeal to the search underway by Amazon.com Inc. (Nasdaq: AMZN) for a second North American headquarters.
"We have a lot of options with nearly 6 million square feet of space available for someone to move into today," said Kourtny Garrett, president and CEO of Downtown Dallas Inc., an advocacy group for Dallas' urban core.
"Amazon said they are looking for 500,000 square feet of space in 2019, and we can easily absorb that in the CBD," Garrett added. "Within a 2.5-mile radius, we have almost 30 million square feet of real estate; the opportunities are endless."
Garrett and other North Texas leaders are helping the Dallas Regional Chamberidentify the best sites in the region that could sway the e-commerce giant to bring its proposed $5 billion campus to Dallas-Fort Worth.
The 500,000 square feet could fit easily into a variety of configurations of either one or a few of Dallas' trophy buildings, she said.
Dallas' tallest skyscraper, Bank of America Plaza, is one of the building's being discussed as a potential option for Amazon to consider. Other options include:
- Tim Headington's development parcels at Field and Ross streets.
- Mike Hoque's recently acquired Hoque Global affiliate-owned property near Dallas City Hall.
- The Texas Central high-speed rail transit-oriented development by Dallas-based Matthews Southwest.
- The Spire Realty development tract on the east side of the CBD by Interstate 345, with the help of nearby properties (like the developable land surrounding the historic Dallas High School and Carpenter Park). If selected, this could mean the cry for the teardown of Interstate 345 could be heard by Amazon execs.
- Exposition Park, which sits east of downtown Dallas near Deep Ellum.
In all, Garrett said Downtown Dallas Inc. plans to help pitch upwards of a dozen different configurations in the city's central business district.
Longtime Dallas developer and investor Mike Ablon said he wouldn't be surprised if Amazon already had a notion of which cities they planned to shortlist, with the idea this publicly issued request-for-proposal process would let those cities validate themselves.
"They are very indicative of a new economy," Ablon, principal at Dallas-based PegasusAblon told the Dallas Business Journal."They are in a number of verticals and spaces and they have to have at the back of their mind: What's is the solution that fulfills our goals for the next 25 years.
"It's a very complicated question to answer from the outside," he added.
Ablon, who played an important role in the early transformation of the Design District, said he wouldn't be surprised if Amazon wanted to weave itself into the fabric of a city, whether it be urban or suburban.
This real estate search — regardless of what happens — will be an important one for Dallas, he said, which seems to still be reeling from Boeing selecting Chicago over Dallas because of the Texas city's lack of culture.
"If they come to Dallas-Fort Worth, we will all benefit," Ablon said. "If they don't and they give feedback for the next five to 10 years, we'll see an action plan to adjust or mitigate that for the future.
"HQ2 is a bit of a watershed moment of the decade," he added. "This will show how a city will position itself for the future."
Friday, September 22, 2017
HOUSTON—In a newly created office investment sales leadership role within JLL as international director, Michael Zietsman’s primary focus is on advancing the company’s growth strategy, executing large transactions and managing client relationships, with a particular focus on the Texas and Denver regions. He is now based out of JLL’s Houston office.
Zietsman has been instrumental in growing JLL’s investment sales in Southern California since re-joining the company in 2007. He led teams that executed such notable transactions as Williams Tower in Houston, Crystals at CityCenter in Las Vegas and Republic Plaza in Denver.
“The Texas and Denver regions are experiencing tremendous population and employment growth, which is driving increased office investment sales demand,” said Jonathan Geanakos, president, JLL Capital Markets Americas. “Under Michael’s guidance, we are establishing a unified office investment sales practice in the region to accelerate our business development efforts and enhance our knowledge and execution capabilities.”
Zietsman has 34 years of experience in the sale, joint venture and financing of various property types, with an aggregate value in excess of $11 billion. He was the president of Zietsman Realty Partners from 2004 to 2007. Prior to that, he was a managing director of Lehman Brothers’ global real estate group where he was responsible for the real estate asset finance business. Zietsman started his career with JLL in Los Angeles in 1983, serving various roles in Los Angeles and Tokyo.
In this exclusive, Zietsman recently discussed the new role, his plans for the future, investment opportunities and how Harvey will impact Houston long term.
GlobeSt.com: You’ve had tremendous success in Los Angeles. What is the reasoning behind JLL creating this new role and what do you hope to accomplish?
Zietsman: We were able to grow our business in Los Angeles by 256% between 2012 and 2016. Looking at opportunities in other areas of the country, we found that there is an exceptional amount of commonality between the owners of properties in Texas and Colorado. The markets in Colorado–especially Denver–and Texas are similar in many ways. In my new role, I will foster a unified team that will provide consistent, connected service to our clients throughout the region.
Lisa Brown/Globe St.
Thursday, September 21, 2017
Developer Trammell Crow Co. and partner Olympus Property are building the third phase of a transit-oriented development in Carrollton.Crow's High Street Residential has broken ground on 352 apartments and retail space in the Union at Carrollton Square in downtown Carrollton.
The project is near DART's commuter rail station and will be finished in late 2018.
"We are grateful to expand upon such a unique and successful project in Carrollton's historic downtown district and pleased to partner with Olympus Property to deliver a best-in-class residential community to Carrollton," said Joel Behrens, a principal with High Street Residential, which started the Union at Carrollton Square project in 2013.
"We purchased the first two phases of Union at Carrollton Square from High Street Residential in January 2015," Anthony Wonderly, a principal at Olympus Property, said in a statement. "Over the past two-plus years, the apartment community has experienced tremendous demand from people wanting to live in downtown Carrollton."
Steve Brown/Dallas Morning News