Friday, September 26, 2008

Hall, Weitzman team up with new Hall Real Estate Capital

Two of Dallas' most experienced commercial real estate market players are teaming up with a new company to take advantage of tumultuous financial times.

Investor and developer Craig Hall and Herbert Weitzman, who founded the state's largest retail brokerage company, are jointly backing the new Hall Real Estate Capital. The company will match investors with real estate projects and raise capital for property market deals.

Heading the day-to-day operation of the company will be Donna Arp, former chief executive of Realty Capital Partners, who will also be a principal in the firm.

Both Mr. Hall and Mr. Weitzman – who have each been in the real estate business for more than three decades – have a track record of building profits on the ruins of real estate and financial market wrecks.

Mr. Weitzman started his Weitzman Group brokerage firm in 1989 during the depths of the last big real estate market bust.

And after almost losing his shirt during the 1980s savings and loan and commercial property crash, Mr. Hall rebounded with a hugely successful investment company with more than $2 billion in holdings in real estate, oil and gas and other ventures.

Mr. Hall was one of the first investors to make savvy purchases in downtown Dallas and Frisco as the property markets began to recover.

"The current turmoil in the financial markets is creating tremendous opportunity at all different levels in the capital markets, and we believe that now is the right time for investors to look to real estate as an opportunistic area with the potential to deliver superior returns on a risk-reward basis," Mr. Hall said.

With the current credit crunch, dozens of real estate deals have been stalled and potential sales have been put on hold.

New investment ventures are seeking to fill gaps left by more traditional players.

"There are many viable opportunities for investing in real estate right now," said Ms. Arp, who recently departed Realty Capital, which raised more than $80 million for investment this year. She is also a former mayor of Colleyville.

"We believe our investors will receive positive returns based on the experience of our team and the strength of our real estate projects," she said.

While Mr. Hall and Mr. Weitzman have been friends for years, this is the first time the two have formed such a high-profile corporate partnership.

"We've done a few little things together, but nothing like this," Mr. Hall said Thursday. "We are also on each other's company boards."

Mr. Hall said the new firm will buy real estate and debt on properties, plus make loans for projects.

"We can make a more conservative loan today and get a higher interest rate and be very choosey," he said.

Hall Real Estate Capital expects to attract a wide range of outside investors.

"Capital-raising operations today have a lot of opportunities," Mr. Hall said.

"A lot of people are pretty fed up with the volatility of the stock market."

As in the 1980s real estate downturn, he doesn't expect the current financial mess to disappear overnight.

"This will go on for a number of years," Mr. Hall said. "It's different because last time it was worse for commercial real estate.

"But what's worse now than then is the financial markets are likely to be constrained for quite a while."

Mr. Hall is best-known locally for his Hall Office Park in Frisco, which now has more than 2 million square feet of office space.

Weitzman Group and its sister company, Cencor Realty, lease more than 44 million square feet of shopping center space in Texas and manage more than 21 million square feet of retail buildings. The firm is also active in shopping center development.

Mr. Weitzman said real estate developers and owners are looking for new backing.

"I've already had numerous people come to us with projects where their financial partner wants out or there is no one to lend them money," he said. "There is going to have to be a lot of focusing on taking care of problems."

And the Dallas investors are better situated to ride out the situation.

"We are doing fine in Texas," Mr. Weitzman said. "But there is a lot of backsliding in other parts of the country."

Baylor, BremnerDuke Plan $350M Cancer-Care Site

DALLAS-Baylor University Medical Center at Dallas and BremnerDuke, the healthcare development division of Indianapolis-based Duke Realty Corp., will undertake a $350-million expansion of the main campus to create the first dedicated cancer hospital in North Texas and the largest outpatient cancer center in the state.
The project, which breaks ground before the year ends, has been in planning and design stages for one year, according to Ed Bittner, BremnerDuke's senior vice president of its South region. He tells that BremnerDuke will develop and own the 450,000-sf outpatient center, with Baylor leasing "a good portion" of the space. The nine-story crescent-shaped building will go up on a five-acre tract, now a surface parking lot at the corner of Hall and Worth streets.

BremnerDuke's building will be connected via a skywalk across Worth Street to the Baylor Charles A. Sammons Cancer Center, marking its 32nd year will be expanded by 120 beds to create the largest hospital of its type in North Texas. Chicago-based Perkins+Will's Dallas team designed both components. Medco Construction of Dallas, a Baylor-affiliated general contractor, will build both structures. BremnerDuke's team, being led by Bittner, includes Richard Couturier, John Huff and Mark Beach, vice presidents of development, leasing and construction, respectively.
Bittner says the leasing team has other top-name tenants lined up for the class A space, with services and research facilities to be disclosed down the road. "It's going to be a world-class cancer-care center," he stresses. "It's been a very long planning process."
The Baylor timeline calls for the outpatient center to open in 2011. The cancer hospital will break ground in 2010, with completion penciled for 2013.

"When completed in 2013, it will be our goal to be a nationally and internationally renowned cancer-care destination, building on Baylor Dallas' commitment to providing advanced cancer treatments and leading the charge of improvement in cancer care through research," Joel T. Allison, president of Dallas-based Baylor Health Care System, says in a press release.

The outpatient center will include physicians' offices, radiation, chemotherapy, pain management and complementary medicine like massage therapy and support groups. "We're entering a new era in cancer care at Baylor Dallas," Dr. Marvin Stone, chief of oncology for the healthcare system and director of the Baylor Charles A. Sammons Cancer Center. "We've made enormous progress during the past 32 years, but now we're ready to rise to the next level, paralleling the striking advancements we've seen in the field."

Bittner stresses the expansion is "a highly patient-focused design." The new facility will provide space for initiatives like targeted therapy, which allows physicians to analyze a patient's genes to determine the best type of treatment. Other cancer-care initiatives will include research focused on science breakthroughs that directly affect patients and expanded clinical trial participation. Currently, Baylor oversees 150 trial studies.

Baylor Dallas is a 1,002-bed not-for-profit academic hospital and Level I trauma center. The $350-million expansion would put Baylor Dallas on a more even par with the internationally renowned M.D. Anderson Cancer Center in Houston.

