Friday, March 21, 2008

Dallas' Design District to gain apartments, shops

Until a few months ago, Michael Ablon's Oak Lawn Avenue property marketing center was a decorative tile showroom.
By next year – if things go as planned – the building will house a restaurant.
Things are happening fast in Dallas' design district.

Pegasus Ablon Properties Lionstone Group owns more than 30 acres of land and buildings around Oak Lawn and Hi Line. Construction has begun on two urban-style apartment projects, and another apartment development is about to break ground.
The quasi-industrial area northwest of downtown is being redeveloped into the city's newest apartment and retail district.
"We'll have almost 1,000 apartment units ready to be occupied by next year," said Mr. Ablon, who's marketing the area for a Houston investor that's bought up much of the neighborhood. "We've been working very hard to move development of the area forward."
Last year, Houston-based Lionstone Group purchased more than 30 acres of land and buildings in the area around Oak Lawn and Hi Line Drive. The purchase includes more than 700,000 square feet of buildings – most of them leased to design firms – plus several tracts of land.
Mr. Ablon's firm, Pegasus Ablon Properties, has teamed up with Lionstone to develop and market the properties.

Pegasus Ablon PropertiesLionstone Group owns more than 30 acres of land and buildings around Oak Lawn and Hi Line. Construction has begun on two urban-style apartment projects, and another apartment development is about to break ground.
Construction has begun on two urban-style apartment projects. And another apartment development is about to break ground.
"This time next year, that area will look completely different than it does today," said C. Todd McCulloch, Dallas development associate with Wood Partners, which has one apartment complex under construction in the design district and is about to start another.
Wood Partners is building a 390-unit, four-story apartment complex on Inspiration Drive across Stemmons Freeway from Victory Park. That project is set to open in early 2009.
And at Oak Lawn and Hi Line overlooking Turtle Creek, Wood Partners is about to break ground for another 214 rental units.
"You should start seeing signs of progress there in the next 30 days," Mr. McCulloch said. "We should have units ready in the early summer of 2009."
In the next block from Wood Partners' site on Oak Lawn, Trammell Crow Residential has broken ground on a 355-unit apartment complex.
The four-story modern-style buildings are on the site of an old commercial building that was torn down.
"We plan to open in March of 2009," said Darren Schackman, Crow Residential's senior managing director. "We think the design district is the next close-in location that's going to kick off.
"The projects going in down there will revitalize the area."
Planned street improvements and construction of a new interchange at the Dallas North Tollway and Oak Lawn Avenue will also help the neighborhood connect better with nearby employment centers, he said.
"From there, you are five minutes from Victory and downtown," Mr. Schackman said. "And you are close to the medical center."
Tax increment finance district funding will be used to improve Oak Lawn and Hi Line, which connects to Victory Avenue, Mr. Ablon said.
"With the TIF money, we can start work on the intersections and streetscape," he said.
Those plans include construction of a decorative gateway at Oak Lawn and Stemmons.
Mr. Ablon is marketing the neighborhood as the new "Lower Oak Lawn," with hopes of identifying the area with the nearby neighborhood with apartments and shops that's already caught on.
After the apartments are open, Mr. Ablon plans to convert the project marketing center at Hi Line and Oak Lawn into a high-profile restaurant.
And other retailers are looking at vacant buildings.
But that doesn't mean the design and creative firms will be pulling out.
"The design firms and showrooms we want to keep here," Mr. Ablon said. "Part of what makes this area special and fun is you have these older showrooms and warehouses that have been gentrified. You don't want to lose that."
Lionstone also owns the two largest design firm complexes in the area – the Decorative Center on Oak Lawn and the Dallas Design Center on Stemmons.
"I advised them to work with some of the land, but the good buildings with good tenants and income you are not going to want to scrape," said broker Newt Walker, who has been representing Lionstone in its transactions.
"What's missing down there at this point is restaurants," Mr. Walker said. "And the retail and restaurants will follow the rooftops.
"There are already over 350 shops and vendors down there, but they have all been going home at 5 o'clock," he said. "This will give the area 24-hour activity."
Ablon Pegasus is also negotiating with buyers for several building sites along Stemmons Freeway.
"We've taken a run at an office building deal," Mr. Ablon said. "And we are talking to a high-rise residential developer and looking at a boutique hotel project."
CB Richard Ellis as been hired to manage and lease the existing buildings.
"This area will transform from an industrial district into a residential neighborhood," Mr. Walker said. "It's happening as we speak." By STEVE BROWN

