Monday, June 06, 2005

Downtown Dallas Real Estate News

Downtown Dallas Real Estate News

Harwood Center EXCLUSIVE: Lehman Chooses Team for Dallas Sale
By Connie Gore
Last updated: June 3, 2005 07:27am

DALLAS-Ending a face-off among all the top brokerage firms, Lehman Brothers yesterday gave the nod to Holliday Fenoglio Fowler to sell the largest block of CBD space to hit the market in quite awhile. Saint Paul Place and Harwood Center, with a combined 993,809 sf, join a growing roster of soon-to-be-marketed class A and class B-plus buildings in the metroplex. has confirmed the HFF win over CB Richard Ellis Inc., Cushman & Wakefield of Texas Inc., Jones Lang LaSalle Inc., Rockwood Realty Associates Inc. and Trammell Crow Co. Word on the street is the New York City-based lender has taken back the CBD high rises in a gentlemen's agreement with the Witkoff Group, which bought the buildings in the mid-1990s. Assessed at close to $70.9 million, the 273,080-sf St. Paul Place at 750 N. St. Paul St. and the 720,729-sf Harwood Center at 1999 Bryan St. are just the tip of the proverbial iceberg of all that's coming up for sale in Dallas/Fort Worth.

The piece de resistance now being groomed for a sale is JPMorgan International Towers I, II and III, 1.1 million sf of premier space along the Dallas North Tollway. An HFF team also snared that win at the interview table with its owner, Ohio Teachers Retirement System. Given market conditions and the asset's quality, the prediction is it will take close to $200 per sf to win the deed. The trio's assessment hovers $152.8 million.

Meanwhile, sources say HFF and C&W made the short list for the assignment to sell the 835,044-sf Millennium Center at 222 W. Las Colinas Blvd. The New York City-based TIAA-CREF is looking to close the books on a seven-year hold of a 22-year-old asset with a $63.6-million assessment in the Las Colinas Urban Center.

And then there's Colonnade Properties LLC, taking the lead of Equity Office Properties to set up a market exit with a 1.1-million-sf, four-building portfolio sale. A Jones Lang LaSalle team will be marketing the play for the New York City owner, who picked up the Downtown Dallas and Las Colinas buildings in 1997 and 1998. The portfolio's assessment nudges $46.8 million.

Add what's coming up to what has already debuted and it sets up one of the largest shopping sprees in the region's history. "It will really test the depth of all this capital that we continue to talk about," Jack Eimer, president of the Central Region for Houston-based for Transwestern Commercial Services Inc., tells "The story here is there are going to be some assets brought to market that a year or two ago would not have qualified as core, but today they'll definitely be pursued by core buyers."

In days gone by, a core buy meant high occupancy within the class A walls. "Because there's so much capital currently in the market looking for class A product, they're not being scared away by vacancy," Eimer says.

The JPMorgan complex is about 75% occupied. St. Paul Place, a class B with a CBD address, is 50% leased. Harwood Center is 70% leased. Millennium Center was hanging at roughly 50% until a recent leasing flurry pushed it closer to 80%. The Colonnade package has 651,058 sf of vacant space--playing out as half full or half empty, depending on the perspective.

Not only is there an abundance of class A and B-plus product for sale, but there's also no shortage of buyers, says Jason Mattox, senior vice president with Dallas-based Behringer Harvard Funds. Buyers of "all shapes and sizes" are shopping the streets of Dallas and select suburbs like Las Colinas. "The competition is very fierce," he says. "They'll have plenty of buyers for those assets."

How hungry is the investment market for Dallas-area space? That answer probably will come when the CB Richard Ellis team starts generating buyers from a quiet marketing of the empty 220,471-sf Waterway Tower at 433 E. Las Colinas Blvd., bought in January 2004 by Dallas-based Bandera Ventures Ltd. at a bargain-basement rate. Sources say the empty building is expected to turn a tidy profit even though it's been mothballed since it was bought.