"We feel a great responsibility to offer the best cancer care in the country," says John B. McWhorter, the hospital's president and senior vice president at Baylor Health Care System. "We want people to be cared for in a compassionate manner. And we want to continue to be the destination center for cancer care for citizens of North Texas."

Thursday, September 25, 2008

Chef Stephan Pyles to open new Dallas restaurant

Dallas chef Stephan Pyles plans to open a new restaurant called Samar by Stephan Pyles next spring at the 2100 Ross Ave. office building in downtown Dallas.

The new restaurant will feature an international tapas menu and indoor and outdoor seating for 95 people. CB Richard Ellis, which handles leasing at 2100 Ross Ave. announced the plans on Thursday.

Construction on the 2,800-square-foot restaurant will begin later this year.

Samar by Stephan Pyles will be slightly north of Mr. Pyles’ existing restaurant that goes by his name at 1807 Ross Ave.

Mr. Pyles, George Majdalani and Michael Welch will own the new restaurant.

“Our new location is in sync with the direction the downtown Arts District is moving,” Mr. Pyles said in a release. “In the restaurant business we strive to create an experience for every guest; 2100 Ross offers both a recognizable address and the high-energy atmosphere we were looking for.”

EVP Settling Into Colliers' Shop

DALLAS-In another move in the market, 20-year veteran Ken Walter is now settling into a new role--executive vice president of corporate solutions for Colliers International's local office. Like others who've changed letterheads, it's all about timing and market conditions.
"I'd finished up my larger transactions. I figured if I was going to move, it's a good time," Walter tells He spent the past six years at CB Richard Ellis as a first five president, where his corporate solutions' workload crisscrossed the US. Walter says he will be doing the same thing at Colliers, working multi-market office accounts and closely coordinating with the firm's respective local offices.

Walter has reunited with a number of former colleagues from the Fults Co. by moving to Colliers, a job change that took place a few weeks ago. Colliers' corporate solutions group also includes Scott Morse and Scott Jessen, both executive vice presidents whose niche has been technology clients.

"His multi-market work on behalf of many large organizations, as well as his previous experience in the financial industry, will enhance the intellectual capital of our team and provide another level of expertise for our clients," Mark Noble, managing director of Colliers' Dallas office, says in a press release.
Walter's background includes more than 10 years in the financial industry as president of Benchmark International, a commodity brokerage firm, and a senior dealer with the Development Bank of Singapore. "This is a down market. I need to rebuild my pipeline," Walter says, citing 17 years of contacts in his black book. "I am going to spend the time to build a business at a new company. It's all about timing."

Tuesday, September 23, 2008

Long-Standing REIT Ties Key to $2B Equity Raise

Behringer Harvard Multifamily REIT I Inc. is relying on its underpinnings from years of relationship-building to fuel a hunt for $2 billion of equity in a capital marketplace that's crippling more players every day. The door has just now opened for investment, with the REIT marking its fifth day from the IPO launch.

"We still have a credit crunch, effectively due to subprime, but I believe for the long term that people are still investing in real estate and multifamily has an attractive profile," stresses Jason Mattox, executive vice president of the Dallas-based Behringer Harvard. He tells that the long list of well-known developers will set the hook for investor interest, citing an IPO launch with 10 projects as signing incentives and only one that has reached completion. "It's quite a list and we have relationships with many more than that," he says.

The fund drive is a standard two-year offering, with liquidation scheduled for four to six years after it closes. The REIT's team is sizing up a plethora of investments, but its SEC filing reflects an affinity for transit-oriented and live-work developments in the 50 largest metropolitan areas in the US.

"One thing that's very clear, with the way commuting is poised to change, a focus on locations in high-traffic corridors with mass transit will build that lifestyle," Mattox says. "There is a reason to believe that's the focus of where this is going." The spotlight also is pointed at high barrier-to-entry markets in Sunbelt states due to favorable demographical shifts that are in play, thanks to relocating Baby Boomers.

Behringer Harvard, with a black book of international investor names, is confining the multifamily play to US terrain--at least, for now. In its SEC filing, the REIT says it won't buy, develop or invest abroad until all non-independent directors and one independent director have three years of experience in acquisition and management of international investments. The non-independent directors will reach that threshold in March 2009. In the prospectus, the REIT also reported it is considering candidates with international investment experience to serve as an additional independent director. The multifamily REIT is led by Mark T. Alfieri, who joined the investment group in 2006 to lay its foundation and build the team.

In addition to ground-up, the REIT will provide debt and equity investments for multifamily developers, including student housing and age-restricted sectors. In today's world, that's a street-savvy capitalistic move since construction loans typically only provide 65% to 80% of the total costs--and that was before Wall Street's tumble in the past week. The REIT doesn't plan to put more than 30% of its portfolio's value into financing vehicles.

The REIT's cash comes at a higher interest rate to capitalize on the risk. In the case of the 149-unit Lovers Lane Townhomes in Dallas, the REIT already funded a $2.18-million mezz loan at a 10% interest rate. The loan matures in April 2011, just one year before the maturity of a $7.48-million senior mezz piece at a 9.5% interest rate provided by Behringer Harvard's $200-million joint venture with Dutch pension fund, Stichting Pensioenfonds Zorg en Welzijn. PGGM has until Nov. 9, 2011, to add its third $100-million contribution.

Whether paper or bricks-and-mortar, the REIT's plan targets single-asset investments from $10 million to $200 million and portfolios of all sizes. The REIT's financing strategy is particularly timely since construction funds have practically dried up in the conventional marketplace.

Just yesterday, Richard F. Moody, chief economist of Austin-based Mission Residential LLC, pointed out in a report that multifamily permits had slowed in August after a jump in July. "We're hesitant to read too much into the decline," he says," but it is possible that tight credit market conditions have meant that in some cases developers have been unable to secure financing for projects already permitted." He says it's "too soon to draw definitive conclusions, but the gap between multifamily permits and starts will bear watching over in the coming months."