North Dallas Multifamily Market

The teardown of aging apartments to make way for new, denser mixed-use developments is the latest trend in North Dallas’ multifamily market, according to Mark Stymiest, executive vice president with CB Richard Ellis in Dallas. “This is evident in many North Dallas areas like North Central Dallas near North Park Center Mall, the Galleria and Addison,” Stymiest says.
Two urban mixed-use projects near the Galleria demonstrate this trend. Columbus Realty Partners developed Village on the Green, a 202-unit mixed-use development with more than 90,000 square feet of high-end retail, while Alliance Residential is nearing completion of its Broadstone Parkway, a 333-unit mixed-use development containing approximately 40,000 square feet of retail, Stymiest says.
In addition to Broadstone Parkway, a number of significant multifamily projects are underway or on the horizon for North Dallas, including PM Realty Group’s high-rise and mid-rise developments at Park Lane Place, which is located across Central Expressway from North Park Center Mall. United Dominian Realty Trust’s (UDRT) Brookhaven project in Addison, a redevelopment of approximately 2,400 aging apartments, and the continued redevelopment of The Village, Lincoln Property Company’s massive apartment development just east of Central Expressway, also will make an impact on the market. New multifamily developers to the North Dallas market include SNK Realty Group, Worthing Southeast, Zale/Corson, American Realty Trust and Legacy Partners.
As evidenced by projects such as Park Lane Place and Brookhaven, most of the new developments in North Dallas, which generally are of a mid- or high-rise nature catering to young, professional renters-by-choice, are occurring in urban, infill locations, according to Stymiest. These areas include Uptown/Intown Dallas (2,941 units currently under construction), Oak Lawn (1,177 units completed during last 12 months), Addison and the Las Colinas Urban Center. “In addition, since Collin County is one of the fastest growing counties in the country, the cities of Plano, Frisco, Allen and McKinney also will see a significant amount of new supply coming on-line in the next 12 to 18 months.”
According to Stymiest, rental rates in Uptown/Intown Dallas for Class A multifamily properties typically range from $1.25 to $1.40 per square foot, with rents for high-end, newly constructed properties being over $1.50 per square foot. Rental rates in North Dallas for Class A multifamily properties typically range from $0.95 to $1.15 per square foot, with rents for the higher-end, newly constructed properties being over $1.20 per square foot. Class A multifamily occupancy rates in the North Dallas submarkets typically range from 93 percent to 96 percent.
The submarkets located in the fairway — between Central Expressway and the Dallas North Tollway — are well situated for continued rental increases, high occupancy and solid demand, Stymiest says. “These submarkets include Uptown/Intown Dallas, North Dallas, Addison, Richardson, Plano, Frisco and Allen/McKinney, which is currently one of the fastest growing areas in the country.”
Overall, record-level employment and population growth has led to strong demand for the Dallas/Fort Worth multifamily sector in 2007, and this growth is expected to continue into the foreseeable future. “This demand has led to occupancy gains (increased by 1.3 basis points in 2007) and rent growth (4 percent same store in 2007) that is closing the gap to pre-2001 levels,” Stymiest says. “In addition, the re-pricing of risk currently occurring in the single-family home market will force would-be first-time buyers to continue to rent, in favor of owning.”
— Mark Stymiest

Concierge Asset Begins Push With 656- Unit Buy

A Concierge Asset Management LLC-affiliated partnership has jumped into a value-add play in East Dallas, acquiring the 656-unit Honey Creek Apartments for slightly less than its $19.5-million assessment. The acquisition is tag teamed with the firm's decision to open a local office.
Concierge Asset Management is and will continue to be headquartered in Tiburon, CA and Houston so the second Texas location is a strong show of confidence in the marketplace and solidified by its decision to buy the 22.4-acre Honey Creek Apartments at 11611 Ferguson Rd., according to CEO Ted Kerr. "We are very bullish on the combined metropolitan area of Dallas/Fort Worth," he says, "and we believe Honey Creek's submarket is well positioned for economic growth."
Built in 1984, Honey Creek was 90% leased at sale time. The 37-building mix of one- and two-bedroom apartments in several floor plans, ranging from 518 sf to 953 sf, is situated at the intersection of Interstate 635 and Ferguson Road.
Kerr says the value-add play calls for a renovation to raise the complex up a notch to class B-plus standards and seed a rent hike for the expected three- to five-year hold. Existing rents go from $449 to $636 per month. He says the post-renovation goal is 5% annual rent growth.
According to Dallas County tax records, the seller is a limited partnership with ties to Tampa-based MuniMae Portfolio Services LLC. Kerr says the free-and-clear sale was closed with a five-year loan from Freddie Mac at a 5.6% fixed-rate interest, which was arranged by Charlie Geiss, Concierge's director of equity and investment finance.
According to Kerr, the Concierge team repeatedly asked MuniMae about the asset, which hit the market about one year ago. "The seller knew we were serious about the property. We had demonstrated a strong interest in buying this particular property," he explains. "And, we had a reputation for being a reliable buyer and had done our homework."
Kerr says there was a requirement for a year-end closing, which worked in Concierge's favor with its track record as the linchpin for the MuniMae recommendation. The seller's broker, Paul Harris, managing partner in Dallas for Chicago-based Moran & Co., says in a press release that Concierge wasn't the highest offer, but "we knew their reputation and based on our recommendation, they were selected as the buyer." Jenny Gillaspy, a Concierge director of acquisitions in Dallas, led negotiations, with COO Myra Rega in charge of due diligence.
Concierge's Dallas office has opened on the fourth floor of 9400 Central Expressway. Michael Wurst, general counsel and director of capital market investments, heads up the four-member office. More personnel and more acquisitions will be added as the year plays out. The investment group owns two other multifamily properties in Dallas/Fort Worth.
Kerr says Concierge is armed with $400 million of debt and equity to deploy this year for its strategy to build a workforce and affordable housing portfolio. "There is no specific goal for Dallas, but we are looking for good opportunities," he says. "We are very interested in some properties and are negotiating to purchase them, but they're not under contract." - Globe Street