The REIT has been seeded with 10 developments by Fairfield Residential of San Diego, Trammell Crow Residential of Atlanta, Simmons Vedder & Co. of Houston, Altman Cos. of Boca Raton, FL and Greystar Development & Construction of Dallas. The only finished project, to date, is the 210-unit Reserve at Johns Creek in Fulton County, GA. In addition to Lovers Lane Townhomes, the portfolio includes the 330-unit Eclipse in Houston; 414-unit Fairfield at Bailey's Crossing and 234-unit Tower 55 Hundred in Arlington County, VA; 430-unit Alexan Rose and 168-unit Alexan Russell Lofts in Clark County, NV; 279-unit Satori in Broward County, FL; 325-unit Fairfield at Cameron House in Silver Spring, MD; and 400 Alexan Prospect in Denver.

Peloton Assumes Leasing of 273,080-SF High Rise

With investment sales at a slow crawl, Atlanta-based Goddard Investment Group is undertaking a new tact for the 273,080-sf Saint Paul Place in the Arts District. The new plan pulls the 55%-leased, renovated high rise from the sales block and puts a new leasing team on the ground for its repositioning.

The 22-story Saint Paul Place at 750 N. Saint Paul St. underwent a multimillion-dollar renovation last year as part of Goddard's value-add plan before it moved to the sales market. As is so common these days, the re-groomed class A office building has been de-listed until the market calms down.

Goddard didn't respond by deadline to comment on the decision which, in turn, triggered a competition for the leasing assignment. The decision's now in: Peloton Real Estate Partners has wrestled the lease from Grubb & Ellis Co., which also didn't respond by deadline to comment on the assignment loss.

Peloton partner Joel Pustmueller and vice president Grant Sumner are in charge of the lease-up strategy. "It's our job to create that market awareness for the brokerage community to really understand how this building's been repositioned," Pustmueller says.

Pustmueller tells that Grubb & Ellis has inked "three or four" deals for new tenants in the past month and deals pending for full-floor leases as does Peloton, which came to the table with a two-floor lease in tow. He says the building's stabilization point is 85% to 90% occupancy. "We're hoping we can be there in 12 months," he says.

Saint Paul Place's largest contiguous block is 50,000 sf on floors seven to 10. Also up for grabs are the penthouse floor and the one right below. Pustmueller says the upper bank block could be expanded by shuffling tenants.

Pustmueller points out that the class A office building, with 13,500-sf floor plates, has strong appeal for boutique law firms, some of which moved to Uptown and are now eyeing Downtown space once again. The attitude change is due largely in part to the difference in lease rates: $21 per sf plus electric at Saint Paul Place versus $30 per sf or more for Uptown space. At the other end of the spectrum, he says class B tenants also are eyeing the space. And the retooled interior, including Saint Paul Place Café, has added to the appeal factor, he says.

"Activity is picking up. This is a double A location with value pricing," Pustmueller says.

Friday, September 19, 2008

U-turn on street names

After months of debate over what to rename Industrial Boulevard, and whether to rename anything for civil rights leader César Chávez, Dallas officially went back to square one Thursday.

In a move that surprised some of its own members, the powerful City Plan Commission voted 11-3 against renaming Industrial to Riverfront Boulevard, the desired choice of Mayor Tom Leppert, several City Council members and most developers of the Trinity River corridor.

"The city of Dallas commissioned a $20,000 survey to take the pulse of its citizens and with the expectation that the citizens' view would be taken seriously," said plan commissioner Neil Emmons, who raised the motion not to rename Industrial.

Because the plan commission declined to rename Industrial to Riverfront, at least 12 votes of the City Council are required to overturn the decision.

In subsequent action Thursday, plan commissioner Jeff Strater moved that the commission consider renaming Industrial for Mr. Chávez next week. When or if the council will hear that is not yet known.

Ross Avenue renaming

Meanwhile on Thursday, a plan hatched by a key City Council committee to rename Ross Avenue for Mr. Chávez was denied by a four-member panel of the plan commission. That denial, however, does not prevent the full plan commission or the City Council from considering renaming Ross.

The main result of Thursday's action was a confusing mix of denials and recommendations at various city levels.

As it stands, either Industrial or Ross or nothing could be renamed for Mr. Chávez.

"It does put us in a difficult predicament," said plan commission chairman Joe Alcantar, who voted to change Industrial to Riverfront.

City Council members, who each appoint one plan commissioner, had a variety of reactions, from confusion to joy.

"I don't agree with it. I don't understand what's going on," District 12 council member Ron Natinsky said. "Riverfront was the right name to put on Industrial, and I still feel that way."

Mayor Pro Tem Elba Garcia said she was pleased by the result. A supporter first of renaming Industrial for Mr. Chávez, Dr. Garcia agreed to a compromise proposal that Ross be renamed instead.

"I am pleased they listened to the voice of the people who took the time to vote," she said.

Dr. Garcia's husband, attorney Domingo Garcia, is the main backer of a task force devoted to renaming a major street in Dallas for Mr. Chávez.

Alberto Ruiz, who leads that task force, said Thursday's vote was the right one and suggested that it is what backers of César Chávez Boulevard wanted all along.

"We knew they couldn't say no to Ross and Industrial. By offering the alternative of Ross, it would force the commission to rethink the results of the survey and consider them as valid," he said.

Business owners along Ross Avenue who fought hard against having their street renamed seemed to breathe a sigh of relief. Several of them urged the plan commission Thursday to rename Industrial, not Ross, for Mr. Chávez.

Effect on businesses

No business owners along Industrial spoke up at the plan commission hearing for renaming that street Riverfront.

But many weren't pleased to learn that the movement to rename it for Mr. Chávez was again alive.

For lawyer James Bush, whose office is at 330 S. Industrial Blvd., the plan commission's decision was a disappointment:

"The name Riverfront just sounds prettier. It's a place people would want to go to," he said.

Two of the biggest backers of renaming Industrial to Riverfront, Mr. Leppert and council member Dave Neumann, didn't return calls for comment Thursday.

Several council members who did speak out about the issue declined to commit to future votes on renaming Industrial or Ross.

It was Mr. Neumann, chairman of the council's Trinity River Committee, who engineered a deal with the council's three Hispanic members to rename Industrial to Riverfront and to recommend that the plan commission consider renaming Ross for Mr. Chávez.

It was also his committee that sponsored the online and telephone survey that resulted in support for renaming Industrial for Mr. Chávez.

Opponents of naming the street for Mr. Chávez have criticized that survey as informal, unscientific and ungoverned.

Nevertheless, as things stand, each member of the plan commission and the City Council may well be left to vote on honoring its result.


Dallas makes Trinity Forest grab

The City of Dallas has purchased more than 1,400 acres of forestland southeast of downtown, locking in a key piece of the Trinity River Corridor Project.

The city ponied up $6.2 million for the Great Trinity Forest property, part of which will become home to a 400-acre equestrian center projected to generate more than $350 million in economic benefit in its first 10 years of operation.

The land purchase is near the intersection of Interstate 45 and Loop 12 on the eastern bank of the Trinity River, with the proposed horse park on land lying north of Loop 12.

The acquisition is a substantial step in the Trinity River Corridor Project, said Don Burns, project manager for the Dallas Parks and Recreation Department.

Home planned for firms based on university inventions

UT Southwestern Medical Center announced Thursday that it will build a biotech park to develop and make money off medical discoveries.

The 500,000-square-foot complex of four buildings, dubbed BioCenter at Southwestern Medical District, will be built on 13 acres purchased from the city of Dallas for $4.1 million.

The land is near the medical center's campus on Inwood Road.

"Ninety-five percent of biotechnology companies are founded on university-based inventions," said Dennis Stone, vice president for technology development at UT Southwestern. "So it makes eminent sense to have the development center in immediate proximity to the scientists who are creating new technologies."

The first building, costing $50 million, will be ready next summer.

BioCenter is expected to serve the full spectrum of the biotechnology and biodevice industry, offering space to both fledgling and mature companies, Mr. Stone said.

He called the development a "public-private relationship," with industry and scientific progress driving each other.

For example, AT&T Inc. said Thursday that it is contributing $750,000 to create an incubation entrepreneurial area at BioCenter.

"Science is spurring important medical advances at a phenomenal rate," Mr. Stone said.

The commercialization process has changed and "over the past five or six years ... we've begun to capitalize on our scientists and their discoveries."

UT Southwestern discoveries have already led to several spinoff companies, including:

Myogen Inc., a Colorado-based biopharmaceutical company focusing on treatments for cardiovascular disorders. The company was sold in 2006 to Gilead Sciences Inc. for $2.5 billion.

Eliance Biotechnology, which was acquired in 2002 by MacroGenics Inc., a Maryland-based company developing treatments tied to the immune system for cancer, infectious diseases and autoimmune disorders.

Reata Pharmaceuticals Inc., based in Irving and pioneered by UT Southwestern scientists in September 2002 to develop cancer and neurodegenerative drugs.

The site for BioCenter was purchased with profit UT Southwestern received from its technology transfer program, in which it sells the rights to develop an idea developed at UT.

Since 1984, more than 550 UT Southwestern researchers have been named as inventors on more than 1,200 inventions, according to the school's public relations department.

Revenue from more than 300 licenses has generated more than $110 million for UT Southwestern since 1984, according to the school.

By JASON ROBERSON / The Dallas Morning News

Thursday, September 18, 2008

Ilume complex going up on Cedar Springs

A new development is giving Oak Lawn's Cedar Springs strip the biggest makeover in two decades.

Called Ilume, the project at Douglas Avenue and Cedar Springs Road combines a shopping center and apartments in a resort-style building.

The five-story complex – already under construction – would be at home in West Hollywood or Miami's South Beach.

More than 300 apartments and 23,000 square feet of retail space will be in the building, which sits on the former site of a Tom Thumb supermarket.

"We believe this project will be an anchor for the strip," said developer Luke Crosland, chief executive of the Crosland Group. "We want to see the street brought up to new standards."

Starting in the early 20th century, when the retail strip grew up along a streetcar line, Cedar Springs between Oak Lawn Avenue and Douglas evolved into a neighborhood of nightclubs, restaurants and shops.

The commercial district is anchored on the south end by the historic Melrose Hotel, built in the 1920s.

The high-rise Centrum complex across from the Melrose was the last major mixed-use addition. It debuted in 1985.

Mr. Crosland hopes that his firm's project will "bring a more upscale touch" to the area.

"The whole project is being built like a boutique hotel," he said.

The ground-floor retail complex will include room for restaurants and shops and has large outdoor dining areas that face Cedar Springs.

Above the shopping center, four floors of apartments will have balconies overlooking the street.

In some respects, Ilume will be similar to the successful West Village on McKinney Avenue.

But this project will include many more amenities for the apartment renters.

The apartment block has a large resort-style pool and outdoor recreation features in a central courtyard.

And residents will have access to health club facilities, a lounge, coffee bar and business center.

Designed by BGO Architects, the building will have a stucco and cast stone exterior.

The apartments will have a separate lobby and entrance on Knight Street. Rents will begin at about $1,000 a month.

"We are trying to build a better mousetrap in a competitive market," said Crosland Group's Mick Rossley. "By the summer of '09, we'll open on our first portion of the project, which will include all the retail and 78 apartment units.

"I think the neighborhood is going to be very pleased."

The surrounding residential district of aging apartments and old homes is already seeing a makeover.

Apartment developer Alliance Residential has completed two large rental complexes in the area.

And across the street from Ilume on Cedar Springs, Atlanta-based Lane Co. has plans for another apartment community.

Crosland Group has been active in the North Texas real estate market for more than two decades.

The developer is planning an even larger mixed-use building on Westchester Drive in Preston Center.

Crosland already owns the nearby Berkshire Court building at Northwest Highway and Preston Road.

"We want to do more close-in stuff," Mr. Crosland said.

"I think the future of development is doing redevelopment in the core of the city.

"It's because of high gasoline, and the type of living people want to enjoy right now."