Sunday, March 16, 2008

Dallas a model for 'walkable' urban centers, land-use expert says

Dallas is a model city for future walkable urban centers, land use strategist Christopher B. Leinberger said Friday at the annual meeting of the Downtown Dallas business group.

"No one is doing it as aggressively as you are," he said, rattling off areas such as downtown, the Cedars and the Trinity River corridor that are seeing revitalization or slated for redevelopment.

Mr. Leinberger said he envisions the Dallas area eventually having 20 to 30 separate walkable districts, up from three today.

Mr. Leinberger's mantra is "walkable urbanism" — or places designed for people to walk easily and safely from home to work to recreation.

His latest book, The Option of Urbanism: Investing in a New American Dream, was published last year. He also is a visiting fellow at the Brookings Institution in Washington, D.C.

Dallas already has some of the key drivers — a mass transit system— in place to create walkable urban centers, Leinberger said.

Next, the city must focus on adding housing, including affordable housing, and then retail and offices will follow, he said.

Walkable cities date back to ancient times. Think Pompeii. They were built in this country up until World War II, when the automobile and freeways changed how we develop cities, Mr. Leinberger said. That's when "drivable suburban" was born, he said.

The pendulum began to swing back in the 1990s as younger people and older empty nesters wanted to live closer to where they work and play, Mr. Leinberger said.

Demographic trends combined with pent-up demand support a continuation of that trend, he said. For instance, the number of U.S. households without children is projected to rise to 88 percent (of new households) in the next 20 years, from 67 percent today and 50 percent in the 1950s, Mr. Leinberger said.

Today, walkable urbanism is occurring in traditional downtowns and adjacent areas, suburban town centers, suburban redevelopment areas and vacant land, Leinberger said.

Places such as Washington, D.C., have become walkable urban models based on neighborhoods developed around a mass transit system. By SHERYL JEAN / The Dallas Morning News

Sunday, March 09, 2008

Developers break ground on two-tower Uptown project

$200 million complex will have office space, luxury apartments

Construction is getting under way on what will be one of the biggest projects yet in Dallas' hot Uptown market.

Granite Properties Developers Granite Properties and Gables Residential are breaking ground on the two-tower development at Akard Street and McKinney Avenue.

The $200 million complex will include 361,000 square feet of office space in one high-rise and 296 luxury apartments in an adjoining tower. The development will contain retail space and a fitness center for the apartments on the lower floors.

Granite announced plans for the development last summer and has been moving ahead with the deal.

This week, construction barriers are going up and site preparation is starting.

"The real work starts in about two weeks," said Granite chief operating officer Greg Fuller. "We have to do some utility work and get rid of an old building there first."

The large tract just north of Woodall Rodgers Freeway is now occupied by surface parking and a vacant commercial building. It's one of the last large development sites along Woodall Rodgers.

Because of the scope of the project, the first tenants won't move into Granite's development until March 2010.

Mr. Fuller said he anticipates the Uptown office market should still be strong then.

"Because we are building two large towers, there is a long lead time," he said. "It's hard to look out that far.

"But the supply and demand balance down there is still good."

More than 1.6 million square feet of office space is already being built in Uptown, but almost 70 percent of that is preleased, said broker Joel Pustmueller with Peloton Real Estate Partners.

"I wouldn't have guessed two years ago the market could handle this many new buildings, but now I think it can," Mr. Pustmueller said.

"I think Granite will do fine."

The 24-story residential tower and a 20-story office building will be just east of the El Fenix restaurant and across Woodall Rodgers from Hunt Consolidated's new headquarters tower.

Architecture firm Good Fulton & Farrell designed the project.

The development will be Granite's first foray into the central Dallas market.

The company has built projects in West Plano, Farmers Branch and Irving.