Developer seeks zoning OK for East Dallas complex

A developer who built a successful condo project south of downtown Dallas is looking at a new deal on Gaston Avenue near White Rock Lake.

Zad Roumaya hopes to construct a retail and residential complex at Gaston, East Grand Avenue and Garland Road if he can get zoning approval.

The property is now mostly occupied by a 20-year-old shopping center.

"I'm hoping that the market tells us this is the place to build a great live-work project," said Mr. Roumaya, who built the Buzz condominiums complex in Dallas' Cedars neighborhood.

But before he can start the Gaston Avenue project, he must get city approval for the combination of apartments and new commercial space.

"We don't own any of it yet," Mr. Roumaya said. "We have the property under contract with a rezoning contingency.

"If we can't get the density we want, we don't want to own the land," he said. "We hope the neighborhoods will work with us."

He is about to begin the city planning process, which could take several months.

The busy intersection of Gaston and Garland Road has been on city planners' radar for several years as a location that's ready for a makeover.

The older commercial buildings at the corner form the entrance to one of Dallas' most popular recreation and residential areas. White Rock Lake Park, the Dallas Arboretum and the affluent Forest Hills and Lakewood neighborhoods are nearby.

"There is a unique gateway opportunity there if it will be allowed to get moving," Mr. Roumaya said. "We conservatively estimate we'd have a construction start in summer or fall of '09."

Preliminary plans call for between 200 and 400 residential units and about 40,000 square feet of retail space.

Around 60,000 square feet of commercial buildings now occupy the 5.2-acre property, which has a lower level fronting on Gaston.

Wednesday, September 17, 2008

Southwest Financial Hub Stays on Solid Ground

After years of being marketed as the financial center of the Southwest, the lifeblood of the 1.1-million-sf Crescent is pumping strong despite the turmoil on Wall Street and its reverberations around the world. The landmark office trophy holds regional offices or valued divisions for nearly all players of the capital markets' debacle.

"The name on the door might be in trouble, but that doesn't mean the unit inside is. Will there be some consolidations? Very possibly," Michael Lewis, managing director for Crescent Real Estate Equities LP, says about the powerhouse tenant mix at 100, 200 and 300 Crescent Court in Uptown. "The units here are still maintaining a good vibrant presence."

The trophy asset's tenant roster includes Merrill Lynch & Co. Inc., Lehman Brothers Holdings Inc., Goldman Sachs Group Inc., Bear Stearns Cos. and naturally its owner, Morgan Stanley Real Estate Funds. Bank of America's stake in the Crescent is a retail location.
To put the roster into perspective, New York Gov. David Paterson, in tossing a lifesaver, to American International Group, pointed out two days ago Goldman Sachs and Morgan Stanley were the only two left standing out of Wall Street's top five independent investment banks. In Dallas, AIG leases 175,000 sf in the Plaza of the Americas at 600 N. Pearl St. in the CBD and the Centre at 4100 Alpha Rd. in North Dallas.

The Crescent today is 99% leased, of which roughly 70% of the tenants are financial institutions, hedge funds and high net-worth investors, Lewis tells Of the reeling Wall Street names, Lehman occupies the most space--15,000 sf. None of the financial giants' leases are set to expire in the near term, but the complex will be getting a 50,000-sf vacancy at year's end when Rosewood Property Co. moves to its new Uptown building at 2101 Cedar Springs Rd. Rosewood had a larger block, but one-third of its total already has been re-leased.

Lewis says Rosewood's space plays out as more of an opportunity than a loss. "We still have people trying to get in who can't," he says. The Crescent's quoted rate hovers $40 per sf.

Just like Lewis sees promise in the upcoming vacancy, he says Crescent's financial tenants also are seizing opportunities to court their neighbors' seasoned talent. He cited a Bear Stearns team that moved to a competitor's camp without any down time and without leaving the building. "They just changed floors and offices," he says. In addition, he says there's been "very little talk" about sublease space or give-backs by the tenants in place.

Lewis believes the Dallas/Fort Worth economy, and Texas in general, is hardy enough that troubled financial institutions most likely won't cut local teams free. "They're the units that are producing and anybody would love to have the producers in the Dallas buildings," he says. "This is Dallas, TX and we are doing well."

Lewis admits there is concern in the ranks, but most tenants have said they are keeping eyes peeled for opportunities that might arise from the debacle. "Some people's failures create other people's opportunities. The good news is we're in Dallas and Texas," he says. "Are we affected? Yes. But not to the massive extent that other parts of the country are. We're concerned about the economy, but we're still conducting business and making money."

Tuesday, September 16, 2008

Green's Coming of Age in Development Circles

DALLAS-With the retail industry eyeing "green" gains on all fronts, the International Council of Shopping Centers has spent two days huddling over built projects, weighing future ones and learning as much about investment intricacies as design. The force behind the movement is coming from tenants.
"Green is essential today in all business," said David Houle, an award-winning author and futurist consultant from Chicago and keynote speaker for ICSC's first greev conference. "Green is now main stream." About 500 retail professionals from development, financing, design and brokerage circles in the US, Canada and Puerto Rico attended the conference at the Hotel Inter-Continental Dallas in Addison.

Houle first laid out the energy situation and where it's headed and then told the roomful of professionals that "the future of shopping centers is going to be retro." High-density, mixed-use development in and around transit stops or stations will hearken the return of Main Street America if for no other reason than the spiking cost of gasoline. "Historians will look back to 2005 to 2010 as the beginning of a new age," he said, citing climate change and global warming, regardless of its cause, as the force behind companies now thinking about the future. Among the certainties will be electric cars, possibly with plug-ins to recharge batteries lining city streets much like parking meters.

Houle recognizes there are science breakthroughs that first must occur before his futurist predictions become reality, but what he does know is the acceptance of the green movement in the past few years is now deep-rooted enough to be the catalyst for change. The outcome is destined to be a mix of renewable energy sources, possibly including space solar panels, so the world can be on track for a zero carbon footprint. "I believe by 2050 that 40% of all the energy we consume in the US will be from renewable [sources]," he said.

Watters Creek at Montgomery Farm in Allen was the bricks-and-mortar proof for conference attendees, who were bused to far north Dallas to tour one of the largest green mixed-use projects under construction in the region. The 52-acre development is awaiting LEED CS certification, achieving 27 points or one more than the minimum for the ranking. One of its more innovative green features is a water-use system that filters run-off from surface lots and recycles it for irrigation and other design elements, including a creek reconstruction.

Trademark Property Co. of Fort Worth has about 30 shops open in the 550,000-sf retail component for the 1.15-million-sf Watters Creek. By October, another 20 stores will open doors and its first residents for the 380 apartments will be moving into their units. A seven-story hotel with an entertainment district is on the drawing board.

"It's the first LEED-certified project for Trademark. We are learning from this project, going in baby steps and will move it onto the next one to help mould retail tenants," said Trademark executive James Reynolds.

Project ideas, though, can't become reality without funding. In a session about new sources for investment capital for green projects, the take-home clearly was developers needed to stick to basic fundamentals when it comes to projects. The bottom line for funding remains location and demographics, with green as merely a component, the panelists said.

A University of California at Berkeley draft report, released last April, showed green projects do carry a financial premium, according to Leanne Tobias, principal of Malachite LLC of Bethesda, MD. Direct rental rates are 2% higher while effective rents are 6% to 9% more and sales up 16% over conventional projects.

Tobias said municipalities and states in some regions are starting to require all private construction to have green components. Likewise, a handful of institutional investors are mandating green underwriting requirements.

"The green building movement right now is being driven by tenants today," emphasized Mychele R. Lord, principal of Dallas-based Lord Green Real Estate Strategies. And with that is coming a change in lease structuring as splits emerge in contracts, allowing the owner to recoup some costs for green initiatives before the tenant reaps benefits from reduced operating costs.

Nicholas E. Stolatis, director of strategic initiatives for New York City-based TIAA-CREF Global Real Estate, advised owners to benchmark their portfolios so they have a starting point to measure future energy gains. "The tool's benefit is not to give you a marketing piece, but to let you know what you're doing," he stressed.

Stolatis assured owners that "not all energy efficient projects require capital investment." Vendors are now following BOMA's lead with neutral agreements. He said it's possible to get new equipment by striking a deal with the vendor for a performance-based contract with the cost predicated on the savings.

"We are pursuing our bottom line from a financial standpoint. We are pursuing our bottom line from an environmental standpoint. And, we are pursuing our bottom line from our investors standpoint," Stolatis said, adding TIAA-CREF's portfolio holds a 75 point Energy Star ranking. "Benchmark properties, set goals and pursue low cost, no cost opportunities and the rest of the plan will fall into it."

Wednesday, September 10, 2008

LA Fitness leases 37,500 square feet in Cypress Equities' Shops at Mockingbird

Developer Cypress Equities said Wednesday that it has leased space to LA Fitness in its new Shops at Mockingbird development near Dallas' Love Field.

The fitness center will take about 37,500 square feet in the 78,000 square-foot retail project which is under construction near Mockingbird Lane and Lemmon Avenue.

O'Brien & Associates designed the project.

And Mycon General Contractors is building the center.

Construction financing was provided a group of lenders including American National Bank of Texas, Legacy Bank of Texas and Coppermark Bank.

Cypress Equities has been working on the project since early 2007.

The development site previously was occupied by a Syms discount store.

Plans for a Wal-Mart superstore on the property were vetoed after neighborhood opposition.

Trinity River project's backers unveil detailed model

A massive scale model of the planned Trinity River park was unveiled today at the Trinity Trust, capturing in minute detail what backers of the long-delayed project hope will be a cornerstone of Dallas’ development.

At 20 feet long and more than 7 feet wide, the model portrays a 10-mile path of the park. It includes much of downtown, the medical district and neighborhoods north and south of the river.

For the first time, it offers a large scale, three-dimensional view of the Trinity’s planned toll road, two white Calatrava-designed bridges, large man-made lakes and the river meandering past lawns, ball fields and forest.

“It’s a vision. It shows our citizens, the community and our neighborhoods our vision,” said Dave Neumann, chairman of the City Council’s Trinity River Corridor Project Committee.

The model, which cost more than $500,000, was built by Oak Cliff artists Charles and Susie Kendrick. It sits inside the Trinity Trust building at 1444 Oak Lawn Ave.

It will be open to the public from 10 a.m. to 7 p.m. beginning Wednesday.

Those viewing hours contionue through Friday. Then, beginning Monday, the model can be viewed from 10 a.m. to 5 p.m. on weekdays.

Much of what appears in the model has yet to be built inside the real levees. Dallas Mayor Tom Leppert has set a goal of 2014 to see major elements of the park, including the toll road, in place.

He said he remains optimistic that goal can be reached but warned that it will take great effort.

“This is $2 billion. It’s a complex project. Nobody should get the feeling this is easy. It’s going to take a lot of hard work,” he said.

Funded by Alon USA, the model will give the project a boost for two reasons, the mayor said.

First, the public will be able to get a firsthand look at how the Trinity could look. Second, it will give prospective donors a real sense of where their money is going, he said.

The model is impressive. Even the roof pitches of the tiny homes dotting the neighborhoods north and south of the Trinity are accurate.

It took more than a year and a half to build, and there is still work to be done.

But what it represents may not be what ultimately appears inside the Trinity’s levees.

The city is still awaiting a federal environmental study on the placement of the toll road. That will surely affect its final position inside the levees. That, in turn, will affect the placement of the major lakes and the surrounding parks.

Funding remains a crucial question as well. Despite voters’ approval of the toll road project last year, the final cost of its construction isn’t certain.

That cost, to be borne in part by Dallas taxpayers but largely by the North Texas Tollway Authority, likely will affect its construction schedule.

Still, city officials and the private backers of the project are eager to see the huge and meticulously detailed rendering that sits now inside the Trinity Trust building become a reality sooner than later.

Tuesday, September 09, 2008

Studio Movie Grill Signs Five-Year HQ Lease

DALLAS-After screening the market nearly one year, Studio Movie Grill Corp. has inked a lease for a new headquarters location. The operator is planning an Oct. 1 move-in, securing the 5,200-sf class B space with a five-year lease and bringing in Staffelbach Design Associates Inc. to repackage the interior.
Studio Movie Grill founder Brian Schultz tells that the search focused on office buildings in and around its Dallas theaters, but Royal Central Tower at 11300 N. Central Expwy. won because it shares a parking lot with the chain's newest theater and 24-Hour Fitness and has direct links to White Rock Lake Trail--setting up a ready-to-go amenity base for employees. "It's very convenient," says Schultz, who co-owns the chain with Martin Massman. "As our company grows, we can see ourselves taking over an entire floor. We've set it up in such a way that we can do that."

Schultz says the locally based design group's charge is to "completely" redesign the interior to make it fit the corporate culture. A test kitchen and screening room are right next door in the new theater at 11170 N. Central Expwy.

Studio Movie Grill's 28-employee team is adding 2,000 sf to its operating space with the move to Royal Central Tower's second floor from Prestonwood Place at 15400 Knoll Trail Dr. in far north Dallas. The move will coincide with the expiration of a short-term lease, according to Benjamin Hautt, senior associate of Dallas-based Stream Realty Partners LP, the tenant's broker for the deal.
Royal Central Tower's owner, Algonquin Realty Inc. of Dallas, had Michael Cagle, Josh Knez and Michael Carmichael with the John Bowles Co., also in Dallas, negotiating its terms for the six-story building. There is just 9,452 sf of vacant space to fill in the 67,777-sf building, which carries a full-service quote of $13.50 per sf.

Studio Movie Grill has five locations up and running in Dallas/Fort Worth and one in Houston, where a second one--a nine-screen theater--is set to come on line this winter in CityCentre, a 1.1-million-sf mixed-use development at 800 W. Sam Houston Pkwy. Next year, the chain will push outside Texas for the first time, focusing its search on lifestyle and town centers much like Arlington Highlands, where it has an eight-screen theater with 1,200 seats at 225 Merchants Row in Arlington.

Schultz says the national acceptance of the dinner-and-theater concept means it's definitely time to take its show on the road. The larger headquarters office provides more room for more employees, also needed for the expansion plan. "We're keying up for our national expansion," he emphasizes, keeping details about the search for its first non-Texas site under wraps for now.

Dallas Chop House Lands Prime Spot in Downtown

DALLAS-Metropolitan Real Estate Investors LLC will expand its 1.5-million-sf Comerica Bank Tower, adding a 1,300-sf glass-enclosed annex to a long-dark restaurant space to park a new steakhouse in the CBD. Leading restaurateur Michael Hogue will debut Dallas Chop House in summer 2009.
The all-in construction cost is still being fine-tuned, but more than $2 million will go into the interior finish-out alone for the 126-seat restaurant, according to Hogue, who signed a 10-year lease for the restaurant spot and patio at 1717 Main St. He says construction is slated to begin by November. "We are going to build a brand that will be part of Downtown Dallas and an institution," says the owner of Hogue Enterprise Co.

The plan to add a high-end restaurant to the 60-story landmark's roster has been in the making seven of the eight years that its gatekeeper under two owners has been in charge of leasing. The deal will light a 5,750-sf restaurant space for the first time in one decade.

"We really wanted a high-end restaurant. There was some interest before, but not the quality that we wanted," says Don Dowell, the tower's long-time leasing agent who transitioned to Cushman & Wakefield of Texas Inc. at Metropolitan's behest after it bought the trophy. "He [Hogue] has the right vision. He is a successful restaurant operator and has a really good following of people."
Hogue's specialty fares are Dallas Fish Market, which is one block from Comerica Tower, and Go Fish Ocean Club, which relocated and just opened last week near the Galleria mall in North Dallas. Go Fish launched in 2005 and Dallas Fish Market in 2007.

"This building itself is a trophy. What we're looking for as owner is to provide as many amenities as we can to our tenants and that's where we add value," says Steve Korn, CFO of the Los Angeles-based Metropolitan Real Estate. "It's a true amenity by putting the Dallas Chop House into our building. It's not only for our tenants, but the Downtown as well."

Hogue is a local entrepreneur and self-made man who's "very creative and qualified," Korn stresses. "We're very pleased to have him opening in the building."

Hogue tells that he had eight months into the planning of a steakhouse concept when his broker, Jack Gosnell, executive vice president of locally based UCR Urban/ChainLinks, put the Comerica tower "opportunity" on his table. "We want to grow Downtown Dallas into a dining destination," Hogue says, adding the Dallas Chop House's planned view of the high rise's plaza and Main Street Garden Park had the right ingredients for his entrepreneurial vision. And to his surprise, the name was available.

Hogue says the new chop house will be a cut above steakhouse competitors, featuring an aging case to produce its own prime, a "steak library" of books about the cuisine and the region's first Kosher station. It also will have valet parking and 150 designated spaces in the tower garage. The interior design will include a custom fireplace and open kitchen while the menu will sport a catering service for the tower's high-powered tenant mix of financial institutions and law and accounting firms. "I believe there's a built-in business in there," Hogue says. Dallas' 5G Studio Collaborative LLC is the project architect.

Dowell says construction is being timed to coincide with the city's completion of Main Street Garden Park, the final touches for Mercantile Place on Main, a Forest City Enterprises' project, and the ramping up of the University of North Texas' in-town law school. "The Downtown had to evolve to the status it is now before this would really work," Dowell stresses. "The park and Mercantile Place coming to completion is what made it right now."

Dowell says the high rise's occupancy is 87%, an economic engine fueled by 60 tenants and 4,000 workers. Tenants like Comerica have been asking for a high-end restaurant in the building. Even though there are restaurants a block away, Dowell says the Texas heat and rain can make that a challenging hike.

"We think it will ultimately help our leasing and tenant retention," Dowell says. "These owners are great. They understand the vision and the value to the property."

Putting the glass extension onto the Philip Johnson signature design means the owner plans to spend "extra money to make sure everything is in sync with the architecture of the building," Korn says about the December 2006 buy, which topped $216 million. "We've invested a lot into the building and we don't want to damage the integrity of it."

Friday, September 05, 2008

Several big apartment, condo projects in works in East Dallas

Kirk Freeman and Clark Lauderdale managed the Newport apartments on Matilda Street near Lovers Lane for more than a decade.

And when the out-of-state owners decided to sell the complex, they saw that the timing was right for redevelopment.

"We thought a condominium conversion was perfect for this property," said Mr. Freeman, who cited the close-in Dallas location and two-block walk to a DART light-rail station as key ingredients to the redo plan.

More than a year later, the renamed Veneto condominiums have just opened, and buyers are starting to move in. The developers spent more than $60,000 a unit to rehabilitate the 72-condo project.

A few years ago, the neighborhood just east of University Park wouldn't have warranted that much of an investment, the developers say.

"There have been a lot of changes, and there are going to be more," said Mr. Lauderdale of Lauderdale Co.

Indeed, developers are tying up building sites and knocking down block after block of older apartments in the area.

A half dozen or so major projects are in the works.

"Neighborhoods served by mass transit have tremendous appeal among renter prospects right now, so these areas are the hot zones targeted by quite a few developers," said Greg Willett of apartment market analyst M/PF YieldStar. "It's happening not just in Dallas but all across the nation."

One of the largest new developments in the neighborhood is Prescott Realty Group's mixed-use complex along Yale Boulevard at Greenville Avenue. It's adjacent to DART's Mockingbird rail stop.

"With $4 gas and ozone action days, we like the concept of people staying out of their cars so they can live, shop and work in the same area," said Prescott Realty chief executive Jud Pankey. "The fastest way to make an impact on DART ridership and air quality is to build residential adjacent to the stations."

The developer and investor has just completed demolishing the old Shamburger Building Center complex and is working on plans for a new apartment and retail complex.

The development is planned to contain about 450 apartments plus retail space. And Prescott Realty owns other land nearby that is also earmarked for redevelopment.

Visible changes are under way along Lovers Lane east of Matilda Street.

Fairfield Properties and Behringer Harvard are tearing down about two blocks of old rental units that will be replaced with new apartments and some retail space.

Fairfield hopes to break ground on the site of the Signature Pointe apartments as early as November. But first, the developer has to get city approval for the project and tear down the old apartments. The apartments were vacated and fenced off months ago. Fairfield has been negotiating with city planners and neighbors over details of the project since then.

"We are looking at building between 365 and 375 apartments," said Fairfield's Steven Stamos. "We will also have a retail component and 23 townhomes."

The developer has already spent more than $25 million on the project and hasn't turned a spade of dirt.

"You can understand that we are anxious to start," he said.

Nearby at the Plaza at Skillman apartments, demolition crews are knocking down the buildings. Behringer Harvard and Greystar Development are making way for more new apartments.

"About 80 percent of the previous structures have been cleared," said Behringer Harvard's Jason Mattox. "Construction will begin immediately after."

About 155 townhouse-style apartments will replace the 185 old units, which were built in the early 1970s.

North of Lovers at Southwestern Boulevard and Skillman Street, Florida-based builder ZOM Inc. has already torn down the almost 40-year-old Village View apartments. ZOM plans a new rental complex with more than 400 units.

The widespread rebuilding has gotten a mixed reaction from neighbors. Some property owners in the area welcome the replacement of aging rental complexes. But others have complained that the redevelopments will bring more traffic and higher housing costs.

The appeal of living a short walk from shopping and mass transit is a big lure for Veneto's buyers, developers say.

"Another developer, Power Properties, had already done successful condominium conversions in the neighborhood," Mr. Freeman said. "A significant number of our buyers are going to be first-time homeowners."

And so far, east side locations are offering a bargain compared with other central Dallas neighborhoods. The Veneto condos range from the $130,000s to the $240,000s, for example.

"This market is at least 25 or 30 percent cheaper than Uptown," Mr. Lauderdale said. "And we have a DART station and a Central Market grocer right up the street."

Lauderdale Co. is pushing ahead with plans to redevelop a second rental building across Birchbrook Drive. That complex will add 65 condo units.

"Most of the apartments in this area are going to be torn down or redone," Mr. Lauderdale said.

Tuesday, September 02, 2008

FDIC Adding 125,000 SF to Energy Plaza Sublease

DALLAS-Due to increased workload, the FDIC's regional office has grabbed another 125,000 sf in the CBD's Energy Plaza in a five-year sublease with Energy Future Holdings Corp., formerly TXU Corp. The federal agency moved in about one year ago, taking 185,000 sf in a 10-year sublease.
An FDIC spokesman tells that the extra floors are being filled in stages, with full occupancy to be completed by Nov. 1. The FDIC, which occupies floors 32 through 38, is adding 17 through 20 in the 49-story Energy Plaza at 1601 Bryan St. "The space will house various divisions of the Dallas regional office as the result of increased workload," says the spokesman for the nation's largest federal banking regulatory agency.

EF Holdings' divisions occupy the rest of the 1.06-million-sf high rise in a master lease that expires July 1, 2022 with the Boston-based owner, US Bank, a successor in interest to State Street Bank and Trust Co. of Connecticut.

EF Holdings has been shuffling its teams since its predecessor's sale in October 2007. GVA Cawley started the sublease assignment about 18 months ago, with 250,000 sf to backfill. But as the internal shuffle plays out, more of the class A-minus space has hit the sublease market.
GVA Cawley's Michael Pierre and Scott Hobbs are now courting the market with a 232,000-sf contiguous block on floors seven through 15. The quoted rate is $14.50 per sf plus electric.

"We're looking for all size tenants," emphasizes John Conger, principal of Dallas-based GVA Cawley. "We feel activity is really good. We have some big tenants looking in the Downtown market."

Pierre likes to point the high rise's features for its chief selling points: 14 conference rooms, mass transit on its doorstep, retail in the tunnel underneath and an IM Pei design. "We've got a large block of space and we're being very aggressive," Pierre says, adding the right size deal could emblazon a tenant's name across the top of the building.